… · s6692 congressional record—senatejuly 13, 2000 of the united mexican states, receiving...

CONGRESSIONAL RECORD — SENATES6692 July 13, 2000of the United Mexican States, receiving 42.5percent of the 37,600,000 votes cast, accordingto preliminary results released by the Fed-eral Electoral Institute; and

Whereas, according to the Federal Elec-toral Institute and domestic and inter-national observers, the July 2nd electionswere unprecedented in their degree of fair-ness and transparency, forming the founda-tion for a genuinely democratic and plural-istic government that represents the willand sovereignty of the people of Mexico:Now, therefore, be it

Resolved,SECTION 1. CONGRATULATING THE PEOPLE OF

MEXICO ON THE OCCASION OF THEDEMOCRATIC ELECTIONS HELD INMEXICO.

(a) CONGRATULATING THE PEOPLE OF MEX-ICO.—The Senate, on behalf of the people ofthe United States, hereby—

(1) congratulates the people of Mexico fortheir long, courageous, and fruitful strugglefor representative democracy and the rule oflaw;

(2) congratulates Vicente Fox Quesada forhis electoral triumph and extends to himgenuine best wishes for great success in hisformation of a new government; and

(3) congratulates Ernesto Zedillo Ponce deLeo

´n, current President of the United Mexi-

can States, for his historic commitment toensure the peaceful and stable transition ofpower.

(b) SENSE OF THE SENATE.—It is the senseof the Senate that the United States shouldseek to—

(1) expand and intensify its cooperationwith the newly elected Government of Mex-ico to promote economic development and toreduce poverty to achieve an improved qual-ity of life for citizens of both countries;

(2) confront common threats such as thetrafficking in illicit narcotics; and

(3) act in solidarity to actively promoterepresentative democracy and the rule of lawthroughout the world.SEC. 2. TRANSMITTAL OF RESOLUTION.

The Secretary of the Senate shall transmita copy of this resolution to—

(1) Vicente Fox Quesada, President-elect ofthe United Mexican States;

(2) Luis Felipe Bravo Mena, president ofthe National Action Party of Mexico;

(3) the International Republican Institutefor International Affairs and the NationalDemocratic Institute; and

(4) the Secretary of State with the requestthat the Secretary further transmit suchcopy to Ernesto Zedillo Ponce de Leo

´n,

President of the United Mexican States.

f

AMENDMENTS SUBMITTED

DEATH TAX ELIMINATION ACT

MOYNIHAN AMENDMENT NO. 3821

Mr. MOYNIHAN proposed an amend-ment to the bill (H.R. 8) to amend theInternal Revenue Code of 1986 to phase-out the estate and gift taxes over a 10-year period; as follows:

Strike all after the first word and insert:1. SHORT TITLE.

(a) SHORT TITLE.—This Act may be cited asthe ‘‘Estate Tax Relief Act of 2000’’.

(b) AMENDMENT OF 1986 CODE.—Except asotherwise expressly provided, whenever inthis Act an amendment or repeal is ex-pressed in terms of an amendment to, or re-peal of, a section or other provision, the ref-erence shall be considered to be made to a

section or other provision of the InternalRevenue Code of 1986.SEC. 2. INCREASE IN AMOUNT OF UNIFIED CRED-

IT AGAINST ESTATE AND GIFTTAXES.

(a) IN GENERAL.—The table contained insection 2010(c) (relating to applicable creditamount) is amended to read as follows:

‘‘In the case of estatesof decedents dying,and gifts made, dur-ing:

The applicableexclusion amount

is:

2001, 2002, 2003, 2004,and 2005 ..................... $1,000,0002006 and 2007 .............. $1,125,0002008 ........................... $1,500,0002009 or thereafter ...... $2,000,000.’’

(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply to the es-tates of decedents dying, and gifts made,after December 31, 2000.SEC. 3. INCREASE IN QUALIFIED FAMILY-OWNED

BUSINESS INTEREST DEDUCTIONAMOUNT.

(a) IN GENERAL.—Paragraph (2) of section2057(a) (relating to family-owned business in-terests) is amended to read as follows:

‘‘(2) MAXIMUM DEDUCTION.—‘‘(A) IN GENERAL.—The deduction allowed

by this section shall not exceed the sum of—‘‘(i) the applicable deduction amount, plus‘‘(ii) in the case of a decedent described in

subparagraph (C), the applicable unusedspousal deduction amount.

‘‘(B) APPLICABLE DEDUCTION AMOUNT.—Forpurposes of this subparagraph (A)(i), the ap-plicable deduction amount is determined inaccordance with the following table:

‘‘In the case of estatesof decedents dyingduring:

The applicablededuction amount

is:2001, 2002, 2003, 2004,and 2005 ..................... $1,375,0002006 and 2007 .............. $1,625,0002008 ........................... $2,375,0002009 or thereafter ...... $3,375,000.

‘‘(C) APPLICABLE UNUSED SPOUSAL DEDUC-TION AMOUNT.—With respect to a decedentwhose immediately predeceased spouse diedafter December 31, 2000, and the estate ofsuch immediately predeceased spouse metthe requirements of subsection (b)(1), the ap-plicable unused spousal deduction amountfor such decedent is equal to the excess of—

‘‘(i) the applicable deduction amount al-lowable under this section to the estate ofsuch immediately predeceased spouse, over

‘‘(ii) the sum of—‘‘(I) the applicable deduction amount al-

lowed under this section to the estate ofsuch immediately predeceased spouse, plus

‘‘(II) the amount of any increase in suchestate’s unified credit under paragraph (3)(B)which was allowed to such estate.’’

(b) CONFORMING AMENDMENTS.—Section2057(a)(3)(B) is amended—

(1) by striking ‘‘$675,000’’ both places it ap-pears and inserting ‘‘the applicable deduc-tion amount’’, and

(2) by striking ‘‘$675,000’’ in the heading andinserting ‘‘APPLICABLE DEDUCTION AMOUNT’’.

(c) EFFECTIVE DATE.—The amendmentmade by this section shall apply to the es-tates of decedents dying, and gifts made,after December 31, 2000.SEC. 4. SENSE OF SENATE REGARDING SAVINGS.

It is the sense of the Senate that the re-duced cost to the Federal Treasury resultingfrom the amendments made by this Act ascompared to the cost to the Federal Treas-ury of H.R. 8 as received by the Senate fromthe House of Representatives on June 12,2000, should be used exclusively to reduce theFederal debt held by the public.

Amend the title so as to read: ‘‘An Act toamend the Internal Revenue Code of 1986 to

increase the unified credit exemption andthe qualified family-owned business interestdeduction, and for other purposes.’’

SCHUMER (AND OTHERS)AMENDMENT NO. 3822

Mr. SCHUMER (for himself, Mr.BIDEN, Mr. BAYH, Ms. LANDRIEU, Mr.DURBIN, and Mr. ROBB) proposed anamendment to the bill, H.R. 8, supra;as follows:



(b) AMENDMENT OF 1986 CODE.—Except asotherwise expressly provided, whenever inthis Act an amendment or repeal is ex-pressed in terms of an amendment to, or re-peal of, a section or other provision, the ref-erence shall be considered to be made to asection or other provision of the InternalRevenue Code of 1986.

TITLE I—ESTATE TAX RELIEFSEC. 101. INCREASE IN AMOUNT OF UNIFIED

CREDIT AGAINST ESTATE AND GIFTTAXES.


‘‘In the case of estatesof decedentsdying, and The applicablegifts made, during: exclusion amount is:


(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply to the es-tates of decedents dying, and gifts made,after December 31, 2000.SEC. 102. INCREASE IN QUALIFIED FAMILY-

OWNED BUSINESS INTEREST DEDUC-TION AMOUNT.






‘‘In the case of estatesof decedentsdying, and The applicablegifts made, during: exclusion amount is:

2001, 2002, 2003, 2004,and 2005 ..................... $1,375,0002006 and 2007 .............. $1,625,0002008 ........................... $2,375,0002009 or thereafter ...... $3,375,000.





VerDate 11-MAY-2000 06:42 Jul 14, 2000 Jkt 079060 PO 00000 Frm 00108 Fmt 4624 Sfmt 0634 E:\CR\FM\A13JY6.119 pfrm01 PsN: S13PT1

CONGRESSIONAL RECORD — SENATE S6693July 13, 2000‘‘(II) the amount of any increase in such

estate’s unified credit under paragraph (3)(B)which was allowed to such estate.’’




(c) EFFECTIVE DATE.—The amendmentmade by this section shall apply to the es-tates of decedents dying, and gifts made,after December 31, 2000.

TITLE II—MAKE COLLEGE AFFORDABLESEC. 201. DEDUCTION FOR HIGHER EDUCATION

EXPENSES.(a) DEDUCTION ALLOWED.—Part VII of sub-

chapter B of chapter 1 (relating to additionalitemized deductions for individuals) isamended by redesignating section 222 as sec-tion 223 and by inserting after section 221 thefollowing:‘‘SEC. 222. HIGHER EDUCATION EXPENSES.

‘‘(a) ALLOWANCE OF DEDUCTION.—‘‘(1) IN GENERAL.—In the case of an indi-

vidual, there shall be allowed as a deductionan amount equal to the applicable dollaramount of the qualified higher education ex-penses paid by the taxpayer during the tax-able year.

‘‘(2) APPLICABLE DOLLAR AMOUNT.—The ap-plicable dollar amount for any taxable yearshall be determined as follows:

Applicable‘‘Taxable year: dollar amount:

2002 .................................................. $4,0002003 .................................................. $8,0002004 and thereafter .......................... $12,000.‘‘(b) LIMITATION BASED ON MODIFIED AD-

JUSTED GROSS INCOME.—‘‘(1) IN GENERAL.—The amount which would

(but for this subsection) be taken into ac-count under subsection (a) shall be reduced(but not below zero) by the amount deter-mined under paragraph (2).

‘‘(2) AMOUNT OF REDUCTION.—The amountdetermined under this paragraph equals theamount which bears the same ratio to theamount which would be so taken into ac-count as—

‘‘(A) the excess of—‘‘(i) the taxpayer’s modified adjusted gross

income for such taxable year, over‘‘(ii) $62,450 ($104,050 in the case of a joint

return, $89,150 in the case of a return filed bya head of household, and $52,025 in the case ofa return by a married individual filing sepa-rately), bears to

‘‘(B) $15,000.‘‘(3) MODIFIED ADJUSTED GROSS INCOME.—

For purposes of this subsection, the term‘modified adjusted gross income’ means theadjusted gross income of the taxpayer for thetaxable year determined—

‘‘(A) without regard to this section andsections 911, 931, and 933, and

‘‘(B) after the application of sections 86,135, 219, 220, and 469.

For purposes of the sections referred to insubparagraph (B), adjusted gross incomeshall be determined without regard to thededuction allowed under this section.

‘‘(c) QUALIFIED HIGHER EDUCATION EX-PENSES.—For purposes of this section—

‘‘(1) QUALIFIED HIGHER EDUCATION EX-PENSES.—

‘‘(A) IN GENERAL.—The term ‘qualifiedhigher education expenses’ means tuitionand fees charged by an educational institu-tion and required for the enrollment or at-tendance of—

‘‘(i) the taxpayer,‘‘(ii) the taxpayer’s spouse,‘‘(iii) any dependent of the taxpayer with

respect to whom the taxpayer is allowed adeduction under section 151, or

‘‘(iv) any grandchild of the taxpayer,as an eligible student at an institution ofhigher education.

‘‘(B) ELIGIBLE COURSES.—Amounts paid forqualified higher education expenses of anyindividual shall be taken into account undersubsection (a) only to the extent suchexpenses—

‘‘(i) are attributable to courses of instruc-tion for which credit is allowed toward a bac-calaureate degree by an institution of highereducation or toward a certificate of requiredcourse work at a vocational school, and

‘‘(ii) are not attributable to any graduateprogram of such individual.

‘‘(C) EXCEPTION FOR NONACADEMIC FEES.—Such term does not include any student ac-tivity fees, athletic fees, insurance expenses,or other expenses unrelated to a student’sacademic course of instruction.

‘‘(D) ELIGIBLE STUDENT.—For purposes ofsubparagraph (A), the term ‘eligible student’means a student who—

‘‘(i) meets the requirements of section484(a)(1) of the Higher Education Act of 1965(20 U.S.C. 1091(a)(1)), as in effect on the dateof the enactment of this section, and

‘‘(ii) is carrying at least one-half the nor-mal full-time work load for the course ofstudy the student is pursuing, as determinedby the institution of higher education.

‘‘(E) IDENTIFICATION REQUIREMENT.—No de-duction shall be allowed under subsection (a)to a taxpayer with respect to an eligible stu-dent unless the taxpayer includes the name,age, and taxpayer identification number ofsuch eligible student on the return of tax forthe taxable year.

‘‘(2) INSTITUTION OF HIGHER EDUCATION.—The term ‘institution of higher education’means an institution which—

‘‘(A) is described in section 481 of the High-er Education Act of 1965 (20 U.S.C. 1088), as ineffect on the date of the enactment of thissection, and

‘‘(B) is eligible to participate in programsunder title IV of such Act.

‘‘(d) SPECIAL RULES.—‘‘(1) NO DOUBLE BENEFIT.—‘‘(A) IN GENERAL.—No deduction shall be

allowed under subsection (a) for any expensefor which a deduction is allowable to the tax-payer under any other provision of this chap-ter unless the taxpayer irrevocably waiveshis right to the deduction of such expenseunder such other provision.

‘‘(B) DENIAL OF DEDUCTION IF CREDIT ELECT-ED.—No deduction shall be allowed undersubsection (a) for a taxable year with respectto the qualified higher education expenses ofan individual if the taxpayer elects to havesection 25A apply with respect to such indi-vidual for such year.

‘‘(C) DEPENDENTS.—No deduction shall beallowed under subsection (a) to any indi-vidual with respect to whom a deductionunder section 151 is allowable to another tax-payer for a taxable year beginning in the cal-endar year in which such individual’s taxableyear begins.

‘‘(D) COORDINATION WITH EXCLUSIONS.—Adeduction shall be allowed under subsection(a) for qualified higher education expensesonly to the extent the amount of such ex-penses exceeds the amount excludable undersection 135 or 530(d)(2) for the taxable year.

‘‘(2) LIMITATION ON TAXABLE YEAR OF DE-DUCTION.—

‘‘(A) IN GENERAL.—A deduction shall be al-lowed under subsection (a) for qualified high-er education expenses for any taxable yearonly to the extent such expenses are in con-nection with enrollment at an institution ofhigher education during the taxable year.

‘‘(B) CERTAIN PREPAYMENTS ALLOWED.—Subparagraph (A) shall not apply to qualifiedhigher education expenses paid during a tax-able year if such expenses are in connection

with an academic term beginning duringsuch taxable year or during the first 3months of the next taxable year.

‘‘(3) ADJUSTMENT FOR CERTAIN SCHOLAR-SHIPS AND VETERANS BENEFITS.—The amountof qualified higher education expenses other-wise taken into account under subsection (a)with respect to the education of an indi-vidual shall be reduced (before the applica-tion of subsection (b)) by the sum of theamounts received with respect to such indi-vidual for the taxable year as—

‘‘(A) a qualified scholarship which undersection 117 is not includable in gross income,

‘‘(B) an educational assistance allowanceunder chapter 30, 31, 32, 34, or 35 of title 38,United States Code, or

‘‘(C) a payment (other than a gift, bequest,devise, or inheritance within the meaning ofsection 102(a)) for educational expenses, orattributable to enrollment at an eligibleeducational institution, which is exemptfrom income taxation by any law of theUnited States.

‘‘(4) NO DEDUCTION FOR MARRIED INDIVID-UALS FILING SEPARATE RETURNS.—If the tax-payer is a married individual (within themeaning of section 7703), this section shallapply only if the taxpayer and the taxpayer’sspouse file a joint return for the taxableyear.

‘‘(5) NONRESIDENT ALIENS.—If the taxpayeris a nonresident alien individual for any por-tion of the taxable year, this section shallapply only if such individual is treated as aresident alien of the United States for pur-poses of this chapter by reason of an electionunder subsection (g) or (h) of section 6013.

‘‘(6) REGULATIONS.—The Secretary mayprescribe such regulations as may be nec-essary or appropriate to carry out this sec-tion, including regulations requiring record-keeping and information reporting.’’

(b) DEDUCTION ALLOWED IN COMPUTING AD-JUSTED GROSS INCOME.—Section 62(a) isamended by inserting after paragraph (17)the following:

‘‘(18) HIGHER EDUCATION EXPENSES.—The de-duction allowed by section 222.’’

(c) CONFORMING AMENDMENT.—The table ofsections for part VII of subchapter B of chap-ter 1 is amended by striking the item relat-ing to section 222 and inserting the fol-lowing:

‘‘Sec. 222. Higher education expenses.‘‘Sec. 223. Cross reference.’’

(d) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to paymentsmade in taxable years beginning after De-cember 31, 2001.SEC. 202. CREDIT FOR INTEREST ON HIGHER

EDUCATION LOANS.(a) IN GENERAL.—Subpart A of part IV of

subchapter A of chapter 1 (relating to non-refundable personal credits) is amended byinserting after section 25A the following newsection:‘‘SEC. 25B. INTEREST ON HIGHER EDUCATION

LOANS.‘‘(a) ALLOWANCE OF CREDIT.—In the case of

an individual, there shall be allowed as acredit against the tax imposed by this chap-ter for the taxable year an amount equal tothe interest paid by the taxpayer during thetaxable year on any qualified education loan.

‘‘(b) MAXIMUM CREDIT.—‘‘(1) IN GENERAL.—Except as provided in

paragraph (2), the credit allowed by sub-section (a) for the taxable year shall not ex-ceed $1,500.

‘‘(2) LIMITATION BASED ON MODIFIED AD-JUSTED GROSS INCOME.—

‘‘(A) IN GENERAL.—If the modified adjustedgross income of the taxpayer for the taxableyear exceeds $50,000 ($80,000 in the case of ajoint return), the amount which would (but


CONGRESSIONAL RECORD — SENATES6694 July 13, 2000for this paragraph) be allowable as a creditunder this section shall be reduced (but notbelow zero) by the amount which bears thesame ratio to the amount which would be soallowable as such excess bears to $20,000.

‘‘(B) MODIFIED ADJUSTED GROSS INCOME.—The term ‘modified adjusted gross income’means adjusted gross income determinedwithout regard to sections 911, 931, and 933.

‘‘(C) INFLATION ADJUSTMENT.—In the caseof any taxable year beginning after 2003, the$50,000 and $80,000 amounts referred to in sub-paragraph (A) shall be increased by anamount equal to—

‘‘(i) such dollar amount, multiplied by‘‘(ii) the cost-of-living adjustment deter-

mined under section (1)(f)(3) for the calendaryear in which the taxable year begins, bysubstituting ‘2002’ for ‘1992’.

‘‘(D) ROUNDING.—If any amount as adjustedunder subparagraph (C) is not a multiple of$50, such amount shall be rounded to thenearest multiple of $50.

‘‘(c) DEPENDENTS NOT ELIGIBLE FOR CRED-IT.—No credit shall be allowed by this sec-tion to an individual for the taxable year ifa deduction under section 151 with respect tosuch individual is allowed to another tax-payer for the taxable year beginning in thecalendar year in which such individual’s tax-able year begins.

‘‘(d) LIMIT ON PERIOD CREDIT ALLOWED.—Acredit shall be allowed under this sectiononly with respect to interest paid on anyqualified education loan during the first 60months (whether or not consecutive) inwhich interest payments are required. Forpurposes of this paragraph, any loan and allrefinancings of such loan shall be treated as1 loan.

‘‘(e) DEFINITIONS.—For purposes of thissection—

‘‘(1) QUALIFIED EDUCATION LOAN.—The term‘qualified education loan’ has the meaninggiven such term by section 221(e)(1).

‘‘(2) DEPENDENT.—The term ‘dependent’ hasthe meaning given such term by section 152.

‘‘(f) SPECIAL RULES.—‘‘(1) DENIAL OF DOUBLE BENEFIT.—No credit

shall be allowed under this section for anyamount taken into account for any deduc-tion under any other provision of this chap-ter.

‘‘(2) MARRIED COUPLES MUST FILE JOINT RE-TURN.—If the taxpayer is married at theclose of the taxable year, the credit shall beallowed under subsection (a) only if the tax-payer and the taxpayer’s spouse file a jointreturn for the taxable year.

‘‘(3) MARITAL STATUS.—Marital status shallbe determined in accordance with section7703.’’

(b) CONFORMING AMENDMENT.—The table ofsections for subpart A of part IV of sub-chapter A of chapter 1 is amended by insert-ing after the item relating to section 25A thefollowing new item:

‘‘Sec. 25B. Interest on higher educationloans.’’

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to anyqualified education loan (as defined in sec-tion 25B(e)(1) of the Internal Revenue Code of1986, as added by this section) incurred on,before, or after the date of the enactment ofthis Act, but only with respect to any loaninterest payment due after December 31,2001.

TITLE III—ADVANCED TEACHERCERTIFICATION INCENTIVES

SEC. 301. CERTIFIED TEACHER CREDIT.(a) FINDINGS.—Congress makes the fol-

lowing findings:(1) Studies have shown that the greatest

single in-school factor affecting studentachievement is teacher quality.

(2) Most accomplished teachers do not getthe rewards they deserve.

(3) After adjusting amounts for inflation,the average teacher salary for 1997–1998 of$39,347 is just $2 above what it was in 1993.Such salary is also just $1,924 more than theaverage salary recorded in 1972, a real in-crease of only $75 per year.

(4) While K–12 enrollments are steadily in-creasing, the teacher population is aging.There is a need, now more than ever, to at-tract competent, capable, and bright collegegraduates or mid-career professionals to theteaching profession.

(5) The Department of Education projectsthat 2,000,000 new teachers will have to behired in the next decade. Shortages, if theyoccur, will most likely be felt in urban orrural regions of the country where workingconditions may be difficult or compensationlow.

(6) If students are to receive a high qualityeducation and remain competitive in theglobal market the United States must at-tract talented and motivated people to theteaching profession in large numbers.

(b) ALLOWANCE OF CREDIT.—Subpart C ofpart IV of subchapter A of chapter 1 (relatingto refundable credits) is amended by redesig-nating section 35 as section 36 and by insert-ing after section 34 the following new sec-tion:‘‘SEC. 35. CERTIFIED TEACHER CREDIT.

‘‘(a) ALLOWANCE OF CREDIT.—‘‘(1) IN GENERAL.—In the case of an eligible

teacher, there shall be allowed as a creditagainst the tax imposed by this chapter forthe taxable year $5,000.

‘‘(2) YEAR CREDIT ALLOWED.—The creditunder paragraph (1) shall be allowed in thetaxable year in which the taxpayer becomesa certified individual.

‘‘(b) DEFINITIONS.—For purposes of thissection—

‘‘(1) ELIGIBLE TEACHER.—‘‘(A) IN GENERAL.—The term ‘eligible

teacher’ means a certified individual who isa pre-kindergarten or early childhood educa-tor, or a kindergarten through grade 12classroom teacher, instructor, counselor,aide, or principal in an elementary or sec-ondary school on a full-time basis for an aca-demic year ending during a taxable year.

‘‘(B) CERTIFIED INDIVIDUAL.—The term ‘cer-tified individual’ means an individual whohas successfully completed the requirementsfor advanced certification provided by theNational Board for Professional TeachingStandards.

‘‘(2) ELEMENTARY OR SECONDARY SCHOOL.—The term ‘elementary or secondary school’means a public elementary or secondaryschool which—

‘‘(A) is located in a school district of alocal educational agency which is eligible,during the taxable year, for assistance underpart A of title I of the Elementary and Sec-ondary Education Act of 1965 (20 U.S.C. 6311et seq.), and

‘‘(B) during the taxable year, the Secretaryof Education determines to have an enroll-ment of children counted under section1124(c) of such Act (20 U.S.C. 6333(c)) in anamount in excess of an amount equal to 40percent of the total enrollment of suchschool.

‘‘(c) VERIFICATION.—The credit allowedunder subsection (a) shall be allowed with re-spect to any certified individual only if thecertification is verified in such manner asthe Secretary shall prescribe by regulation.

‘‘(d) ELECTION TO HAVE CREDIT NOTAPPLY.—A taxpayer may elect to have thissection not apply for any taxable year.’’.

(c) EXCLUSION FROM INCOME FOR CERTAINAMOUNTS.—Part III of subchapter B of chap-ter 1 (relating to items specifically excluded

from gross income) is amended by redesig-nating section 139 as section 140 and insert-ing after section 138 the following new sec-tion:‘‘SEC. 139. CERTAIN AMOUNTS RECEIVED BY CER-

TIFIED TEACHERS.‘‘(a) IN GENERAL.—In the case of a certified

teacher, gross income shall not include thevalue of anything received during the tax-able year solely by reason of such teacherhaving successfully completed the require-ments for advanced certification provided bythe National Board for Professional Teach-ing Standards (such as an incentive pay-ment).

‘‘(b) CERTIFIED TEACHER.—For purposes ofthis section, the term ‘certified teacher’ hasthe meaning given the term ‘eligible teacher’under section 35(b)(1).

‘‘(c) VERIFICATION.—The exclusion undersubsection (a) shall be allowed with respectto any certified teacher only if the certifi-cation is verified in such manner as the Sec-retary shall prescribe by regulation.

‘‘(d) AMOUNTS MUST BE REASONABLE.—Amounts excluded under subsection (a) shallinclude only amounts which are reason-able.’’.

(d) CONFORMING AMENDMENTS.—(1) Section 1324(b)(2) of title 31, United

States Code, is amended by striking ‘‘or’’ be-fore ‘‘enacted’’ and by inserting before theperiod at the end ‘‘, or from section 35 ofsuch Code’’.

(2) The table of sections for subpart C ofpart IV of subchapter A of chapter 1 isamended by striking the item relating tosection 35 and inserting the following:

‘‘Sec. 35. Certified teacher credit.‘‘Sec. 36. Overpayments of tax.’’

(3) The table of sections for part III of sub-chapter B of chapter 1 is amended by strik-ing the item relating to section 139 and in-serting the following new items:‘‘Sec. 139. Certain amounts received by cer-

tified teachers.‘‘Sec. 140. Cross references to other Acts.’’

(e) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2001.

HATCH (AND OTHERS)AMENDMENT NO. 3823

Mr. HATCH (for himself, Mr. ROBB,and Mr. KENNEDY) proposed an amend-ment to the bill, H.R. 8, supra; as fol-lows:

At the end, add the following:TITLE VI—PERMANENT EXTENSION OF

RESEARCH CREDITSEC. 601. PERMANENT EXTENSION OF RESEARCH

CREDIT.(a) IN GENERAL.—Section 41 (relating to

credit for increasing research activities) isamended by striking subsection (h).

(b) CONFORMING AMENDMENT.—Paragraph(1) of section 45C(b) is amended by strikingsubparagraph (D).

GRAHAM (AND OTHERS)AMENDMENT NO. 3824

(Ordered to lie on the table.)Mr. GRAHAM (for himself, Mr. KEN-

NEDY, Mr. ROBB, Mr. BRYAN, Mrs. LIN-COLN, Mr. ROCKEFELLER, Mr. DASCHLE,Mr. WELLSTONE, Mr. KERRY, and Mr.DORGAN) submitted an amendment in-tended to be proposed by them to thebill, H.R. 8, supra; as follows:

Strike all after the first word and insert:SECTION 1. SHORT TITLE.



CONGRESSIONAL RECORD — SENATE S6695July 13, 2000(b) AMENDMENT OF 1986 CODE.—Except as

otherwise expressly provided, whenever inthis Act an amendment or repeal is ex-pressed in terms of an amendment to, or re-peal of, a section or other provision, the ref-erence shall be considered to be made to asection or other provision of the InternalRevenue Code of 1986.

TITLE I—ESTATE TAX RELIEF

SEC. 101. INCREASE IN AMOUNT OF UNIFIEDCREDIT AGAINST ESTATE AND GIFTTAXES.




is:


(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply to the es-tates of decedents dying, and gifts made,after December 31, 2000.

SEC. 102. INCREASE IN QUALIFIED FAMILY-OWNED BUSINESS INTEREST DEDUC-TION AMOUNT.






‘‘In the case of estatesof decedents dyingduring:


is:2001, 2002, 2003, 2004,and 2005 ..................... $1,375,0002006 and 2007 .............. $1,625,0002008 ........................... $2,375,0002009 or thereafter ...... $3,375,000.’’










TITLE II—ADDTIONAL BUDGET RE-SOURCES FOR A MEDICARE PRESCRIP-TION DRUG BENEFIT PROGRAM

SEC. 201. ADDTIONAL BUDGET RESOURCES FORA MEDICARE PRESCRIPTION DRUGBENEFIT PROGRAM.

(a) FINDINGS.—The Senate makes the fol-lowing findings:

(1) Beneficiaries under the medicare pro-gram under title XVIII of the Social Secu-rity Act (42 U.S.C. 1395 et seq.) are the onlygroup of insured Americans without pre-scription drug coverage.

(2) At any point in time, approximately13,000,000 medicare beneficiaries are withoutprescription drug coverage.

(3) Over the course of a year, nearly20,000,000 medicare beneficiaries are withoutprescription drug coverage for all or part ofthe year.

(4) The options available to medicare bene-ficiaries for obtaining prescription drug cov-erage are declining since—

(A) the number of employers providing em-ployer-sponsored retiree coverage is declin-ing at a dramatic rate;

(B) Medicare+Choice plans that might oth-erwise provide prescription drug coverageare pulling out of counties throughout theNation; and

(C) medicare supplemental policies(medigap policies) that offer prescriptiondrug coverage are so prohibitively expensivethat only 8 percent of medicare beneficiarieshave the means to purchase such policies.

(5) An elderly individual without prescrip-tion drug coverage living on $12,525 a year(150 percent of the Federal poverty line), whohas diabetes, hypertension, and high choles-terol, pays more than 18.3 percent of theirtotal income on the prescription drugs mostcommonly prescribed to treat their medicalconditions.

(6) Medicare beneficiaries should neverhave to make the choice between having aroof over their head, having food in theirmouth, or having necessary prescriptiondrugs.

(7) Congress must provide medicare bene-ficiaries with a meaningful medicare pre-scription drug benefit that—

(A) is universal and affordable;(B) guarantees stable coverage for medi-

care beneficiaries receiving benefits throughthe original fee-for-service program orthrough enrollment in a Medicare+Choiceplan; and

(C) provides real low-income and stop-lossprotections.

(8) Meaningful prescription drug coverageincludes stop-loss protection above $4,000 ofout-of-pocket expenses for prescriptiondrugs.

(9) In March 2000, the Congressional BudgetOffice estimated the on-budget surplus forthe 5-year period of fiscal year 2001 throughfiscal year 2005 to be $148,000,000,000, assum-ing that discretionary spending was allowedto increase with inflation.

(10) Relying on the March 2000 estimate ofthe Congressional Budget Office, on April 12,2000, Congress passed the concurrent resolu-tion on the budget for fiscal year 2001 whichallocated $40,000,000,000 of the estimated on-budget surplus for the 5-year period de-scribed in paragraph (9) to provide a pre-scription drug benefit for medicare bene-ficiaries.

(11) Forty billion dollars over 5 years can-not ensure access to a meaningful medicareprescription drug benefit that—

(A) is universal and affordable;(B) guarantees stable coverage for medi-

care beneficiaries receiving benefits throughthe original fee-for-service program orthrough enrollment in a Medicare+Choiceplan; and

(C) provides real low-income and stop-lossprotections.

(12) Congress should not be bound to an ar-bitrarily low and inadequate allocation forproviding a medicare prescription drug ben-efit when the estimated on-budget surplusfor the 5-year period described in paragraph(9) has increased dramatically since March2000.

(13) The Office of Management and Budgetrecently has revised its estimates for the on-budget surplus for the 5-year period de-scribed in paragraph (9) and now estimatesthat the on-budget surplus will be$360,000,000,000 for such period.

(14) The Congressional Budget Office willissue its revised budget estimates in the nextfew days and those estimates are widely ex-pected to reflect a significant increase in theon-budget surplus for the 5-year period de-scribed in paragraph (9) as compared to theon-budget surplus that was estimated forsuch period in March 2000.

(b) 2001 BUDGET RESOLUTION AMENDMENT.—Section 213(b) of H. Con. Res. 290 (106th Con-gress) is amended to read as follows:

‘‘(b) ADJUSTMENTS.—The chairman of theCommittee on the Budget of the House orSenate, as applicable—

‘‘(1) shall revise committee allocations andother appropriate budgetary levels and lim-its to accommodate legislation described insection 215(a) which improves access to pre-scription drugs for Medicare beneficiaries inan additional amount not to exceed$40,000,000,000 or the difference between theon-budget surpluses in the reports referredto in subsection (a), whichever is less; and

‘‘(2) may, after the adjustment in para-graph (1), make the following adjustments inan amount not to exceed the difference be-tween the on-budget surpluses in the reportsreferred to in subsection (a) minus the ad-justment made pursuant to paragraph (1):

‘‘(A) Reduce the on-budget revenue aggre-gate by that amount for such fiscal year.

‘‘(B) Adjust the instruction in section 103or 104 to—

‘‘(i) increase the reduction in revenues bythat amount for fiscal year 2001;

‘‘(ii) increase the reduction in revenues bythe sum of the amounts for the period of fis-cal years 2001 through 2005; and

‘‘(iii) in the House only, increase theamount of debt reduction by that amount forfiscal year 2001.

‘‘(C) Adjust such other levels in this reso-lution, as appropriate and the Senate pay-as-you-go scorecard.’’.






(a) IN GENERAL.—The table contained insection 2010(c) (relating to applicable creditamount) is amended to read as follows:‘‘In the case of estates

of decedents dying,and gifts made, dur-ing:


is:



CONGRESSIONAL RECORD — SENATES6696 July 13, 2000(b) EFFECTIVE DATE.—The amendment

made by this section shall apply to the es-tates of decedents dying, and gifts made,after December 31, 2000.SEC. 102. INCREASE IN QUALIFIED FAMILY-






‘‘(B) APPLICABLE DEDUCTION AMOUNT.—Forpurposes of this subparagraph (A)(i), the ap-plicable deduction amount is determined inaccordance with the following table:‘‘In the case of estates

of decedents dyingduring:












TITLE II—HEALTH PROVISIONSSEC. 201. LONG-TERM CARE TAX CREDIT.

(a) ALLOWANCE OF CREDIT.—(1) IN GENERAL.—Section 24(a) (relating to

allowance of child tax credit) is amended toread as follows:

‘‘(a) ALLOWANCE OF CREDIT.—‘‘(1) IN GENERAL.—There shall be allowed as

a credit against the tax imposed by thischapter for the taxable year an amountequal to the sum of—

‘‘(A) $500 multiplied by the number ofqualifying children of the taxpayer, plus

‘‘(B) the applicable dollar amount multi-plied by the number of applicable individualswith respect to whom the taxpayer is an eli-gible caregiver for the taxable year.

‘‘(2) APPLICABLE DOLLAR AMOUNT.—For pur-poses of paragraph (1)(B), the applicable dol-lar amount for taxable years beginning inany calendar year shall be determined in ac-cordance with the following table:

Applicable‘‘Calendar year: Dollar amount:

2001 .................................................. $1,0002002 .................................................. $1,5002003 .................................................. $2,0002004 .................................................. $2,5002005 and thereafter .......................... $3,000.’’

(2) ADDITIONAL CREDIT FOR TAXPAYER WITH 3OR MORE SEPARATE CREDIT AMOUNTS.—Somuch of section 24(d) as precedes paragraph(1)(A) thereof is amended to read as follows:

‘‘(d) ADDITIONAL CREDIT FOR TAXPAYERSWITH 3 OR MORE SEPARATE CREDITAMOUNTS.—

‘‘(1) IN GENERAL.—If the sum of the numberof qualifying children of the taxpayer andthe number of applicable individuals with re-spect to which the taxpayer is an eligiblecaregiver is 3 or more for any taxable year,the aggregate credits allowed under subpartC shall be increased by the lesser of—’’.

(3) CONFORMING AMENDMENTS.—(A) The heading for section 32(n) is amend-

ed by striking ‘‘CHILD’’ and inserting ‘‘FAM-ILY CARE’’.

(B) The heading for section 24 is amendedto read as follows:‘‘SEC. 24. FAMILY CARE CREDIT.’’

(C) The table of sections for subpart A ofpart IV of subchapter A of chapter 1 isamended by striking the item relating tosection 24 and inserting the following newitem:‘‘Sec. 24. Family care credit.’’

(b) DEFINITIONS.—Section 24(c) (definingqualifying child) is amended to read as fol-lows:

‘‘(c) DEFINITIONS.—For purposes of thissection—

‘‘(1) QUALIFYING CHILD.—‘‘(A) IN GENERAL.—The term ‘qualifying

child’ means any individual if—‘‘(i) the taxpayer is allowed a deduction

under section 151 with respect to such indi-vidual for the taxable year,

‘‘(ii) such individual has not attained theage of 17 as of the close of the calendar yearin which the taxable year of the taxpayer be-gins, and

‘‘(iii) such individual bears a relationshipto the taxpayer described in section32(c)(3)(B).

‘‘(B) EXCEPTION FOR CERTAIN NONCITIZENS.—The term ‘qualifying child’ shall not includeany individual who would not be a dependentif the first sentence of section 152(b)(3) wereapplied without regard to all that follows‘resident of the United States’.

‘‘(2) APPLICABLE INDIVIDUAL.—‘‘(A) IN GENERAL.—The term ‘applicable in-

dividual’ means, with respect to any taxableyear, any individual who has been certified,before the due date for filing the return oftax for the taxable year (without exten-sions), by a physician (as defined in section1861(r)(1) of the Social Security Act) as beingan individual with long-term care needs de-scribed in subparagraph (B) for a period—

‘‘(i) which is at least 180 consecutive days,and

‘‘(ii) a portion of which occurs within thetaxable year.Such term shall not include any individualotherwise meeting the requirements of thepreceding sentence unless within the 391⁄2month period ending on such due date (orsuch other period as the Secretary pre-scribes) a physician (as so defined) has cer-tified that such individual meets such re-quirements.

‘‘(B) INDIVIDUALS WITH LONG-TERM CARENEEDS.—An individual is described in thissubparagraph if the individual meets any ofthe following requirements:

‘‘(i) The individual is at least 6 years of ageand—

‘‘(I) is unable to perform (without substan-tial assistance from another individual) atleast 3 activities of daily living (as defined insection 7702B(c)(2)(B)) due to a loss of func-tional capacity, or

‘‘(II) requires substantial supervision toprotect such individual from threats tohealth and safety due to severe cognitive im-

pairment and is unable to perform at least 1activity of daily living (as so defined) or tothe extent provided in regulations prescribedby the Secretary (in consultation with theSecretary of Health and Human Services), isunable to engage in age appropriate activi-ties.

‘‘(ii) The individual is at least 2 but not 6years of age and is unable due to a loss offunctional capacity to perform (without sub-stantial assistance from another individual)at least 2 of the following activities: eating,transferring, or mobility.

‘‘(iii) The individual is under 2 years of ageand requires specific durable medical equip-ment by reason of a severe health conditionor requires a skilled practitioner trained toaddress the individual’s condition to beavailable if the individual’s parents orguardians are absent.

‘‘(3) ELIGIBLE CAREGIVER.—‘‘(A) IN GENERAL.—A taxpayer shall be

treated as an eligible caregiver for any tax-able year with respect to the following indi-viduals:

‘‘(i) The taxpayer.‘‘(ii) The taxpayer’s spouse.‘‘(iii) An individual with respect to whom

the taxpayer is allowed a deduction undersection 151 for the taxable year.

‘‘(iv) An individual who would be describedin clause (iii) for the taxable year if section151(c)(1)(A) were applied by substituting forthe exemption amount an amount equal tothe sum of the exemption amount, the stand-ard deduction under section 63(c)(2)(C), andany additional standard deduction under sec-tion 63(c)(3) which would be applicable to theindividual if clause (iii) applied.

‘‘(v) An individual who would be describedin clause (iii) for the taxable year if—

‘‘(I) the requirements of clause (iv) are metwith respect to the individual, and

‘‘(II) the requirements of subparagraph (B)are met with respect to the individual in lieuof the support test of section 152(a).

‘‘(B) RESIDENCY TEST.—The requirementsof this subparagraph are met if an individualhas as his principal place of abode the homeof the taxpayer and—

‘‘(i) in the case of an individual who is anancestor or descendant of the taxpayer orthe taxpayer’s spouse, is a member of thetaxpayer’s household for over half the tax-able year, or

‘‘(ii) in the case of any other individual, isa member of the taxpayer’s household for theentire taxable year.

‘‘(C) SPECIAL RULES WHERE MORE THAN 1 ELI-GIBLE CAREGIVER.—

‘‘(i) IN GENERAL.—If more than 1 individualis an eligible caregiver with respect to thesame applicable individual for taxable yearsending with or within the same calendaryear, a taxpayer shall be treated as the eligi-ble caregiver if each such individual (otherthan the taxpayer) files a written declara-tion (in such form and manner as the Sec-retary may prescribe) that such individualwill not claim such applicable individual forthe credit under this section.

‘‘(ii) NO AGREEMENT.—If each individual re-quired under clause (i) to file a written dec-laration under clause (i) does not do so, theindividual with the highest modified ad-justed gross income (as defined in section32(c)(5)) shall be treated as the eligible care-giver.

‘‘(iii) MARRIED INDIVIDUALS FILING SEPA-RATELY.—In the case of married individualsfiling separately, the determination underthis subparagraph as to whether the husbandor wife is the eligible caregiver shall be madeunder the rules of clause (ii) (whether or notone of them has filed a written declarationunder clause (i)).’’

(c) IDENTIFICATION REQUIREMENTS.—


CONGRESSIONAL RECORD — SENATE S6697July 13, 2000(1) IN GENERAL.—Section 24(e) is amended

by adding at the end the following new sen-tence: ‘‘No credit shall be allowed under thissection to a taxpayer with respect to any ap-plicable individual unless the taxpayer in-cludes the name and taxpayer identificationnumber of such individual, and the identi-fication number of the physician certifyingsuch individual, on the return of tax for thetaxable year.’’

(2) ASSESSMENT.—Section 6213(g)(2)(I) ofsuch Code is amended—

(A) by inserting ‘‘or physician identifica-tion’’ after ‘‘correct TIN’’, and

(B) by striking ‘‘child’’ and inserting ‘‘fam-ily care’’.

(d) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2000.SEC. 202. FULL DEDUCTION FOR HEALTH INSUR-

ANCE COSTS OF SELF-EMPLOYED IN-DIVIDUALS.

(a) IN GENERAL.—Section 162(l)(1) (relatingto special rules for health insurance costs ofself-employed individuals) is amended toread as follows:

‘‘(1) ALLOWANCE OF DEDUCTION.—In the caseof an individual who is an employee withinthe meaning of section 401(c)(1), there shallbe allowed as a deduction under this sectionan amount equal to the amount paid duringthe taxable year for insurance which con-stitutes medical care for the taxpayer, thetaxpayer’s spouse, and dependents.’’.

(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply to taxableyears beginning after December 31, 2000.

WELLSTONE (AND OTHERS)AMENDMENT NO. 3826

(Ordered to lie on the table.)Mr. WELLSTONE (for himself, Mr.

DODD, Mr. LANDRIEU, and Mr. KOHL),submitted an amendment intended tobe proposed by them to the bill, H.R. 8,supra; as follows:









is:





‘‘(2) MAXIMUM DEDUCTION.—

‘‘(A) IN GENERAL.—The deduction allowedby this section shall not exceed the sum of—

‘‘(i) the applicable deduction amount, plus‘‘(ii) in the case of a decedent described in














(c) EFFECTIVE DATE.—The amendmentmade by this section shall apply to the es-tates of decedents dying, and gifts made,after December 31, 2000.TITLE II—DEPENDENT CARE TAX CREDIT

SEC. 201. EXPANSION OF DEPENDENT CARE TAXCREDIT.

(a) IN GENERAL.—Paragraph (2) of section21(a) (relating to expenses for household anddependent care services necessary for gainfulemployment) is amended to read as follows:

‘‘(2) APPLICABLE PERCENTAGE DEFINED.—Forpurposes of paragraph (1), the term ‘applica-ble percentage’ means 50 percent (40 percentfor taxable years beginning after December31, 2002, and before January 1, 2005) reduced(but not below 20 percent) by 1 percentagepoint for each $1,000 (or fraction thereof) bywhich the taxpayer’s adjusted gross incomefor the taxable year exceeds $30,000.’’

(b) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME PARENTS.—Section 21(e) (relatingto special rules) is amended by adding at theend the following:

‘‘(11) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME PARENTS.—Notwithstanding sub-section (d), in the case of any taxpayer withone or more qualifying individuals describedin subsection (b)(1)(A) under the age of 1 atany time during the taxable year, such tax-payer shall be deemed to have employment-related expenses with respect to not morethan 2 of such qualifying individuals in anamount equal to the greater of—

‘‘(A) the amount of employment-relatedexpenses incurred for such qualifying indi-viduals for the taxable year (determinedunder this section without regard to thisparagraph), or

‘‘(B) $41.67 for each month in such taxableyear during which each such qualifying indi-vidual is under the age of 1.’’.

(c) INFLATION ADJUSTMENT OF DOLLARAMOUNTS.—

(1) Section 21 is amended by redesignatingsubsection (f) as subsection (g) and by insert-ing after subsection (e) the following newsubsection:

‘‘(f) INFLATION ADJUSTMENT.—In the case ofany taxable year beginning in a calendaryear after 2001, the $30,000 amount containedin subsection (a), the $2,400 amount in sub-section (c), and the $41.67 amount in sub-section (e)(11) shall be increased by anamount equal to—

‘‘(1) such dollar amount, multiplied by‘‘(2) the cost-of-living adjustment deter-

mined under section 1(f)(3) for such calendaryear by substituting ‘calendar year 2000’ for‘calendar year 1992’ in subparagraph (B)thereof.If the increase determined under the pre-ceding sentence is not a multiple of $50 ($5 inthe case of the amount in subsection (e)(11)),such amount shall be rounded to the nextlowest multiple thereof.’’

(2) Paragraph (2) of section 21(c) is amend-ed by striking ‘‘$4,800’’ and inserting ‘‘twicethe dollar amount applicable under para-graph (1)’’.

(3) Paragraph (2) of section 21(d) is amend-ed by striking ‘‘less than—’’ and all that fol-lows through the end of the first sentenceand inserting ‘‘less than 1⁄12 of the amountwhich applies under subsection (c) to thetaxpayer for the taxable year.’’

(d) CREDIT ALLOWED BASED ON RESIDENCYIN CERTAIN CASES.—Subsection (e) of section21 is amended by adding at the end the fol-lowing new paragraph:

‘‘(12) CREDIT ALLOWED BASED ON RESIDENCYIN CERTAIN CASES.—In the case of ataxpayer—

‘‘(A) who does not satisfy the householdmaintenance test of subsection (a) for anyperiod, but

‘‘(B) whose principal place of abode forsuch period is also the principal place ofabode of any qualifying individual,then such taxpayer shall be treated as satis-fying such test for such period but theamount of credit allowable under this sec-tion with respect to such individual shall bedetermined by allowing only 1⁄12 of the limi-tation under subsection (c) for each fullmonth that the requirement of subparagraph(B) is met.’’

(e) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2000.SEC. 202. DEPENDENT CARE TAX CREDIT MADE

REFUNDABLE.(a) IN GENERAL.—Part IV of subchapter A

of chapter 1 (relating to credits against tax)is amended—

(1) by redesignating section 35 as section36, and

(2) by redesignating section 21 as section35.

(b) ADVANCE PAYMENT OF CREDIT.—Chapter25 (relating to general provisions relating toemployment taxes) is amended by insertingafter section 3507 the following:‘‘SEC. 3507A. ADVANCE PAYMENT OF DEPENDENT

CARE CREDIT.‘‘(a) GENERAL RULE.—Except as otherwise

provided in this section, every employermaking payment of wages with respect towhom a dependent care eligibility certificateis in effect shall, at the time of paying suchwages, make an additional payment equal tosuch employee’s dependent care advanceamount.

‘‘(b) DEPENDENT CARE ELIGIBILITY CERTIFI-CATE.—For purposes of this title, a depend-ent care eligibility certificate is a statementfurnished by an employee to the employerwhich—

‘‘(1) certifies that the employee will be eli-gible to receive the credit provided by sec-tion 35 for the taxable year,


CONGRESSIONAL RECORD — SENATES6698 July 13, 2000‘‘(2) certifies that the employee reasonably

expects to be an applicable taxpayer for thetaxable year,

‘‘(3) certifies that the employee does nothave a dependent care eligibility certificatein effect for the calendar year with respectto the payment of wages by another em-ployer,

‘‘(4) states whether or not the employee’sspouse has a dependent care eligibility cer-tificate in effect,

‘‘(5) states the number of qualifying indi-viduals in the household maintained by theemployee, and

‘‘(6) estimates the amount of employment-related expenses for the calendar year.

‘‘(c) DEPENDENT CARE ADVANCE AMOUNT.—‘‘(1) IN GENERAL.—For purposes of this

title, the term ‘dependent care advanceamount’ means, with respect to any payrollperiod, the amount determined—

‘‘(A) on the basis of the employee’s wagesfrom the employer for such period,

‘‘(B) on the basis of the employee’s esti-mated employment-related expenses in-cluded in the dependent care eligibility cer-tificate, and

‘‘(C) in accordance with tables provided bythe Secretary.

‘‘(2) ADVANCE AMOUNT TABLES.—The tablesreferred to in paragraph (1)(C) shall be simi-lar in form to the tables prescribed undersection 3402 and, to the maximum extent fea-sible, shall be coordinated with such tablesand the tables prescribed under section3507(c).

‘‘(d) OTHER RULES.—For purposes of thissection, rules similar to the rules of sub-sections (d) and (e) of section 3507 shallapply.

‘‘(e) DEFINITIONS.—For purposes of this sec-tion, terms used in this section which are de-fined in section 35 shall have the respectivemeanings given such terms by section 35.’’.

(c) CONFORMING AMENDMENTS.—(1) Section 35(a)(1), as redesignated by

paragraph (1), is amended by striking ‘‘chap-ter’’ and inserting ‘‘subtitle’’.

(2) Section 35(e), as so redesignated andamended by subsection (c), is amended byadding at the end the following:

‘‘(13) COORDINATION WITH ADVANCE PAY-MENTS AND MINIMUM TAX.—Rules similar tothe rules of subsections (g) and (h) of section32 shall apply for purposes of this section.’’.

(3) Sections 23(f)(1) and 129(a)(2)(C) are eachamended by striking ‘‘section 21(e)’’ and in-serting ‘‘section 35(e)’’.

(4) Section 129(b)(2) is amended by striking‘‘section 21(d)(2)’’ and inserting ‘‘section35(d)(2)’’.

(5) Section 129(e)(1) is amended by striking‘‘section 21(b)(2)’’ and inserting ‘‘section35(b)(2)’’.

(6) Section 213(e) is amended by striking‘‘section 21’’ and inserting ‘‘section 35’’.

(7) Section 995(f)(2)(C) is amended by strik-ing ‘‘and 34’’ and inserting ‘‘34, and 35’’.

(8) Section 6211(b)(4)(A) is amended bystriking ‘‘and 34’’ and inserting ‘‘, 34, and35’’.

(9) Section 6213(g)(2)(H) is amended bystriking ‘‘section 21’’ and inserting ‘‘section35’’.

(10) Section 6213(g)(2)(L) is amended bystriking ‘‘section 21, 24, or 32’’ and inserting‘‘section 24, 32, or 35’’.


‘‘Sec. 35. Dependent care services.

‘‘Sec. 36. Overpayments of tax.’’.(12) The table of sections for subpart A of

such part IV is amended by striking the itemrelating to section 21.

(13) The table of sections for chapter 25 isamended by adding after the item relating tosection 3507 the following:

‘‘Sec. 3507A. Advance payment of dependentcare credit.’’.

(14) Section 1324(b)(2) of title 31, UnitedStates Code, is amended by inserting beforethe period ‘‘, or enacted by the Death TaxElimination Act of 2000’’.

(d) EFFECTIVE DATE.—The amendmentsmade by this section apply to taxable yearsbeginning after December 31, 2002.

TITLE III—EXPANSION OF ADOPTIONCREDIT

SEC. 301. EXPANSION OF ADOPTION CREDIT.(a) SPECIAL NEEDS ADOPTION.—(1) CREDIT AMOUNT.—Paragraph (1) of sec-

tion 23(a) (relating to allowance of credit) isamended to read as follows:

‘‘(1) IN GENERAL.—In the case of an indi-vidual, there shall be allowed as a creditagainst the tax imposed by this chapter—

‘‘(A) in the case of a special needs adop-tion, $10,000, or

‘‘(B) in the case of any other adoption, theamount of the qualified adoption expensespaid or incurred by the taxpayer.’’.

(2) YEAR CREDIT ALLOWED.—Section 23(a)(2)(relating to year credit allowed) is amendedby adding at the end the following new flushsentence:‘‘In the case of a special needs adoption, thecredit allowed under paragraph (1) shall beallowed for the taxable year in which theadoption becomes final.’’.

(3) DOLLAR LIMITATION.—Section 23(b)(1) isamended—

(A) by striking ‘‘subsection (a)’’ and insert-ing ‘‘subsection (a)(1)(B)’’, and

(B) by striking ‘‘($6,000, in the case of achild with special needs)’’.

(4) DEFINITION OF SPECIAL NEEDS ADOP-TION.—Section 23(d) (relating to definitions)is amended by adding at the end the fol-lowing new paragraph:

‘‘(4) SPECIAL NEEDS ADOPTION.—The term‘special needs adoption’ means the finaladoption of an individual during the taxableyear who is an eligible child and who is achild with special needs.’’.

(5) DEFINITION OF CHILD WITH SPECIALNEEDS.—Section 23(d)(3) (defining child withspecial needs) is amended to read as follows:

‘‘(3) CHILD WITH SPECIAL NEEDS.—The term‘child with special needs’ means any child ifa State has determined that the child’s eth-nic background, age, membership in a minor-ity or sibling groups, medical condition orphysical impairment, or emotional handicapmakes some form of adoption assistance nec-essary.’’.

(b) INCREASE IN INCOME LIMITATIONS.—Sec-tion 23(b)(2) (relating to income limitation)is amended—

(1) in subparagraph (A)—(A) by striking ‘‘$75,000’’ and inserting

‘‘$63,550 ($105,950 in the case of a joint re-turn)’’, and

(B) by striking ‘‘$40,000’’ and inserting ‘‘theapplicable amount’’, and

(2) by adding at the end the following newsubparagraph:

‘‘(C) APPLICABLE AMOUNT.—For purposes ofsubparagraph (A), the applicable amount,with respect to any taxpayer, for the taxableyear shall be an amount equal to the excessof—

‘‘(i) the maximum taxable income amountfor the 31 percent bracket under the tablecontained in section 1 relating to such tax-payer and in effect for the taxable year, over

‘‘(ii) the dollar amount in effect with re-spect to the taxpayer for the taxable yearunder subparagraph (A)(i).

‘‘(D) COST-OF-LIVING ADJUSTMENT.—‘‘(i) IN GENERAL.—In the case of a taxable

year beginning after 2001, each dollar

amount under subparagraph (A)(i) shall beincreased by an amount equal to—

‘‘(I) such dollar amount, multiplied by‘‘(II) the cost-of-living adjustment deter-

mined under section 1(f )(3) for the calendaryear in which the taxable year begins, deter-mined by substituting ‘calendar year 2000’for ‘calendar year 1992’ in subparagraph (B)thereof.

‘‘(ii) ROUNDING RULES.—If any amount afteradjustment under clause (i) is not a multipleof $1,000, such amount shall be rounded tothe next lower multiple of $1,000.’’.

(c) ADOPTION CREDIT MADE PERMANENT.—Subclauses (A) and (B) of section 23(d)(2) (de-fining eligible child) are amended to read asfollows:

‘‘(A) who has not attained age 18, or‘‘(B) who is physically or mentally incapa-

ble of caring for himself.’’.(d) CONFORMING AMENDMENTS.—(1) Section 23(a)(2) is amended by striking

‘‘(1)’’ and inserting ‘‘(1)(B)’’.(2) Section 23(b)(3) is amended by striking

‘‘(a)’’ each place it appears and inserting‘‘(a)(1)(B)’’.


TITLE IV—INCENTIVES FOR EMPLOYER-PROVIDED CHILD CARE

SEC. 401. ALLOWANCE OF CREDIT FOR EM-PLOYER EXPENSES FOR CHILD CAREASSISTANCE.

(a) IN GENERAL.—Subpart D of part IV ofsubchapter A of chapter 1 (relating to busi-ness related credits) is amended by adding atthe end the following new section:‘‘SEC. 45D. EMPLOYER-PROVIDED CHILD CARE

CREDIT.‘‘(a) ALLOWANCE OF CREDIT.—For purposes

of section 38, the employer-provided childcare credit determined under this section forthe taxable year is an amount equal to thesum of—

‘‘(1) 25 percent of the qualified child careexpenditures, and

‘‘(2) 10 percent of the qualified child careresource and referral expenditures,of the taxpayer for such taxable year.

‘‘(b) DOLLAR LIMITATION.—The credit al-lowable under subsection (a) for any taxableyear shall not exceed $150,000.


‘‘(1) QUALIFIED CHILD CARE EXPENDITURE.—‘‘(A) IN GENERAL.—The term ‘qualified

child care expenditure’ means any amountpaid or incurred—

‘‘(i) to acquire, construct, rehabilitate, orexpand property—

‘‘(I) which is to be used as part of an eligi-ble qualified child care facility of the tax-payer,

‘‘(II) with respect to which a deduction fordepreciation (or amortization in lieu of de-preciation) is allowable, and

‘‘(III) which does not constitute part of theprincipal residence (within the meaning ofsection 121) of the taxpayer or any employeeof the taxpayer,

‘‘(ii) for the operating costs of an eligiblequalified child care facility of the taxpayer,including costs related to the training of em-ployees of the child care facility, to scholar-ship programs, to the providing of differen-tial compensation to employees based onlevel of child care training, and to expensesassociated with achieving accreditation, or

‘‘(iii) under a contract with a qualifiedchild care facility to provide child care serv-ices to employees of the taxpayer.

‘‘(B) EXCLUSION FOR AMOUNTS FUNDED BYGRANTS, ETC.—The term ‘qualified child careexpenditure’ shall not include any amount tothe extent such amount is funded by anygrant, contract, or otherwise by another per-son (or any governmental entity).


CONGRESSIONAL RECORD — SENATE S6699July 13, 2000‘‘(C) NONDISCRIMINATION.—The term ‘quali-

fied child care expenditure’ shall not includeany amount expended in relation to anychild care services unless the providing ofsuch services to employees of the taxpayerdoes not discriminate in favor of highly com-pensated employees (within the meaning ofsection 404(q)).

‘‘(2) QUALIFIED CHILD CARE FACILITY.—‘‘(A) IN GENERAL.—The term ‘qualified

child care facility’ means a facility—‘‘(i) the principal use of which is to provide

child care assistance, and‘‘(ii) which meets the requirements of all

applicable laws and regulations of the Stateor local government in which it is located,including, but not limited to, the licensing ofthe facility as a child care facility.Clause (i) shall not apply to a facility whichis the principal residence (within the mean-ing of section 121) of the operator of the fa-cility.

‘‘(B) ELIGIBLE QUALIFIED CHILD CARE FACIL-ITY.—A qualified child care facility shall betreated as an eligible qualified child care fa-cility with respect to the taxpayer if—

‘‘(i) enrollment in the facility is open toemployees of the taxpayer during the taxableyear,

‘‘(ii) the facility is not the principal tradeor business of the taxpayer, and

‘‘(iii) at least 30 percent of the enrollees ofsuch facility are dependents of employees ofthe taxpayer.

‘‘(C) APPLICATION OF SUBPARAGRAPH (B).—Inthe case of a new facility, the facility shallbe treated as meeting the requirement ofsubparagraph (B)(iii) if not later than 2 yearsafter placing such facility in service at least30 percent of the enrollees of such facilityare dependents of employees of the taxpayer.

‘‘(3) QUALIFIED CHILD CARE RESOURCE ANDREFERRAL EXPENDITURE.—

‘‘(A) IN GENERAL.—The term ‘qualifiedchild care resource and referral expenditure’means any amount paid or incurred under acontract to provide child care resource andreferral services to employees of the tax-payer.

‘‘(B) EXCLUSION FOR AMOUNTS FUNDED BYGRANTS, ETC.—The term ‘qualified child careresource and referral expenditure’ shall notinclude any amount to the extent suchamount is funded by any grant, contract, orotherwise by another person (or any govern-mental entity).

‘‘(C) NONDISCRIMINATION.—The term ‘quali-fied child care resource and referral expendi-ture’ shall not include any amount expendedin relation to any child care resource and re-ferral services unless the providing of suchservices to employees of the taxpayer doesnot discriminate in favor of highly com-pensated employees (within the meaning ofsection 404(q)).

‘‘(d) RECAPTURE OF ACQUISITION AND CON-STRUCTION CREDIT.—

‘‘(1) IN GENERAL.—If, as of the close of anytaxable year, there is a recapture event withrespect to any eligible qualified child carefacility of the taxpayer, then the tax of thetaxpayer under this chapter for such taxableyear shall be increased by an amount equalto the product of—

‘‘(A) the applicable recapture percentage,and

‘‘(B) the aggregate decrease in the creditsallowed under section 38 for all prior taxableyears which would have resulted if the quali-fied child care expenditures of the taxpayerdescribed in subsection (c)(1)(A) with respectto such facility had been zero.

‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.—‘‘(A) IN GENERAL.—For purposes of this sub-

section, the applicable recapture percentageshall be determined from the following table:

‘‘If the recaptureevent occurs in:

The applicablerecapture

percentage is:Year 1 .......................... 100Year 2 .......................... 80Year 3 .......................... 60Year 4 .......................... 40Year 5 .......................... 20Years 6 and thereafter 0.

‘‘(B) YEARS.—For purposes of subparagraph(A), year 1 shall begin on the first day of thetaxable year in which the eligible qualifiedchild care facility is placed in service by thetaxpayer.

‘‘(3) RECAPTURE EVENT DEFINED.—For pur-poses of this subsection, the term ‘recaptureevent’ means—

‘‘(A) CESSATION OF OPERATION.—The ces-sation of the operation of the facility as aneligible qualified child care facility.

‘‘(B) CHANGE IN OWNERSHIP.—‘‘(i) IN GENERAL.—Except as provided in

clause (ii), the disposition of a taxpayer’s in-terest in an eligible qualified child care facil-ity with respect to which the credit de-scribed in subsection (a) was allowable.

‘‘(ii) AGREEMENT TO ASSUME RECAPTURE LI-ABILITY.—Clause (i) shall not apply if theperson acquiring such interest in the facilityagrees in writing to assume the recapture li-ability of the person disposing of such inter-est in effect immediately before such disposi-tion. In the event of such an assumption, theperson acquiring the interest in the facilityshall be treated as the taxpayer for purposesof assessing any recapture liability (com-puted as if there had been no change in own-ership).

‘‘(4) SPECIAL RULES.—‘‘(A) TAX BENEFIT RULE.—The tax for the

taxable year shall be increased under para-graph (1) only with respect to credits allowedby reason of this section which were used toreduce tax liability. In the case of creditsnot so used to reduce tax liability, thecarryforwards and carrybacks under section39 shall be appropriately adjusted.

‘‘(B) NO CREDITS AGAINST TAX.—Any in-crease in tax under this subsection shall notbe treated as a tax imposed by this chapterfor purposes of determining the amount ofany credit under subpart A, B, or D of thispart.

‘‘(C) NO RECAPTURE BY REASON OF CASUALTYLOSS.—The increase in tax under this sub-section shall not apply to a cessation of op-eration of the facility as a qualified childcare facility by reason of a casualty loss tothe extent such loss is restored by recon-struction or replacement within a reasonableperiod established by the Secretary.

‘‘(e) SPECIAL RULES.—For purposes of thissection—

‘‘(1) AGGREGATION RULES.—All personswhich are treated as a single employer undersubsections (a) and (b) of section 52 shall betreated as a single taxpayer.

‘‘(2) PASS-THRU IN THE CASE OF ESTATES ANDTRUSTS.—Under regulations prescribed bythe Secretary, rules similar to the rules ofsubsection (d) of section 52 shall apply.

‘‘(3) ALLOCATION IN THE CASE OF PARTNER-SHIPS.—In the case of partnerships, the cred-it shall be allocated among partners underregulations prescribed by the Secretary.

‘‘(f) NO DOUBLE BENEFIT.—‘‘(1) REDUCTION IN BASIS.—For purposes of

this subtitle—‘‘(A) IN GENERAL.—If a credit is determined

under this section with respect to any prop-erty by reason of expenditures described insubsection (c)(1)(A), the basis of such prop-erty shall be reduced by the amount of thecredit so determined.

‘‘(B) CERTAIN DISPOSITIONS.—If during anytaxable year there is a recapture amount de-termined with respect to any property thebasis of which was reduced under subpara-

graph (A), the basis of such property (imme-diately before the event resulting in such re-capture) shall be increased by an amountequal to such recapture amount. For pur-poses of the preceding sentence, the term ‘re-capture amount’ means any increase in tax(or adjustment in carrybacks or carryovers)determined under subsection (d).

‘‘(2) OTHER DEDUCTIONS AND CREDITS.—Nodeduction or credit shall be allowed underany other provision of this chapter with re-spect to the amount of the credit determinedunder this section.’’

(b) CONFORMING AMENDMENTS.—(1) Section 38(b) is amended—(A) by striking out ‘‘plus’’ at the end of

paragraph (11),(B) by striking out the period at the end of

paragraph (12), and inserting a comma and‘‘plus’’, and

(C) by adding at the end the following newparagraph:

‘‘(13) the employer-provided child carecredit determined under section 45D.’’.

(2) The table of sections for subpart D ofpart IV of subchapter A of chapter 1 isamended by adding at the end the followingnew item:

‘‘Sec. 45D. Employer-provided child carecredit.’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2000.

ABRAHAM (AND OTHERS)AMENDMENT NO. 3827

Mr. ABRAHAM (for himself, Mr.FITZGERALD, Mrs. HUTCHISON, and Mr.GRAMS) proposed an amendment to thebill, H.R. 8, supra; as follows:

At the end, add the following:TITLE VI—TEMPORARY FEDERAL FUELS

TAX REDUCTIONSEC. 601. SHORT TITLE.

This title may be cited as the ‘‘MotoristsRelief Act of 2000’’.SEC. 602. TEMPORARY REDUCTION IN HIGHWAY

FUEL TAXES ON GASOLINE, DIESELFUEL, KEROSENE, AND SPECIALFUELS TO ZERO.

(a) IN GENERAL.—Section 4081 of the Inter-nal Revenue Code of 1986 (relating to imposi-tion of tax on gasoline, diesel fuel, and ker-osene) is amended by adding at the end thefollowing new subsection:

‘‘(f) TEMPORARY REDUCTION IN TAXES ONGASOLINE, DIESEL FUEL, KEROSENE, AND SPE-CIAL FUELS.—

‘‘(1) HOLDING HARMLESS HIGHWAY TRUSTFUND AND APPORTIONMENTS.—In determiningthe amounts to be appropriated or trans-ferred to the Highway Trust Fund under sec-tion 9503 an amount equal to the reductionin revenues to the Treasury by reason of areduction in any rate of tax under paragraph(3) shall be treated for purposes of chapter 98as taxes received in the Treasury at suchrate. Amounts appropriated or transferredby reason of the preceding sentence shall betransferred from the general fund at suchtimes and in such manner as to replicate tothe extent possible the transfers whichwould have occurred to the Highway TrustFund had this subsection not been enacted.Nothing in this subsection may be construedas authorizing a reduction in the apportion-ments of such Trust Fund to the States as aresult of the temporary reduction in rates oftax under paragraph (3), except as otherwiseprovided by law.

‘‘(2) PROTECTING SOCIAL SECURITY TRUSTFUND.—If the Secretary, after consultationwith the Director of the Office of Manage-ment and Budget, and based on the most re-cent available estimate of the Federal on-


CONGRESSIONAL RECORD — SENATES6700 July 13, 2000budget surplus for fiscal years 2000 and 2001,determines that such reduction would resultin an aggregate reduction in revenues to theTreasury exceeding such surplus during theremainder of the applicable period, the Sec-retary shall modify such reduction such thateach rate of tax referred to in paragraph (4)is reduced in a pro rata manner and such ag-gregate reduction does not exceed such sur-plus.

‘‘(3) TEMPORARY REDUCTION IN RATES OFCERTAIN TAXES.—During the applicable pe-riod, each rate of tax referred to in para-graph (4) shall be reduced to zero.

‘‘(4) RATES OF TAX.—The rates of tax re-ferred to in this paragraph are the rates oftax otherwise applicable under—

‘‘(A) clauses (i) and (iii) of subsection(a)(2)(A) (relating to gasoline, diesel fuel,and kerosene), and

‘‘(B) paragraphs (1), (2), and (3) of section4041(a) (relating to diesel fuel and specialfuels) and section 4041(m) (relating to certainalcohol fuels) with respect to fuel sold foruse or used in a highway vehicle.

‘‘(5) SPECIAL REDUCTION RULES.—In thecase of a reduction under paragraph (3)—

‘‘(A) subsection (c) shall be applied withoutregard to paragraph (6) thereof,

‘‘(B) section 40(e)(1) shall be applied with-out regard to subparagraph (B) thereof,

‘‘(C) section 4041(d)(1) shall be applied bydisregarding ‘if tax is imposed by subsection(a)(1) or (2) on such sale or use’, and

‘‘(D) section 6427(b) shall be applied with-out regard to paragraph (2) thereof.

‘‘(6) APPLICABLE PERIOD.—For purposes ofthis subsection, the term ‘applicable period’means the 150-day period beginning after thedate of the enactment of the Motorists ReliefAct of 2000.

‘‘(7) PREEMPTION OF STATE LAW.—No Statetax may be increased by reason of any sus-pension of tax under this subsection.

‘‘(8) RETURN REQUIREMENTS CONTINUE INEFFECT.—Requirements for filing returns re-lating to any tax reduced under this sub-section, and penalties for failing to file suchreturns, shall continue in effect as if thissubsection had not been enacted. Such re-turns shall identify the amount of tax thatwould have been paid but for the enactmentof this subsection.’’.

(b) EFFECTIVE DATE.—The amendmentsmade by this section shall take effect on thedate of the enactment of this Act.SEC. 603. FLOOR STOCK REFUNDS.

(a) IN GENERAL.—If—(1) before the tax reduction date, tax has

been imposed under section 4041 or 4081 ofthe Internal Revenue Code of 1986 on any liq-uid, and

(2) on such date such liquid is held by adealer and has not been used and is intendedfor sale,there shall be credited or refunded (withoutinterest) to the person who paid such tax(hereafter in this section referred to as the‘‘taxpayer’’) an amount equal to the excessof the tax paid by the taxpayer over theamount of such tax which would be imposedon such liquid had the taxable event oc-curred on the tax reduction date.

(b) TIME FOR FILING CLAIMS.—No credit orrefund shall be allowed or made under thissection unless—

(1) claim therefor is filed with the Sec-retary of the Treasury before the date whichis 6 months after the tax reduction date, and

(2) in any case where liquid is held by adealer (other than the taxpayer) on the taxreduction date—

(A) the dealer submits a request for refundor credit to the taxpayer before the datewhich is 3 months after the tax reductiondate, and

(B) the taxpayer files with the Secretary—

(i) a certification that the taxpayer hasgiven, subsequent to receipt of the requestfor refund or credit from such dealer undersubparagraph (A), a credit to such dealerwith respect to such liquid against the deal-er’s first purchase of liquid from the tax-payer, and

(ii) a certification by such dealer that suchdealer has given, subsequent to the tax sus-pension date, a credit to a succeeding dealer(if any) with respect to such liquid againstthe succeeding dealer’s first purchase of liq-uid from such dealer.

(c) REASONABLENESS OF CLAIMS CER-TIFIED.—Any certification made under sub-section (b)(1)(B) shall include an additionalcertification that the claim for credit wasreasonably based on the taxpayer’s or deal-er’s past business relationship with the suc-ceeding dealer.

(d) DEFINITIONS.—For purposes of thissection—

(1) the terms ‘‘dealer’’ and ‘‘held by a deal-er’’ have the respective meanings given tosuch terms by section 6412 of such Code; ex-cept that the term ‘‘dealer’’ includes a pro-ducer, and

(2) the term ‘‘tax reduction date’’ meansthe day after the date of the enactment ofthis Act.

(e) CERTAIN RULES TO APPLY.—Rules simi-lar to the rules of subsections (b) and (c) ofsection 6412 of such Code shall apply for pur-poses of this section.SEC. 604. FLOOR STOCKS TAX.

(a) IMPOSITION OF TAX.—In the case of anyliquid on which tax would have been imposedunder section 4041 or 4081 of the InternalRevenue Code of 1986 during the applicableperiod but for the amendments made by thisAct, and which is held on the floor stockstax date by any person, there is hereby im-posed a floor stocks tax equal to the excessof the tax which would be imposed on suchliquid had the taxable event occurred onsuch date over the tax previously paid (ifany) on such liquid.

(b) LIABILITY FOR TAX AND METHOD OF PAY-MENT.—

(1) LIABILITY FOR TAX.—A person holding aliquid on the floor stocks tax date to whichthe tax imposed by subsection (a) appliesshall be liable for such tax.

(2) METHOD OF PAYMENT.—The tax imposedby subsection (a) shall be paid in such man-ner as the Secretary of the Treasury shallprescribe.

(3) TIME FOR PAYMENT.—The tax imposedby subsection (a) shall be paid on or beforethe date which is 45 days after the floorstocks tax date.

(c) DEFINITIONS.—For purposes of thissection—

(1) HELD BY A PERSON.—A liquid shall beconsidered as ‘‘held by a person’’ if titlethereto has passed to such person (whetheror not delivery to the person has been made).

(2) FLOOR STOCKS TAX DATE.—The term‘‘floor stocks tax date’’ means the day afterthe date which is 150 days after the date ofthe enactment of this Act.

(3) APPLICABLE PERIOD.—The term ‘‘appli-cable period’’ means the 150-day period be-ginning after the date of the enactment ofthis Act.

(d) EXCEPTION FOR EXEMPT USES.—The taximposed by subsection (a) shall not apply toany liquid held by any person exclusively forany use to the extent a credit or refund ofthe tax referred to in section 4081(f)(4) of theInternal Revenue Code of 1986 (as added bysection 602) is allowable for such use.

(e) EXCEPTION FOR CERTAIN AMOUNTS OFFUEL.—

(1) IN GENERAL.—No tax shall be imposedby subsection (a) on any liquid held on thefloor stocks tax date by any person if the ag-

gregate amount of such liquid held by suchperson on such date does not exceed 2,000 gal-lons. The preceding sentence shall apply onlyif such person submits to the Secretary (atthe time and in the manner required by theSecretary) such information as the Sec-retary shall require for purposes of this para-graph.

(2) EXEMPT FUEL.—For purposes of para-graph (1), there shall not be taken into ac-count any liquid held by any person which isexempt from the tax imposed by subsection(a) by reason of subsection (d).

(3) CONTROLLED GROUPS.—For purposes ofthis subsection—

(A) CORPORATIONS.—(i) IN GENERAL.—All persons treated as a

controlled group shall be treated as 1 person.(ii) CONTROLLED GROUP.—The term ‘‘con-

trolled group’’ has the meaning given to suchterm by subsection (a) of section 1563 of suchCode; except that for such purposes thephrase ‘‘more than 50 percent’’ shall be sub-stituted for the phrase ‘‘at least 80 percent’’each place it appears in such subsection.

(B) NONINCORPORATED PERSONS UNDER COM-MON CONTROL.—Under regulations prescribedby the Secretary, principles similar to theprinciples of subparagraph (A) shall apply toa group of persons under common controlwhere 1 or more of such persons is not a cor-poration.

(g) OTHER LAW APPLICABLE.—All provisionsof law, including penalties, applicable withrespect to the taxes imposed by section 4041or 4081 of such Code shall, insofar as applica-ble and not inconsistent with the provisionsof this subsection, apply with respect to thefloor stock taxes imposed by subsection (a)to the same extent as if such taxes were im-posed by such section 4041 or 4081.SEC. 605. BENEFITS OF TAX REDUCTION SHOULD

BE PASSED ON TO CONSUMERS.(a) PASSTHROUGH TO CONSUMERS.—(1) SENSE OF CONGRESS.—It is the sense of

Congress that—(A) consumers immediately receive the

benefit of the reduction in taxes under thisAct, and

(B) transportation motor fuels producersand other dealers take such actions as nec-essary to reduce transportation motor fuelsprices to reflect such reduction, includingimmediate credits to customer accounts rep-resenting tax credits or refunds under 604.

(2) STUDY.—(A) IN GENERAL.—The Comptroller General

of the United States shall conduct a study ofthe reduction of taxes under this Act to de-termine whether there has been a pass-through of such reduction.

(B) REPORT.—Not later than 90 days afterthe date of the enactment of this Act, theComptroller General of the United Statesshall report to the Committee on Finance ofthe Senate and the Committee on Ways andMeans of the House of Representatives theresults of the study conducted under sub-paragraph (A).

BINGAMAN (AND OTHERS)AMENDMENT NO. 3828

Mr. BINGAMAN (for himself, Mr.KENNEDY, Mrs. MURRAY, Mr. DODD, Mr.KERRY, Mr. SCHUMER, and Mr. DORGAN)proposed an amendment to the bill,H.R. 8, supra; as follows:



(b) AMENDMENT OF 1986 CODE.—Except asotherwise expressly provided, whenever inthis Act an amendment or repeal is ex-pressed in terms of an amendment to, or re-peal of, a section or other provision, the ref-erence shall be considered to be made to a


CONGRESSIONAL RECORD — SENATE S6701July 13, 2000section or other provision of the InternalRevenue Code of 1986.SEC. 2. INCREASE IN AMOUNT OF UNIFIED CRED-

IT AGAINST ESTATE AND GIFTTAXES.




is:


(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply to the es-tates of decedents dying, and gifts made,after December 31, 2000.SEC. 3. INCREASE IN QUALIFIED FAMILY-OWNED


















(c) EFFECTIVE DATE.—The amendmentmade by this section shall apply to the es-tates of decedents dying, and gifts made,after December 31, 2000.SEC. 4. APPROPRIATIONS.

There are appropriated, out of any moneyin the Treasury not otherwise appropriated,the following amounts:

(1) $1,750,000,000 to carry out class size re-duction activities in the same manner assuch activities are carried out under section310 of the Department of Education Appro-priations Act, 2000.

(2) $2,200,000,000 to carry out title II of theElementary and Secondary Education Act of1965 and title II of the Higher Education Actof 1965.

(3) $250,000,000 to carry out sections 1116and 1117 of the Elementary and SecondaryEducation Act of 1965.

(4) $1,000,000,000 to carry out part I of titleX of the Elementary and Secondary Edu-cation Act of 1965.

(5) $325,000,000 to carry out chapter 2 ofsubpart 2 of part A of title IV of the HigherEducation Act of 1965.

(6) $1,000,000,000 to carry out part B of theIndividuals with Disabilities Education Act.

(7) $3,000,000,000 to enable the Secretary ofEducation to carry out a College CompletionGrant Program.

(8) $150,000,000 to carry out part D of titleI of the Elementary and Secondary Edu-cation Act of 1965.

(9) $1,300,000,000 to carry out title XII of theElementary and Secondary Education Act of1965.

ROTH (AND OTHERS) AMENDMENTNO. 3829

Mr. ROTH (for himself, Mr. BREAUX,Mr. NICKLES, Mr. ROBB, Mr. MUR-KOWSKI, Ms. COLLINS, and Mr. BAUCUS)proposed an amendment to the bill,H.R. 8, supra; as follows:

At the end, add the following:

TITLE VI—REPEAL OF EXCISE TAX ONTELEPHONE AND OTHER COMMUNICA-TIONS SERVICES

SEC. 601. REPEAL OF EXCISE TAX ON TELEPHONEAND OTHER COMMUNICATIONSSERVICES.

(a) IN GENERAL.—Chapter 33 (relating to fa-cilities and services) is amended by strikingsubchapter B.

(b) CONFORMING AMENDMENTS.—(1) Section 4293 is amended by striking

‘‘chapter 32 (other than the taxes imposed bysections 4064 and 4121) and subchapter B ofchapter 33,’’ and inserting ‘‘and chapter 32(other than the taxes imposed by sections4064 and 4121),’’.

(2)(A) Paragraph (1) of section 6302(e) isamended by striking ‘‘section 4251 or’’.

(B) Paragraph (2) of section 6302(e) isamended by striking ‘‘imposed by—’’ and allthat follows through ‘‘with respect to’’ andinserting ‘‘imposed by section 4261 or 4271with respect to’’.

(C) The subsection heading for section6302(e) is amended by striking ‘‘COMMUNICA-TIONS SERVICES AND’’.

(3) Section 6415 is amended by striking‘‘4251, 4261, or 4271’’ each place it appears andinserting ‘‘4261 or 4271’’.

(4) Paragraph (2) of section 7871(a) isamended by inserting ‘‘or’’ at the end of sub-paragraph (B), by striking subparagraph (C),and by redesignating subparagraph (D) assubparagraph (C).

(5) The table of subchapters for chapter 33is amended by striking the item relating tosubchapter B.

(c) STUDY REGARDING CONTINUING ECONOMICBENEFIT OF REPEAL.—

(1) STUDY.—The Comptroller General of theUnited States, after consultation with theChairman of the Federal CommunicationsCommission, shall study and identify—

(A) the extent to which the benefits of therepeal of the excise tax on telephone andother communication services under sub-section (a) are passed through to individualand business consumers, and

(B) any actions taken by communicationservice providers or others that diminishsuch benefits, including increases in any reg-ulated or unregulated communication serv-ice provider charges or increases in otherFederal or State fees or taxes related to suchservice occurring since the date of such re-peal.

(2) REPORT.—By not later than September1, 2001, the Comptroller General of theUnited States shall submit a report regard-ing the study described in paragraph (1) tothe Committee on Ways and Means of theHouse of Representatives and the Committeeon Finance of the Senate.

(d) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to amountspaid pursuant to bills first rendered afterAugust 31, 2000.

PROVIDING MARRIAGE TAXRELIEF

TORRICELLI AMENDMENT NO. 3830

(Ordered to lie on the table.)Mr. TORRICELLI submitted an amend-

ment intended to be proposed by him to thebill (S. 2839) to amend the Internal RevenueCode of 1986 to provide marriage tax relief byadjusting the standard deduction, 15-percentand 28-percent rate brackets, and earned in-come credit, and for other purposes; as fol-lows:

At the end, add the following:SEC. ll. MODIFICATIONS TO DISASTER CAS-

UALTY LOSS DEDUCTION.(a) LOWER ADJUSTED GROSS INCOME

THRESHOLD.—Paragraph (2) of section 165(h)of the Internal Revenue Code of 1986 (relat-ing to treatment of casualty gains andlosses) is amended—

(1) by striking subparagraph (A) and in-serting the following:

‘‘(A) IN GENERAL.—If the personal casualtylosses for any taxable year exceed the per-sonal casualty gains for such taxable year,such losses shall be allowed for the taxableyear only to the extent of the sum of—

‘‘(i) the amount of the personal casualtygains for the taxable year, plus

‘‘(ii) so much of such excess attributable tolosses described in subsection (i) as exceeds 5percent of the adjusted gross income of theindividual (determined without regard toany deduction allowable under subsection(c)(3))’’, plus

‘‘(iii) so much of such excess attributableto losses not described in subsection (i) asexceeds 10 percent of the adjusted gross in-come of the individual.For purposes of this subparagraph, personalcasualty losses attributable to losses not de-scribed in subsection (i) shall be consideredbefore such losses attributable to losses de-scribed in subsection (i).’’, and

(2) by striking ‘‘10 PERCENT’’ in the headingand inserting ‘‘PERCENTAGE’’.

(b) ABOVE-THE-LINE DEDUCTION.—Section62(a) of the Internal Revenue Code of 1986(defining adjusted gross income) is amendedby inserting after paragraph (17) the fol-lowing:

‘‘(18) CERTAIN DISASTER LOSSES.—The de-duction allowed by section 165(c)(3) to the ex-tent attributable to losses described in sec-tion 165(i).’’

(c) ELECTION TO TAKE DISASTER LOSS DE-DUCTION FOR PRECEDING OR SUCCEEDING 2YEARS.—Paragraph (1) of section 165(i) of theInternal Revenue Code of 1986 (relating todisaster losses) is amended—

(1) by inserting ‘‘or succeeding’’ after ‘‘pre-ceding’’, and

(2) by inserting ‘‘OR SUCCEEDING’’ after‘‘PRECEDING’’ in the heading.

(d) ELIMINATION OF MARRIAGE PENALTY FORINDIVIDUALS SUFFERING CASUALTY LOSSES.—Subparagraph (B) of section 165(h)(4) of theInternal Revenue Code of 1986 (relating tospecial rules) is amended to read as follows:

‘‘(B) JOINT RETURNS.—For purposes of thissubsection—


CONGRESSIONAL RECORD — SENATES6702 July 13, 2000‘‘(i) IN GENERAL.—Except as provided in

clause (ii), a husband and wife making ajoint return for the taxable year shall betreated as 1 individual.

‘‘(ii) ELECTION.—A husband and wife mayelect to have each be treated as a single indi-vidual for purposes of applying this section.If an election is made under this clause, theadjusted gross income of each individualshall be determined on the basis of the itemsof income and deduction properly allocableto the individual, as determined under rulesprescribed by the Secretary.’’

(e) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to lossessustained in taxable years beginning afterDecember 31, 2000.

TORRICELLI AMENDMENT NO. 3834

(Ordered to lie on the table.)Mr. TORRICELLI submitted an

amendment intended to be proposed byhim to the bill, S. 2839, supra; as fol-lows:

At the end of the bill, add the following:SEC. 7. INCREASED LEAD POISONING

SCREENINGS AND TREATMENTSUNDER THE MEDICAID PROGRAM.

(a) REPORTING REQUIREMENT.—Section1902(a)(43)(D) of the Social Security Act (42U.S.C. 1396a(a)(43)(D)) is amended—

(1) in clause (iii), by striking ‘‘and’’ at theend;

(2) in clause (iv), by striking the semicolonand inserting ‘‘, and’’; and

(3) by adding at the end the following:‘‘(v) the number of children who are under

the age of 3 and enrolled in the State planand the number of those children who havereceived a blood lead screening test;’’.

(b) MANDATORY SCREENING REQUIRE-MENTS.—Section 1902(a) of the Social Secu-rity Act (42 U.S.C. 1396a(a)) is amended—

(1) in paragraph (64), by striking ‘‘and’’ atthe end;

(2) in paragraph (65), by striking the periodand inserting ‘‘; and’’; and

(3) by inserting after paragraph (65) the fol-lowing:

‘‘(66) provide that each contract enteredinto between the State and an entity (includ-ing a health insuring organization and amedicaid managed care organization) that isresponsible for the provision (directly orthrough arrangements with providers ofservices) of medical assistance under theState plan shall provide for—

‘‘(A) compliance with mandatory bloodlead screening requirements that are con-sistent with prevailing guidelines of the Cen-ters for Disease Control and Prevention forsuch screening; and

‘‘(B) coverage of qualified lead treatmentservices described in section 1905(x) includ-ing diagnosis, treatment, and follow-up fur-nished for children with elevated blood leadlevels in accordance with prevailing guide-lines of the Centers for Disease Control andPrevention.’’.

(c) REIMBURSEMENT FOR TREATMENT OFCHILDREN WITH ELEVATED BLOOD LEAD LEV-ELS.—Section 1905 of the Social Security Act(42 U.S.C. 1396d) is amended—

(1) in subsection (a)—(A) in paragraph (26), by striking ‘‘and’’ at

the end;(B) by redesignating paragraph (27) as

paragraph (28); and(C) by inserting after paragraph (26) the

following:‘‘(27) qualified lead treatment services (as

defined in subsection (x)); and’’; and(2) by adding at the end the following:‘‘(x)(1) In this subsection:‘‘(A) The term ‘qualified lead treatment

services’ means the following:

‘‘(i) Lead-related medical management, asdefined in subparagraph (B).

‘‘(ii) Lead-related case management, as de-fined in subparagraph (C), for a child de-scribed in paragraph (2).

‘‘(iii) Lead-related anticipatory guidance,as defined in subparagraph (D), provided aspart of—

‘‘(I) prenatal services;‘‘(II) early and periodic screening, diag-

nostic, and treatment services (EPSDT) serv-ices described in subsection (r) and availableunder subsection (a)(4)(B) (including as de-scribed and available under implementingregulations and guidelines) to individuals en-rolled in the State plan under this title whohave not attained age 21; and

‘‘(III) routine pediatric preventive services.‘‘(B) The term ‘lead-related medical man-

agement’ means the provision and coordina-tion of the diagnostic, treatment, and follow-up services provided for a child diagnosedwith an elevated blood lead level (EBLL)that includes—

‘‘(i) a clinical assessment, including aphysical examination and medically indi-cated tests (in addition to diagnostic bloodlead level tests) and other diagnostic proce-dures to determine the child’s develop-mental, neurological, nutritional, and hear-ing status, and the extent, duration, and pos-sible source of the child’s exposure to lead;

‘‘(ii) repeat blood lead level tests furnishedwhen medically indicated for purposes ofmonitoring the blood lead concentrations inthe child;

‘‘(iii) pharmaceutical services, includingchelation agents and other drugs, vitamins,and minerals prescribed for treatment of anEBLL;

‘‘(iv) medically indicated inpatient serv-ices including pediatric intensive care andemergency services;

‘‘(v) medical nutrition therapy when medi-cally indicated by a nutritional assessment,that shall be furnished by a dietitian orother nutrition specialist who is authorizedto provide such services under State law;

‘‘(vi) referral—‘‘(I) when indicated by a nutritional assess-

ment, to the State agency or contractor ad-ministering the program of assistance underthe special supplemental food program forwomen, infants and children (WIC) under sec-tion 17 of the Child Nutrition Act of 1966 (42U.S.C. 1786) and coordination of clinical man-agement with that program; and

‘‘(II) when indicated by a clinical or devel-opmental assessment, to the State agencyresponsible for early intervention and spe-cial education programs under the Individ-uals with Disabilities Education Act (20U.S.C. 1400 et seq.); and

‘‘(vii) environmental investigation, as de-fined in subparagraph (E).

‘‘(C) The term ‘lead-related case manage-ment’ means the coordination, provision,and oversight of the nonmedical services fora child with an EBLL necessary to achievereductions in the child’s blood lead levels,improve the child’s nutrition, and secureneeded resources and services to protect thechild by a case manager trained to developand oversee a multi-disciplinary plan for achild with an EBLL or by a childhood leadpoisoning prevention program, as defined bythe Secretary. Such services include—

‘‘(i) assessing the child’s environmental,nutritional, housing, family, and insurancestatus and identifying the family’s imme-diate needs to reduce lead exposure throughan initial home visit;

‘‘(ii) developing a multidisciplinary casemanagement plan of action that addressesthe provision and coordination of each of thefollowing classes of services as appropriate—

‘‘(I) whether or not such services are cov-ered under the State plan under this title;

‘‘(II) lead-related medical management ofan EBLL (including environmental inves-tigation);

‘‘(III) nutrition services;‘‘(IV) family lead education;‘‘(V) housing;‘‘(VI) early intervention services;‘‘(VII) social services; and‘‘(VIII) other services or programs that are

indicated by the child’s clinical status andenvironmental, social, educational, housing,and other needs;

‘‘(iii) assisting the child (and the child’sfamily) in gaining access to covered and non-covered services in the case managementplan developed under clause (ii);

‘‘(iv) providing technical assistance to theprovider that is furnishing lead-related med-ical management for the child; and

‘‘(v) implementation and coordination ofthe case management plan developed underclause (ii) through home visits, family leadeducation, and referrals.

‘‘(D) The term ‘lead-related anticipatoryguidance’ means education and informationfor families of children and pregnant womenenrolled in the State plan under this titleabout prevention of childhood lead poisoningthat addresses the following topics:

‘‘(i) The importance of lead screening testsand where and how to obtain such tests.

‘‘(ii) Identifying lead hazards in the home.‘‘(iii) Specialized cleaning, home mainte-

nance, nutritional, and other measures tominimize the risk of childhood lead poi-soning.

‘‘(iv) The rights of families under the Resi-dential Lead-Based Paint Hazard ReductionAct of 1992 (42 U.S.C. 4851 et seq.).

‘‘(E) The term ‘environmental investiga-tion’ means the process of determining thesource of a child’s exposure to lead by an in-dividual that is certified or registered to per-form such investigations under State orlocal law, including the collection and anal-ysis of information and environmental sam-ples from a child’s living environment. Forpurposes of this subparagraph, a child’s liv-ing environment includes the child’s resi-dence or residences, residences of frequentlyvisited caretakers, relatives, and playmates,and the child’s day care site. Such investiga-tions shall be conducted in accordance withthe standards of the Department of Housingand Urban Development for the evaluationand control of lead-based paint hazards inhousing and in compliance with State andlocal health agency standards for environ-mental investigation and reporting.

‘‘(2) For purposes of paragraph (1)(A)(ii), achild described in this paragraph is a childwho—

‘‘(A) has attained 6 months but has not at-tained 6 years of age; and

‘‘(B) has been identified as having a bloodlead level that equals or exceeds 20micrograms per deciliter (or after 2 consecu-tive tests, equals or exceeds 15 microgramsper deciliter, or the applicable number ofmicrograms designated for such tests underprevailing guidelines of the Centers for Dis-ease Control and Prevention).’’.

(d) ENHANCED MATCH FOR DATA COMMUNICA-TIONS SYSTEM.—Section 1903(a)(3) of the So-cial Security Act (42 U.S.C. 1396b(a)(3)) isamended—

(1) in subparagraph (D), by striking ‘‘plus’’at the end and inserting ‘‘and’’; and

(2) by inserting after subparagraph (D), thefollowing:

‘‘(E)(i) 90 percent of so much of the sumsexpended during such quarter as are attrib-utable to the design, development, or instal-lation of an information retrieval systemthat may be easily accessed and used byother federally-funded means-tested publicbenefit programs to determine whether achild is enrolled in the State plan under this


CONGRESSIONAL RECORD — SENATE S6703July 13, 2000title and whether an enrolled child has re-ceived mandatory early and periodic screen-ing, diagnostic, and treatment services, asdescribed in section 1905(r); and

‘‘(ii) 75 percent of so much of the sums ex-pended during such quarter as are attrib-utable to the operation of a system (whethersuch system is operated directly by theState or by another person under a contractwith the State) of the type described inclause (i); plus’’.

(e) REPORT.—The Secretary of Health andHuman Services, acting through the Admin-istrator of the Health Care Financing Ad-ministration, annually shall report to Con-gress on the number of children enrolled inthe medicaid program under title XIX of theSocial Security Act (42 U.S.C. 1396 et seq.)who have received a blood lead screeningtest during the prior fiscal year, noting thepercentage that such children represent ascompared to all children enrolled in thatprogram.

(f) RULE OF CONSTRUCTION.—Nothing in thissection or in any amendment made by thissection shall be construed as prohibiting theSecretary of Health and Human Services orthe State agency administering the Stateplan under title XIX of the Social SecurityAct (42 U.S.C. 1396 et seq.) from using fundsprovided under title XIX of that Act to reim-burse a State or entity for expenditures formedically necessary activities in the homeof a lead-poisoned child to prevent additionalexposure to lead, including specialized clean-ing of lead-contaminated dust, emergencyrelocation, safe repair of peeling paint, dustcontrol, and other activities that reduce leadexposure.

TORRICELLI AMENDMENTS NOS.3832–3833

(Ordered to lie on the table.)Mr. TORRICELLI submitted two

amendments intended to be proposedby him to the bill, S. 2839, supra; as fol-lows:

AMENDMENT NO. 3832At the end of the bill, add the following:

SEC. 7. WAIVER OF 24-MONTH WAITING PERIODFOR MEDICARE COVERAGE OF INDI-VIDUALS DISABLED WITHAMYOTROPHIC LATERAL SCLEROSIS(ALS).

(a) IN GENERAL.—Section 226 of the SocialSecurity Act (42 U.S.C. 426) is amended—

(1) by redesignating subsection (h) as sub-section (j) and by moving such subsection tothe end of the section; and

(2) by inserting after subsection (g) the fol-lowing:

‘‘(h) For purposes of applying this sectionin the case of an individual medically deter-mined to have amyotrophic lateral sclerosis(ALS), the following special rules apply:

‘‘(1) Subsection (b) shall be applied as ifthere were no requirement for any entitle-ment to benefits, or status, for a periodlonger than 1 month.

‘‘(2) The entitlement under such subsectionshall begin with the first month (rather thantwenty-fifth month) of entitlement or sta-tus.

‘‘(3) Subsection (f) shall not be applied.’’.(b) CONFORMING AMENDMENT.—Section 1837

of such Act (42 U.S.C. 1395p) is amended byadding at the end the following:

‘‘(j) In applying this section in the case ofan individual who is entitled to benefitsunder part A pursuant to the operation ofsection 226(h), the following special rulesapply:

‘‘(1) The initial enrollment period undersubsection (d) shall begin on the first day ofthe first month in which the individual satis-fies the requirement of section 1836(1).

‘‘(2) In applying subsection (g)(1), the ini-tial enrollment period shall begin on thefirst day of the first month of entitlement todisability insurance benefits referred to insuch subsection.’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to benefitsfor months beginning after the date of theenactment of this Act.

DEATH TAX ELIMINATION ACT

GRASSLEY (AND OTHERS)AMENDMENT NO. 3834

Mr. GRASSLEY (for himself, Mr.CRAIG, Mr. BURNS, Mr. LUGAR, Mr.BROWNBACK, Mr. GRAMS, and Mr. HAR-KIN) proposed an amendment to thebill, H.R. 8, supra; as follows:

AMENDMENT NO. 3833At the end, add the following:

SEC. ll. ELIMINATION OF MARRIAGE PENALTYFOR INDIVIDUALS SUFFERING CAS-UALTY LOSSES.

(a) IN GENERAL.—Subparagraph (B) of sec-tion 165(h)(4) of the Internal Revenue Code of1986 (relating to special rules) is amended toread as follows:

‘‘(B) JOINT RETURNS.—For purposes of thissubsection—

‘‘(i) IN GENERAL.—Except as provided inclause (ii), a husband and wife making ajoint return for the taxable year shall betreated as 1 individual.

‘‘(ii) ELECTION.—A husband and wife mayelect to have each be treated as a single indi-vidual for purposes of applying this section.If an election is made under this clause, theadjusted gross income of each individualshall be determined on the basis of the itemsof income and deduction properly allocableto the individual, as determined under rulesprescribed by the Secretary.’’

(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply to lossessustained in taxable years beginning afterDecember 31, 2000.

At the end of the bill, add the following:TITLE VI—TAX RELIEF FOR FARMERS

SEC. 601. FARM, FISHING, AND RANCH RISK MAN-AGEMENT ACCOUNTS.

(a) IN GENERAL.—Subpart C of part II ofsubchapter E of chapter 1 (relating to tax-able year for which deductions taken) isamended by inserting after section 468B thefollowing:‘‘SEC. 468C. FARM, FISHING, AND RANCH RISK

MANAGEMENT ACCOUNTS.‘‘(a) DEDUCTION ALLOWED.—In the case of

an individual engaged in an eligible farmingbusiness or commercial fishing, there shallbe allowed as a deduction for any taxableyear the amount paid in cash by the tax-payer during the taxable year to a Farm,Fishing, and Ranch Risk Management Ac-count (hereinafter referred to as the‘FFARRM Account’).

‘‘(b) LIMITATION.—‘‘(1) CONTRIBUTIONS.—The amount which a

taxpayer may pay into the FFARRM Ac-count for any taxable year shall not exceed20 percent of so much of the taxable incomeof the taxpayer (determined without regardto this section) which is attributable (deter-mined in the manner applicable under sec-tion 1301) to any eligible farming business orcommercial fishing.

‘‘(2) DISTRIBUTIONS.—Distributions from aFFARRM Account may not be used to pur-chase, lease, or finance any new fishing ves-sel, add capacity to any fishery, or otherwisecontribute to the overcapitalization of anyfishery. The Secretary of Commerce shallimplement regulations to enforce this para-graph.

‘‘(c) ELIGIBLE BUSINESSES.—For purposes ofthis section—

‘‘(1) ELIGIBLE FARMING BUSINESS.—The term‘eligible farming business’ means any farm-ing business (as defined in section 263A(e)(4))which is not a passive activity (within themeaning of section 469(c)) of the taxpayer.

‘‘(2) COMMERCIAL FISHING.—The term ‘com-mercial fishing’ has the meaning given suchterm by section (3) of the Magnuson-StevensFishery Conservation and Management Act(16 U.S.C. 1802) but only if such fishing is nota passive activity (within the meaning ofsection 469(c)) of the taxpayer.

‘‘(d) FFARRM ACCOUNT.—For purposes ofthis section—

‘‘(1) IN GENERAL.—The term ‘FFARRM Ac-count’ means a trust created or organized inthe United States for the exclusive benefit ofthe taxpayer, but only if the written gov-erning instrument creating the trust meetsthe following requirements:

‘‘(A) No contribution will be accepted forany taxable year in excess of the amount al-lowed as a deduction under subsection (a) forsuch year.

‘‘(B) The trustee is a bank (as defined insection 408(n)) or another person who dem-onstrates to the satisfaction of the Secretarythat the manner in which such person willadminister the trust will be consistent withthe requirements of this section.

‘‘(C) The assets of the trust consist en-tirely of cash or of obligations which haveadequate stated interest (as defined in sec-tion 1274(c)(2)) and which pay such interestnot less often than annually.

‘‘(D) All income of the trust is distributedcurrently to the grantor.

‘‘(E) The assets of the trust will not becommingled with other property except in acommon trust fund or common investmentfund.

‘‘(2) ACCOUNT TAXED AS GRANTOR TRUST.—The grantor of a FFARRM Account shall betreated for purposes of this title as theowner of such Account and shall be subjectto tax thereon in accordance with subpart Eof part I of subchapter J of this chapter (re-lating to grantors and others treated as sub-stantial owners).

‘‘(e) INCLUSION OF AMOUNTS DISTRIBUTED.—‘‘(1) IN GENERAL.—Except as provided in

paragraph (2), there shall be includible in thegross income of the taxpayer for any taxableyear—

‘‘(A) any amount distributed from aFFARRM Account of the taxpayer duringsuch taxable year, and

‘‘(B) any deemed distribution under—‘‘(i) subsection (f )(1) (relating to deposits

not distributed within 5 years),‘‘(ii) subsection (f )(2) (relating to cessation

in eligible farming business), and‘‘(iii) subparagraph (A) or (B) of subsection

(f )(3) (relating to prohibited transactionsand pledging account as security).

‘‘(2) EXCEPTIONS.—Paragraph (1)(A) shallnot apply to—

‘‘(A) any distribution to the extent attrib-utable to income of the Account, and

‘‘(B) the distribution of any contributionpaid during a taxable year to a FFARRM Ac-count to the extent that such contributionexceeds the limitation applicable under sub-section (b) if requirements similar to the re-quirements of section 408(d)(4) are met.

For purposes of subparagraph (A), distribu-tions shall be treated as first attributable toincome and then to other amounts.

‘‘(f ) SPECIAL RULES.—‘‘(1) TAX ON DEPOSITS IN ACCOUNT WHICH ARE

NOT DISTRIBUTED WITHIN 5 YEARS.—‘‘(A) IN GENERAL.—If, at the close of any

taxable year, there is a nonqualified balancein any FFARRM Account—


CONGRESSIONAL RECORD — SENATES6704 July 13, 2000‘‘(i) there shall be deemed distributed from

such Account during such taxable year anamount equal to such balance, and

‘‘(ii) the taxpayer’s tax imposed by thischapter for such taxable year shall be in-creased by 10 percent of such deemed dis-tribution.

The preceding sentence shall not apply if anamount equal to such nonqualified balance isdistributed from such Account to the tax-payer before the due date (including exten-sions) for filing the return of tax imposed bythis chapter for such year (or, if earlier, thedate the taxpayer files such return for suchyear).

‘‘(B) NONQUALIFIED BALANCE.—For purposesof subparagraph (A), the term ‘nonqualifiedbalance’ means any balance in the Accounton the last day of the taxable year which isattributable to amounts deposited in suchAccount before the 4th preceding taxableyear.

‘‘(C) ORDERING RULE.—For purposes of thisparagraph, distributions from a FFARRMAccount (other than distributions of currentincome) shall be treated as made from depos-its in the order in which such deposits weremade, beginning with the earliest deposits.

‘‘(2) CESSATION IN ELIGIBLE BUSINESS.—Atthe close of the first disqualification periodafter a period for which the taxpayer was en-gaged in an eligible farming business or com-mercial fishing, there shall be deemed dis-tributed from the FFARRM Account of thetaxpayer an amount equal to the balance insuch Account (if any) at the close of suchdisqualification period. For purposes of thepreceding sentence, the term ‘disqualifica-tion period’ means any period of 2 consecu-tive taxable years for which the taxpayer isnot engaged in an eligible farming businessor commercial fishing.

‘‘(3) CERTAIN RULES TO APPLY.—Rules simi-lar to the following rules shall apply for pur-poses of this section:

‘‘(A) Section 220(f )(8) (relating to treat-ment on death).

‘‘(B) Section 408(e)(2) (relating to loss ofexemption of account where individual en-gages in prohibited transaction).

‘‘(C) Section 408(e)(4) (relating to effect ofpledging account as security).

‘‘(D) Section 408(g) (relating to communityproperty laws).

‘‘(E) Section 408(h) (relating to custodialaccounts).

‘‘(4) TIME WHEN PAYMENTS DEEMED MADE.—For purposes of this section, a taxpayer shallbe deemed to have made a payment to aFFARRM Account on the last day of a tax-able year if such payment is made on ac-count of such taxable year and is made on orbefore the due date (without regard to exten-sions) for filing the return of tax for suchtaxable year.

‘‘(5) INDIVIDUAL.—For purposes of this sec-tion, the term ‘individual’ shall not includean estate or trust.

‘‘(6) DEDUCTION NOT ALLOWED FOR SELF-EM-PLOYMENT TAX.—The deduction allowable byreason of subsection (a) shall not be takeninto account in determining an individual’snet earnings from self-employment (withinthe meaning of section 1402(a)) for purposesof chapter 2.

‘‘(g) REPORTS.—The trustee of a FFARRMAccount shall make such reports regardingsuch Account to the Secretary and to theperson for whose benefit the Account ismaintained with respect to contributions,distributions, and such other matters as theSecretary may require under regulations.The reports required by this subsection shallbe filed at such time and in such manner andfurnished to such persons at such time and insuch manner as may be required by such reg-ulations.’’.

(b) TAX ON EXCESS CONTRIBUTIONS.—(1) Subsection (a) of section 4973 (relating

to tax on excess contributions to certain tax-favored accounts and annuities) is amendedby striking ‘‘or’’ at the end of paragraph (3),by redesignating paragraph (4) as paragraph(5), and by inserting after paragraph (3) thefollowing:

‘‘(4) a FFARRM Account (within the mean-ing of section 468C(d)), or’’.

(2) Section 4973 is amended by adding atthe end the following:

‘‘(g) EXCESS CONTRIBUTIONS TO FFARRMACCOUNTS.—For purposes of this section, inthe case of a FFARRM Account (within themeaning of section 468C(d)), the term ‘excesscontributions’ means the amount by whichthe amount contributed for the taxable yearto the Account exceeds the amount whichmay be contributed to the Account undersection 468C(b) for such taxable year. Forpurposes of this subsection, any contributionwhich is distributed out of the FFARRM Ac-count in a distribution to which section468C(e)(2)(B) applies shall be treated as anamount not contributed.’’.

(3) The section heading for section 4973 isamended to read as follows:‘‘SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN

ACCOUNTS, ANNUITIES, ETC.’’.(4) The table of sections for chapter 43 is

amended by striking the item relating tosection 4973 and inserting the following:

‘‘Sec. 4973. Excess contributions to certainaccounts, annuities, etc.’’.

(c) TAX ON PROHIBITED TRANSACTIONS.—(1) Subsection (c) of section 4975 (relating

to tax on prohibited transactions) is amend-ed by adding at the end the following:

‘‘(6) SPECIAL RULE FOR FFARRM ACCOUNTS.—A person for whose benefit a FFARRM Ac-count (within the meaning of section 468C(d))is established shall be exempt from the taximposed by this section with respect to anytransaction concerning such account (whichwould otherwise be taxable under this sec-tion) if, with respect to such transaction, theaccount ceases to be a FFARRM Account byreason of the application of section468C(f )(3)(A) to such account.’’.

(2) Paragraph (1) of section 4975(e) isamended by redesignating subparagraphs (E)and (F) as subparagraphs (F) and (G), respec-tively, and by inserting after subparagraph(D) the following:

‘‘(E) a FFARRM Account described in sec-tion 468C(d),’’.

(d) FAILURE TO PROVIDE REPORTS ONFFARRM ACCOUNTS.—Paragraph (2) of sec-tion 6693(a) (relating to failure to provide re-ports on certain tax-favored accounts or an-nuities) is amended by redesignating sub-paragraphs (C) and (D) as subparagraphs (D)and (E), respectively, and by inserting aftersubparagraph (B) the following:

‘‘(C) section 468C(g) (relating to FFARRMAccounts),’’.

(e) CLERICAL AMENDMENT.—The table ofsections for subpart C of part II of sub-chapter E of chapter 1 is amended by insert-ing after the item relating to section 468Bthe following:

‘‘Sec. 468C. Farm, Fishing and Ranch RiskManagement Accounts.’’.

(f ) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2000.SEC. 602. WRITTEN AGREEMENT RELATING TO

EXCLUSION OF CERTAIN FARMRENTAL INCOME FROM NET EARN-INGS FROM SELF-EMPLOYMENT.

(a) INTERNAL REVENUE CODE.—Section1402(a)(1)(A) (relating to net earnings fromself-employment) is amended by striking ‘‘anarrangement’’ and inserting ‘‘a lease agree-ment’’.

(b) SOCIAL SECURITY ACT.—Section211(a)(1)(A) of the Social Security Act isamended by striking ‘‘an arrangement’’ andinserting ‘‘a lease agreement’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2000.SEC. 603. TREATMENT OF CONSERVATION RE-

SERVE PROGRAM PAYMENTS ASRENTALS FROM REAL ESTATE.

(a) IN GENERAL.—Section 1402(a)(1) (defin-ing net earnings from self-employment) isamended by inserting ‘‘and including pay-ments under section 1233(2) of the Food Secu-rity Act of 1985 (16 U.S.C. 3833(2))’’ after‘‘crop shares’’.

(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply to paymentsmade before, on, or after the date of the en-actment of this Act.SEC. 604. EXEMPTION OF AGRICULTURAL BONDS

FROM STATE VOLUME CAP.(a) IN GENERAL.—Section 146(g) (relating to

exception for certain bonds) is amended bystriking ‘‘and’’ at the end of paragraph (3),by striking the period at the end of para-graph (4) and inserting ‘‘, and’’, and by in-serting after paragraph (4) the following:

‘‘(5) any qualified small issue bond de-scribed in section 144(a)(12)(B)(ii).’’.

(b) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to bondsissued after the date of enactment of thisAct.SEC. 605. MODIFICATIONS TO SECTION 512(b)(13).

(a) IN GENERAL.—Paragraph (13) of section512(b) is amended by redesignating subpara-graph (E) as subparagraph (F) and by insert-ing after subparagraph (D) the following newparagraph:

‘‘(E) PARAGRAPH TO APPLY ONLY TO EXCESSPAYMENTS.—

‘‘(i) IN GENERAL.—Subparagraph (A) shallapply only to the portion of a specified pay-ment received by the controlling organiza-tion that exceeds the amount which wouldhave been paid if such payment met the re-quirements prescribed under section 482.

‘‘(ii) ADDITION TO TAX FOR VALUATIONMISSTATEMENTS.—The tax imposed by thischapter on the controlling organization shallbe increased by an amount equal to 20 per-cent of such excess.’’.

(b) EFFECTIVE DATE.—(1) IN GENERAL.—The amendment made by

this section shall apply to payments receivedor accrued after December 31, 2000.

(2) PAYMENTS SUBJECT TO BINDING CONTRACTTRANSITION RULE.—If the amendments madeby section 1041 of the Taxpayer Relief Act of1997 do not apply to any amount received oraccrued after the date of the enactment ofthis Act under any contract described in sub-section (b)(2) of such section, such amend-ments also shall not apply to amounts re-ceived or accrued under such contract beforeJanuary 1, 2001.SEC. 606. CHARITABLE DEDUCTION FOR CON-

TRIBUTIONS OF FOOD INVENTORY.(a) IN GENERAL.—Subsection (e) of section

170 (relating to certain contributions of ordi-nary income and capital gain property) isamended by adding at the end the followingnew paragraph:

‘‘(7) SPECIAL RULE FOR CONTRIBUTIONS OFFOOD INVENTORY.—For purposes of thissection—

‘‘(A) CONTRIBUTIONS BY NON-CORPORATETAXPAYERS.—In the case of a charitable con-tribution of food, paragraph (3)(A) shall beapplied without regard to whether or not thecontribution is made by a corporation.

‘‘(B) LIMIT ON REDUCTION.—In the case of acharitable contribution of food which is aqualified contribution (within the meaningof paragraph (3)(A), as modified by subpara-graph (A) of this paragraph)—


CONGRESSIONAL RECORD — SENATE S6705July 13, 2000‘‘(i) paragraph (3)(B) shall not apply, and‘‘(ii) the reduction under paragraph (1)(A)

for such contribution shall be no greaterthan the amount (if any) by which theamount of such contribution exceeds twicethe basis of such food.

‘‘(C) DETERMINATION OF BASIS.—For pur-poses of this paragraph, if a taxpayer usesthe cash method of accounting, the basis ofany qualified contribution of such taxpayershall be deemed to be 50 percent of the fairmarket value of such contribution.

‘‘(D) DETERMINATION OF FAIR MARKETVALUE.—In the case of a charitable contribu-tion of food which is a qualified contribution(within the meaning of paragraph (3), asmodified by subparagraphs (A) and (B) of thisparagraph) and which, solely by reason of in-ternal standards of the taxpayer, lack ofmarket, or similar circumstances, or whichis produced by the taxpayer exclusively forthe purposes of transferring the food to anorganization described in paragraph (3)(A),cannot or will not be sold, the fair marketvalue of such contribution shall bedetermined—

‘‘(i) without regard to such internal stand-ards, such lack of market, such cir-cumstances, or such exclusive purpose, and

‘‘(ii) if applicable, by taking into accountthe price at which the same or similar fooditems are sold by the taxpayer at the time ofthe contribution (or, if not so sold at suchtime, in the recent past).’’.

(b) EFFECTIVE DATE.—The amendmentmade by subsection (a) shall apply to taxableyears beginning after December 31, 2000.SEC. 607. INCOME AVERAGING FOR FARMERS

AND FISHERMEN NOT TO INCREASEALTERNATIVE MINIMUM TAX LIABIL-ITY.

(a) IN GENERAL.—Section 55(c) (definingregular tax) is amended by redesignatingparagraph (2) as paragraph (3) and by insert-ing after paragraph (1) the following:

‘‘(2) COORDINATION WITH INCOME AVERAGINGFOR FARMERS AND FISHERMEN.—Solely forpurposes of this section, section 1301 (relat-ing to averaging of farm and fishing income)shall not apply in computing the regulartax.’’.

(b) ALLOWING INCOME AVERAGING FOR FISH-ERMEN.—

(1) IN GENERAL.—Section 1301(a) is amendedby striking ‘‘farming business’’ and inserting‘‘farming business or fishing business,’’.

(2) DEFINITION OF ELECTED FARM INCOME.—(A) IN GENERAL.—Clause (i) of section

1301(b)(1)(A) is amended by inserting ‘‘orfishing business’’ before the semicolon.

(B) CONFORMING AMENDMENT.—Subpara-graph (B) of section 1301(b)(1) is amended byinserting ‘‘or fishing business’’ after ‘‘farm-ing business’’ both places it occurs.

(3) DEFINITION OF FISHING BUSINESS.—Sec-tion 1301(b) is amended by adding at the endthe following new paragraph:

‘‘(4) FISHING BUSINESS.—The term ‘fishingbusiness’ means the conduct of commercialfishing as defined in section 3 of the Magnu-son-Stevens Fishery Conservation and Man-agement Act (16 U.S.C. 1802).’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2000.SEC. 608. REPEAL OF MODIFICATION OF INSTALL-

MENT METHOD.(a) IN GENERAL.—Subsection (a) of section

536 of the Ticket to Work and Work Incen-tives Improvement Act of 1999 (relating tomodification of installment method and re-peal of installment method for accrual meth-od taxpayers) is repealed effective with re-spect to sales and other dispositions occur-ring on or after the date of the enactment ofsuch Act.

(b) APPLICABILITY.—The Internal RevenueCode of 1986 shall be applied and adminis-

tered as if such subsection (and the amend-ments made by such subsection) had notbeen enacted.SEC. 609. COOPERATIVE MARKETING INCLUDES

VALUE-ADDED PROCESSINGTHROUGH ANIMALS.

(a) IN GENERAL.—Section 1388 (relating todefinitions and special rules) is amended byadding at the end the following:

‘‘(k) COOPERATIVE MARKETING INCLUDESVALUE-ADDED PROCESSING THROUGH ANI-MALS.—For purposes of section 521 and thissubchapter, ‘marketing the products of mem-bers or other producers’ includes feeding theproducts of members or other producers tocattle, hogs, fish, chickens, or other animalsand selling the resulting animals or animalproducts.’’

(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply to taxableyears beginning after the date of the enact-ment of this Act.SEC. 610. DECLARATORY JUDGMENT RELIEF FOR

SECTION 521 COOPERATIVES.(a) IN GENERAL.—Section 7428(a)(1) (relat-

ing to declaratory judgments of tax exemptorganizations) is amended by striking ‘‘or’’at the end of subparagraph (B) and by addingat the end the following:

‘‘(D) with respect to the initial qualifica-tion or continuing qualification of a coopera-tive as described in section 521(b) which isexempt from tax under section 521(a), or’’.

(b) EFFECTIVE DATE.—The amendmentsmade by this section shall apply with respectto pleadings filed after the date of the enact-ment of this Act but only with respect to de-terminations (or requests for determina-tions) made after January 1, 2000.SEC. 611. SMALL ETHANOL PRODUCER CREDIT.

(a) ALLOCATION OF ALCOHOL FUELS CREDITTO PATRONS OF A COOPERATIVE.—Section40(g) (relating to alcohol used as fuel) isamended by adding at the end the following:

‘‘(6) ALLOCATION OF SMALL ETHANOL PRO-DUCER CREDIT TO PATRONS OF COOPERATIVE.—

‘‘(A) ELECTION TO ALLOCATE.—‘‘(i) IN GENERAL.—In the case of a coopera-

tive organization described in section 1381(a),any portion of the credit determined undersubsection (a)(3) for the taxable year may, atthe election of the organization, be appor-tioned pro rata among patrons of the organi-zation on the basis of the quantity or valueof business done with or for such patrons forthe taxable year.

‘‘(ii) FORM AND EFFECT OF ELECTION.—Anelection under clause (i) for any taxable yearshall be made on a timely filed return forsuch year. Such election, once made, shall beirrevocable for such taxable year.

‘‘(iii) SPECIAL RULE FOR 1998 AND 1999.—Not-withstanding clause (ii), an election for anytaxable year ending prior to the date of theenactment of the Death Tax Elimination Actof 2000 may be made at any time before theexpiration of the 3-year period beginning onthe last date prescribed by law for filing thereturn of the taxpayer for such taxable year(determined without regard to extensions) byfiling an amended return for such year.

‘‘(B) TREATMENT OF ORGANIZATIONS AND PA-TRONS.—The amount of the credit appor-tioned to patrons under subparagraph (A)—

‘‘(i) shall not be included in the amount de-termined under subsection (a) with respectto the organization for the taxable year,

‘‘(ii) shall be included in the amount deter-mined under subsection (a) for the taxableyear of each patron for which the patronagedividends for the taxable year described insubparagraph (A) are included in gross in-come, and

‘‘(iii) shall be included in gross income ofsuch patrons for the taxable year in themanner and to the extent provided in section87.

‘‘(C) SPECIAL RULES FOR DECREASE IN CRED-ITS FOR TAXABLE YEAR.—If the amount of thecredit of a cooperative organization deter-mined under subsection (a)(3) for a taxableyear is less than the amount of such creditshown on the return of the cooperative orga-nization for such year, an amount equal tothe excess of—

‘‘(i) such reduction, over‘‘(ii) the amount not apportioned to such

patrons under subparagraph (A) for the tax-able year,shall be treated as an increase in tax im-posed by this chapter on the organization.Such increase shall not be treated as tax im-posed by this chapter for purposes of deter-mining the amount of any credit under thissubpart or subpart A, B, E, or G.’’.

(b) IMPROVEMENTS TO SMALL ETHANOL PRO-DUCER CREDIT.—

(1) SMALL ETHANOL PRODUCER CREDIT NOT APASSIVE ACTIVITY CREDIT.—Clause (i) of sec-tion 469(d)(2)(A) is amended by striking ‘‘sub-part D’’ and inserting ‘‘subpart D, other thansection 40(a)(3),’’.

(2) ALLOWING CREDIT AGAINST MINIMUMTAX.—

(A) IN GENERAL.—Subsection (c) of section38 (relating to limitation based on amount oftax) is amended by redesignating paragraph(3) as paragraph (4) and by inserting afterparagraph (2) the following new paragraph:

‘‘(3) SPECIAL RULES FOR SMALL ETHANOLPRODUCER CREDIT.—

‘‘(A) IN GENERAL.—In the case of the smallethanol producer credit—

‘‘(i) this section and section 39 shall be ap-plied separately with respect to the credit,and

‘‘(ii) in applying paragraph (1) to thecredit—

‘‘(I) subparagraphs (A) and (B) thereof shallnot apply, and

‘‘(II) the limitation under paragraph (1) (asmodified by subclause (I)) shall be reducedby the credit allowed under subsection (a) forthe taxable year (other than the small eth-anol producer credit).

‘‘(B) SMALL ETHANOL PRODUCER CREDIT.—For purposes of this subsection, the term‘small ethanol producer credit’ means thecredit allowable under subsection (a) by rea-son of section 40(a)(3).’’.

(B) CONFORMING AMENDMENT.—Subclause(II) of section 38(c)(2)(A)(ii) is amended by in-serting ‘‘or the small ethanol producer cred-it’’ after ‘‘employment credit’’.

(3) SMALL ETHANOL PRODUCER CREDIT NOTADDED BACK TO INCOME UNDER SECTION 87.—Section 87 (relating to income inclusion ofalcohol fuel credit) is amended to read as fol-lows:‘‘SEC. 87. ALCOHOL FUEL CREDIT.

‘‘Gross income includes an amount equalto the sum of—

‘‘(1) the amount of the alcohol mixturecredit determined with respect to the tax-payer for the taxable year under section40(a)(1), and

‘‘(2) the alcohol credit determined with re-spect to the taxpayer for the taxable yearunder section 40(a)(2).’’.

(c) CONFORMING AMENDMENT.—Section 1388(relating to definitions and special rules forcooperative organizations) is amended byadding at the end the following:

‘‘(k) CROSS REFERENCE.—For provisions re-lating to the apportionment of the alcoholfuels credit between cooperative organiza-tions and their patrons, see section 40(d) (6).’’

(d) EFFECTIVE DATE.—(1) IN GENERAL.—Except as provided in

paragraph (2), the amendments made by sub-section (b) of this section shall apply to tax-able years ending after the date of enact-ment.

(2) PROVISIONS AFFECTING COOPERATIVESAND THEIR PATRONS.—The amendments made


CONGRESSIONAL RECORD — SENATES6706 July 13, 2000by subsections (a) and (c), and the amend-ments made by paragraphs (2) and (3) of sub-section (b), shall apply to taxable years be-ginning after December 31, 1997.

BAUCUS (AND OTHERS)AMENDMENT NO. 3835

Mr. BAUCUS (for himself, Mr.KERREY, Mr. DORGAN, and Mr. ROBB)proposed an amendment to the bill,H.R. 8, supra; as follows:









is:





















TITLE II—PENSION INCENTIVESSEC. 201. REFUNDABLE CREDIT TO CERTAIN IN-

DIVIDUALS FOR ELECTIVE DEFER-RALS AND IRA CONTRIBUTIONS.

(a) IN GENERAL.—Subpart C of part IV ofsubchapter A of chapter 1 (relating to re-fundable credits) is amended by redesig-nating section 35 as section 36 and by insert-ing after section 34 the following new sec-tion:‘‘SEC. 35. ELECTIVE DEFERRALS AND IRA CON-

TRIBUTIONS BY CERTAIN INDIVID-UALS.

‘‘(a) ALLOWANCE OF CREDIT.—In the case ofan eligible individual, there shall be allowedas a credit against the tax imposed by thissubtitle for the taxable year an amountequal to the applicable percentage of somuch of the qualified retirement savingscontributions of the eligible individual forthe taxable year as do not exceed $1,000.

‘‘(b) APPLICABLE PERCENTAGE.—For pur-poses of this section, the applicable percent-age is the percentage determined in accord-ance with the following table:

Adjusted Gross Income

Applica-ble per-centage

Joint return Head of a house-hold All other cases

Over Not over Over Not over Over Not over

$0 $25,000 $0 $18,750 $0 $12,500 5025,000 35,000 18,750 26,250 12,500 17,500 4535,000 45,000 26,250 33,750 17,500 22,500 3545,000 55,000 33,750 41,250 22,500 27,500 2555,000 75,000 41,250 56,250 27,500 37,500 1575,000 80,000 56,250 60,000 37,500 40,000 580,000 .............. 60,000 .............. 40,000 .............. 0

‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes ofthis section—

‘‘(1) IN GENERAL.—The term ‘eligible indi-vidual’ means any individual if—

‘‘(A) such individual has attained the ageof 18, but has not attained the age of 61, asof the close of the taxable year, and

‘‘(B) the compensation (as defined in sec-tion 219(f)(1)) includible in the gross incomeof the individual (or, in the case of a joint re-turn, of the taxpayer) for such taxable yearis at least $5,000.

‘‘(2) DEPENDENTS AND FULL-TIME STUDENTSNOT ELIGIBLE.—The term ‘eligible individual’shall not include—

‘‘(A) any individual with respect to whoma deduction under section 151 is allowable toanother taxpayer for a taxable year begin-ning in the calendar year in which such indi-vidual’s taxable year begins, and

‘‘(B) any individual who is a student (as de-fined in section 151(c)(4)).

‘‘(3) INDIVIDUALS RECEIVING CERTAIN RETIRE-MENT DISTRIBUTIONS NOT ELIGIBLE.—

‘‘(A) IN GENERAL.—The term ‘eligible indi-vidual’ shall not include, with respect to ataxable year, any individual who receivedduring the testing period—

‘‘(i) any distribution from a qualified re-tirement plan (as defined in section 4974(c)),or from an eligible deferred compensationplan (as defined in section 457(b)), which isincludible in gross income, or

‘‘(ii) any distribution from a Roth IRAwhich is not a qualified rollover contribution(as defined in section 408A(e)) to a Roth IRA.

‘‘(B) TESTING PERIOD.—For purposes of sub-paragraph (A), the testing period, with re-

spect to a taxable year, is the period whichincludes—

‘‘(i) such taxable year,‘‘(ii) the 2 preceding taxable years, and‘‘(iii) the period after such taxable year

and before the due date (without extensions)for filing the return of tax for such taxableyear.

‘‘(C) EXCEPTED DISTRIBUTIONS.—There shallnot be taken into account under subpara-graph (A)—

‘‘(i) any distribution referred to in section72(p), 401(k)(8), 401(m)(6), 402(g)(2), 404(k), or408(d)(4),

‘‘(ii) any distribution to which section408A(d)(3) applies, and

‘‘(iii) any distribution before January 1,2002.

‘‘(D) TREATMENT OF DISTRIBUTIONS RE-CEIVED BY SPOUSE OF INDIVIDUAL.—For pur-poses of determining whether an individualis an eligible individual for any taxable year,any distribution received by the spouse ofsuch individual shall be treated as receivedby such individual if such individual andspouse file a joint return for such taxableyear and for the taxable year during whichthe spouse receives the distribution.

‘‘(d) QUALIFIED RETIREMENT SAVINGS CON-TRIBUTIONS.—For purposes of this section,the term ‘qualified retirement savings con-tributions’ means the sum of—

‘‘(1) the amount of the qualified retirementcontributions (as defined in section 219(e))for the benefit of the eligible individual,

‘‘(2) the amount of the elective deferrals(as defined in section 414(u)(2)(C)) of such in-dividual, and

‘‘(3) the amount of voluntary employeecontributions by such individual to anyqualified retirement plan (as defined in sec-tion 4974(c)).

‘‘(e) INVESTMENT IN THE CONTRACT.—Not-withstanding any other provision of law, aqualified retirement savings contributionshall not fail to be included in determiningthe investment in the contract for purposesof section 72 by reason of the credit underthis section.’’

(b) CONFORMING AMENDMENTS.—(1) Paragraph (2) of section 1324(b) of title

31, United States Code, is amended by insert-ing before the period ‘‘, or from section 35 ofsuch Code’’.

(2) The table of sections for subpart C ofpart IV of subchapter A of chapter 1 isamended by striking the last item and in-serting the following new items:

‘‘Sec. 35. Elective deferrals and IRA con-tributions by certain individ-uals.

‘‘Sec. 36. Overpayments of tax.’’

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2000.SEC. 202. CREDIT FOR SMALL EMPLOYER PEN-

SION PLAN CONTRIBUTIONS ANDSTART-UP COSTS.

(a) IN GENERAL.—Subpart D of part IV ofsubchapter A of chapter 1 (relating to busi-ness related credits) is amended by adding atthe end the following new section:‘‘SEC. 45D. SMALL EMPLOYER PENSION PLAN

CREDIT.‘‘(a) GENERAL RULE.—For purposes of sec-

tion 38, in the case of an eligible employer,the small employer pension plan credit de-termined under this section for any taxableyear is an amount equal to the sum of—

‘‘(1) 25 percent of the qualified employercontributions of the taxpayer for the taxableyear, and

‘‘(2) the qualified start-up costs paid or in-curred by the taxpayer during the taxableyear.

‘‘(b) LIMITATIONS.—


CONGRESSIONAL RECORD — SENATE S6707July 13, 2000‘‘(1) LIMITS ON CONTRIBUTIONS.—For pur-

poses of subsection (a)(1)—‘‘(A) qualified employer contributions may

only be taken into account for each of thefirst 3 taxable years ending after the datethe employer establishes the qualified em-ployer plan to which the contribution ismade, and

‘‘(B) the amount of the qualified employercontributions taken into account with re-spect to any qualified employee for any suchtaxable year shall not exceed 3 percent of thecompensation (as defined in section 414(s)) ofthe qualified employee for such taxable year.

‘‘(2) LIMITS ON START-UP COSTS.—Theamount of the credit determined under sub-section (a)(2) for any taxable year shall notexceed—

‘‘(A) $500 for each of the first, second, andthird taxable years ending after the date theemployer established the qualified employerplan to which such costs relate, and

‘‘(B) zero for each taxable year thereafter.‘‘(c) DEFINITIONS.—For purposes of this

section—‘‘(1) ELIGIBLE EMPLOYER.—‘‘(A) IN GENERAL.—The term ‘eligible em-

ployer’ means, with respect to any year, anemployer which has no more than—

‘‘(i) for purposes of subsection (a)(1), 25 em-ployees, and

‘‘(ii) for purposes of subsection (a)(2), 100employees,who received at least $5,000 of compensationfrom the employer for the preceding year.

‘‘(B) 2-YEAR GRACE PERIOD.—An eligible em-ployer who establishes and maintains aqualified employer plan for 1 or more yearsand who fails to be an eligible employer forany subsequent year shall be treated as aneligible employer for the 2 years followingthe last year the employer was an eligibleemployer.

‘‘(C) REQUIREMENT FOR NEW QUALIFIED EM-PLOYER PLANS.—Such term shall not includean employer if the employer (or any prede-cessor employer) established or maintained aqualified employer plan with respect towhich contributions were made, or benefitswere accrued, for service in the 3 taxableyears ending prior to the first taxable yearin which the credit under this section is al-lowed.

‘‘(2) QUALIFIED EMPLOYER CONTRIBUTIONS.—‘‘(A) IN GENERAL.—The term ‘qualified em-

ployer contributions’ means, with respect toany taxable year, any employer contribu-tions made on behalf of a qualified employeeto a qualified employer plan for a plan yearending with or within the taxable year.

‘‘(B) EMPLOYER CONTRIBUTIONS.—The term‘employer contributions’ shall not includeany elective deferral (within the meaning ofsection 402(g)(3)).

‘‘(3) QUALIFIED EMPLOYEE.—The term‘qualified employee’ means an individualwho—

‘‘(A) is eligible to participate in the quali-fied employer plan to which the employercontributions are made, and

‘‘(B) is not a highly compensated employee(within the meaning of section 414(q)) for theyear for which the contribution is made.

‘‘(4) QUALIFIED START-UP COSTS.—The term‘qualified start-up costs’ means any ordinaryand necessary expenses of an eligible em-ployer which are paid or incurred in connec-tion with—

‘‘(A) the establishment or maintenance ofa qualified employer plan in which qualifiedemployees are eligible to participate, and

‘‘(B) providing educational information toemployees regarding participation in suchplan and the benefits of establishing an in-vestment plan.

‘‘(5) QUALIFIED EMPLOYER PLAN.—The term‘qualified employer plan’ has the meaninggiven such term in section 4972(d).

‘‘(d) SPECIAL RULES.—‘‘(1) AGGREGATION RULES.—All persons

treated as a single employer under sub-section (a) or (b) of section 52, or subsection(n) or (o) of section 414, shall be treated asone person. All qualified employer plans ofan employer shall be treated as 1 qualifiedemployer plan.

‘‘(2) DISALLOWANCE OF DEDUCTION.—No de-duction shall be allowable under this chapterfor any qualified start-up costs or qualifiedemployer contributions for which a credit isdetermined under subsection (a).

‘‘(3) ELECTION NOT TO CLAIM CREDIT.—Thissection shall not apply to a taxpayer for anytaxable year if such taxpayer elects to havethis section not apply for such taxableyear.’’.

(b) CREDIT ALLOWED AS PART OF GENERALBUSINESS CREDIT.—Section 38(b) (definingcurrent year business credit) is amended bystriking ‘‘plus’’ at the end of paragraph (11),by striking the period at the end of para-graph (12) and inserting ‘‘, plus’’, and by add-ing at the end the following new paragraph:

‘‘(13) in the case of an eligible employer (asdefined in section 45D(c)), the small em-ployer pension plan credit determined undersection 45D(a).’’.

(c) CONFORMING AMENDMENT.—The table ofsections for subpart D of part IV of sub-chapter A of chapter 1 is amended by addingat the end the following new item:

‘‘Sec. 45D. Small employer pension plancredit.’’.

(d) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to costspaid or incurred or contributions made inconnection with qualified employer plans es-tablished after December 31, 2000.

TITLE III—SOCIAL SECURITY KIDSAVEACCOUNTS

SEC. 301. SHORT TITLE.This title may be cited as the ‘‘Social Se-

curity KidSave Accounts Act’’.SEC. 302. SOCIAL SECURITY KIDSAVE ACCOUNTS.

Title II of the Social Security Act (42U.S.C. 401 et seq.) is amended—

(1) by inserting before section 201 the fol-lowing:

‘‘PART A—INSURANCE BENEFITS’’;

and(2) by adding at the end the following:

‘‘PART B—KIDSAVE ACCOUNTS

‘‘KIDSAVE ACCOUNTS

‘‘SEC. 251. (a) ESTABLISHMENT.—The Com-missioner of Social Security shall establishin the name of each individual born on orafter January 1, 2006, a KidSave Accountupon the later of—

‘‘(1) the date of enactment of this part, or‘‘(2) the date of the issuance of a Social Se-

curity account number under section205(c)(2) to such individual.The KidSave Account shall be identified tothe account holder by means of the accountholder’s Social Security account number.

‘‘(b) CONTRIBUTIONS.—‘‘(1) IN GENERAL.—There are authorized to

be appropriated and are appropriated suchsums as are necessary in order for the Sec-retary of the Treasury to transfer from thegeneral fund of the Treasury for crediting bythe Commissioner to each account holder’sKidSave Account under subsection (a), anamount equal to $1000.00, on the date of theestablishment of such individual’s KidSaveAccount.

‘‘(2) ADJUSTMENT FOR INFLATION.—For anycalendar year after 2010, the dollar amountunder paragraph (1) shall be increased by thecost-of-living adjustment determined undersection 215(i) for the calendar year.

‘‘(c) DESIGNATIONS REGARDING KIDSAVE AC-COUNTS.—

‘‘(1) INITIAL DESIGNATIONS OF INVESTMENTVEHICLE.—A person described in subsection(d) shall, on behalf of the individual de-scribed in subsection (a), designate the in-vestment vehicle for the KidSave Account towhich contributions on behalf of such indi-vidual are to be deposited. Such designationshall be made on the application for such in-dividual’s Social Security account number.

‘‘(2) CHANGES IN INVESTMENT VEHICLES ORTYPES OF KIDSAVE ACCOUNTS.—The Commis-sioner shall by regulation provide the timeand manner by which an individual or a per-son described in subsection (d) on behalf ofsuch individual may change 1 or more invest-ment vehicles for a KidSave Account.

‘‘(d) TREATMENT OF MINORS AND INCOM-PETENT INDIVIDUALS.—Any designation undersubsection (c) to be made by a minor, or anindividual mentally incompetent or underother legal disability, may be made by theperson who is constituted guardian or otherfiduciary by the law of the State of residenceof the individual or is otherwise legally vest-ed with the care of the individual or his es-tate. Payment under this part due a minor,or an individual mentally incompetent orunder other legal disability, may be made tothe person who is constituted guardian orother fiduciary by the law of the State ofresidence of the claimant or is otherwise le-gally vested with the care of the claimant orhis estate. In any case in which a guardian orother fiduciary of the individual under legaldisability has not been appointed under thelaw of the State of residence of the indi-vidual, if any other person, in the judgmentof the Commissioner, is responsible for thecare of such individual, any designationunder subsection (c) which may otherwise bemade by such individual may be made bysuch person, any payment under this partwhich is otherwise payable to such indi-vidual may be made to such person, and thepayment of an annuity payment under thispart to such person bars recovery by anyother person.

‘‘DEFINITIONS AND SPECIAL RULES

‘‘SEC. 252. For purposes of this part—‘‘(1) KIDSAVE ACCOUNT.—The term ‘KidSave

Account’ means an account in the KidSaveInvestment Fund (established under section253) which is administered by the KidSaveInvestment Fund Board.

‘‘(2) TREATMENT OF ACCOUNT.—‘‘(A) IN GENERAL.—Except as otherwise pro-

vided in this part and in section 531 of the In-ternal Revenue Code of 1986, any KidSave Ac-count shall be treated in the same manner asan individual account in the Thrift SavingsFund under subchapter III of chapter 84 oftitle 5, United States Code.

‘‘(B) EXCEPTIONS.—‘‘(i) CONTRIBUTION LIMIT.—The aggregate

amount of contributions for any taxable yearto all KidSave Accounts of an individualshall not exceed the contribution made pur-suant to section 251(b) for such year on be-half of such individual.

‘‘(ii) ROLLOVER CONTRIBUTIONS.—No roll-over contribution may be made to a KidSaveAccount unless it is from another KidSaveAccount. A rollover described in the pre-ceding sentence shall not be taken into ac-count for purposes of clause (i).

‘‘(iii) DISTRIBUTIONS.—Notwithstandingany other provision of law, distributionsmay only be made from a KidSave Accountof an individual on or after the earlier of—

‘‘(I) the date on which the individual be-gins receiving benefits under this title, or

‘‘(II) the date of the individual’s death.

‘‘KIDSAVE INVESTMENT FUND

‘‘SEC. 253. (a) ESTABLISHMENT.—There is es-tablished and maintained in the Treasury ofthe United States a KidSave Investment


CONGRESSIONAL RECORD — SENATES6708 July 13, 2000Fund in the same manner as the Thrift Sav-ings Fund under sections 8437, 8438, and 8439of title 5, United States Code.

‘‘(b) KIDSAVE INVESTMENT FUND BOARD.—‘‘(1) IN GENERAL.—There is established and

operated in the Social Security Administra-tion a Kidsave Investment Fund Board in thesame manner as the Federal RetirementThrift Investment Board under subchapterVII of chapter 84 of title 5, United StatesCode.

‘‘(2) SPECIFIC INVESTMENT DUTIES.—TheKidsave Investment Fund shall be managedby the Kidsave Investment Fund Board inthe same manner as the Thrift Savings Fundis managed under subchapter VIII of chapter84 of title 5, United States Code.’’.

GRAMS (AND ABRAHAM)AMENDMENT NO. 3836

Mr. GRAMS (for himself and Mr.ABRAHAM) proposed an amendment tothe bill, H.R. 8, supra; as follows:

At the end of the bill, add the following:TITLE VI—MISCELLANEOUS PROVISIONS

SEC. 601. REPEAL OF INCREASE IN TAX ON SO-CIAL SECURITY BENEFITS.

(a) REPEAL OF INCREASE IN TAX ON SOCIALSECURITY BENEFITS.—

(1) IN GENERAL.—Paragraph (2) of section86(a) (relating to social security and tier 1railroad retirement benefits) is amended byadding at the end the following new flushsentence:‘‘This paragraph shall not apply to any tax-able year beginning after December 31, 2000.’’

(2) EFFECTIVE DATE.—The amendmentmade by this subsection shall apply to tax-able years beginning after December 31, 2000.

(b) REVENUE OFFSET.—The Secretary of theTreasury shall transfer, for each fiscal year,from the general fund in the Treasury to theFederal Hospital Insurance Trust Fund es-tablished under section 1817 of the Social Se-curity Act (42 U.S.C. 1395i) an amount equalto the decrease in revenues to the Treasuryfor such fiscal year by reason of the amend-ment made by this section.

DODD (AND OTHERS) AMENDMENTNO. 3837

(Ordered to lie on the table.)Mr. DODD (for himself, Mr.

WELLSTONE, Ms. LANDRIEU, and Mr.KOHL) submitted an amendment to beproposed by them to the bill, H.R. 8,supra; as follows:









is:

2001, 2002, 2003, 2004,and 2005 ..................... $1,000,0002006 and 2007 .............. $1,125,000



is:

2008 ........................... $1,500,0002009 or thereafter ...... $2,000,000.’’



















(c) EFFECTIVE DATE.—The amendmentmade by this section shall apply to the es-tates of decedents dying, and gifts made,after December 31, 2000.TITLE II—DEPENDENT CARE TAX CREDIT

SEC. 201. EXPANSION OF DEPENDENT CARE TAXCREDIT.

(a) IN GENERAL.—Paragraph (2) of section21(a) (relating to expenses for household anddependent care services necessary for gainfulemployment) is amended to read as follows:

‘‘(2) APPLICABLE PERCENTAGE DEFINED.—Forpurposes of paragraph (1), the term ‘applica-ble percentage’ means 50 percent (40 percentfor taxable years beginning after December31, 2002, and before January 1, 2005) reduced(but not below 20 percent) by 1 percentagepoint for each $1,000 (or fraction thereof) bywhich the taxpayer’s adjusted gross incomefor the taxable year exceeds $30,000.’’

(b) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME PARENTS.—Section 21(e) (relatingto special rules) is amended by adding at theend the following:

‘‘(11) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME PARENTS.—Notwithstanding sub-section (d), in the case of any taxpayer withone or more qualifying individuals describedin subsection (b)(1)(A) under the age of 1 atany time during the taxable year, such tax-

payer shall be deemed to have employment-related expenses with respect to not morethan 2 of such qualifying individuals in anamount equal to the greater of—

‘‘(A) the amount of employment-relatedexpenses incurred for such qualifying indi-viduals for the taxable year (determinedunder this section without regard to thisparagraph), or

‘‘(B) $41.67 for each month in such taxableyear during which each such qualifying indi-vidual is under the age of 1.’’.

(c) INFLATION ADJUSTMENT OF DOLLARAMOUNTS.—

(1) Section 21 is amended by redesignatingsubsection (f) as subsection (g) and by insert-ing after subsection (e) the following newsubsection:

‘‘(f) INFLATION ADJUSTMENT.—In the case ofany taxable year beginning in a calendaryear after 2001, the $30,000 amount containedin subsection (a), the $2,400 amount in sub-section (c), and the $41.67 amount in sub-section (e)(11) shall be increased by anamount equal to—

‘‘(1) such dollar amount, multiplied by‘‘(2) the cost-of-living adjustment deter-

mined under section 1(f)(3) for such calendaryear by substituting ‘calendar year 2000’ for‘calendar year 1992’ in subparagraph (B)thereof.If the increase determined under the pre-ceding sentence is not a multiple of $50 ($5 inthe case of the amount in subsection (e)(11)),such amount shall be rounded to the nextlowest multiple thereof.’’

(2) Paragraph (2) of section 21(c) is amend-ed by striking ‘‘$4,800’’ and inserting ‘‘twicethe dollar amount applicable under para-graph (1)’’.

(3) Paragraph (2) of section 21(d) is amend-ed by striking ‘‘less than—’’ and all that fol-lows through the end of the first sentenceand inserting ‘‘less than 1⁄12 of the amountwhich applies under subsection (c) to thetaxpayer for the taxable year.’’

(d) CREDIT ALLOWED BASED ON RESIDENCYIN CERTAIN CASES.—Subsection (e) of section21 is amended by adding at the end the fol-lowing new paragraph:

‘‘(12) CREDIT ALLOWED BASED ON RESIDENCYIN CERTAIN CASES.—In the case of ataxpayer—

‘‘(A) who does not satisfy the householdmaintenance test of subsection (a) for anyperiod, but

‘‘(B) whose principal place of abode forsuch period is also the principal place ofabode of any qualifying individual,then such taxpayer shall be treated as satis-fying such test for such period but theamount of credit allowable under this sec-tion with respect to such individual shall bedetermined by allowing only 1⁄12 of the limi-tation under subsection (c) for each fullmonth that the requirement of subparagraph(B) is met.’’

(e) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2000.SEC. 202. DEPENDENT CARE TAX CREDIT MADE

REFUNDABLE.(a) IN GENERAL.—Part IV of subchapter A

of chapter 1 (relating to credits against tax)is amended—

(1) by redesignating section 35 as section36, and

(2) by redesignating section 21 as section35.

(b) ADVANCE PAYMENT OF CREDIT.—Chapter25 (relating to general provisions relating toemployment taxes) is amended by insertingafter section 3507 the following:‘‘SEC. 3507A. ADVANCE PAYMENT OF DEPENDENT

CARE CREDIT.‘‘(a) GENERAL RULE.—Except as otherwise

provided in this section, every employer


CONGRESSIONAL RECORD — SENATE S6709July 13, 2000making payment of wages with respect towhom a dependent care eligibility certificateis in effect shall, at the time of paying suchwages, make an additional payment equal tosuch employee’s dependent care advanceamount.

‘‘(b) DEPENDENT CARE ELIGIBILITY CERTIFI-CATE.—For purposes of this title, a depend-ent care eligibility certificate is a statementfurnished by an employee to the employerwhich—

‘‘(1) certifies that the employee will be eli-gible to receive the credit provided by sec-tion 35 for the taxable year,

‘‘(2) certifies that the employee reasonablyexpects to be an applicable taxpayer for thetaxable year,

‘‘(3) certifies that the employee does nothave a dependent care eligibility certificatein effect for the calendar year with respectto the payment of wages by another em-ployer,

‘‘(4) states whether or not the employee’sspouse has a dependent care eligibility cer-tificate in effect,

‘‘(5) states the number of qualifying indi-viduals in the household maintained by theemployee, and

‘‘(6) estimates the amount of employment-related expenses for the calendar year.

‘‘(c) DEPENDENT CARE ADVANCE AMOUNT.—‘‘(1) IN GENERAL.—For purposes of this

title, the term ‘dependent care advanceamount’ means, with respect to any payrollperiod, the amount determined—

‘‘(A) on the basis of the employee’s wagesfrom the employer for such period,

‘‘(B) on the basis of the employee’s esti-mated employment-related expenses in-cluded in the dependent care eligibility cer-tificate, and

‘‘(C) in accordance with tables provided bythe Secretary.

‘‘(2) ADVANCE AMOUNT TABLES.—The tablesreferred to in paragraph (1)(C) shall be simi-lar in form to the tables prescribed undersection 3402 and, to the maximum extent fea-sible, shall be coordinated with such tablesand the tables prescribed under section3507(c).

‘‘(d) OTHER RULES.—For purposes of thissection, rules similar to the rules of sub-sections (d) and (e) of section 3507 shallapply.

‘‘(e) DEFINITIONS.—For purposes of this sec-tion, terms used in this section which are de-fined in section 35 shall have the respectivemeanings given such terms by section 35.’’.

(c) CONFORMING AMENDMENTS.—(1) Section 35(a)(1), as redesignated by

paragraph (1), is amended by striking ‘‘chap-ter’’ and inserting ‘‘subtitle’’.

(2) Section 35(e), as so redesignated andamended by subsection (c), is amended byadding at the end the following:

‘‘(13) COORDINATION WITH ADVANCE PAY-MENTS AND MINIMUM TAX.—Rules similar tothe rules of subsections (g) and (h) of section32 shall apply for purposes of this section.’’.

(3) Sections 23(f)(1) and 129(a)(2)(C) are eachamended by striking ‘‘section 21(e)’’ and in-serting ‘‘section 35(e)’’.

(4) Section 129(b)(2) is amended by striking‘‘section 21(d)(2)’’ and inserting ‘‘section35(d)(2)’’.

(5) Section 129(e)(1) is amended by striking‘‘section 21(b)(2)’’ and inserting ‘‘section35(b)(2)’’.

(6) Section 213(e) is amended by striking‘‘section 21’’ and inserting ‘‘section 35’’.

(7) Section 995(f)(2)(C) is amended by strik-ing ‘‘and 34’’ and inserting ‘‘34, and 35’’.

(8) Section 6211(b)(4)(A) is amended bystriking ‘‘and 34’’ and inserting ‘‘, 34, and35’’.

(9) Section 6213(g)(2)(H) is amended bystriking ‘‘section 21’’ and inserting ‘‘section35’’.

(10) Section 6213(g)(2)(L) is amended bystriking ‘‘section 21, 24, or 32’’ and inserting‘‘section 24, 32, or 35’’.


‘‘Sec. 35. Dependent care services.‘‘Sec. 36. Overpayments of tax.’’.

(12) The table of sections for subpart A ofsuch part IV is amended by striking the itemrelating to section 21.

(13) The table of sections for chapter 25 isamended by adding after the item relating tosection 3507 the following:

‘‘Sec. 3507A. Advance payment of dependentcare credit.’’.

(14) Section 1324(b)(2) of title 31, UnitedStates Code, is amended by inserting beforethe period ‘‘, or enacted by the Death TaxElimination Act of 2000’’.

(d) EFFECTIVE DATE.—The amendmentsmade by this section apply to taxable yearsbeginning after December 31, 2002.

TITLE III—EXPANSION OF ADOPTIONCREDIT

SEC. 301. EXPANSION OF ADOPTION CREDIT.(a) SPECIAL NEEDS ADOPTION.—(1) CREDIT AMOUNT.—Paragraph (1) of sec-

tion 23(a) (relating to allowance of credit) isamended to read as follows:

‘‘(1) IN GENERAL.—In the case of an indi-vidual, there shall be allowed as a creditagainst the tax imposed by this chapter—

‘‘(A) in the case of a special needs adop-tion, $10,000, or

‘‘(B) in the case of any other adoption, theamount of the qualified adoption expensespaid or incurred by the taxpayer.’’.

(2) YEAR CREDIT ALLOWED.—Section 23(a)(2)(relating to year credit allowed) is amendedby adding at the end the following new flushsentence:‘‘In the case of a special needs adoption, thecredit allowed under paragraph (1) shall beallowed for the taxable year in which theadoption becomes final.’’.

(3) DOLLAR LIMITATION.—Section 23(b)(1) isamended—

(A) by striking ‘‘subsection (a)’’ and insert-ing ‘‘subsection (a)(1)(B)’’, and

(B) by striking ‘‘($6,000, in the case of achild with special needs)’’.

(4) DEFINITION OF SPECIAL NEEDS ADOP-TION.—Section 23(d) (relating to definitions)is amended by adding at the end the fol-lowing new paragraph:

‘‘(4) SPECIAL NEEDS ADOPTION.—The term‘special needs adoption’ means the finaladoption of an individual during the taxableyear who is an eligible child and who is achild with special needs.’’.

(5) DEFINITION OF CHILD WITH SPECIALNEEDS.—Section 23(d)(3) (defining child withspecial needs) is amended to read as follows:

‘‘(3) CHILD WITH SPECIAL NEEDS.—The term‘child with special needs’ means any child ifa State has determined that the child’s eth-nic background, age, membership in a minor-ity or sibling groups, medical condition orphysical impairment, or emotional handicapmakes some form of adoption assistance nec-essary.’’.

(b) INCREASE IN INCOME LIMITATIONS.—Sec-tion 23(b)(2) (relating to income limitation)is amended—

(1) in subparagraph (A)—(A) by striking ‘‘$75,000’’ and inserting

‘‘$63,550 ($105,950 in the case of a joint re-turn)’’, and

(B) by striking ‘‘$40,000’’ and inserting ‘‘theapplicable amount’’, and


‘‘(C) APPLICABLE AMOUNT.—For purposes ofsubparagraph (A), the applicable amount,

with respect to any taxpayer, for the taxableyear shall be an amount equal to the excessof—

‘‘(i) the maximum taxable income amountfor the 31 percent bracket under the tablecontained in section 1 relating to such tax-payer and in effect for the taxable year, over

‘‘(ii) the dollar amount in effect with re-spect to the taxpayer for the taxable yearunder subparagraph (A)(i).

‘‘(D) COST-OF-LIVING ADJUSTMENT.—‘‘(i) IN GENERAL.—In the case of a taxable

year beginning after 2001, each dollaramount under subparagraph (A)(i) shall beincreased by an amount equal to—


mined under section 1(f )(3) for the calendaryear in which the taxable year begins, deter-mined by substituting ‘calendar year 2000’for ‘calendar year 1992’ in subparagraph (B)thereof.

‘‘(ii) ROUNDING RULES.—If any amount afteradjustment under clause (i) is not a multipleof $1,000, such amount shall be rounded tothe next lower multiple of $1,000.’’.

(c) ADOPTION CREDIT MADE PERMANENT.—Subclauses (A) and (B) of section 23(d)(2) (de-fining eligible child) are amended to read asfollows:

‘‘(A) who has not attained age 18, or‘‘(B) who is physically or mentally incapa-

ble of caring for himself.’’.(d) CONFORMING AMENDMENTS.—(1) Section 23(a)(2) is amended by striking

‘‘(1)’’ and inserting ‘‘(1)(B)’’.(2) Section 23(b)(3) is amended by striking

‘‘(a)’’ each place it appears and inserting‘‘(a)(1)(B)’’.


TITLE IV—INCENTIVES FOR EMPLOYER-PROVIDED CHILD CARE



CREDIT.

‘‘(a) ALLOWANCE OF CREDIT.—For purposesof section 38, the employer-provided childcare credit determined under this section forthe taxable year is an amount equal to thesum of—











‘‘(ii) for the operating costs of an eligiblequalified child care facility of the taxpayer,


CONGRESSIONAL RECORD — SENATES6710 July 13, 2000including costs related to the training of em-ployees of the child care facility, to scholar-ship programs, to the providing of differen-tial compensation to employees based onlevel of child care training, and to expensesassociated with achieving accreditation, or



‘‘(C) NONDISCRIMINATION.—The term ‘quali-fied child care expenditure’ shall not includeany amount expended in relation to anychild care services unless the providing ofsuch services to employees of the taxpayerdoes not discriminate in favor of highly com-pensated employees (within the meaning ofsection 404(q)).








‘‘(iii) at least 30 percent of the enrollees ofsuch facility are dependents of employees ofthe taxpayer.







‘‘(1) IN GENERAL.—If, as of the close of anytaxable year, there is a recapture event withrespect to any eligible qualified child carefacility of the taxpayer, then the tax of thetaxpayer under this chapter for such taxable

year shall be increased by an amount equalto the product of—




section, the applicable recapture percentageshall be determined from the following table:

‘‘If the recaptureevent occurs in:

The applicablerecapture

percentage is:Year 1 .......................... 100Year 2 .......................... 80Year 3 .......................... 60Year 4 .......................... 40Year 5 .......................... 20Years 6 and thereafter 0.






‘‘(ii) AGREEMENT TO ASSUME RECAPTURE LI-ABILITY.—Clause (i) shall not apply if theperson acquiring such interest in the facilityagrees in writing to assume the recapture li-ability of the person disposing of such inter-est in effect immediately before such disposi-tion. In the event of such an assumption, theperson acquiring the interest in the facilityshall be treated as the taxpayer for purposesof assessing any recapture liability (com-puted as if there had been no change in own-ership).








‘‘(3) ALLOCATION IN THE CASE OF PARTNER-SHIPS.—In the case of partnerships, the cred-

it shall be allocated among partners underregulations prescribed by the Secretary.




‘‘(B) CERTAIN DISPOSITIONS.—If during anytaxable year there is a recapture amount de-termined with respect to any property thebasis of which was reduced under subpara-graph (A), the basis of such property (imme-diately before the event resulting in such re-capture) shall be increased by an amountequal to such recapture amount. For pur-poses of the preceding sentence, the term ‘re-capture amount’ means any increase in tax(or adjustment in carrybacks or carryovers)determined under subsection (d).

‘‘(2) OTHER DEDUCTIONS AND CREDITS.—Nodeduction or credit shall be allowed underany other provision of this chapter with re-spect to the amount of the credit determinedunder this section.’’









SANTORUM (AND OTHERS)AMENDMENT NO. 3838

(Ordered to lie on the table.)Mr. SANTORUM (for himself, Mr.

LIEBERMAN, Mr. ABRAHAM, Mr. HUTCH-INSON, Mr. TORRICELLI, Mr. DEWINE,Mr. KOHL, Ms. LANDRIEU, and Mr.KERRY) submitted an amendment in-tended to be proposed by them to thebill, H.R. 8, supra; as follows:

At the end, add the following:

DIVISION B—AMERICAN COMMUNITY RE-NEWAL AND NEW MARKETS EMPOWER-MENT

SECTION 1. SHORT TITLE; ETC.

(a) SHORT TITLE.—This division may becited as the ‘‘American Community Renewaland New Markets Empowerment Act’’.

(b) AMENDMENT OF 1986 CODE.—Except asotherwise expressly provided, whenever inthis division an amendment or repeal is ex-pressed in terms of an amendment to, or re-peal of, a section or other provision, the ref-erence shall be considered to be made to asection or other provision of the InternalRevenue Code of 1986.

(c) TABLE OF CONTENTS.—

Sec. 1. Short title; etc.

TITLE I—AMERICAN COMMUNITYRENEWAL

Sec. 101. Designation of and tax incentivesfor renewal communities.


CONGRESSIONAL RECORD — SENATE S6711July 13, 2000Sec. 102. Extension of expensing of environ-

mental remediation costs to re-newal communities; extensionof termination date for renewalcommunities and empowermentzones.

Sec. 103. Work opportunity credit for hiringyouth residing in renewal com-munities.

Sec. 104. Evaluation and reporting require-ments.

Sec. 105. Exclusion of effects of this titlefrom paygo scorecard.

TITLE II—NEW MILLENNIUMCLASSROOMS

Sec. 201. Credit for computer donations toschools, senior centers, publiclibraries, and other trainingcenters.

TITLE III—EXPANSION AND EXTENSIONOF EMPOWERMENT ZONE TAX INCEN-TIVES

Sec. 301. Authority to designate 9 additionalempowerment zones.

Sec. 302. Extension of enterprise zone treat-ment through 2009.

Sec. 303. 20 percent employment credit forall empowerment zones.

Sec. 304. Increased expensing under section179.

Sec. 305. Higher limits on tax-exempt em-powerment zone facility bonds.

Sec. 306. Nonrecognition of gain on rolloverof empowerment zone invest-ments.

Sec. 307. Increased exclusion of gain on saleof empowerment zone invest-ments.

Sec. 308. Funding entitlement for Round IIempowerment zones.

Sec. 309. Rules regarding qualified issues.Sec. 310. Custom user fees.

TITLE IV—FAITH BASED SUBSTANCEABUSE TREATMENT

Sec. 401. Prevention and treatment of sub-stance abuse; services providedthrough religious organiza-tions.

TITLE V—HOMEOWNERSHIPSec. 501. Transfer of unoccupied and sub-

standard HUD-held housing tolocal governments and commu-nity development corporations.

Sec. 502. Transfer of HUD assets in revital-ization areas.

Sec. 503. Risk-sharing demonstration.TITLE VI—AMERICA’S PRIVATE

INVESTMENT COMPANIESSec. 601. Short title.Sec. 602. Findings and purposes.Sec. 603. Definitions.Sec. 604. Authorization.Sec. 605. Selection of APICs.Sec. 606. Operations of APICs.Sec. 607. Credit enhancement by the Federal

Government.Sec. 608. APIC requests for guarantee ac-

tions.Sec. 609. Examination and monitoring of

APICs.Sec. 610. Penalties.Sec. 611. Effective date.Sec. 612. Sunset.TITLE VII—NEW MARKETS TAX CREDIT

Sec. 701. New markets tax credit.TITLE VIII—COMMUNITY DEVELOPMENT

AND VENTURE CAPITALSec. 800. Short title.

Subtitle A—New Markets Venture CapitalProgram

Sec. 801. New Markets Venture Capital Pro-gram.

Sec. 802. Bankruptcy exemption for NMVCcompanies.

Sec. 803. Federal savings associations.

Subtitle B—Community DevelopmentVenture Capital Assistance

Sec. 811. Findings and purposes.Sec. 812. Community development venture

capital activities.Subtitle C—Business LINC

Sec. 821. Grants authorized.Sec. 822. Regulations.TITLE IX—BOND VOLUME CAP AND LOW-

INCOME HOUSING CREDIT INCREASESSec. 901. Increase in State ceiling on private

activity bonds.Sec. 902. Increase in State ceiling on low-in-

come housing credit.TITLE X—INDIVIDUAL DEVELOPMENT

ACCOUNTSSec. 1001. Findings.Sec. 1002. Purposes.Sec. 1003. Definitions.

Subtitle A—Individual DevelopmentAccounts for Low-Income Workers

Sec. 1011. Structure and administration ofqualified individual develop-ment account programs.

Sec. 1012. Procedures for opening an Indi-vidual Development Accountand qualifying for matchingfunds.

Sec. 1013. Contributions to Individual Devel-opment Accounts.

Sec. 1014. Deposits by qualified individualdevelopment account programs.

Sec. 1015. Withdrawal procedures.Sec. 1016. Certification and termination of

qualified individual develop-ment account programs.

Sec. 1017. Reporting, monitoring, and eval-uation.

Sec. 1018. Certain account funds of programparticipants disregarded forpurposes of certain means-test-ed Federal programs.

Subtitle B—Qualified Individual Develop-ment Account Program Investment Credits

Sec. 1021. Qualified individual developmentaccount program investmentcredits.

Sec. 1022. CRA credit treatment for qualifiedindividual development accountprogram investments.

Sec. 1023. Designation of earned income taxcredit payments for deposit toIndividual Development Ac-counts.

TITLE XI—CHARITABLE CHOICEEXPANSION

Sec. 1101. Provision of assistance under gov-ernment programs by religiousorganizations.

TITLE XII—ANTHRACITE REGIONREDEVELOPMENT

Sec. 1201. Credit to holders of qualified an-thracite region redevelopmentbonds.

TITLE I—AMERICAN COMMUNITYRENEWAL

SEC. 101. DESIGNATION OF AND TAX INCENTIVESFOR RENEWAL COMMUNITIES.

(a) IN GENERAL.—Chapter 1 is amended byadding at the end the following new sub-chapter:

‘‘Subchapter X—Renewal Communities‘‘Part I. Designation.‘‘Part II. Renewal community capital gain;

renewal community business.‘‘Part III. Additional incentives.

‘‘PART I—DESIGNATION‘‘Sec. 1400E. Designation of renewal commu-

nities.‘‘SEC. 1400E. DESIGNATION OF RENEWAL COMMU-

NITIES.‘‘(a) DESIGNATION.—

‘‘(1) DEFINITIONS.—For purposes of thistitle, the term ‘renewal community’ meansany area—

‘‘(A) which is nominated by one or morelocal governments and the State or States inwhich it is located for designation as a re-newal community (hereinafter in this sec-tion referred to as a ‘nominated area’), and

‘‘(B) which the Secretary of Housing andUrban Development designates as a renewalcommunity, after consultation with—

‘‘(i) the Secretaries of Agriculture, Com-merce, Labor, and the Treasury; the Directorof the Office of Management and Budget, andthe Administrator of the Small Business Ad-ministration, and

‘‘(ii) in the case of an area on an Indianreservation, the Secretary of the Interior.

‘‘(2) NUMBER OF DESIGNATIONS.—‘‘(A) IN GENERAL.—The Secretary of Hous-

ing and Urban Development may designatenot more than 1 nominated area as a renewalcommunity in each State.

‘‘(B) MINIMUM DESIGNATION IN RURALAREAS.—Of the areas designated under para-graph (1), at least 20 percent must be areas—

‘‘(i) which are within a local governmentjurisdiction or jurisdictions with a popu-lation of less than 50,000,

‘‘(ii) which are outside of a metropolitanstatistical area (within the meaning of sec-tion 143(k)(2)(B)), or

‘‘(iii) which are determined by the Sec-retary of Housing and Urban Development,after consultation with the Secretary ofCommerce, to be rural areas.

‘‘(3) AREAS DESIGNATED BASED ON DEGREEOF POVERTY, ETC.—

‘‘(A) IN GENERAL.—Except as otherwise pro-vided in this section, the nominated areasdesignated as renewal communities underthis subsection shall be those nominatedareas with the highest average ranking withrespect to the criteria described in subpara-graphs (B), (C), and (D) of subsection (c)(3).For purposes of the preceding sentence, anarea shall be ranked within each such cri-terion on the basis of the amount by whichthe area exceeds such criterion, with thearea which exceeds such criterion by thegreatest amount given the highest ranking.

‘‘(B) EXCEPTION WHERE INADEQUATE COURSEOF ACTION, ETC.—An area shall not be des-ignated under subparagraph (A) if the Sec-retary of Housing and Urban Developmentdetermines that the course of action de-scribed in subsection (d)(2) with respect tosuch area is inadequate.

‘‘(4) LIMITATION ON DESIGNATIONS.—‘‘(A) PUBLICATION OF REGULATIONS.—The

Secretary of Housing and Urban Develop-ment shall prescribe by regulation no laterthan 4 months after the date of the enact-ment of this section, after consultation withthe officials described in paragraph (1)(B)—

‘‘(i) the procedures for nominating an areaunder paragraph (1)(A),

‘‘(ii) the parameters relating to the sizeand population characteristics of a renewalcommunity, and

‘‘(iii) the manner in which nominated areaswill be evaluated based on the criteria speci-fied in subsection (d).

‘‘(B) TIME LIMITATIONS.—The Secretary ofHousing and Urban Development may des-ignate nominated areas as renewal commu-nities only during the 24-month period begin-ning on the first day of the first month fol-lowing the month in which the regulationsdescribed in subparagraph (A) are prescribed.

‘‘(C) PROCEDURAL RULES.—The Secretary ofHousing and Urban Development shall notmake any designation of a nominated area asa renewal community under paragraph (2)unless—

‘‘(i) the local governments and the Statesin which the nominated area is located havethe authority—


CONGRESSIONAL RECORD — SENATES6712 July 13, 2000‘‘(I) to nominate such area for designation

as a renewal community,‘‘(II) to make the State and local commit-

ments described in subsection (d), and‘‘(III) to provide assurances satisfactory to

the Secretary of Housing and Urban Develop-ment that such commitments will be ful-filled,

‘‘(ii) a nomination regarding such area issubmitted in such a manner and in suchform, and contains such information, as theSecretary of Housing and Urban Develop-ment shall by regulation prescribe, and

‘‘(iii) the Secretary of Housing and UrbanDevelopment determines that any informa-tion furnished is reasonably accurate.

‘‘(5) NOMINATION PROCESS FOR INDIAN RES-ERVATIONS.—For purposes of this subchapter,in the case of a nominated area on an Indianreservation, the reservation governing body(as determined by the Secretary of the Inte-rior) shall be treated as being both the Stateand local governments with respect to sucharea.

‘‘(b) PERIOD FOR WHICH DESIGNATION IS INEFFECT.—

‘‘(1) IN GENERAL.—Any designation of anarea as a renewal community shall remain ineffect during the period beginning on Janu-ary 1, 2001, and ending on the earliest of—

‘‘(A) December 31, 2009,‘‘(B) the termination date designated by

the State and local governments in theirnomination, or

‘‘(C) the date the Secretary of Housing andUrban Development revokes such designa-tion.

‘‘(2) REVOCATION OF DESIGNATION.—The Sec-retary of Housing and Urban Developmentmay revoke the designation under this sec-tion of an area if such Secretary determinesthat the local government or the State inwhich the area is located—

‘‘(A) has modified the boundaries of thearea, or

‘‘(B) is not complying substantially with,or fails to make progress in achieving, theState or local commitments, respectively,described in subsection (d).

‘‘(c) AREA AND ELIGIBILITY REQUIRE-MENTS.—

‘‘(1) IN GENERAL.—The Secretary of Hous-ing and Urban Development may designate anominated area as a renewal communityunder subsection (a) only if the area meetsthe requirements of paragraphs (2) and (3) ofthis subsection.

‘‘(2) AREA REQUIREMENTS.—A nominatedarea meets the requirements of this para-graph if—

‘‘(A) the area is within the jurisdiction ofone or more local governments,

‘‘(B) the boundary of the area is contin-uous, and

‘‘(C) the area—‘‘(i) has a population, of at least—‘‘(I) 4,000 if any portion of such area (other

than a rural area described in subsection(a)(2)(B)(i)) is located within a metropolitanstatistical area (within the meaning of sec-tion 143(k)(2)(B)) which has a population of50,000 or greater, or

‘‘(II) 1,000 in any other case, or‘‘(ii) is entirely within an Indian reserva-

tion (as determined by the Secretary of theInterior).

‘‘(3) ELIGIBILITY REQUIREMENTS.—A nomi-nated area meets the requirements of thisparagraph if the State and the local govern-ments in which it is located certify (and theSecretary of Housing and Urban Develop-ment, after such review of supporting data ashe deems appropriate, accepts such certifi-cation) that—

‘‘(A) the area is one of pervasive poverty,unemployment, and general distress,

‘‘(B) the unemployment rate in the area, asdetermined by the most recent available

data, was at least 11⁄2 times the national un-employment rate for the period to whichsuch data relate,

‘‘(C) the poverty rate for each populationcensus tract within the nominated area is atleast 20 percent, and

‘‘(D) in the case of an urban area, at least70 percent of the households living in thearea have incomes below 80 percent of themedian income of households within the ju-risdiction of the local government (deter-mined in the same manner as under section119(b)(2) of the Housing and Community De-velopment Act of 1974).

‘‘(4) CONSIDERATION OF HIGH INCIDENCE OFCRIME.—The Secretary of Housing and UrbanDevelopment shall take into account, in se-lecting nominated areas for designation asrenewal communities under this section, theextent to which such areas have a high inci-dence of crime.

‘‘(5) CONSIDERATION OF COMMUNITIES IDENTI-FIED IN GAO STUDY.—The Secretary of Hous-ing and Urban Development shall take intoaccount, in selecting nominated areas fordesignation as renewal communities underthis section, if the area has census tractsidentified in the May 12, 1998, report of theGovernment Accounting Office regarding theidentification of economically distressedareas.

‘‘(d) REQUIRED STATE AND LOCAL COMMIT-MENTS.—

‘‘(1) IN GENERAL.—The Secretary of Hous-ing and Urban Development may designateany nominated area as a renewal communityunder subsection (a) only if—

‘‘(A) the local government and the State inwhich the area is located agree in writingthat, during any period during which thearea is a renewal community, such govern-ments will follow a specified course of actionwhich meets the requirements of paragraph(2) and is designed to reduce the various bur-dens borne by employers or employees insuch area, and

‘‘(B) the economic growth promotion re-quirements of paragraph (3) are met.

‘‘(2) COURSE OF ACTION.—‘‘(A) IN GENERAL.—A course of action meets

the requirements of this paragraph if suchcourse of action is a written document,signed by a State (or local government) andneighborhood organizations, which evidencesa partnership between such State or govern-ment and community-based organizationsand which commits each signatory to spe-cific and measurable goals, actions, andtimetables. Such course of action shall in-clude at least 4 of the following:

‘‘(i) A reduction of tax rates or fees apply-ing within the renewal community.

‘‘(ii) An increase in the level of efficiencyof local services within the renewal commu-nity.

‘‘(iii) Crime reduction strategies, such ascrime prevention (including the provision ofsuch services by nongovernmental entities).

‘‘(iv) Actions to reduce, remove, simplify,or streamline governmental requirementsapplying within the renewal community.

‘‘(v) Involvement in the program by pri-vate entities, organizations, neighborhoodorganizations, and community groups, par-ticularly those in the renewal community,including a commitment from such privateentities to provide jobs and job training for,and technical, financial, or other assistanceto, employers, employees, and residents fromthe renewal community.

‘‘(vi) The gift (or sale at below fair marketvalue) of surplus real property (such as land,homes, and commercial or industrial struc-tures) in the renewal community to neigh-borhood organizations, community develop-ment corporations, or private companies.

‘‘(B) RECOGNITION OF PAST EFFORTS.—Forpurposes of this section, in evaluating the

course of action agreed to by any State orlocal government, the Secretary of Housingand Urban Development shall take into ac-count the past efforts of such State or localgovernment in reducing the various burdensborne by employers and employees in thearea involved.

‘‘(3) ECONOMIC GROWTH PROMOTION REQUIRE-MENTS.—The economic growth promotion re-quirements of this paragraph are met withrespect to a nominated area if the local gov-ernment and the State in which such area islocated certify in writing that such govern-ment and State (respectively) have repealed,will not enforce, or will reduce within thearea at least 4 of the following if such areais designated as a renewal community:

‘‘(A) Licensing requirements for occupa-tions that do not ordinarily require a profes-sional degree.

‘‘(B) Zoning restrictions on home-basedbusinesses which do not create a public nui-sance.

‘‘(C) Permit requirements for street ven-dors who do not create a public nuisance.

‘‘(D) Zoning or other restrictions that im-pede the formation of schools or child carecenters.

‘‘(E) Franchises or other restrictions oncompetition for businesses providing publicservices, including taxicabs, jitneys, cabletelevision, or trash hauling.This paragraph shall not apply to the extentthat such regulation of businesses and occu-pations is necessary for and well-tailored tothe protection of health and safety.

‘‘(e) COORDINATION WITH TREATMENT OF EM-POWERMENT ZONES AND ENTERPRISE COMMU-NITIES.—

‘‘(1) IN GENERAL.—For purposes of thistitle, the designation under section 1391 ofany area as an empowerment zone or enter-prise community shall cease to be in effectas of the date that any portion of such areais designated as a renewal community.

‘‘(2) SPECIAL RULE FOR WAGE CREDIT.—Forpurposes of section 1400H (relating to re-newal community employment credit)—

‘‘(A) there shall not be taken into accountwages taken into account under section 1396(without regard to section 1400H), and

‘‘(B) the $15,000 amount in section 1396(c)shall (in applying section 1400H) be reducedfor any calendar year by the amount ofwages paid or incurred during such yearwhich are taken into account in determiningthe credit under section 1396 (without regardto section 1400H).

‘‘(f) DEFINITIONS AND SPECIAL RULES.—Forpurposes of this subchapter—

‘‘(1) GOVERNMENTS.—If more than one gov-ernment seeks to nominate an area as a re-newal community, any reference to, or re-quirement of, this section shall apply to allsuch governments.

‘‘(2) LOCAL GOVERNMENT.—The term ‘localgovernment’ means—

‘‘(A) any county, city, town, township, par-ish, village, or other general purpose polit-ical subdivision of a State, and

‘‘(B) any combination of political subdivi-sions described in subparagraph (A) recog-nized by the Secretary of Housing and UrbanDevelopment.

‘‘(3) STATE.—The term ‘State’ means theseveral States.

‘‘(4) APPLICATION OF RULES RELATING TOCENSUS TRACTS.—The rules of sections1392(b)(4) shall apply.

‘‘(5) CENSUS DATA.—Population and povertyrate shall be determined by using 1990 censusdata.‘‘PART II—RENEWAL COMMUNITY CAP-

ITAL GAIN; RENEWAL COMMUNITY BUSI-NESS

‘‘Sec. 1400F. Renewal community capitalgain.


CONGRESSIONAL RECORD — SENATE S6713July 13, 2000‘‘Sec. 1400G. Renewal community business

defined.‘‘SEC. 1400F. RENEWAL COMMUNITY CAPITAL

GAIN.

‘‘(a) GENERAL RULE.—Gross income doesnot include any qualified capital gain recog-nized on the sale or exchange of a qualifiedcommunity asset held for more than 5 years.

‘‘(b) QUALIFIED COMMUNITY ASSET.—Forpurposes of this section—

‘‘(1) IN GENERAL.—The term ‘qualified com-munity asset’ means—

‘‘(A) any qualified community stock,‘‘(B) any qualified community partnership

interest, and‘‘(C) any qualified community business

property.‘‘(2) QUALIFIED COMMUNITY STOCK.—‘‘(A) IN GENERAL.—Except as provided in

subparagraph (B), the term ‘qualified com-munity stock’ means any stock in a domes-tic corporation if—

‘‘(i) such stock is acquired by the taxpayerafter December 31, 2000, and before January1, 2010, at its original issue (directly orthrough an underwriter) from the corpora-tion solely in exchange for cash,

‘‘(ii) as of the time such stock was issued,such corporation was a renewal communitybusiness (or, in the case of a new corpora-tion, such corporation was being organizedfor purposes of being a renewal communitybusiness), and

‘‘(iii) during substantially all of the tax-payer’s holding period for such stock, suchcorporation qualified as a renewal commu-nity business.

‘‘(B) REDEMPTIONS.—A rule similar to therule of section 1202(c)(3) shall apply for pur-poses of this paragraph.

‘‘(3) QUALIFIED COMMUNITY PARTNERSHIP IN-TEREST.—The term ‘qualified communitypartnership interest’ means any capital orprofits interest in a domestic partnershipif—

‘‘(A) such interest is acquired by the tax-payer after December 31, 2000, and beforeJanuary 1, 2010, from the partnership solelyin exchange for cash,

‘‘(B) as of the time such interest was ac-quired, such partnership was a renewal com-munity business (or, in the case of a newpartnership, such partnership was being or-ganized for purposes of being a renewal com-munity business), and

‘‘(C) during substantially all of the tax-payer’s holding period for such interest, suchpartnership qualified as a renewal commu-nity business.A rule similar to the rule of paragraph (2)(B)shall apply for purposes of this paragraph.

‘‘(4) QUALIFIED COMMUNITY BUSINESS PROP-ERTY.—

‘‘(A) IN GENERAL.—The term ‘qualifiedcommunity business property’ means tan-gible property if—

‘‘(i) such property was acquired by the tax-payer by purchase (as defined in section179(d)(2)) after December 31, 2000, and beforeJanuary 1, 2010,

‘‘(ii) the original use of such property inthe renewal community commences with thetaxpayer, and

‘‘(iii) during substantially all of the tax-payer’s holding period for such property,substantially all of the use of such propertywas in a renewal community business of thetaxpayer.

‘‘(B) SPECIAL RULE FOR SUBSTANTIAL IM-PROVEMENTS.—The requirements of clauses(i) and (ii) of subparagraph (A) shall be treat-ed as satisfied with respect to—

‘‘(i) property which is substantially im-proved by the taxpayer before January 1,2010, and

‘‘(ii) any land on which such property is lo-cated.

The determination of whether a property issubstantially improved shall be made underclause (ii) of section 1400B(b)(4)(B), exceptthat ‘December 31, 2000’ shall be substitutedfor ‘December 31, 1997’ in such clause.

‘‘(c) QUALIFIED CAPITAL GAIN.—For pur-poses of this section—

‘‘(1) IN GENERAL.—Except as otherwise pro-vided in this subsection, the term ‘qualifiedcapital gain‘ means any gain recognized onthe sale or exchange of—

‘‘(A) a capital asset, or‘‘(B) property used in the trade or business

(as defined in section 1231(b).‘‘(2) GAIN BEFORE 2001 OR AFTER 2014 NOT

QUALIFIED.—The term ‘qualified capital gain’shall not include any gain attributable to pe-riods before January 1, 2001, or after Decem-ber 31, 2014.

‘‘(3) CERTAIN RULES TO APPLY.—Rules simi-lar to the rules of paragraphs (3), (4), and (5)of section 1400B(e) shall apply for purposes ofthis subsection.

‘‘(d) CERTAIN RULES TO APPLY.—For pur-poses of this section, rules similar to therules of paragraphs (5), (6), and (7) of sub-section (b), and subsections (f ) and (g), ofsection 1400B shall apply; except that forsuch purposes section 1400B(g)(2) shall be ap-plied by substituting ‘January 1, 2001’ for‘January 1, 1998’ and ‘December 31, 2014’ for‘December 31, 2007’.‘‘SEC. 1400G. RENEWAL COMMUNITY BUSINESS

DEFINED.‘‘For purposes of this subchapter, the term

‘renewal community business’ means any en-tity or proprietorship which would be aqualified business entity or qualified propri-etorship under section 1397C if references torenewal communities were substituted forreferences to empowerment zones in suchsection.

‘‘PART III—ADDITIONAL INCENTIVES‘‘Sec. 1400H. Renewal community employ-

ment credit.‘‘Sec. 1400I. Commercial revitalization de-

duction.‘‘Sec. 1400J. Increase in expensing under sec-

tion 179.‘‘SEC. 1400H. RENEWAL COMMUNITY EMPLOY-

MENT CREDIT.‘‘(a) IN GENERAL.—Subject to the modifica-

tion in subsection (b), a renewal communityshall be treated as an empowerment zone forpurposes of section 1396.

‘‘(b) MODIFICATION.—In applying section1396 with respect to renewal communities,the applicable percentage shall be—

‘‘(1) 15 percent in the case of calendar years2001, 2002, 2003, or 2004, and

‘‘(2) 20 percent in the case of calendar yearsafter 2004 and before 2010.‘‘SEC. 1400I. COMMERCIAL REVITALIZATION DE-

DUCTION.‘‘(a) GENERAL RULE.—At the election of the

taxpayer, either—‘‘(1) one-half of any qualified revitalization

expenditures chargeable to capital accountwith respect to any qualified revitalizationbuilding shall be allowable as a deduction forthe taxable year in which the building isplaced in service, or

‘‘(2) a deduction for all such expendituresshall be allowable ratably over the 120-month period beginning with the month inwhich the building is placed in service.

‘‘(b) QUALIFIED REVITALIZATION BUILDINGSAND EXPENDITURES.—For purposes of thissection—

‘‘(1) QUALIFIED REVITALIZATION BUILDING.—The term ‘qualified revitalization building’means any building (and its structural com-ponents) if—

‘‘(A) such building is located in a renewalcommunity and is placed in service after De-cember 31, 2000,

‘‘(B) a commercial revitalization deductionamount is allocated to the building undersubsection (d), and

‘‘(C) depreciation is allowable with respectto the building (without regard to this sec-tion).

‘‘(2) QUALIFIED REVITALIZATION EXPENDI-TURE.—

‘‘(A) IN GENERAL.—The term ‘qualified revi-talization expenditure’ means any amountproperly chargeable to capital account—

‘‘(i) for property for which depreciation isallowable under section 168 (without regardto this section) and which is—

‘‘(I) nonresidential real property, or‘‘(II) an addition or improvement to prop-

erty described in subclause (I),‘‘(ii) in connection with the construction of

any qualified revitalization building whichwas not previously placed in service or inconnection with the substantial rehabilita-tion (within the meaning of section47(c)(1)(C)) of a building which was placed inservice before the beginning of such rehabili-tation, and

‘‘(iii) for land (including land which isfunctionally related to such property andsubordinate thereto).

‘‘(B) DOLLAR LIMITATION.—The aggregateamount which may be treated as qualifiedrevitalization expenditures with respect toany qualified revitalization building for anytaxable year shall not exceed the excess of—

‘‘(i) $10,000,000, reduced by‘‘(ii) any such expenditures with respect to

the building taken into account by the tax-payer or any predecessor in determining theamount of the deduction under this sectionfor all preceding taxable years.

‘‘(C) CERTAIN EXPENDITURES NOT IN-CLUDED.—The term ‘qualified revitalizationexpenditure’ does not include—

‘‘(i) ACQUISITION COSTS.—The costs of ac-quiring any building or interest therein andany land in connection with such building tothe extent that such costs exceed 30 percentof the qualified revitalization expendituresdetermined without regard to this clause.

‘‘(ii) CREDITS.—Any expenditure which thetaxpayer may take into account in com-puting any credit allowable under this titleunless the taxpayer elects to take the ex-penditure into account only for purposes ofthis section.

‘‘(c) LIMITATION ON AGGREGATE EXPENDI-TURES ALLOWABLE WITH RESPECT TO BUILD-INGS LOCATED IN A STATE.—

‘‘(1) IN GENERAL.—The aggregate qualifiedrevitalization expenditures chargeable tocapital account with respect to any buildingwhich may be taken into account in deter-mining the deduction under this section withrespect to such building shall not exceed thecommercial revitalization expenditureamount allocated to such building under thissubsection by the commercial revitalizationagency. Such allocation shall be made at thesame time and in the same manner as underparagraphs (1) and (7) of section 42(h).

‘‘(2) COMMERCIAL REVITALIZATION EXPENDI-TURE AMOUNT FOR AGENCIES.—

‘‘(A) IN GENERAL.—The aggregate commer-cial revitalization expenditure amountwhich a commercial revitalization agencymay allocate for any calendar year is theamount of the State commercial revitaliza-tion expenditure ceiling determined underthis paragraph for such calendar year forsuch agency.

‘‘(B) STATE COMMERCIAL REVITALIZATION EX-PENDITURE CEILING.—The State commercialrevitalization expenditure ceiling applicableto any State—

‘‘(i) for each calendar year after 2000 andbefore 2010 is $12,000,000 for each renewalcommunity in the State, and

‘‘(ii) for each calendar year thereafter iszero.


CONGRESSIONAL RECORD — SENATES6714 July 13, 2000‘‘(C) COMMERCIAL REVITALIZATION AGENCY.—

For purposes of this section, the term ‘com-mercial revitalization agency’ means anyagency authorized by a State to carry outthis section.

‘‘(d) RESPONSIBILITIES OF COMMERCIAL RE-VITALIZATION AGENCIES.—

‘‘(1) PLANS FOR ALLOCATION.—Notwith-standing any other provision of this section,the commercial revitalization deductionamount with respect to any building shall bezero unless—

‘‘(A) such amount was allocated pursuantto a qualified allocation plan of the commer-cial revitalization agency which is approved(in accordance with rules similar to the rulesof section 147(f)(2) (other than subparagraph(B)(ii) thereof)) by the governmental unit ofwhich such agency is a part, and

‘‘(B) such agency notifies the chief execu-tive officer (or its equivalent) of the local ju-risdiction within which the building is lo-cated of such allocation and provides suchindividual a reasonable opportunity to com-ment on the allocation.

‘‘(2) QUALIFIED ALLOCATION PLAN.—For pur-poses of this subsection, the term ‘qualifiedallocation plan’ means any plan—

‘‘(A) which sets forth selection criteria tobe used to determine priorities of the com-mercial revitalization agency which are ap-propriate to local conditions,

‘‘(B) which considers—‘‘(i) the degree to which a project contrib-

utes to the implementation of a strategicplan that is devised for a renewal communitythrough a citizen participation process,

‘‘(ii) the amount of any increase in perma-nent, full-time employment by reason of anyproject, and

‘‘(iii) the active involvement of residentsand nonprofit groups within the renewalcommunity, and

‘‘(C) which provides a procedure that theagency (or its agent) will follow in moni-toring compliance with this section.

‘‘(e) SPECIAL RULES.—‘‘(1) DEDUCTION IN LIEU OF DEPRECIATION.—

The deduction provided by this section forqualified revitalization expenditures shall—

‘‘(A) with respect to the deduction deter-mined under subsection (a)(1), be in lieu ofany depreciation deduction otherwise allow-able on account of 1⁄2 of such expenditures,and

‘‘(B) with respect to the deduction deter-mined under subsection (a)(2), be in lieu ofany depreciation deduction otherwise allow-able on account of all of such expenditures.

‘‘(2) BASIS ADJUSTMENT, ETC.—For purposesof sections 1016 and 1250, the deduction underthis section shall be treated in the samemanner as a depreciation deduction.

‘‘(3) SUBSTANTIAL REHABILITATIONS TREAT-ED AS SEPARATE BUILDINGS.—A substantialrehabilitation (within the meaning of sec-tion 47(c)(1)(C)) of a building shall be treatedas a separate building for purposes of sub-section (a).

‘‘(4) CLARIFICATION OF ALLOWANCE OF DE-DUCTION UNDER MINIMUM TAX.—Notwith-standing section 56(a)(1), the deduction underthis section shall be allowed in determiningalternative minimum taxable income undersection 55.

‘‘(f) REGULATIONS.—For purposes of thissection, the Secretary shall, by regulations,provide for the application of rules similarto the rules of section 49 and subsections (a)and (b) of section 50.

‘‘(g) TERMINATION.—This section shall notapply to any building placed in service afterDecember 31, 2009.‘‘SEC. 1400J. INCREASE IN EXPENSING UNDER

SECTION 179.‘‘(a) IN GENERAL.—For purposes of section

1397A—

‘‘(1) a renewal community shall be treatedas an empowerment zone,

‘‘(2) a renewal community business shall betreated as an empowerment zone business,and

‘‘(3) qualified renewal property shall betreated as enterprise zone property.

‘‘(b) QUALIFIED RENEWAL PROPERTY.—Forpurposes of this section—

‘‘(1) IN GENERAL.—The term ‘qualified re-newal property’ means any property towhich section 168 applies (or would apply butfor section 179) if—

‘‘(A) such property was acquired by thetaxpayer by purchase (as defined in section179(d)(2)) after December 31, 2000, and beforeJanuary 1, 2010, and

‘‘(B) such property would be qualified zoneproperty (as defined in section 1397D) if ref-erences to renewal communities were sub-stituted for references to empowermentzones in section 1397D.

‘‘(2) CERTAIN RULES TO APPLY.—The rules ofsubsections (a)(2) and (b) of section 1397Dshall apply for purposes of this section.’’.

(b) EXCEPTION FOR COMMERCIAL REVITAL-IZATION DEDUCTION FROM PASSIVE LOSSRULES.—

(1) Paragraph (3) of section 469(i) is amend-ed by redesignating subparagraphs (C), (D),and (E) as subparagraphs (D), (E), and (F), re-spectively, and by inserting after subpara-graph (B) the following new subparagraph:

‘‘(C) EXCEPTION FOR COMMERCIAL REVITAL-IZATION DEDUCTION.—Subparagraph (A) shallnot apply to any portion of the passive activ-ity loss for any taxable year which is attrib-utable to the commercial revitalization de-duction under section 1400I.’’.

(2) Subparagraph (E) of section 469(i)(3), asredesignated by subparagraph (A), is amend-ed to read as follows:

‘‘(E) ORDERING RULES TO REFLECT EXCEP-TIONS AND SEPARATE PHASE-OUTS.—If subpara-graph (B), (C), or (D) applies for a taxableyear, paragraph (1) shall be applied—

‘‘(i) first to the portion of the passive ac-tivity loss to which subparagraph (C) doesnot apply,

‘‘(ii) second to the portion of the passiveactivity credit to which subparagraph (B) or(D) does not apply,

‘‘(iii) third to the portion of such credit towhich subparagraph (B) applies,

‘‘(iv) fourth to the portion of such loss towhich subparagraph (C) applies, and

‘‘(v) then to the portion of such credit towhich subparagraph (D) applies.’’.

(3)(A) Subparagraph (B) of section 469(i)(6)is amended by striking ‘‘or’’ at the end ofclause (i), by striking the period at the endof clause (ii) and inserting ‘‘, or’’, and byadding at the end the following new clause:

‘‘(iii) any deduction under section 1400I (re-lating to commercial revitalization deduc-tion).’’.

(B) The heading for such subparagraph (B)is amended by striking ‘‘OR REHABILITATIONCREDIT’’ and inserting ‘‘, REHABILITATIONCREDIT, OR COMMERCIAL REVITALIZATION DE-DUCTION’’.

(c) CLERICAL AMENDMENT.—The table ofsubchapters for chapter 1 is amended by add-ing at the end the following new item:

‘‘Subchapter X. Renewal Communities.’’.

SEC. 102. EXTENSION OF EXPENSING OF ENVI-RONMENTAL REMEDIATION COSTSTO RENEWAL COMMUNITIES; EXTEN-SION OF TERMINATION DATE FORRENEWAL COMMUNITIES AND EM-POWERMENT ZONES.

(a) EXTENSION.—(1) IN GENERAL.—Subparagraph (A) of sec-

tion 198(c)(2) (defining targeted area) isamended by striking ‘‘and’’ at the end ofclause (iii), by striking the period at the endof clause (iv) and inserting

‘‘, and’’, and by adding at the end the fol-lowing new clause:

‘‘(v) any renewal community (as defined insection 1400E).’’.

(2) EFFECTIVE DATE.—The amendmentmade by paragraph (1) shall apply to expend-itures paid or incurred after December 31,2000.

(b) EXTENSION OF TERMINATION DATE.—Sub-section (h) of section 198 is amended by in-serting before the period ‘‘(December 31, 2009,in the case of an empowerment zone or re-newal community)’’.SEC. 103. WORK OPPORTUNITY CREDIT FOR HIR-

ING YOUTH RESIDING IN RENEWALCOMMUNITIES.

(a) HIGH-RISK YOUTH.—Subparagraphs(A)(ii) and (B) of section 51(d)(5) are eachamended by striking ‘‘empowerment zone orenterprise community’’ and inserting ‘‘em-powerment zone, enterprise community, orrenewal community’’.

(b) QUALIFIED SUMMER YOUTH EMPLOYEE.—Clause (iv) of section 51(d)(7)(A) is amendedby striking ‘‘empowerment zone or enter-prise community’’ and inserting ‘‘empower-ment zone, enterprise community, or re-newal community’’.

(c) HEADINGS.—Paragraphs (5)(B) and (7)(C)of section 51(d) are each amended by insert-ing ‘‘OR COMMUNITY’’ in the heading after‘‘ZONE’’.

(d) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to individ-uals who begin work for the employer afterDecember 31, 2000.SEC. 104. EVALUATION AND REPORTING RE-

QUIREMENTS.Not later than the close of the fourth cal-

endar year after the year in which the Sec-retary of Housing and Urban Developmentfirst designates an area as a renewal commu-nity under section 1400E of the Internal Rev-enue Code of 1986, and at the close of eachfourth calendar year thereafter, such Sec-retary shall prepare and submit to the Con-gress a report on the effects of such designa-tions in stimulating the creation of new jobs,particularly for disadvantaged workers andlong-term unemployed individuals, and pro-moting the revitalization of economicallydistressed areas.SEC. 105. EXCLUSION OF EFFECTS OF THIS TITLE

FROM PAYGO SCORECARD.Upon the enactment of this title, the Di-

rector of the Office of Management andBudget shall not make any estimates ofchanges in receipts under section 252(d) ofthe Balanced Budget and Emergency DeficitControl Act of 1985 resulting from the enact-ment of this title.

TITLE II—NEW MILLENNIUMCLASSROOMS

SEC. 201. CREDIT FOR COMPUTER DONATIONS TOSCHOOLS, SENIOR CENTERS, PUBLICLIBRARIES, AND OTHER TRAININGCENTERS.

(a) IN GENERAL.—Subpart D of part IV ofsubchapter A of chapter 1 (relating to busi-ness related credits) is amended by adding atthe end the following new section:‘‘SEC. 48D. CREDIT FOR COMPUTER DONATIONS

TO SCHOOLS, SENIOR CENTERS,PUBLIC LIBRARIES, AND OTHERTRAINING CENTERS.

‘‘(a) GENERAL RULE.—For purposes of sec-tion 38, the computer donation credit deter-mined under this section is an amount equalto 50 percent of the qualified computer con-tributions made by the taxpayer during thetaxable year as determined after the applica-tion of section 170(e)(6)(A) to any entity lo-cated in—

‘‘(1) a renewal community designatedunder section 1400E,

‘‘(2) an empowerment zone or enterprisecommunity designated under section 1391,


CONGRESSIONAL RECORD — SENATE S6715July 13, 2000‘‘(3) an Indian reservation (as defined in

section 168(j)(6)), or‘‘(4) a low-income community (as defined

in subsection (c).‘‘(b) QUALIFIED COMPUTER CONTRIBUTION.—

For purposes of this section, the term ‘quali-fied computer contribution’ has the meaninggiven the term ‘qualified elementary or sec-ondary educational contribution’ by section170(e)(6)(B), except that—

‘‘(1) clause (ii) thereof shall be applied—‘‘(A) by substituting ‘3 years’ for ‘2 years’,‘‘(B) by inserting ‘or reacquired’ after ‘ac-

quired’, and‘‘(C) by inserting ‘for the taxpayer’s own

use’ after ‘constructed by the taxpayer’,‘‘(2) clause (iii) thereof shall be applied by

inserting ‘, the person from whom the donorreacquires the property,’ after ‘the donor’,

‘‘(3) such term shall include the contribu-tion of a computer (as defined in section168(i)(2)(B)(ii)) only if computer software (asdefined in section 197(e)(3)(B)) that serves asa computer operating system has been law-fully installed in such computer,

‘‘(4) notwithstanding clauses (i) and (iv) ofsection 170(e)(6)(B), such term shall includethe contribution of computer technology orequipment to—

‘‘(A) multipurpose senior centers (as de-fined in section 102(35) of the Older Ameri-cans Act of 1965 (42 U.S.C. 3002(35), as in ef-fect on the date of the enactment of theAmerican Community Renewal and NewMarkets Empowerment Act) described insection 501(c)(3) and exempt from tax undersection 501(a) to be used by individuals whohave attained 60 years of age to improve jobskills in computers,

‘‘(B) a public library (within the meaningof section 213(2)(A) of the Library Servicesand Technology Act (20 U.S.C. 9122(2)(A), asin effect on the date of the enactment of theAmerican Community Renewal and NewMarkets Empowerment Act) established andmaintained by an entity described in section170(c)(1), or

‘‘(C) an organization exempt from taxunder section 501(a) which provides employ-ment, vocational, and job-training servicesto individuals with barriers to employment,including welfare recipients and individualswith disabilities, and

‘‘(5) such term shall only include contribu-tions which meet the minimum standardsprescribed by the Secretary by regulation,after consultation, at the option of the Sec-retary, with the National Telecommuni-cations and Information Agency and anyother Federal agency with expertise in com-puter technology.

‘‘(c) LOW-INCOME COMMUNITY.—For pur-poses of this section—

‘‘(1) IN GENERAL.—The term ‘low-incomecommunity’ means any population censustract if—

‘‘(A)(i) the poverty rate for such tract is atleast 20 percent, or

‘‘(ii)(I) in the case of a tract not locatedwithin a metropolitan area, the median fam-ily income for such tract does not exceed 80percent of statewide median family income,or

‘‘(II) in the case of a tract located within ametropolitan area, the median family in-come for such tract does not exceed 80 per-cent of the greater of statewide median fam-ily income or the metropolitan area medianfamily income, and

‘‘(B) the unemployment rate for such tract,as determined by the most recent availabledata, was at least 11⁄2 times the national un-employment rate for the period to whichsuch data relate.

‘‘(2) AREAS NOT WITHIN CENSUS TRACTS.—Inthe case of an area which is not tracted forpopulation census tracts, the equivalentcounty divisions (as defined by the Bureau of

the Census for purposes of defining povertyareas) shall be used for purposes of deter-mining poverty rates, median family income,and unemployment rates.

‘‘(d) CERTAIN RULES MADE APPLICABLE.—For purposes of this section, rules similar tothe rules of paragraphs (1) and (2) of section41(f) shall apply.

‘‘(e) TERMINATION.—This section shall notapply to taxable years beginning after De-cember 31, 2009.’’.

(b) CURRENT YEAR BUSINESS CREDIT CAL-CULATION.—Section 38(b) (relating to currentyear business credit) is amended by striking‘‘plus’’ at the end of paragraph (11), by strik-ing the period at the end of paragraph (12)and inserting ‘‘, plus’’, and by adding at theend the following:

‘‘(13) the computer donation credit deter-mined under section 45D(a).’’.

(c) DISALLOWANCE OF DEDUCTION BYAMOUNT OF CREDIT.—Section 280C (relatingto certain expenses for which credits are al-lowable) is amended by adding at the end thefollowing:

‘‘(d) CREDIT FOR COMPUTER DONATIONS.—Nodeduction shall be allowed for that portion ofthe qualified computer contributions (as de-fined in section 45D(b)) made during the tax-able year that is equal to the amount ofcredit determined for the taxable year undersection 45D(a). In the case of a corporationwhich is a member of a controlled group ofcorporations (within the meaning of section52(a)) or a trade or business which is treatedas being under common control with othertrades or businesses (within the meaning ofsection 52(b)), this subsection shall be ap-plied under rules prescribed by the Secretarysimilar to the rules applicable under sub-sections (a) and (b) of section 52.’’.

(d) LIMITATION ON CARRYBACK.—Subsection(d) of section 39 (relating to carryback andcarryforward of unused credits) is amendedby adding at the end the following:

‘‘(9) NO CARRYBACK OF COMPUTER DONATIONCREDIT BEFORE EFFECTIVE DATE.—No amountof unused business credit available undersection 45D may be carried back to a taxableyear beginning on or before the date of theenactment of this paragraph.’’.

(e) CLERICAL AMENDMENT.—The table ofsections for subpart D of part IV of sub-chapter A of chapter 1 is amended by insert-ing after the item relating to section 45C thefollowing:

‘‘Sec. 45D. Credit for computer donations toschools, senior centers, publiclibraries, and other trainingcenters.’’.

(f) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to contribu-tions made in taxable years beginning afterDecember 31, 2000.TITLE III—EXPANSION AND EXTENSION

OF EMPOWERMENT ZONE TAX INCEN-TIVES

SEC. 301. ADDITIONAL EMPOWERMENT ZONEDESIGNATIONS.

Section 1391 is amended by adding at theend the following new subsection:

‘‘(h) ADDITIONAL DESIGNATIONS PER-MITTED.—

‘‘(1) IN GENERAL.—In addition to the areasdesignated under subsections (a) and (g), theappropriate Secretaries may designate in theaggregate an additional 9 nominated areas asempowerment zones under this section, sub-ject to the availability of eligible nominatedareas. Of that number, not more than 7 maybe designated in urban areas and not morethan 2 may be designated in rural areas.

‘‘(2) PERIOD DESIGNATIONS MAY BE MADE ANDTAKE EFFECT.—A designation may be madeunder this subsection after the date of theenactment of this subsection and before Jan-uary 1, 2001. Subject to subparagraphs (B)

and (C) of subsection (d)(1), such designa-tions shall remain in effect during the periodbeginning on January 1, 2001, and ending onDecember 31, 2009.

‘‘(3) MODIFICATIONS TO ELIGIBILITY CRI-TERIA, ETC.—The rules of subsection (g)(3)shall apply to designations under this sub-section.

‘‘(4) EMPOWERMENT ZONES WHICH BECOME RE-NEWAL COMMUNITIES.—The number of areaswhich may be designated as empowermentzones under this subsection shall be in-creased by 1 for each area which ceases to bean empowerment zone by reason of section1400E(e). Each additional area designated byreason of the preceding sentence shall havethe same urban or rural character as thearea it is replacing.’’.SEC. 302. EXTENSION OF ENTERPRISE ZONE

TREATMENT THROUGH 2009.Subparagraph (A) of section 1391(d)(1) (re-

lating to period for which designation is ineffect) is amended to read as follows:

‘‘(A) December 31, 2009,’’.SEC. 303. 20 PERCENT EMPLOYMENT CREDIT FOR

ALL EMPOWERMENT ZONES.(a) 20 PERCENT CREDIT.—Subsection (b) of

section 1396 (relating to empowerment zoneemployment credit) is amended to read asfollows:

‘‘(b) APPLICABLE PERCENTAGE.—For pur-poses of this section, the applicable percent-age is 20 percent.’’.

(b) ALL EMPOWERMENT ZONES ELIGIBLE FORCREDIT.—Section 1396 is amended by strikingsubsection (e).

(c) CONFORMING AMENDMENT.—Subsection(d) of section 1400 is amended to read as fol-lows:

‘‘(d) SPECIAL RULE FOR APPLICATION OF EM-PLOYMENT CREDIT.—With respect to the DCZone, section 1396(d)(1)(B) (relating to em-powerment zone employment credit) shall beapplied by substituting ‘the District of Co-lumbia’ for ‘such empowerment zone’.’’.

(d) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to wagespaid or incurred after December 31, 2000.SEC. 304. INCREASED EXPENSING UNDER SEC-

TION 179.(a) IN GENERAL.—Subparagraph (A) of sec-

tion 1397A(a)(1) is amended by striking‘‘$20,000’’ and inserting ‘‘$35,000’’.

(b) EXPENSING FOR PROPERTY USED IN DE-VELOPABLE SITES.—Section 1397A is amendedby striking subsection (c).

(c) EFFECTIVE DATE.—The amendmentmade by subsection (a) shall apply to taxableyears beginning after December 31, 2000.SEC. 305. HIGHER LIMITS ON TAX-EXEMPT EM-

POWERMENT ZONE FACILITYBONDS.

(a) IN GENERAL.—Paragraph (3) of section1394(f) (relating to bonds for empowermentzones designated under section 1391(g)) isamended to read as follows:

‘‘(3) EMPOWERMENT ZONE FACILITY BOND.—For purposes of this subsection, the term‘empowerment zone facility bond’ means anybond which would be described in subsection(a) if only empowerment zones were takeninto account under sections 1397C and1397D.’’ .

(b) CONFORMING AMENDMENTS.—(1) Subsection (f) of section 1394 is amended

by striking ‘‘new empowerment zone facilitybond’’ each place it appears and inserting‘‘empowerment zone facility bond’’.

(2) The heading for such subsection isamended to read as follows:

‘‘(f) BONDS FOR EMPOWERMENT ZONES.—’’.(3) Paragraph (1) of section 1394(c) is

amended—(A) by striking ‘‘empowerment zone or’’ in

subparagraph (A), and(B) by striking ‘‘empowerment zones and’’

in subparagraph (B).


CONGRESSIONAL RECORD — SENATES6716 July 13, 2000(c) EFFECTIVE DATE.—The amendments

made by this section shall apply to obliga-tions issued after December 31, 2000.SEC. 306. NONRECOGNITION OF GAIN ON ROLL-

OVER OF EMPOWERMENT ZONE IN-VESTMENTS.

(a) IN GENERAL.—Part III of subchapter Uof chapter 1 is amended—

(1) by redesignating subpart C as subpartD,

(2) by redesignating sections 1397B and1397C as sections 1397C and 1397D, respec-tively, and

(3) by inserting after subpart B the fol-lowing new subpart:

‘‘Subpart C—Nonrecognition of Gain onRollover of Empowerment Zone Investments

‘‘Sec. 1397B. Nonrecognition of Gain on Roll-over of Empowerment Zone In-vestments.

‘‘SEC. 1397B. NONRECOGNITION OF GAIN ONROLLOVER OF EMPOWERMENTZONE INVESTMENTS.

‘‘(a) NONRECOGNITION OF GAIN.—In the caseof any sale of a qualified empowerment zoneasset held by the taxpayer for more than 1year and with respect to which such tax-payer elects the application of this section,gain from such sale shall be recognized onlyto the extent that the amount realized onsuch sale exceeds—

‘‘(1) the cost of any qualified empowermentzone asset (with respect to the same zone asthe asset sold) purchased by the taxpayerduring the 60-day period beginning on thedate of such sale, reduced by

‘‘(2) any portion of such cost previouslytaken into account under this section.This section shall apply only to gain whichis qualified capital gain.

‘‘(b) DEFINITIONS AND SPECIAL RULES.—Forpurposes of this section—

‘‘(1) QUALIFIED EMPOWERMENT ZONEASSET.—

‘‘(A) IN GENERAL.—The term ‘qualified em-powerment zone asset’ means any propertywhich would be a qualified community asset(as defined in section 1400F) if in section1400F—

‘‘(i) references to empowerment zones weresubstituted for references to renewal com-munities, and

‘‘(ii) references to enterprise zone busi-nesses (as defined in section 1397C) were sub-stituted for references to renewal commu-nity businesses.

‘‘(B) TREATMENT OF DC ZONE.—For termination of rollover with respect to

the District of Columbia Enterprise Zone forproperty acquired after December 31, 2002,see section 1400(f).

‘‘(2) QUALIFIED CAPITAL GAIN.—‘‘(A) IN GENERAL.—Except as otherwise pro-

vided in this paragraph, the term ‘qualifiedcapital gain‘ means any gain from the sale orexchange of—

‘‘(i) a capital asset, or‘‘(ii) property used in the trade or business

(as defined in section 1231(b)).‘‘(B) CERTAIN RULES TO APPLY.—Rules simi-

lar to the rules of paragraphs (3) and (4) ofsection 1400B(e) shall apply for purposes ofthis subsection.

‘‘(3) PURCHASE.—A taxpayer shall be treat-ed as having purchased any property if, butfor paragraph (4), the unadjusted basis ofsuch property in the hands of the taxpayerwould be its cost (within the meaning of sec-tion 1012).

‘‘(4) BASIS ADJUSTMENTS.—If gain from anysale is not recognized by reason of subsection(a), such gain shall be applied to reduce (inthe order acquired) the basis for determininggain or loss of any qualified empowermentzone asset which is purchased by the tax-payer during the 60-day period described insubsection (a). This paragraph shall notapply for purposes of section 1202.

‘‘(5) HOLDING PERIOD.—For purposes of de-termining whether the nonrecognition ofgain under subsection (a) applies to anyqualified empowerment zone asset which issold—

‘‘(A) the taxpayer’s holding period for suchasset and the asset referred to in subsection(a)(1) shall be determined without regard tosection 1223, and

‘‘(B) only the first year of the taxpayer’sholding period for the asset referred to insubsection (a)(1) shall be taken into accountfor purposes of paragraphs (2)(A)(iii), (3)(C),and (4)(A)(iii) of section 1400F(b).’’

(b) CONFORMING AMENDMENTS.—(1) Paragraph (23) of section 1016(a) is

amended—(A) by striking ‘‘or 1045’’ and inserting

‘‘1045, or 1397B’’, and(B) by striking ‘‘or 1045(b)(4)’’ and inserting

‘‘1045(b)(4), or 1397B(b)(4)’’.(2) Paragraph (15) of section 1223 is amend-

ed to read as follows:‘‘(15) Except for purposes of sections

1202(a)(2), 1202(c)(2)(A), 1400B(b), and 1400F(b),in determining the period for which the tax-payer has held property the acquisition ofwhich resulted under section 1045 or 1397B inthe nonrecognition of any part of the gainrealized on the sale of other property, thereshall be included the period for which suchother property has been held as of the date ofsuch sale.’’

(3) Paragraph (2) of section 1394(b) isamended—

(A) by striking ‘‘section 1397C’’ and insert-ing ‘‘section 1397D’’, and

(B) by striking ‘‘section 1397C(a)(2)’’ andinserting ‘‘section 1397D(a)(2)’’.

(4) Paragraph (3) of section 1394(b) isamended—

(A) by striking ‘‘section 1397B’’ each placeit appears and inserting ‘‘section 1397C’’, and

(B) by striking ‘‘section 1397B(d)’’ and in-serting ‘‘section 1397C(d)’’.

(5) Sections 1400(e) and 1400B(c) are eachamended by striking ‘‘section 1397B’’ eachplace it appears and inserting ‘‘section1397C’’.

(6) The table of subparts for part III of sub-chapter U of chapter 1 is amended by strik-ing the last item and inserting the followingnew items:

‘‘Subpart C. Nonrecognition of gain on roll-over of empowerment zone in-vestments.

‘‘Subpart D. General provisions.’’(7) The table of sections for subpart D of

such part III is amended to read as follows:

‘‘Sec. 1397C. Enterprise zone business de-fined.

‘‘Sec. 1397D. Qualified zone property de-fined.’’

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to qualifiedempowerment zone assets acquired after De-cember 31, 2000.SEC. 307. INCREASED EXCLUSION OF GAIN ON

SALE OF EMPOWERMENT ZONESTOCK.

(a) IN GENERAL.—Subsection (a) of section1202 is amended to read as follows:

‘‘(a) EXCLUSION.—‘‘(1) IN GENERAL.—In the case of a taxpayer

other than a corporation, gross income shallnot include 50 percent of any gain from thesale or exchange of qualified small businessstock held for more than 5 years.

‘‘(2) EMPOWERMENT ZONE BUSINESSES.—‘‘(A) IN GENERAL.—In the case of qualified

small business stock acquired after the dateof the enactment of this paragraph in a cor-poration which is a qualified business entity(as defined in section 1397C(b)) during sub-stantially all of the taxpayer’s holding pe-riod for such stock, paragraph (1) shall be ap-

plied by substituting ‘60 percent’ for ‘50 per-cent’.

‘‘(B) CERTAIN RULES TO APPLY.—Rules simi-lar to the rules of paragraphs (5) and (7) ofsection 1400B(b) shall apply for purposes ofthis paragraph.

‘‘(C) GAIN AFTER 2014 NOT QUALIFIED.—Sub-paragraph (A) shall not apply to gain attrib-utable to periods after December 31, 2014.’’.

(b) CONFORMING AMENDMENT.—Paragraph(8) of section 1(h) is amended by striking‘‘means’’ and all that follows and inserting‘‘means the excess of—

‘‘(A) the gain which would be excludedfrom gross income under section 1202 but forthe percentage limitation in section 1202(a),over

‘‘(B) the gain excluded from gross incomeunder section 1202.’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to stock ac-quired after December 31, 2000.SEC. 308. FUNDING ENTITLEMENT FOR ROUND II

EMPOWERMENT ZONES.(a) IN GENERAL.—(1) ENTITLEMENT.—Section 2007(a)(1) of the

Social Security Act (42 U.S.C. 1397f(a)(1)) isamended—

(A) in subparagraph (A), by striking ‘‘inthe State; and’’ and inserting ‘‘that is in theState and is designated pursuant to section1391(b) of the Internal Revenue Code of1986;’’;

(B) by adding after subparagraph (B) thefollowing:

‘‘(C)(i) 8 grants under this section for eachqualified empowerment zone that is in anurban area in the State and is designatedpursuant to section 1391(g) of such Code; and

‘‘(ii) 8 grants under this section for eachqualified empowerment zone that is in arural area in the State and is designated pur-suant to section 1391(g) of such Code;

‘‘(D) 8 grants under this section for eachqualified enterprise community that is inthe State and is designated pursuant to sec-tion 766 of the Agriculture, Rural Develop-ment, Food and Drug Administration, andRelated Agencies Appropriations Act, 1999;and

‘‘(E) 1 grant under this section for eachstrategic planning community.’’.

(2) AMOUNT OF GRANTS.—Section 2007(a)(2)of such Act (42 U.S.C. 1397f(a)(2)) isamended—

(A) in the heading of subparagraph (A), byinserting ‘‘ORIGINAL’’ before ‘‘EMPOWER-MENT’’;

(B) in subparagraph (A), in the matter pre-ceding clause (i), by inserting ‘‘referred to inparagraph (1)(A)’’ after ‘‘empowermentzone’’;

(C) by redesignating subparagraph (C) assubparagraph (F); and

(D) by inserting after subparagraph (B) thefollowing:

‘‘(C) ADDITIONAL EMPOWERMENT GRANTS.—The amount of the grant to a State underthis section for a qualified empowermentzone referred to in paragraph (1)(C) shall be—

‘‘(i) if the zone is in an urban area,$11,675,000 for each of fiscal years 2001through 2008; or

‘‘(ii) if the zone is in a rural area, $4,600,000for each of fiscal years 2001 through 2008,multiplied by the proportion of the popu-lation of the zone that resides in the State.

‘‘(D) ADDITIONAL ENTERPRISE COMMUNITYGRANTS.—The amount of the grant to a Stateunder this section for a qualified enterprisecommunity referred to in paragraph (1)(D)shall be $2,750,000, multiplied by the propor-tion of the population of the communitythat resides in the State.

‘‘(E) STRATEGIC PLANNING COMMUNITYGRANTS.—The amount of the grant to a Stateunder this section for a strategic planningcommunity shall be $3,000,000, multiplied by


CONGRESSIONAL RECORD — SENATE S6717July 13, 2000the proportion of the population of the com-munity that resides in the State.’’.

(3) TIMING OF GRANTS.—Section 2007(a)(3) ofsuch Act (42 U.S.C. 1397f(a)(3)) is amended—

(A) in the heading of subparagraph (A), byinserting ‘‘ORIGINAL’’ before ‘‘QUALIFIED’’;

(B) in subparagraph (A), in the matter pre-ceding clause (i), by inserting ‘‘referred to inparagraph (1)(A)’’ after ‘‘empowermentzone’’; and

(C) by adding after subparagraph (B) thefollowing:

‘‘(C) ADDITIONAL QUALIFIED EMPOWERMENTZONES.—With respect to each qualified em-powerment zone referred to in paragraph(1)(C), the Secretary shall make 1 grantunder this section to the State in which thezone lies, on the first day of fiscal year 2001and of each of the 7 succeeding fiscal years.

‘‘(D) ADDITIONAL QUALIFIED ENTERPRISECOMMUNITIES.—With respect to each qualifiedenterprise community referred to in para-graph (1)(D), the Secretary shall make 1grant under this section to the State inwhich the community lies on the first day offiscal year 2001 and of each of the 7 suc-ceeding fiscal years.

‘‘(E) STRATEGIC PLANNING COMMUNITIES.—With respect to each strategic planning com-munity, the Secretary shall make 1 grantunder this section to the State in which thecommunity is located, on October 1, 2001.’’.

(4) FUNDING.—Section 2007(a)(4) of such Act(42 U.S.C. 1397f(a)(4)) is amended—

(A) by striking ‘‘(4) FUNDING.—$1,000,000’’and inserting the following:

‘‘(4) FUNDING.—‘‘(A) ORIGINAL GRANTS.—$1,000,000’’;(B) by inserting ‘‘for empowerment zones

and enterprise communities described in sub-paragraphs (A) and (B) of paragraph (1)’’ be-fore the period; and

(C) by adding after and below the end thefollowing:

‘‘(B) ADDITIONAL EMPOWERMENT ZONEGRANTS.—$1,585,000,000 shall be made avail-able to the Secretary for grants under thissection for empowerment zones referred to inparagraph (1)(C).

‘‘(C) ADDITIONAL ENTERPRISE COMMUNITYGRANTS.—$55,000,000 shall be made availableto the Secretary for grants under this sec-tion for enterprise communities referred toin paragraph (1)(D).

‘‘(D) STRATEGIC PLANNING COMMUNITYGRANTS.—$45,000,000 shall be made availableto the Secretary for grants under this sec-tion for strategic planning communities.’’.

(5) DIRECT FUNDING FOR INDIAN TRIBES.—Section 2007(a) of such Act (42 U.S.C. 1397f(a))is amended by adding at the end the fol-lowing:

‘‘(5) DIRECT FUNDING FOR INDIAN TRIBES.—‘‘(A) IN GENERAL.—The Secretary may

make a grant under this section directly tothe governing body of an Indian tribe if—

‘‘(i) the tribe is identified in the strategicplan of a qualified empowerment zone orqualified enterprise community as the entitythat assumes sole or primary responsibilityfor carrying out activities and projects underthe grant; and

‘‘(ii) the grant is to be used for activitiesand projects that are—

‘‘(I) included in the strategic plan of thequalified empowerment zone or qualified en-terprise community, consistent with thissection; and

‘‘(II) approved by the Secretary of Agri-culture, in the case of a qualified empower-ment zone or qualified enterprise communityin a rural area, or the Secretary of Housingand Urban Development, in the case of aqualified empowerment zone or qualified en-terprise community in an urban area.

‘‘(B) RULES OF INTERPRETATION.—‘‘(i) If grant under this section is made di-

rectly to the governing body of an Indian

tribe under subparagraph (A), the tribe shallbe considered a State for purposes of thissection.

‘‘(ii) This subparagraph shall not be con-strued as making applicable to this sectionthe provisions of the Indian Self-Determina-tion and Education Assistance Act.’’.

(6) DEFINITIONS.—(A) QUALIFIED ENTERPRISE COMMUNITY.—

Section 2007(f)(2)(A) of such Act (42 U.S.C.1397f(f)(2)(A)) is amended by inserting ‘‘orpursuant to section 766 of the Agriculture,Rural Development, Food and Drug Adminis-tration, and Related Agencies Appropria-tions Act, 1999’’ before the semicolon.

(B) STRATEGIC PLAN.—Section 2007(f)(3) ofsuch Act (42 U.S.C. 1397f(f)(3)) is amended byinserting ‘‘or under section 766 of the Agri-culture, Rural Development, Food and DrugAdministration, and Related Agencies Ap-propriations Act, 1999’’ before the period.

(C) STRATEGIC PLANNING COMMUNITY.—Sec-tion 2007(f) of such Act (42 U.S.C. 1397f(f)) isamended by adding at the end the following:

‘‘(7) STRATEGIC PLANNING COMMUNITY.—Theterm ‘strategic planning community’ meansa respondent to the Notice Inviting Applica-tions at 63 Federal Register 19162 (April 16,1998) whose application was ranked 16ththrough 30th in the competition that con-cluded in December 1998.’’.

(D) INDIAN TRIBE.—Section 2007(f) of suchAct (42 U.S.C. 1397f(f)), as amended by sub-paragraph (C), is amended by adding at theend the following:

‘‘(8) INDIAN TRIBE.—The term ‘Indian tribe’means any Indian tribe, band, nation, orother organized group or community, includ-ing any Alaska Native village or regional orvillage corporation as defined in or estab-lished pursuant to the Alaska Native ClaimsSettlement Act, which is recognized as eligi-ble for the special programs and services pro-vided by the United States to Indians be-cause of their status as Indians.’’.

(b) USE OF GRANT FUNDS.—(1) REVOLVING LOAN ACTIVITIES.—Section

2007(b) of the Social Security Act (42 U.S.C.1397f(b)) is amended by adding at the end thefollowing:

‘‘(5) REVOLVING LOAN ACTIVITIES.—‘‘(A) IN GENERAL.—In order to assist dis-

advantaged adults and youths in achievingand maintaining economic self-support, aState may use amounts paid under this sec-tion to fund revolving loan funds or similararrangements for the purpose of makingloans to residents, institutions, organiza-tions, or businesses that hire disadvantagedadults and youths.

‘‘(B) RULES FOR DISBURSEMENT.—Amountsto be used as described in subparagraph (A)shall be disbursed by the Secretary, con-sistent with the provisions of the Cash Man-agement Improvement Act and its imple-menting rules, regulations, and proceduresissued by the Secretary of the Treasury—

‘‘(i) in the case of a grant to a revolvingloan fund—

‘‘(I) pursuant to a written irrevocablegrant commitment; and

‘‘(II) at such time or times as the Sec-retary determines that the funds are neededto meet the purposes of such commitment;or

‘‘(ii) in the case of a grant for purposes ofcapitalizing an insured depository institu-tion (as defined in section 3 of the FederalDeposit Insurance Act (12 U.S.C. 1813)) or aninsured credit union (as defined in section101 of the Federal Credit Union Act (12 U.S.C.1742)), at such time or times as the Secretarydetermines that funds are needed for suchcapitalization.’’.

(2) USE AS NON-FEDERAL SHARE.—Section2007(b) of such Act (42 U.S.C. 1397f(b)), asamended by paragraph (1), is amended byadding at the end the following:

‘‘(6) A State may use amounts receivedfrom a grant under this section to pay all orpart of the non-Federal share of expendituresunder any other Federal grant to a local pub-lic or nonprofit private agency or organiza-tion for activities consistent with the pur-poses of this section, unless the statutoryauthority for such other grant expressly pro-hibits counting of Federal grant funds assuch non-Federal share.’’.

(c) ENVIRONMENTAL REVIEW.—Section 2007of the Social Security Act (42 U.S.C. 1397f) isamended—

(1) by redesignating subsection (f) as sub-section (g); and

(2) by inserting after subsection (e) the fol-lowing:

‘‘(f) ENVIRONMENTAL REVIEW.—‘‘(1) EXECUTION OF RESPONSIBILITY BY THE

SECRETARY OF HOUSING AND URBAN DEVELOP-MENT AND THE SECRETARY OF AGRICULTURE.—

‘‘(A) APPLICABILITY.—This subsection shallapply to grants under this section in connec-tion with empowerment zones, enterprisecommunities, and strategic planning com-munities (as defined in subsection (g)).

‘‘(B) EXECUTION OF RESPONSIBILITY.—Withrespect to grants described in subparagraph(A), the Secretary of Housing and Urban De-velopment and the Secretary of Agriculture,as appropriate, shall execute the responsibil-ities under the National Environmental Pol-icy Act of 1969 and other provisions of lawthat further the purposes of such Act (asspecified in regulations issued by each suchSecretary under paragraph (2)(B)) that wouldotherwise apply to the Secretary of Healthand Human Services, and may provide forthe assumption of such responsibilities in ac-cordance with paragraphs (2) through (5).

‘‘(C) DEFINITION OF SECRETARY.—Except asotherwise specified, in this subsection, theterm ‘Secretary’ means the Secretary ofHousing and Urban Development for pur-poses of grants under this section with re-spect to qualified empowerment zones andqualified enterprise communities in urbanareas, and strategic planning areas, and theSecretary of Agriculture for purposes ofgrants under this section with respect toqualified empowerment zones and qualifiedenterprise communities in rural areas.

‘‘(2) ASSUMPTION OF RESPONSIBILITY BYSTATES, UNITS OF GENERAL LOCAL GOVERN-MENT, AND INDIAN TRIBES.—

‘‘(A) RELEASE OF FUNDS.—In order to assurethat the policies of the National Environ-mental Policy Act of 1969 and other provi-sions of law that further the purposes of suchAct (as specified in regulations issued by theSecretary under subparagraph (B)) are mosteffectively implemented in connection withthe expenditure of funds under this section,and to assure to the public undiminishedprotection of the environment, the Secretarymay, under such regulations, in lieu of theenvironmental protection procedures other-wise applicable, provide for the release offunds for particular projects to recipients ofassistance under this section if the State,unit of general local government, or Indiantribe, as designated by the Secretary in ac-cordance with regulations issued by the Sec-retary under subparagraph (B), assumes allof the responsibilities for environmental re-view, decisionmaking, and action pursuantto such Act, and such other provisions of lawas the regulations of the Secretary specify,that would otherwise apply to the Secretarywere the Secretary to undertake suchprojects as Federal projects.

‘‘(B) IMPLEMENTATION.—The Secretary ofHousing and Urban Development and theSecretary of Agriculture shall each issueregulations to carry out this subsection onlyafter consultation with the Council on Envi-ronmental Quality. Such regulations shall—


CONGRESSIONAL RECORD — SENATES6718 July 13, 2000‘‘(i) specify any other provisions of law

that further the purposes of the National En-vironmental Policy Act of 1969 and to whichthe assumption of responsibility as providedin this subsection applies;

‘‘(ii) provide eligibility criteria and proce-dures for the designation of a State, unit ofgeneral local government, or Indian tribe toassume all of the responsibilities describedin subparagraph (A);

‘‘(iii) specify the purposes for which fundsmay be committed without regard to theprocedure established under paragraph (3);

‘‘(iv) provide for monitoring of the per-formance of environmental reviews underthis subsection;

‘‘(v) in the discretion of the Secretary, pro-vide for the provision or facilitation of train-ing for such performance; and

‘‘(vi) subject to the discretion of the Sec-retary, provide for suspension or terminationby the Secretary of the assumption undersubparagraph (A).

‘‘(C) RESPONSIBILITIES OF STATE, UNIT OFGENERAL LOCAL GOVERNMENT, OR INDIANTRIBE.—The Secretary’s duty under subpara-graph (B) shall not be construed to limit anyresponsibility assumed by a State, unit ofgeneral local government, or Indian tribewith respect to any particular release offunds under subparagraph (A).

‘‘(3) PROCEDURE.—The Secretary shall ap-prove the release of funds for projects sub-ject to the procedures authorized by thissubsection only if, not less than 15 days priorto such approval and prior to any commit-ment of funds to such projects (except forsuch purposes specified in the regulationsissued under paragraph (2)(B)), the recipientsubmits to the Secretary a request for suchrelease accompanied by a certification of theState, unit of general local government, orIndian tribe that meets the requirements ofparagraph (4). The approval by the Secretaryof any such certification shall be deemed tosatisfy the Secretary’s responsibilities pur-suant to paragraph (1) under the NationalEnvironmental Policy Act of 1969 and suchother provisions of law as the regulations ofthe Secretary specify insofar as those re-sponsibilities relate to the releases of fundsfor projects to be carried out pursuant there-to that are covered by such certification.

‘‘(4) CERTIFICATION.—A certification underthe procedures authorized by this subsectionshall—

‘‘(A) be in a form acceptable to the Sec-retary;

‘‘(B) be executed by the chief executive of-ficer or other officer of the State, unit ofgeneral local government, or Indian tribewho qualifies under regulations of the Sec-retary;

‘‘(C) specify that the State, unit of generallocal government, or Indian tribe under thissubsection has fully carried out its respon-sibilities as described under paragraph (2);and

‘‘(D) specify that the certifying officer—‘‘(i) consents to assume the status of a re-

sponsible Federal official under the NationalEnvironmental Policy Act of 1969 and eachprovision of law specified in regulationsissued by the Secretary insofar as the provi-sions of such Act or other such provisions oflaw apply pursuant to paragraph (2); and

‘‘(ii) is authorized and consents on behalfof the State, unit of general local govern-ment, or Indian tribe and himself or herselfto accept the jurisdiction of the Federalcourts for the purpose of enforcement of theresponsibilities as such an official.

‘‘(5) APPROVAL BY STATES.—In cases inwhich a unit of general local governmentcarries out the responsibilities described inparagraph (2), the Secretary may permit theState to perform those actions of the Sec-retary described in paragraph (3). The per-

formance of such actions by the State, wherepermitted, shall be deemed to satisfy the re-sponsibilities referred to in the second sen-tence of paragraph (3).’’.SEC. 309. RULES REGARDING QUALIFIED ISSUES.

(a) IN GENERAL.—In the case of a qualifiedissue (as defined in subsection (c)), section1394(c)(1) of the Internal Revenue Code of1986 shall be applied by substituting‘‘$200,000,000’’ for the dollar amounts con-tained in such section, and section 1394(a) ofsuch Code shall be applied by treating aqualified facility (as defined in subsection(c)) as an enterprise zone facility without re-gard to the requirements of subsections (b)and (e) of section 1394 of such Code.

(b) SPECIAL RULES REGARDING QUALIFIEDISSUES.—A qualified issue—

(1) shall not be treated as an issue of pri-vate activity bonds for purposes of sections57(a)(5) and 146(a) of the Internal RevenueCode of 1986;

(2) shall be subject to section 147(e) of suchCode determined without regard to thephrase ‘‘skybox or other private luxury box’’;

(3) shall not cause the qualified facility tobe treated as tax-exempt use property or tax-exempt bond financed property for purposesof section 168(g) of such Code; and

(4) shall be treated as financing capital ex-penditures relating to the qualified facility(to the extent such capital expenditures wereactually paid in an amount not exceedingthe amount of the indebtedness being refi-nanced) without regard to any regulationspertaining to the allocation of bond proceedsto expenses (including expenses paid prior tothe issuance of the bonds).

(c) DEFINITIONS.—For purposes of thissection—

(1) QUALIFIED ISSUE.—The term ‘‘qualifiedissue’’ means an issue of bonds (including anissue in a series of refunding issues) issued torefinance the outstanding indebtedness in-curred in connection with a qualified facil-ity.

(2) QUALIFIED FACILITY.—The term ‘‘quali-fied facility’’ means an enclosed, mixed-useentertainment, conference, and sports com-plex located in the District of Columbia En-terprise Zone, which held its first profes-sional sports event on December 2, 1997, in-cluding all related facilities and costs.SEC. 310. CUSTOMS USER FEES.

Section 13031(j)(3) of the Consolidated Om-nibus Budget Reconciliation Act of 1985 (19U.S.C. 58c(j)(3)) is amended by striking‘‘2003’’ and inserting ‘‘2008’’.

TITLE IV—FAITH BASED SUBSTANCEABUSE TREATMENT

SEC. 401. PREVENTION AND TREATMENT OF SUB-STANCE ABUSE; SERVICES PRO-VIDED THROUGH RELIGIOUS ORGA-NIZATIONS.

Title V of the Public Health Service Act(42 U.S.C. 290aa et seq.) is amended by addingat the end the following part:

‘‘PART G—SERVICES PROVIDED THROUGHRELIGIOUS ORGANIZATIONS

‘‘SEC. 581. APPLICABILITY TO DESIGNATED PRO-GRAMS.

‘‘(a) DESIGNATED PROGRAMS.—Subject tosubsection (b), this part applies to discre-tionary and formula grant programs admin-istered by the Substance Abuse and MentalHealth Services Administration that makeawards of Federal financial assistance topublic or private entities for the purpose ofcarrying out activities to prevent or treatsubstance abuse (in this part referred to as a‘designated program’). Designated programsinclude the program under subpart II of partB of title XIX (relating to formula grants tothe States).

‘‘(b) LIMITATION.—This part does not applyto any award of Federal financial assistance

under a designated program for a purposeother than the purpose specified in sub-section (a).

‘‘(c) DEFINITIONS.—For purposes of thispart (and subject to subsection (b)):

‘‘(1) The term ‘designated award recipient’means a public or private entity that has re-ceived an award of financial assistance undera designated program (whether the award isa designated direct award or a designatedsubaward).

‘‘(2) The term ‘designated direct award’means an award of financial assistance undera designated program that is received di-rectly from the Federal Government.

‘‘(3) The term ‘designated subaward’ meansan award of financial assistance made by anon-Federal entity, which award consists inwhole or in part of Federal financial assist-ance provided through an award under a des-ignated program.

‘‘(4) The term ‘designated program’ has themeaning given such term in subsection (a).

‘‘(5) The term ‘financial assistance’ meansa grant, cooperative agreement, contract, orvoucherized assistance.

‘‘(6) The term ‘program beneficiary’ meansan individual who receives program services.

‘‘(7) The term ‘program participant’ hasthe meaning given such term in section582(a)(2).

‘‘(8) The term ‘program services’ meanstreatment for substance abuse, or preventiveservices regarding such abuse, provided pur-suant to an award of financial assistanceunder a designated program.

‘‘(9) The term ‘religious organization’means a nonprofit religious organization.

‘‘(10) The term ‘voucherized assistance’means—

‘‘(A) a system of selecting and reimbursingprogram services in which—

‘‘(i) the beneficiary is given a document orother authorization that may be used to payfor program services;

‘‘(ii) the beneficiary chooses the organiza-tion that will provide services to him or heraccording to rules specified by the des-ignated award recipient; and

‘‘(iii) the organization selected by the ben-eficiary is reimbursed by the designatedaward recipient for program services pro-vided; or

‘‘(B) any other mode of financial assistanceto pay for program services in which the pro-gram beneficiary determines the allocationof program funds through his or her selec-tion of one service provider from among al-ternatives.

‘‘SEC. 582. RELIGIOUS ORGANIZATIONS AS PRO-GRAM PARTICIPANTS.

‘‘(a) IN GENERAL.—‘‘(1) SCOPE OF AUTHORITY.—Notwith-

standing any other provision of law, a reli-gious organization—

‘‘(A) may be a designated award recipient;‘‘(B) may make designated subawards to

other public or nonprofit private entities (in-cluding other religious organizations);

‘‘(C) may provide for the provision of pro-gram services to program beneficiariesthrough the use of voucherized assistance;and

‘‘(D) may be a provider of services under adesignated program, including a providerthat accepts voucherized assistance.

‘‘(2) DEFINITION OF PROGRAM PARTICIPANT.—For purposes of this part, the term ‘programparticipant’ means a public or private entitythat has received a designated direct award,or a designated subaward, regardless ofwhether the entity provides program serv-ices. Such term includes an entity whoseonly participation in a designated program isto provide program services pursuant to theacceptance of voucherized assistance.


CONGRESSIONAL RECORD — SENATE S6719July 13, 2000‘‘(b) RELIGIOUS ORGANIZATIONS.—The pur-

pose of this section is to allow religious or-ganizations to be program participants onthe same basis as any other nonprofit pri-vate provider without impairing the reli-gious character of such organizations, andwithout diminishing the religious freedom ofprogram beneficiaries.

‘‘(c) NONDISCRIMINATION AGAINST RELIGIOUSORGANIZATIONS.—

‘‘(1) ELIGIBILITY AS PROGRAM PARTICI-PANTS.—Religious organizations are eligibleto be program participants on the same basisas any other nonprofit private organizationas long as the programs are implementedconsistent with the Establishment Clause ofthe First Amendment to the United StatesConstitution. The Federal Government mayunder the preceding sentence apply to reli-gious organizations the same eligibility con-ditions in designated programs as are appliedto any nonprofit private organization as longas the conditions are consistent with theFree Exercise Clause of the First Amend-ment.

‘‘(2) NONDISCRIMINATION.—Neither the Fed-eral Government nor a State receiving fundsunder such programs shall discriminateagainst an organization that is or applies tobe a program participant on the basis thatthe organization has a religious character.

‘‘(d) RELIGIOUS CHARACTER AND FREEDOM.—‘‘(1) RELIGIOUS ORGANIZATIONS.—Except as

provided in this section, any religious orga-nization that is a program participant shallretain its independence from Federal, State,and local government, including such organi-zation’s control over the definition, develop-ment, practice, and expression of its reli-gious beliefs.

‘‘(2) ADDITIONAL SAFEGUARDS.—Neither theFederal Government nor a State shall re-quire a religious organization to—

‘‘(A) alter its form of internal governance;or

‘‘(B) remove religious art, icons, scripture,or other symbols;in order to be a program participant.

‘‘(e) EMPLOYMENT PRACTICES.—A religiousorganization’s exemption provided under sec-tion 702 of the Civil Rights Act of 1964 re-garding employment practices shall not beaffected by its participation in, or receipt offunds from, a designated program.

‘‘(f) RIGHTS OF PROGRAM BENEFICIARIES.—‘‘(1) IN GENERAL.—With respect to an indi-

vidual who is a program beneficiary or a pro-spective program beneficiary, if the indi-vidual objects to a program participant onthe basis that the participant is a religiousorganization, the following applies:

‘‘(A) If the organization received a des-ignated direct award, the organization shallrefer the individual to an alternative entitythat provides program services and shall, tothe extent practicable, provide appropriatefollow-up services.

‘‘(B) If the organization received a des-ignated subaward, the non-Federal entitythat made the subaward shall refer the indi-vidual to an alternative entity that providesprogram services and shall, to the extentpracticable, provide appropriate follow-upservices.

‘‘(C) If the organization is providing serv-ices pursuant to voucherized assistance, thedesignated award recipient that operates thevoucherized assistance program shall referthe individual to an alternative entity thatprovides program services and shall, to theextent practicable, provide appropriate fol-low-up services.

‘‘(D) If the local government involvedmakes available a list of entities in the geo-graphic area that provide program services,the program participant with the responsi-bility for making the referral under subpara-graph (A), (B), or (C), as the case may be,

shall obtain a copy of such list and considerthe list in making the referral (except thatthis subparagraph does not apply if the pro-gram participant is the local government orthe State).

‘‘(E) Referrals under any of subparagraphs(A) through (C) shall be made to alternativeentities that will provide program servicesthe monetary value of which is not less thanthe monetary value of the program servicesthat the individual would have received fromthe religious organization involved.

‘‘(2) NONDISCRIMINATION.—Except as other-wise provided in law, a religious organizationthat is a program participant shall not inproviding program services discriminateagainst a program beneficiary on the basis ofreligion or religious belief.

‘‘(g) FISCAL ACCOUNTABILITY.—‘‘(1) IN GENERAL.—Except as provided in

paragraph (2), any religious organizationthat is a program participant shall be sub-ject to the same regulations as other recipi-ents of awards of Federal financial assist-ance to account, in accordance with gen-erally accepted auditing principles, for theuse of the funds provided under such awards.

‘‘(2) LIMITED AUDIT.—With respect to theaward involved, if a religious organizationthat is a program participant maintains theFederal funds in a separate account fromnon-Federal funds, then only the Federalfunds shall be subject to audit.

‘‘(h) COMPLIANCE.—With respect to compli-ance with this section by an agency, a reli-gious organization may obtain judicial re-view of agency action in accordance withchapter 7 of title 5, United States Code.‘‘SEC. 583. LIMITATIONS ON USE OF FUNDS FOR

CERTAIN PURPOSES.‘‘(a) IN GENERAL.—Except as provided in

subsection (b), no funds provided directly toan entity under a designated program shallbe expended for sectarian worship or instruc-tion.

‘‘(b) EXCEPTION.—Subsection (a) shall notapply to assistance provided to or on behalfof a program beneficiary if the beneficiarymay choose where such assistance is re-deemed or allocated.‘‘SEC. 584. FINANCIAL ASSISTANCE NOT AID TO

INSTITUTIONS.‘‘Financial assistance under a designated

program is aid to the beneficiary, not to theorganization providing program services.‘‘SEC. 585. EDUCATIONAL REQUIREMENTS FOR

PERSONNEL IN DRUG TREATMENTPROGRAMS.

‘‘(a) FINDINGS.—The Congress finds that—‘‘(1) establishing formal educational quali-

fication for counselors and other personnelin drug treatment programs may underminethe effectiveness of such programs; and

‘‘(2) such formal educational requirementsfor counselors and other personnel mayhinder or prevent the provision of neededdrug treatment services.

‘‘(b) LIMITATION ON EDUCATIONAL REQUIRE-MENTS OF PERSONNEL.—

‘‘(1) TREATMENT OF RELIGIOUS EDUCATION.—‘‘(A) IN GENERAL.—If any State or local

government that is a program participantimposes formal educational qualifications onproviders of program services, including reli-gious organizations, such State or local gov-ernment shall treat religious education andtraining of personnel as having a critical andpositive role in the delivery of program serv-ices.

‘‘(B) EDUCATION AND TRAINING ON PREVEN-TION AND TREATMENT OF SUBSTANCE ABUSE.—In applying to religious organizations edu-cational qualifications for personnel of suchorganizations who provide program services,a State or local government that is a pro-gram participant shall, with respect to edu-cation and training on preventing and treat-

ing substance abuse, give credit for such edu-cation and training that is provided by reli-gious organizations equivalent to creditgiven for secular course work that providessuch education and training.

‘‘(C) GENERAL EDUCATIONAL REQUIRE-MENTS.—In applying to religious organiza-tions educational qualifications for per-sonnel of such organizations who provideprogram services, a State or local govern-ment that is a program participant shall, ifsuch qualifications include course work thatdoes not relate specifically to preventing ortreating substance abuse, give credit for reli-gious education equivalent to credit givenfor secular course work.

‘‘(2) RESTRICTION OF DISCRIMINATION RE-QUIREMENTS..—

‘‘(A) IN GENERAL.—Subject to paragraph(1), a State or local government that is aprogram participant may establish formaleducational qualifications for personnel inorganizations providing program servicesthat contribute to success in reducing druguse among program beneficiaries.

‘‘(B) EXCEPTION.—The Secretary shallwaive the application of any educationalqualification imposed under subparagraph(A) for an individual religious organization,if the Secretary determines that—

‘‘(i) the religious organization has a recordof prior successful drug treatment for atleast the preceding three years;

‘‘(ii) the educational qualifications have ef-fectively barred such religious organizationfrom becoming a program provider;

‘‘(iii) the organization has applied to theSecretary to waive the qualifications; and

‘‘(iv) the State or local government hasfailed to demonstrate empirically that theeducational qualifications in question arenecessary to the successful operation of adrug treatment program.’’.

TITLE V—HOMEOWNERSHIPSEC. 501. TRANSFER OF UNOCCUPIED AND SUB-

STANDARD HUD-HELD HOUSING TOLOCAL GOVERNMENTS AND COMMU-NITY DEVELOPMENT CORPORA-TIONS.

Section 204 of the Departments of VeteransAffairs and Housing and Urban Development,and Independent Agencies AppropriationsAct, 1997 (12 U.S.C. 1715z–11a) is amended—

(1) by striking ‘‘FLEXIBLE AUTHORITY.—’’and inserting ‘‘DISPOSITION OF HUD-OWNEDPROPERTIES. (a) FLEXIBLE AUTHORITY FORMULTIFAMILY PROJECTS.—’’; and

(2) by adding at the end the following newsubsection:

‘‘(b) TRANSFER OF UNOCCUPIED AND SUB-STANDARD HOUSING TO LOCAL GOVERNMENTSAND COMMUNITY DEVELOPMENT CORPORA-TIONS.—

‘‘(1) TRANSFER AUTHORITY.—Notwith-standing the authority under subsection (a)and the last sentence of section 204(g) of theNational Housing Act (12 U.S.C. 1710(g)), theSecretary of Housing and Urban Develop-ment shall transfer ownership of any quali-fied HUD property, subject to the require-ments of this section, to a unit of generallocal government having jurisdiction for thearea in which the property is located or to acommunity development corporation whichoperates within such a unit of general localgovernment in accordance with this sub-section, but only to the extent that units ofgeneral local government and communitydevelopment corporations consent to trans-fer and the Secretary determines that suchtransfer is practicable.

‘‘(2) QUALIFIED HUD PROPERTIES.—For pur-poses of this subsection, the term ‘qualifiedHUD property’ means any property forwhich, as of the date that notification of theproperty is first made under paragraph(3)(B), not less than 6 months have elapsedsince the later of the date that the property


CONGRESSIONAL RECORD — SENATES6720 July 13, 2000was acquired by the Secretary or the datethat the property was determined to be un-occupied or substandard, that is owned bythe Secretary and is—

‘‘(A) an unoccupied multifamily housingproject;

‘‘(B) a substandard multifamily housingproject; or

‘‘(C) an unoccupied single family propertythat—

‘‘(i) has been determined by the Secretarynot to be an eligible asset under section204(h) of the National Housing Act (12 U.S.C.1710(h)); or

‘‘(ii) is an eligible asset under such section204(h), but—

‘‘(I) is not subject to a specific sale agree-ment under such section; and

‘‘(II) has been determined by the Secretaryto be inappropriate for continued inclusionin the program under such section 204(h) pur-suant to paragraph (10) of such section.

‘‘(3) TIMING.—The Secretary shall establishprocedures that provide for—

‘‘(A) time deadlines for transfers under thissubsection;

‘‘(B) notification to units of general localgovernment and community developmentcorporations of qualified HUD properties intheir jurisdictions;

‘‘(C) such units and corporations to expressinterest in the transfer under this subsectionof such properties;

‘‘(D) a right of first refusal for transfer ofqualified HUD properties to units of generallocal government and community develop-ment corporations, under which—

‘‘(i) the Secretary shall establish a periodduring which the Secretary may not transfersuch properties except to such units and cor-porations;

‘‘(ii) the Secretary shall offer qualifiedHUD properties that are single family prop-erties for purchase by units of general localgovernment at a cost of $1 for each property,but only to the extent that the costs to theFederal Government of disposal at such pricedo not exceed the costs to the Federal Gov-ernment of disposing of property subject tothe procedures for single family property es-tablished by the Secretary pursuant to theauthority under the last sentence of section204(g) of the National Housing Act (12 U.S.C.1710(g));

‘‘(iii) the Secretary may accept an offer topurchase a property made by a communitydevelopment corporation only if the offerprovides for purchase on a cost recoverybasis; and

‘‘(iv) the Secretary shall accept an offer topurchase such a property that is made dur-ing such period by such a unit or corporationand that complies with the requirements ofthis paragraph;

‘‘(E) a written explanation, to any unit ofgeneral local government or community de-velopment corporation making an offer topurchase a qualified HUD property underthis subsection that is not accepted, of thereason that such offer was not acceptable.

‘‘(4) OTHER DISPOSITION.—With respect toany qualified HUD property, if the Secretarydoes not receive an acceptable offer to pur-chase the property pursuant to the procedureestablished under paragraph (3), the Sec-retary shall dispose of the property to theunit of general local government in whichproperty is located or to community devel-opment corporations located in such unit ofgeneral local government on a negotiated,competitive bid, or other basis, on suchterms as the Secretary deems appropriate.

‘‘(5) SATISFACTION OF INDEBTEDNESS.—Be-fore transferring ownership of any qualifiedHUD property pursuant to this subsection,the Secretary shall satisfy any indebtednessincurred in connection with the property to

be transferred, by canceling the indebted-ness.

‘‘(6) DETERMINATION OF STATUS OF PROP-ERTIES.—To ensure compliance with the re-quirements of this subsection, the Secretaryshall take the following actions:

‘‘(A) UPON ENACTMENT.—Upon the enact-ment of this subsection, the Secretary shallpromptly assess each residential propertyowned by the Secretary to determine wheth-er such property is a qualified HUD property.

‘‘(B) UPON ACQUISITION.—Upon acquiringany residential property, the Secretary shallpromptly determine whether the property isa qualified HUD property.

‘‘(C) UPDATES.—The Secretary shall peri-odically reassess the residential propertiesowned by the Secretary to determine wheth-er any such properties have become qualifiedHUD properties.

‘‘(7) TENANT LEASES.—This subsection shallnot affect the terms or the enforceability ofany contract or lease entered into with re-spect to any residential property before thedate that such property becomes a qualifiedHUD property.

‘‘(8) USE OF PROPERTY.—Property trans-ferred under this subsection shall be usedonly for appropriate neighborhood revitaliza-tion efforts, including homeownership, rent-al units, commercial space, and parks, con-sistent with local zoning regulations, localbuilding codes, and subdivision regulationsand restrictions of record.

‘‘(9) INAPPLICABILITY TO PROPERTIES MADEAVAILABLE FOR HOMELESS.—Notwithstandingany other provision of this subsection, thissubsection shall not apply to any propertiesthat the Secretary determines are to bemade available for use by the homeless pur-suant to subpart E of part 291 of title 24,Code of Federal Regulations, during the pe-riod that the properties are so available.

‘‘(10) PROTECTION OF EXISTING CONTRACTS.—This subsection may not be construed toalter, affect, or annul any legally binding ob-ligations entered into with respect to aqualified HUD property before the propertybecomes a qualified HUD property.

‘‘(11) DEFINITIONS.—For purposes of thissubsection, the following definitions shallapply:

‘‘(A) COMMUNITY DEVELOPMENT CORPORA-TION.—The term ‘community developmentcorporation’ means a nonprofit organizationwhose primary purpose is to promote com-munity development by providing housingopportunities for low-income families.

‘‘(B) COST RECOVERY BASIS.—The term ‘costrecovery basis’ means, with respect to anysale of a residential property by the Sec-retary, that the purchase price paid by thepurchaser is equal to or greater than the sumof (i) the appraised value of the property, asdetermined in accordance with such require-ments as the Secretary shall establish, and(ii) the costs incurred by the Secretary inconnection with such property during the pe-riod beginning on the date on which the Sec-retary acquires title to the property and end-ing on the date on which the sale is con-summated.

‘‘(C) MULTIFAMILY HOUSING PROJECT.—Theterm ‘multifamily housing project’ has themeaning given the term in section 203 of theHousing and Community DevelopmentAmendments of 1978.

‘‘(D) RESIDENTIAL PROPERTY.—The term‘residential property’ means a property thatis a multifamily housing project or a singlefamily property.

‘‘(E) SECRETARY.—The term ‘Secretary’means the Secretary of Housing and UrbanDevelopment.

‘‘(F) SEVERE PHYSICAL PROBLEMS.—Theterm ‘severe physical problems’ means, withrespect to a dwelling unit, that the unit—

‘‘(i) lacks hot or cold piped water, a flushtoilet, or both a bathtub and a shower in theunit, for the exclusive use of that unit;

‘‘(ii) on not less than three separate occa-sions during the preceding winter months,was uncomfortably cold for a period of morethan 6 consecutive hours due to a malfunc-tion of the heating system for the unit;

‘‘(iii) has no functioning electrical service,exposed wiring, any room in which there isnot a functioning electrical outlet, or has ex-perienced three or more blown fuses ortripped circuit breakers during the preceding90-day period;

‘‘(iv) is accessible through a public hallwayin which there are no working light fixtures,loose or missing steps or railings, and no ele-vator; or

‘‘(v) has severe maintenance problems, in-cluding water leaks involving the roof, win-dows, doors, basement, or pipes or plumbingfixtures, holes or open cracks in walls orceilings, severe paint peeling or broken plas-ter, and signs of rodent infestation.

‘‘(G) SINGLE FAMILY PROPERTY.—The term‘single family property’ means a 1- to 4-fam-ily residence.

‘‘(H) SUBSTANDARD.—The term ‘sub-standard’ means, with respect to a multi-family housing project, that 25 percent ormore of the dwelling units in the projecthave severe physical problems.

‘‘(I) UNIT OF GENERAL LOCAL GOVERNMENT.—The term ‘unit of general local government’has the meaning given such term in section102(a) of the Housing and Community Devel-opment Act of 1974.

‘‘(J) UNOCCUPIED.—The term ‘unoccupied’means, with respect to a residential prop-erty, that the unit of general local govern-ment having jurisdiction over the area inwhich the project is located has certified inwriting that the property is not inhabited.

‘‘(12) REGULATIONS.—‘‘(A) INTERIM.—Not later than 30 days after

the date of the enactment of this subsection,the Secretary shall issue such interim regu-lations as are necessary to carry out thissubsection.

‘‘(B) FINAL.—Not later than 60 days afterthe date of the enactment of this subsection,the Secretary shall issue such final regula-tions as are necessary to carry out this sub-section.’’.SEC. 502. TRANSFER OF HUD ASSETS IN REVITAL-

IZATION AREAS.In carrying out the program under section

204(h) of the National Housing Act (12 U.S.C.1710(h)), upon the request of the chief execu-tive officer of a county or the government ofappropriate jurisdiction and not later than60 days after such request is made, the Sec-retary of Housing and Urban Developmentshall designate as a revitalization area allportions of such county that meet the cri-teria for such designation under paragraph(3) of such section.SEC. 503. RISK-SHARING DEMONSTRATION.

Section 249 of the National Housing Act (12U.S.C. 1715z–14) is amended—

(1) by striking the section heading and in-serting the following:

‘‘RISK-SHARING DEMONSTRATION’’;(2) by striking ‘‘reinsurance’’ each place

such term appears and insert ‘‘risk-sharing’’;(3) in subsection (a)—(A) in the first sentence, by inserting ‘‘and

insured community development financialinstitutions’’ after ‘‘private mortgage insur-ers’’;

(B) in the second sentence—(i) by striking ‘‘two’’ and inserting ‘‘4’’;

and(ii) by striking ‘‘March 15, 1988’’ and insert-

ing ‘‘the expiration of the 5-year period be-ginning on the date of the enactment of theAmerican Community Renewal and NewMarkets Empowerment Act’’; and


CONGRESSIONAL RECORD — SENATE S6721July 13, 2000(C) in the last sentence, by striking ‘‘10

percent’’ and inserting ‘‘20 percent’’;(4) in subsection (b)—(A) in the first sentence, by inserting ‘‘and

with insured community development finan-cial institutions’’ before the period at theend;

(B) in the first sentence, by striking‘‘which have been determined to be qualifiedinsurers under section 302(b)(2)(C)’’;

(C) in the second sentence, by inserting‘‘and insured community development finan-cial institutions’’ after ‘‘private mortgageinsurance companies’’;

(D) by striking paragraph (1) and insertingthe following new paragraph:

‘‘(1) assume the first loss on any mortgageinsured pursuant to section 203(b), 234, or 245that covers a one- to four-family dwellingand is included in the program under thissection, up to the percentage of loss that isset forth in the risk-sharing contract;’’; and

(E) in paragraph (2)—(i) by striking ‘‘carry out (under appro-

priate delegation) such’’ and inserting ‘‘dele-gate underwriting,’’; and

(ii) by striking ‘‘function’’ and inserting‘‘functions’’;

(5) in subsection (c)—(A) in the first sentence—(i) by striking ‘‘of’’ the first place it ap-

pears and insert ‘‘for’’;(ii) by striking ‘‘insurance reserves’’ and

inserting ‘‘loss reserves’’; and(iii) by striking ‘‘such insurance’’ and in-

serting ‘‘such reserves’’; and(B) in the second sentence, by inserting ‘‘or

insured community development financialinstitution’’ after ‘‘private mortgage insur-ance company’’;

(6) in subsection (d), by inserting ‘‘or in-sured community development financial in-stitution’’ after ‘‘private mortgage insurancecompany’’; and

(7) by adding at the end the following newsubsection:

‘‘(e) INSURED COMMUNITY DEVELOPMENT FI-NANCIAL INSTITUTIONS.—For purposes of thissection, the term ‘insured community devel-opment financial institution’ means a com-munity development financial institution, assuch term is defined in section 103 of ReigleCommunity Development and RegulatoryImprovement Act of 1994 (12 U.S.C. 4702) thatis an insured depository institution (as suchterm is defined in section 3 of the FederalDeposit Insurance Act (12 U.S.C. 1813)) or aninsured credit union (as such term is definedin section 101 of the Federal Credit UnionAct (12 U.S.C. 1752)).’’.

TITLE VI—AMERICA’S PRIVATEINVESTMENT COMPANIES

SEC. 601. SHORT TITLE.This title may be cited as the ‘‘America’s

Private Investment Companies Act’’.SEC. 602. FINDINGS AND PURPOSES.

(a) FINDINGS.—The Congress finds that—(1) people living in distressed areas, both

urban and rural, that are characterized byhigh levels of joblessness, poverty, and lowincomes have not benefited adequately fromthe economic expansion experienced by theNation as a whole;

(2) unequal access to economic opportuni-ties continues to make the social costs ofjoblessness and poverty to our Nation veryhigh; and

(3) there are significant untapped marketsin our Nation, and many of these are in areasthat are underserved by institutions that canmake equity and credit investments.

(b) PURPOSES.—The purposes of this titleare to—

(1) license private for profit community de-velopment entities that will focus on makingequity and credit investments for large-scalebusiness developments that benefit low-in-come communities;

(2) provide credit enhancement for thoseentities for use in low-income communities;and

(3) provide a vehicle under which the eco-nomic and social returns on financial invest-ments made pursuant to this title may beavailable both to the investors in these enti-ties and to the residents of the low-incomecommunities.SEC. 603. DEFINITIONS.

As used in this title:(1) ADMINISTRATOR.—The term ‘‘Adminis-

trator’’ means the Administrator of theSmall Business Administration.

(2) AGENCY.—The term ‘‘agency’’ has themeaning given such term in section 551(1) oftitle 5, United States Code.

(3) APIC.—The term ‘‘APIC’’ means a busi-ness entity that has been licensed under theterms of this title as an America’s PrivateInvestment Company, and the license ofwhich has not been revoked.

(4) COMMUNITY DEVELOPMENT ENTITY.—Theterm ‘‘community development entity’’means an entity the primary mission ofwhich is serving or providing investmentcapital for low-income communities or low-income persons and which maintains ac-countability to residents of low-income com-munities.

(5) HUD.—The term ‘‘HUD’’ means the Sec-retary of Housing and Urban Development orthe Department of Housing and Urban Devel-opment, as the context requires.

(6) LICENSE.—The term ‘‘license’’ means alicense issued by HUD as provided in section604.

(7) LOW-INCOME COMMUNITY.—The term‘‘low-income community’’ means—

(A) a census tract or tracts that have—(i) a poverty rate of 20 percent or greater,

based on the most recent census data; or(ii) a median family income that does not

exceed 80 percent of the greater of (I) the me-dian family income for the metropolitanarea in which such census tract or tracts arelocated, or (II) the median family income forthe State in which such census tract ortracts are located; or

(B) a property that was located on a mili-tary installation that was closed or re-aligned pursuant to title II of the DefenseAuthorization Amendments and Base Clo-sure and Realignment Act (Public Law 100–526; 10 U.S.C. 2687 note), the Defense BaseClosure and Realignment Act of 1990 (part Aof title XXIX of Public Law 101–510; 10 U.S.C.2687 note), section 2687 of title 10, UnitedStates Code, or any other similar law en-acted after the date of the enactment of thisAct that provides for closure or realignmentof military installations.

(8) LOW-INCOME PERSON.—The term ‘‘low-in-come person’’ means a person who is a mem-ber of a low-income family, as such term isdefined in section 104 of the Cranston-Gon-zalez National Affordable Housing Act (42U.S.C. 12704).

(9) PRIVATE EQUITY CAPITAL.—(A) IN GENERAL.—The term ‘‘private equity

capital’’—(i) in the case of a corporate entity, the

paid-in capital and paid-in surplus of the cor-porate entity;

(ii) in the case of a partnership entity, thecontributed capital of the partners of thepartnership entity;

(iii) in the case of a limited liability com-pany entity, the equity investment of themembers of the limited liability companyentity; and

(iv) earnings from investments of the enti-ty that are not distributed to investors andare available for reinvestment by the entity.

(B) EXCLUSIONS.—Such term does not in-clude any—

(i) funds borrowed by an entity from anysource or obtained through the issuance of

leverage; except that this clause may not beconstrued to exclude amounts evidenced by alegally binding and irrevocable investmentcommitment in the entity, or the use by anentity of a pledge of such investment com-mitment to obtain bridge financing from aprivate lender to fund the entity’s activitieson an interim basis; or

(ii) funds obtained directly or indirectlyfrom any Federal, State, or local govern-ment or any government agency, exceptfor—

(I) funds invested by an employee welfarebenefit plan or pension plan; and

(II) credits against any Federal, State, orlocal taxes.

(10) QUALIFIED ACTIVE BUSINESS.—The term‘‘qualified active business’’ means a businessor trade—

(A) that, at the time that an investment ismade in the business or trade, is deriving atleast 50 percent of its gross income from theconduct of trade or business activities inlow-income communities;

(B) a substantial portion of the use of thetangible property of which is used withinlow-income communities;

(C) a substantial portion of the servicesthat the employees of which perform are per-formed in low-income communities; and

(D) less than 5 percent of the aggregateunadjusted bases of the property of which isattributable to certain financial property, asthe Secretary shall set forth in regulations,or in collectibles, other than collectiblesheld primarily for sale to customers.

(11) QUALIFIED DEBENTURE.—The term‘‘qualified debenture’’ means a debt instru-ment having terms that meet the require-ments established pursuant to section606(c)(1).

(12) QUALIFIED LOW-INCOME COMMUNITY IN-VESTMENT.—The term ‘‘qualified low-incomecommunity investment’’ mean an equity in-vestment in, or a loan to, a qualified activebusiness.

(13) SECRETARY.—The term ‘‘Secretary’’means the Secretary of Housing and UrbanDevelopment, unless otherwise specified inthis title.SEC. 604. AUTHORIZATION.

(a) LICENSES.—The Secretary is authorizedto license community development entitiesas America’s Private Investment Companies,in accordance with the terms of this title.

(b) REGULATIONS.—The Secretary shall reg-ulate APICs for compliance with sound fi-nancial management practices, and the pro-gram and procedural goals of this title andother related Acts, and other purposes as re-quired or authorized by this title, or deter-mined by the Secretary. The Secretary shallissue such regulations as are necessary tocarry out the licensing and regulatory andother duties under this title, and may issuenotices and other guidance or directives asthe Secretary determines are appropriate tocarry out such duties.

(c) USE OF CREDIT SUBSIDY FOR LICENSES.—(1) NUMBER OF LICENSES.—The number of

APICs licensed at any one time may notexceed—

(A) the number that may be supported bythe amount of budget authority appropriatedin accordance with section 504(b) of the Fed-eral Credit Reform Act of 1990 (2 U.S.C. 661c)for the cost (as such term is defined in sec-tion 502 of such Act) of the subsidy and theinvestment strategies of such APICs; or

(B) to the extent the limitation under sec-tion 605(e)(1) applies, the number authorizedunder such section.

(2) USE OF ADDITIONAL CREDIT SUBSIDY.—Subject to the limitation under paragraph(1), the Secretary may use any budget au-thority available after credit subsidy hasbeen allocated for the APICs initially li-censed pursuant to section 605 as follows:


CONGRESSIONAL RECORD — SENATES6722 July 13, 2000(A) ADDITIONAL LICENSES.—To license addi-

tional APICs.(B) CREDIT SUBSIDY INCREASES.—To in-

crease the credit subsidy allocated to anAPIC as an award for high performanceunder this title, except that such increasesmay be made only in accordance with thefollowing requirements and limitations:

(i) TIMING.—An increase may only be pro-vided for an APIC that has been licensed fora period of not less than 2 years.

(ii) COMPETITION.—An increase may only beprovided for a fiscal year pursuant to a com-petition for such fiscal year among APICs el-igible for, and requesting, such an increase.The competition shall be based upon criteriathat the Secretary shall establish, whichshall include the financial soundness andperformance of the APICs, as measured byachievement of the public performance goalsincluded in the APICs statements requiredunder section 605(a)(6) and audits conductedunder section 609(b)(2). Among the criteriaestablished by the Secretary to determinepriority for selection under this section, theSecretary shall include making investmentsin and loans to qualified active businesses inurban or rural areas that have been des-ignated under subchapter U of Chapter 1 ofthe Internal Revenue Code of 1986 as em-powerment zones or enterprise communities.

(d) COOPERATION AND COORDINATION.—(1) PROGRAM POLICIES.—The Secretary is

authorized to coordinate and cooperate,through memoranda of understanding, anAPIC liaison committee, or otherwise, withthe Administrator, the Secretary of theTreasury, and other agencies in the discre-tion of the Secretary, on implementation ofthis title, including regulation, examination,and monitoring of APICs under this title.

(2) FINANCIAL SOUNDNESS REQUIREMENTS.—The Secretary shall consult with the Admin-istrator and the Secretary of the Treasury,and may consult with such other heads ofagencies as the Secretary may consider ap-propriate, in establishing any regulations,requirements, guidelines, or standards for fi-nancial soundness or management practicesof APICs or entities applying for licensing asAPICs. In implementing and monitoringcompliance with any such regulations, re-quirements, guidelines, and standards, theSecretary shall enter into such agreementsand memoranda of understanding with theAdministrator and the Secretary of theTreasury as may be appropriate to providefor such officials to provide any assistancethat may be agreed to.

(3) OPERATIONS.—The Secretary may carryout this title—

(A) directly, through agreements withother Federal entities under section 1535 oftitle 31, United States Code, or otherwise, or

(B) indirectly, under contracts or agree-ments, as the Secretary shall determine.

(e) FEES AND CHARGES FOR ADMINISTRATIVECOSTS.—To the extent provided in appropria-tions Acts, the Secretary is authorized toimpose fees and charges for application, re-view, licensing, and regulation, or other ac-tions under this title, and to pay for thecosts of such activities from the fees andcharges collected.

(f) GUARANTEE FEES.—The Secretary is au-thorized to set and collect fees for loan guar-antee commitments and loan guaranteesthat the Secretary makes under this title.

(g) FUNDING.—(1) AUTHORIZATION OF APPROPRIATIONS FOR

LOAN GUARANTEE COMMITMENTS.—For each offiscal years 2000, 2001, 2002, 2003, and 2004,there is authorized to be appropriated up to$36,000,000 for the cost (as such term is de-fined in section 502(5) of the Federal CreditReform Act of 1990) of annual loan guaranteecommitments under this title. Amounts ap-

propriated under this paragraph shall remainavailable until expended.

(2) AGGREGATE LOAN GUARANTEE COMMIT-MENT LIMITATION.—The Secretary may makecommitments to guarantee loans only to theextent that the total loan principal, any partof which is guaranteed, will not exceed$1,000,000,000, unless another such amount isspecified in appropriation Acts for any fiscalyear.

(3) AUTHORIZATION OF APPROPRIATIONS FORADMINISTRATIVE EXPENSES.—For each of thefiscal years 2000, 2001, 2002, 2003, and 2004,there is authorized to be appropriated$1,000,000 for administrative expenses for car-rying out this title. The Secretary maytransfer amounts appropriated under thisparagraph to any appropriation account ofHUD or another agency, to carry out the pro-gram under this title. Any agency to whichthe Secretary may transfer amounts underthis title is authorized to accept such trans-ferred amounts in any appropriation accountof such agency.

SEC. 605. SELECTION OF APICS.

(a) ELIGIBLE APPLICANTS.—An entity shallbe eligible to be selected for licensing undersection 604 as an APIC only if the entity sub-mits an application in compliance with therequirements established pursuant to sub-section (b) and the entity meets or complieswith the following requirements:

(1) ORGANIZATION.—The entity shall be aprivate, for-profit entity that qualifies as acommunity development entity for the pur-poses of the New Markets Tax Credits, to theextent such credits are established underFederal law.

(2) MINIMUM PRIVATE EQUITY CAPITAL.—Theamount of private equity capital reasonablyavailable to the entity, as determined by theSecretary, at the time that a license is ap-proved may not be less than $25,000,000.

(3) QUALIFIED MANAGEMENT.—The manage-ment of the entity shall, in the determina-tion of the Secretary, meet such standardsas the Secretary shall establish to ensurethat the management of the APIC is quali-fied, and has the financial expertise, knowl-edge, experience, and capability necessary,to make investments for community andeconomic development in low-income com-munities.

(4) CONFLICT OF INTEREST.—The entity shalldemonstrate that, in accordance with soundfinancial management practices, the entityis structured to preclude financial conflict ofinterest between the APIC and a manager orinvestor.

(5) INVESTMENT STRATEGY.—The entityshall prepare and submit to the Secretary aninvestment strategy that includes bench-marks for evaluation of its progress, that in-cludes an analysis of existing locally ownedbusinesses in the communities in which theinvestments under the strategy will be made,that prioritizes such businesses for invest-ment opportunities, and that fulfills the spe-cific public purpose goals of the entity.

(6) STATEMENT OF PUBLIC PURPOSE GOALS.—The entity shall prepare and submit to theSecretary a statement of the public purposegoals of the entity, which shall—

(A) set forth goals that shall promote com-munity and economic development, whichshall include—

(i) making investments in low-incomecommunities that further economic develop-ment objectives by targeting such invest-ments in businesses or trades that complywith the requirements under subparagraphs(A) through (C) of section 603(10) relating tolow-income communities in a manner thatbenefits low-income persons;

(ii) creating jobs in low-income commu-nities for residents of such communities;

(iii) involving community-based organiza-tions and residents in community develop-ment activities;

(iv) such other goals as the Secretary shallspecify; and

(v) such elements as the entity may setforth to achieve specific public purposegoals;

(B) include such other elements as the Sec-retary shall specify; and

(C) include proposed measurements andstrategies for meeting the goals.

(7) COMPLIANCE WITH LAWS.—The entityshall agree to comply with applicable laws,including Federal executive orders, Office ofManagement and Budget circulars, and re-quirements of the Department of the Treas-ury, and such operating and regulatory re-quirements as the Secretary may imposefrom time to time.

(8) OTHER.—The entity shall satisfy anyother application requirements that the Sec-retary may impose by regulation or FederalRegister notice.

(b) COMPETITIONS.—The Secretary shall se-lect eligible entities under subsection (a) tobe licensed under section 604 as APICs on thebasis of competitions. The Secretary shallannounce each such competition by causinga notice to be published in the Federal Reg-ister that invites applications for licensesand sets forth the requirements for applica-tion and such other terms of the competitionnot otherwise provided for, as determined bythe Secretary.

(c) SELECTION.—In competitions under sub-section (b), the Secretary shall select eligi-ble entities under subsection (a) for licensingas APICs on the basis of—

(1) the extent to which the entity is ex-pected to achieve the goals of this title bymeeting or exceeding criteria establishedunder subsection (d); and

(2) to the extent practicable and subject tothe existence of approvable applications, en-suring geographical diversity among the ap-plicants selected and diversity of APICs in-vestment strategies, so that urban and ruralcommunities are both served, in the deter-mination of the Secretary, by the programunder this title.

(d) SELECTION CRITERIA.—The Secretaryshall establish selection criteria for competi-tions under subsection (b), which shall in-clude the following criteria:

(1) CAPACITY.—(A) MANAGEMENT.—The extent to which

the entity’s management has the quality, ex-perience, and expertise to make and managesuccessful investments for community andeconomic development in low-income com-munities.

(B) STATE AND LOCAL COOPERATION.—Theextent to which the entity demonstrates acapacity to cooperate with States or units ofgeneral local government and with commu-nity-based organizations and residents oflow-income communities.

(2) INVESTMENT STRATEGY.—The quality ofthe entity’s investment strategy submittedin accordance with subsection (a)(5) and theextent to which the investment strategy fur-thers the goals of this title pursuant to para-graph (3) of this subsection.

(3) PUBLIC PURPOSE GOALS.—With respect tothe statement of public purpose goals of theentity submitted in accordance with sub-section (a)(6), and the strategy and measure-ments included therein—

(A) the extent to which such goals promotecommunity and economic development;

(B) the extent to which such goals providefor making qualified investments in low-in-come communities that further economic de-velopment objectives, such as—

(i) creating, within 2 years of the comple-tion of the initial such investment, job op-portunities, opportunities for ownership, and


CONGRESSIONAL RECORD — SENATE S6723July 13, 2000other economic opportunities within a low-income community, both short-term and of alonger duration;

(ii) improving the economic vitality of alow-income community, including stimu-lating other business development;

(iii) bringing new income into a low-in-come community and assisting in the revi-talization of such community;

(iv) converting real property for the pur-pose of creating a site for business incuba-tion and location, or business district revi-talization;

(v) enhancing economic competition, in-cluding the advancement of technology;

(vi) rural development;(vii) mitigating, rehabilitating, and

reusing real property considered subject tothe Solid Waste Disposal Act (42 U.S.C. 6901et seq.; commonly referred to as the Re-source Conservation and Recovery Act) orrestoring coal mine-scarred land;

(viii) creation of local wealth through in-vestments in employee stock ownership com-panies or resident-owned ventures; and

(ix) any other objective that the Secretarymay establish to further the purposes of thistitle;

(C) the quality of jobs to be created forresidents of low-income communities, takinginto consideration such factors as the pay-ment of higher wages, job security, employ-ment benefits, opportunity for advancement,and personal asset building;

(D) the extent to which achievement ofsuch goals will involve community-based or-ganizations and residents in community de-velopment activities; and

(E) the extent to which the investments re-ferred to in subparagraph (B) are likely tobenefit existing small business in low-in-come communities or will encourage thegrowth of small business in such commu-nities.

(4) OTHER.—Any other criteria that theSecretary may establish to carry out thepurposes of this title.

(e) FIRST YEAR REQUIREMENTS.—(1) NUMERICAL LIMITATION.—The number of

APICs may not, at any time during the 1-year period that begins upon the Secretaryawarding the first license for an APIC underthis title, exceed 15.

(2) LIMITATION ON ALLOCATION OF AVAILABLECREDIT SUBSIDY.—Of the amount of budgetauthority initially made available for alloca-tion under this title for APICs, the amountallocated for any single APIC may not ex-ceed 20 percent.

(3) NATIVE AMERICAN PRIVATE INVESTMENTCOMPANY.—Subject only to the absence of anapprovable application from an entity, dur-ing the 1-year period referred to in paragraph(1), of the entities selected and licensed bythe Secretary as APICs, at least one shall bean entity that has as its primary purpose themaking of qualified low-income communityinvestments in areas that are within Indiancountry (as such term is defined in section1151 of title 18, United States Code) or withinlands that have status as Hawaiian homeland under section 204 of the HawaiianHomes Commission Act, 1920 (42 Stat. 108) orare acquired pursuant to such Act. The Sec-retary may establish specific selection cri-teria for applicants under this paragraph.

(f) COMMUNICATIONS BETWEEN HUD AND AP-PLICANTS.—

(1) IN GENERAL.—The Secretary shall setforth in regulations the procedures underwhich HUD and applicants for APIC licenses,and others, may communicate. Such regula-tions shall—

(A) specify by position the HUD officersand employees who may communicate withsuch applicants and others;

(B) permit HUD officers and employees torequest and discuss with the applicant and

others (such as banks or other credit or busi-ness references, or potential investors, thatthe applicant specifies in writing) any moredetailed information that may be desirableto facilitate HUD’s review of the applicant’sapplication;

(C) restrict HUD officers and employeesfrom revealing to any applicant—

(i) the fact or chances of award of a licenseto such applicant, unless there has been apublic announcement of the results of thecompetition; and

(ii) any information with respect to anyother applicant; and

(D) set forth requirements for making andkeeping records of any communications con-ducted under this subsection, including re-quirements for making such records avail-able to the public after the award of licensesunder an initial or subsequent notice, as ap-propriate, under subsection (a).

(2) TIMING.—Regulations under this sub-section may be issued as interim rules for ef-fect on or before the date of publication ofthe first notice under subsection (a), andshall apply only with respect to applicationsunder such notice. Regulations to implementthis subsection with respect to any noticeafter the first such notice shall be subject tonotice and comment rulemaking.

(3) INAPPLICABILITY OF DEPARTMENT OF HUDACT PROVISION.—Section 12(e)(2) of the De-partment of Housing and Urban DevelopmentAct (42 U.S.C. 3537a(e)(2)) is amended by in-serting before the period at the end the fol-lowing: ‘‘or any license provided under theAmerica’s Private Investment CompaniesAct’’.SEC. 606. OPERATIONS OF APICS.

(a) POWERS AND AUTHORITIES.—(1) IN GENERAL.—An APIC shall have any

powers or authorities that—(A) the APIC derives from the jurisdiction

in which it is organized, or that the APICotherwise has;

(B) may be conferred by a license underthis title; and

(C) the Secretary may prescribe by regula-tion.

(2) NEW MARKET ASSISTANCE.—Nothing inthis title shall preclude an APIC or its inves-tors from receiving an allocation of NewMarket Tax Credits (to the extent such cred-its are established under Federal law) if theAPIC satisfies any applicable terms and con-ditions under the Internal Revenue Code of1986.

(b) INVESTMENT LIMITATIONS.—(1) QUALIFIED LOW-INCOME COMMUNITY IN-

VESTMENTS.—Substantially all investmentsthat an APIC makes shall be qualified low-income community investments if the in-vestments are financed with—

(A) amounts available from the proceeds ofthe issuance of an APIC’s qualified debentureguaranteed under this title;

(B) proceeds of the sale of obligations de-scribed under subsection (c)(3)(C)(iii); or

(C) the use of private equity capital, as de-termined by the Secretary, in an amountspecified in the APIC’s license.

(2) SINGLE BUSINESS INVESTMENTS.—AnAPIC shall not, as a matter of sound finan-cial practice, invest in any one business anamount that exceeds an amount equal to 35percent of the sum of—

(A) the APIC’s private equity capital; plus(B) an amount equal to the percentage

limit that the Secretary determines that anAPIC may have outstanding at any one time,under subsection (c)(2)(A).

(c) BORROWING POWERS; QUALIFIED DEBEN-TURES.—

(1) ISSUANCE.—An APIC may issue qualifieddebentures. The Secretary shall, by regula-tion, specify the terms and requirements fordebentures to be considered qualified deben-

tures for purposes of this title, except thatthe term to maturity of any qualified deben-ture may not exceed 21 years and each quali-fied debenture shall bear interest during allor any part of that time period at a rate orrates approved by the Secretary.

(2) LEVERAGE LIMITS.—In general, as a mat-ter of sound financial managementpractices—

(A) the total amount of qualified deben-tures that an APIC issues under this titlethat an APIC may have outstanding at anyone time shall not exceed an amount equalto 200 percent of the private equity capital ofthe APIC, as determined by the Secretary;and

(B) an APIC shall not have more than$300,000,000 in face value of qualified deben-tures issued under this title outstanding atany one time.

(3) REPAYMENT.—(A) CONDITION OF BUSINESS WIND-UP.—An

APIC shall have repaid, or have otherwisebeen relieved of indebtedness, with respect toany interest or principal amounts of bor-rowings under this subsection no less than 2years before the APIC may dissolve or other-wise complete the wind-up of its business.

(B) TIMING.—An APIC may repay any in-terest or principal amounts of borrowingsunder this subsection at any time: Provided,That the repayment of such amounts shallnot relieve an APIC of any duty otherwiseapplicable to the APIC under this title, un-less the Secretary orders such relief.

(C) USE OF INVESTMENT PROCEEDS BEFOREREPAYMENT.—Until an APIC has repaid allinterest and principal amounts on APIC bor-rowings under this subsection, an APIC mayuse the proceeds of investments, in accord-ance with regulations issued by the Sec-retary, only to—

(i) pay for proper costs and expenses theAPIC incurs in connection with such invest-ments;

(ii) pay for the reasonable administrativeexpenses of the APIC;

(iii) purchase Treasury securities;(iv) repay interest and principal amounts

on APIC borrowings under this subsection;(v) make interest, dividend, or other dis-

tributions to or on behalf of an investor; or(vi) undertake such other purposes as the

Secretary may approve.(D) USE OF INVESTMENT PROCEEDS AFTER

REPAYMENT.—After an APIC has repaid allinterest and principal amounts on APIC bor-rowings under this subsection, and subject tocontinuing compliance with subsection (a),the APIC may use the proceeds from invest-ments to make interest, dividend, or otherdistributions to or on behalf of investors inthe nature of returns on capital, or the with-drawal of private equity capital, without re-gard to subparagraph (C) but in conformitywith the APIC’s investment strategy andstatement of public purpose goals.

(d) REUSE OF QUALIFIED DEBENTURE PRO-CEEDS.—An APIC may use the proceeds ofsale of Treasury securities purchased undersubsection (c)(3)(C)(iii) to make qualifiedlow-income community investments, subjectto the Secretary’s approval. In making therequest for the Secretary’s approval, theAPIC shall follow the procedures applicableto an APIC’s request for HUD guarantee ac-tion, as the Secretary may modify such pro-cedures for implementation of this sub-section. Such procedures shall include thedescription and certifications that an APICmust include in all requests for guaranteeaction, and the environmental certificationapplicable to initial expenditures for aproject or activity.

(e) ANTIPIRATING.—Notwithstanding anyother provision of law, an APIC may not useany private equity capital required to becontributed under this title, or the proceeds


CONGRESSIONAL RECORD — SENATES6724 July 13, 2000from the sale of any qualified debentureunder this title, to make an investment, asdetermined by the Secretary, to assist di-rectly in the relocation of any industrial orcommercial plant, facility, or operation,from 1 area to another area, if the relocationis likely to result in a significant loss of em-ployment in the labor market area fromwhich the relocation occurs.

(f) EXCLUSION OF APIC FROM DEFINITION OFDEBTOR UNDER BANKRUPTCY PROVISIONS.—Section 109(b)(2) of title 11, United StatesCode, is amended by inserting before ‘‘creditunion’’ the following: ‘‘America’s Private In-vestment Company licensed under the Amer-ica’s Private Investment Companies Act,’’.SEC. 607. CREDIT ENHANCEMENT BY THE FED-

ERAL GOVERNMENT.(a) ISSUANCE AND GUARANTEE OF QUALIFIED

DEBENTURES.—(1) AUTHORITY.—To the extent consistent

with the Federal Credit Reform Act of 1990,the Secretary is authorized to make commit-ments to guarantee and guarantee the time-ly payment of all principal and interest asscheduled on qualified debentures issued byAPICs. Such commitments and guaranteesmay only be made in accordance with theterms and conditions established under para-graph (2).

(2) TERMS AND CONDITIONS.—The Secretaryshall establish such terms and conditions asthe Secretary determines to be appropriatefor commitments and guarantees under thissubsection, including terms and conditionsrelating to amounts, expiration, number, pri-orities of repayment, security, collateral,amortization, payment of interest (includingthe timing thereof), and fees and charges.The terms and conditions applicable to anyparticular commitment or guarantee may beestablished in documents that the Secretaryapproves for such commitment or guarantee.

(3) SENIORITY.—Notwithstanding any otherprovision of Federal law or any law or theconstitution of any State, qualified deben-tures guaranteed under this subsection bythe Secretary shall be senior to any otherdebt obligation, equity contribution or earn-ings, or the distribution of dividends, inter-est, or other amounts, of an APIC.

(b) ISSUANCE OF TRUST CERTIFICATES.—TheSecretary, or an agent or entity selected bythe Secretary, is authorized to issue trustcertificates representing ownership of all ora fractional part of guaranteed qualified de-bentures issued by APICs and held in trust.

(c) GUARANTEE OF TRUST CERTIFICATES.—(1) IN GENERAL.—The Secretary is author-

ized, upon such terms and conditions as theSecretary determines to be appropriate, toguarantee the timely payment of the prin-cipal of and interest on trust certificatesissued by the Secretary, or an agent or otherentity, for purposes of this section. Suchguarantee shall be limited to the extent ofprincipal and interest on the guaranteedqualified debentures which compose thetrust.

(2) SUBSTITUTION OPTION.—The Secretaryshall have the option to replace in the corpusof the trust any prepaid or defaulted quali-fied debenture with a debenture, another fullfaith and credit instrument, or any obliga-tions of the United States, that may reason-ably substitute for such prepaid or defaultedqualified debenture.

(3) PROPORTIONATE REDUCTION OPTION.—Inthe event that the Secretary elects not toexercise the option under paragraph (2), anda qualified debenture in such trust is pre-paid, or in the event of default of a qualifieddebenture, the guarantee of timely paymentof principal and interest on the trust certifi-cate shall be reduced in proportion to theamount of principal and interest that suchprepaid qualified debenture represents in thetrust. Interest on prepaid or defaulted quali-

fied debentures shall accrue and be guaran-teed by the Secretary only through the dateof payment of the guarantee. During theterm of a trust certificate, it may be calledfor redemption due to prepayment or defaultof all qualified debentures that are in thecorpus of the trust.

(d) FULL FAITH AND CREDIT BACKING OFGUARANTEES.—The full faith and credit ofthe United States is pledged to the timelypayment of all amounts which may be re-quired to be paid under any guarantee by theSecretary pursuant to this section.

(e) SUBROGATION AND LIENS.—(1) SUBROGATION.—In the event the Sec-

retary pays a claim under a guarantee issuedunder this section, the Secretary shall besubrogated fully to the rights satisfied bysuch payment.

(2) PRIORITY OF LIENS.—No State or locallaw, and no Federal law, shall preclude orlimit the exercise by the Secretary of itsownership rights in the debentures in thecorpus of a trust under this section.

(f) REGISTRATION.—(1) IN GENERAL.—The Secretary shall pro-

vide for a central registration of all trustcertificates issued pursuant to this section.

(2) AGENTS.—The Secretary may contractwith an agent or agents to carry out on be-half of the Secretary the pooling and thecentral registration functions of this sectionnotwithstanding any other provision of law,including maintenance on behalf of andunder the direction of the Secretary, suchcommercial bank accounts or investments inobligations of the United States as may benecessary to facilitate trusts backed byqualified debentures guaranteed under thistitle and the issuance of trust certificates tofacilitate formation of the corpus of thetrusts. The Secretary may require suchagent or agents to provide a fidelity bond orinsurance in such amounts as the Secretarydetermines to be necessary to protect the in-terests of the Government.

(3) FORM.—Book-entry or other electronicforms of registration for trust certificatesunder this title are authorized.

(g) TIMING OF ISSUANCE OF GUARANTEES OFQUALIFIED DEBENTURES AND TRUST CERTIFI-CATES.—The Secretary may, from time totime in the Secretary’s discretion, exercisethe authority to issue guarantees of quali-fied debentures under this title or trust cer-tificates under this title.SEC. 608. APIC REQUESTS FOR GUARANTEE AC-

TIONS.(a) IN GENERAL.—The Secretary may issue

a guarantee under this title for a qualifieddebenture that an APIC intends to issue onlypursuant to a request to the Secretary bythe APIC for such guarantee that is made inaccordance with regulations governing thecontent and procedures for such requests,that the Secretary shall prescribe. Such reg-ulations shall provide that each such requestshall include—

(1) a description of the manner in whichthe APIC intends to use the proceeds fromthe qualified debenture;

(2) a certification by the APIC that theAPIC is in substantial compliance with—

(A) this title and other applicable laws, in-cluding any requirements established underthis title by the Secretary;

(B) all terms and conditions of its license,any cease-and-desist order issued under sec-tion 610, and of any penalty or condition thatmay have arisen from examination or moni-toring by the Secretary or otherwise, includ-ing the satisfaction of any financial audit ex-ception that may have been outstanding; and

(C) all requirements relating to the alloca-tion and use of New Markets Tax Credits, tothe extent such credits are established underFederal law; and

(3) any other information or certificationthat the Secretary considers appropriate.

(b) REQUESTS FOR GUARANTEE OF QUALIFIEDDEBENTURES THAT INCLUDE FUNDING FOR INI-TIAL EXPENDITURE FOR A PROJECT OR ACTIV-ITY.—In addition to the description and cer-tification that an APIC is required to supplyin all requests for guarantee action undersubsection (a), in the case of an APIC’s re-quest for a guarantee that includes a quali-fied debenture, the proceeds of which theAPIC expects to be used as its initial expend-iture for a project or activity in which theAPIC intends to invest, and the expenditurefor which would require an environmentalassessment under the National Environ-mental Policy Act of 1969 and other relatedlaws that further the purposes of such Act,such request for guarantee action shall in-clude evidence satisfactory to the Secretaryof the certification of the completion of en-vironmental review of the project or activityrequired of the cognizant State or local gov-ernment under subsection (c). If the environ-mental review responsibility for the projector activity has not been assumed by a Stateor local government under subsection (c),then the Secretary shall be responsible forcarrying out the applicable responsibilitiesunder the National Environmental PolicyAct of 1969 and other provisions of law thatfurther the purposes of such Act that relateto the project or activity, and the Secretaryshall execute such responsibilities beforeacting on the APIC’s request for the guar-antee that is covered by this subsection.

(c) RESPONSIBILITY FOR ENVIRONMENTALREVIEWS.—

(1) EXECUTION OF RESPONSIBILITY BY THESECRETARY.—This subsection shall apply toguarantees by the Secretary of qualified de-bentures under this title, the proceeds ofwhich would be used in connection withqualified low-income community invest-ments of APICs under this title.

(2) ASSUMPTION OF RESPONSIBILITY BY COG-NIZANT UNIT OF GENERAL GOVERNMENT.—

(A) GUARANTEE OF QUALIFIED DEBEN-TURES.—In order to assure that the policiesof the National Environmental Policy Act of1969 and other provisions of law that furtherthe purposes of such Act (as specified in reg-ulations issued by the Secretary) are mosteffectively implemented in connection withthe expenditure of funds under this title, andto assure to the public undiminished protec-tion of the environment, the Secretary may,under such regulations, in lieu of the envi-ronmental protection procedures otherwiseapplicable, provide for the guarantee ofqualified debentures, any part of the pro-ceeds of which are to fund particular quali-fied low-income community investments ofAPICs under this title, if a State or unit ofgeneral local government, as designated bythe Secretary in accordance with regulationsissued by the Secretary, assumes all of theresponsibilities for environmental review,decisionmaking, and action pursuant to theNational Environmental Policy Act of 1969and such other provisions of law that furthersuch Act as the regulations of the Secretaryspecify, that would otherwise apply to theSecretary were the Secretary to undertakethe funding of such investments as a Federalaction.

(B) IMPLEMENTATION.—The Secretary shallissue regulations to carry out this sub-section only after consultation with theCouncil on Environmental Quality. Such reg-ulations shall—

(i) specify any other provisions of lawwhich further the purposes of the NationalEnvironmental Policy Act of 1969 and towhich the assumption of responsibility asprovided in this subsection applies;

(ii) provide eligibility criteria and proce-dures for the designation of a State or unitof general local government to assume all ofthe responsibilities in this subsection;


CONGRESSIONAL RECORD — SENATE S6725July 13, 2000(iii) specify the purposes for which funds

may be committed without regard to theprocedure established under paragraph (3);

(iv) provide for monitoring of the perform-ance of environmental reviews under thissubsection;

(v) in the discretion of the Secretary, pro-vide for the provision or facilitation of train-ing for such performance; and

(vi) subject to the discretion of the Sec-retary, provide for suspension or terminationby the Secretary of the assumption undersubparagraph (A).

(C) RESPONSIBILITIES OF STATES AND UNITSOF GENERAL LOCAL GOVERNMENT.—The Sec-retary’s duty under subparagraph (B) shallnot be construed to limit any responsibilityassumed by a State or unit of general localgovernment with respect to any particularrequest for guarantee under subparagraph(A), or the use of funds for a qualified invest-ment.

(3) PROCEDURE.—Subject to compliance bythe APIC with the requirements of this title,the Secretary shall approve the request forguarantee of a qualified debenture, any partof the proceeds of which is to fund particularqualified low-income community invest-ments of an APIC under this title, that issubject to the procedures authorized by thissubsection only if, not less than 15 days priorto such approval and prior to any commit-ment of funds to such investment (except forsuch purposes specified in the regulationsissued under paragraph (2)(B)), the APIC sub-mits to the Secretary a request for guar-antee of a qualified debenture that is accom-panied by evidence of a certification of theState or unit of general local governmentwhich meets the requirements of paragraph(4). The approval by the Secretary of anysuch certification shall be deemed to satisfythe Secretary’s responsibilities pursuant toparagraph (1) under the National Environ-mental Policy Act of 1969 and such other pro-visions of law as the regulations of the Sec-retary specify insofar as those responsibil-ities relate to the guarantees of qualified de-bentures, any parts of the proceeds of whichare to fund such investments, which are cov-ered by such certification.

(4) CERTIFICATION.—A certification underthe procedures authorized by this subsectionshall—

(A) be in a form acceptable to the Sec-retary;

(B) be executed by the chief executive offi-cer or other officer of the State or unit ofgeneral local government who qualifiesunder regulations of the Secretary;

(C) specify that the State or unit of gen-eral local government under this subsectionhas fully carried out its responsibilities asdescribed under paragraph (2); and

(D) specify that the certifying officer—(i) consents to assume the status of a re-

sponsible Federal official under the NationalEnvironmental Policy Act of 1969 and eachprovision of law specified in regulationsissued by the Secretary insofar as the provi-sions of such Act or other such provision oflaw apply pursuant to paragraph (2); and

(ii) is authorized and consents on behalf ofthe State or unit of general local govern-ment and himself or herself to accept the ju-risdiction of the Federal courts for the pur-pose of enforcement of the responsibilities assuch an official.SEC. 609. EXAMINATION AND MONITORING OF

APICS.(a) IN GENERAL.—The Secretary shall,

under regulations, through audits, perform-ance agreements, license conditions, or oth-erwise, examine and monitor the operationsand activities of APICs for compliance withsound financial management practices, andfor satisfaction of the program and proce-dural goals of this title and other related

Acts. The Secretary may undertake any re-sponsibility under this section in coopera-tion with an APIC liaison committee, or anyagency that is a member of such a com-mittee, or other agency.

(b) MONITORING, UPDATING, AND PROGRAMREVIEW.—

(1) REPORTING AND UPDATING.—The Sec-retary shall establish such annual or morefrequent reporting requirements for APICs,and such requirements for the updating ofthe statement of public purpose goals, in-vestment strategy (including the bench-marks in such strategy), and other docu-ments that may have been used in the li-cense application process under this title, asthe Secretary determines necessary to assistthe Secretary in monitoring the complianceand performance of APICs.

(2) ANNUAL AUDITS.—The Secretary shallrequire each APIC to have an independentaudit conducted annually of the operationsof the APIC. The Secretary, in consultationwith the Administrator and the Secretary ofthe Treasury, shall establish requirementsand standards for such audits, including re-quirements that such audits be conducted inaccordance with generally accepted account-ing principles, that the APIC submit the re-sults of the audit to Secretary, and thatspecify the information to be submitted.

(3) EXAMINATIONS.—The Secretary shall, noless often than once every 2 years, examinethe operations and portfolio of each APIC li-censed under this title for compliance withsound financial management practices, andfor compliance with this title.

(4) EXAMINATION STANDARDS.—(A) SOUND FINANCIAL MANAGEMENT PRAC-

TICES.—The Secretary shall examine eachAPIC to ensure, as a matter of sound finan-cial management practices, substantial com-pliance with this and other applicable laws,including Federal executive orders, Depart-ment of Treasury and Office of Managementand Budget guidance, circulars, and applica-tion and licensing requirements on a con-tinuing basis. The Secretary may, by regula-tion, establish any additional standards forsound financial management practices, in-cluding standards that address solvency andfinancial exposure.

(B) PERFORMANCE AND OTHER EXAMINA-TIONS.—The Secretary shall monitor eachAPIC’s progress in meeting the goals in theAPIC’s statement of public purpose goals,executing the APIC’s investment strategy,and other matters.

(c) INSPECTOR GENERAL RESPONSIBILITY.—In carrying out monitoring of HUD’s respon-sibilities under this title and for purposes ofensuring that the program under this title isoperated in accordance with sound financialmanagement practices, the Inspector Gen-eral of the Department of Housing and UrbanDevelopment shall consult with the Inspec-tor General of the Department of the Treas-ury and the Inspector General of the SmallBusiness Administration, as appropriate, andmay enter into such agreements and memo-randa of understanding as may be necessaryto obtain the cooperation of the InspectorsGeneral of the Department of the Treasuryand the Small Business Administration incarrying out such function.

(d) ANNUAL REPORT BY SECRETARY.—TheSecretary shall submit a report to the Con-gress annually regarding the operations, ac-tivities, financial health, and achievementsof the APIC program under this title. The re-port shall list each investment made by anAPIC and include a summary of the exami-nations conducted under subsection (b)(3),the guarantee actions of HUD, and any regu-latory or policy actions taken by HUD. Thereport shall distinguish recently licensedAPICs from APICs that have held licensesfor a longer period for purposes of indicatingprogram activities and performance.

(e) GAO REPORT.—(1) REQUIREMENT.—Not later than 2 years

after the date of the enactment of this Act,the Comptroller General of the United Statesshall submit a report to the Congress regard-ing the operation of the program under thistitle for licensing and guarantees for APICs.

(2) CONTENTS.—The report shall include—(A) an analysis of the operations and moni-

toring by HUD of the APIC program underthis title;

(B) the administrative and capacity needsof HUD required to ensure the integrity ofthe program;

(C) the extent and adequacy of any creditsubsidy appropriated for the program; and

(D) the management of financial risk andliability of the Federal Government underthe program.SEC. 610. PENALTIES.

(a) VIOLATIONS SUBJECT TO PENALTY.—TheSecretary may impose a penalty under thissubsection on any APIC or manager of anAPIC that, by any act, practice, or failure toact, engages in fraud, mismanagement, ornoncompliance with this title, the regula-tions under this title, or a condition of theAPIC’s license under this title. The Sec-retary shall, by regulation, identify, by ge-neric description of a role or responsibilities,any manager of an APIC that is subject to apenalty under this section.

(b) PENALTIES REQUIRING NOTICE AND ANOPPORTUNITY TO RESPOND.—If, after notice inwriting to an APIC or the manager of anAPIC that the APIC or manager has engagedin any action, practice, or failure to actthat, under subsection (a), is subject to apenalty, and after an opportunity for theAPIC or manager to respond to the notice,the Secretary determines that the APIC ormanager engaged in such action or failure toact, the Secretary may, in addition to otherpenalties imposed—

(1) assess a civil money penalty, exceptthan any civil money penalty under this sub-section shall be in an amount not exceeding$10,000;

(2) issue an order to cease and desist withrespect to such action, practice, or failure toact of the APIC or manager;

(3) suspend, or condition the use of, theAPIC’s license, including deferring, for theperiod of the suspension, any commitment toguarantee any new qualified debenture of theAPIC, except that any suspension or condi-tion under this paragraph may not exceed 90days; and

(4) impose any other penalty that the Sec-retary determines to be less burdensome tothe APIC than a penalty under subsection(c).

(c) PENALTIES REQUIRING NOTICE AND HEAR-ING.—If, after notice in writing to an APIC orthe manager of an APIC that an APIC ormanager has engaged in any action, practice,or failure to act that, under subsection (a), issubject to a penalty, and after an oppor-tunity for administrative hearing, the Sec-retary determines that the APIC or managerengaged in such action or failure to act, theSecretary may—

(1) assess a civil money penalty against theAPIC or a manager in any amount;

(2) require the APIC to divest any interestin an investment, on such terms and condi-tions as the Secretary may impose; or

(3) revoke the APIC’s license.(d) EFFECTIVE DATE OF PENALTIES.—(1) PRIOR NOTICE REQUIREMENT.—Except as

provided in paragraph (2) of this subsection,a penalty under subsection (b) or (c) shallnot be due and payable and shall not other-wise take effect or be subject to enforcementby an order of a court, before notice of thepenalty is published in the Federal Register.

(2) CEASE-AND-DESIST ORDERS AND SUSPEN-SION OR CONDITIONING OF LICENSE.—In the


CONGRESSIONAL RECORD — SENATES6726 July 13, 2000case of a cease-and-desist order under sub-section (b)(2) or the suspension or condi-tioning of an APIC’s license under subsection(b)(3), the following procedures shall apply:

(A) ACTION WITHOUT PUBLISHED NOTICE.—The Secretary may order an APIC or man-ager to cease and desist from an action, prac-tice, or failure to act or may suspend or con-dition an APIC’s license, for not more than45 days without prior publication of notice inthe Federal Register, but such cease-and-de-sist order or suspension or conditioning shalltake effect only after the Secretary hasissued a written notice (which may include awriting in electronic form) of such action tothe APIC. Notwithstanding subsection (b),such written notice shall be effective with-out regard to whether the APIC has been ac-corded an opportunity to respond. Upon suchnotice, such cease-and-desist order or sus-pension or conditioning shall be subject toenforcement by an order of a court.

(B) PUBLICATION OF NOTICE OF SUSPENSIONOR CONDITIONING OF LICENSE.—Upon a suspen-sion or conditioning of a license taking ef-fect pursuant to subparagraph (A), the Sec-retary shall promptly cause a notice of sus-pension or conditioning of such license for aperiod of not more than 90 days to be pub-lished in the Federal Register. The Secretaryshall provide the APIC an opportunity to re-spond to such notice. For purposes of the de-termining the duration of the period of anysuspension or conditioning under this sub-paragraph, the first day of such period shallbe the day of issuance of the written noticeunder this paragraph of the suspension orconditioning.

(C) REVOCATION OF LICENSE.—During theperiod of the suspension or conditioning ofan APIC’s license, the Secretary may takeaction under subsection (c)(3) to revoke thelicense of the APIC, in accordance with theprocedures applicable to such subsection.Notwithstanding any other provision of thissection, if the Secretary takes such action,the Secretary may extend the suspension orconditioning of the APIC’s license, for one ormore periods of not more than 90 days each,by causing notice of such action to be pub-lished in the Federal Register—

(i) for the first such extension, before theexpiration of the period under subparagraph(B); and

(ii) for any subsequent extension, beforethe expiration of the preceding extension pe-riod under this subparagraph.

(D) TERM OF EFFECTIVENESS.—A cease-and-desist order or the suspension or condi-tioning of an APIC’s license by the Secretaryunder this paragraph shall remain in effectin accordance with the terms of the order,suspension, or conditioning until final adju-dication in any action undertaken to chal-lenge the order, or the suspension or condi-tioning, or the revocation, of an APIC’s li-cense.SEC. 611. EFFECTIVE DATE.

(a) IN GENERAL.—Except as provided insubsection (b), this title shall take effectupon the expiration of the 6-month periodbeginning on the date of the enactment ofthis Act.

(b) ISSUANCE OF REGULATIONS AND GUIDE-LINES.—Any authority under this title of theSecretary, the Administrator, and the Sec-retary of the Treasury to issue regulations,standards, guidelines, or licensing require-ments, and any authority of such officials toconsult or enter into agreements or memo-randa of understanding regarding suchissuance, shall take effect on the date of theenactment of this Act.SEC. 612. SUNSET.

After the expiration of the 5-year periodbeginning upon the date that the Secretaryawards the first license for an APIC underthis title—

(1) the Secretary may not license anyAPIC; and

(2) no amount may be appropriated for thecosts (as such term is defined in section 502of the Federal Credit Reform Act of 1990 (2U.S.C. 661c)) of any guarantee under thistitle for any debenture issued by an APIC.This section may not be construed to pro-hibit, limit, or affect the award, allocation,or use of any budget authority for the costsof such guarantees that is appropriated be-fore the expiration of such period.

TITLE VII—NEW MARKETS TAX CREDITSEC. 701. NEW MARKETS TAX CREDIT.

(a) IN GENERAL.—Subpart D of part IV ofsubchapter A of chapter 1 (relating to busi-ness-related credits), as amended by section201(a), is amended by adding at the end thefollowing new section:‘‘SEC. 45E. NEW MARKETS TAX CREDIT.

‘‘(a) ALLOWANCE OF CREDIT.—‘‘(1) IN GENERAL.—For purposes of section

38, in the case of a taxpayer who holds aqualified equity investment on a credit al-lowance date of such investment which oc-curs during the taxable year, the new mar-kets tax credit determined under this sectionfor such taxable year is an amount equal tothe applicable percentage of the amount paidto the qualified community development en-tity for such investment at its original issue.

‘‘(2) APPLICABLE PERCENTAGE.—For pur-poses of paragraph (1), the applicable per-centage is—

‘‘(A) 5 percent with respect to the first 3credit allowance dates, and

‘‘(B) 6 percent with respect to the remain-der of the credit allowance dates.

‘‘(3) CREDIT ALLOWANCE DATE.—For pur-poses of paragraph (1), the term ‘credit al-lowance date’ means, with respect to anyqualified equity investment—

‘‘(A) the date on which such investment isinitially made, and

‘‘(B) each of the 6 anniversary dates ofsuch date thereafter.

‘‘(b) QUALIFIED EQUITY INVESTMENT.—Forpurposes of this section—

‘‘(1) IN GENERAL.—The term ‘qualified eq-uity investment’ means any equity invest-ment in a qualified community developmententity if—

‘‘(A) such investment is acquired by thetaxpayer at its original issue (directly orthrough an underwriter) solely in exchangefor cash,

‘‘(B) substantially all of the proceeds fromsuch investment is used by the qualifiedcommunity development entity to makequalified low-income community invest-ments, and

‘‘(C) such investment is designated for pur-poses of this section by the qualified commu-nity development entity.Such term shall not include any equity in-vestment issued by a qualified communitydevelopment entity more than 5 years afterthe date that such entity receives an alloca-tion under subsection (f). Any allocation notused within such 5-year period may be reallo-cated by the Secretary under subsection (f).

‘‘(2) LIMITATION.—The maximum amount ofequity investments issued by a qualifiedcommunity development entity which maybe designated under paragraph (1)(C) by suchentity shall not exceed the portion of thelimitation amount allocated under sub-section (f) to such entity.

‘‘(3) SAFE HARBOR FOR DETERMINING USE OFCASH.—The requirement of paragraph (1)(B)shall be treated as met if at least 85 percentof the aggregate gross assets of the qualifiedcommunity development entity are investedin qualified low-income community invest-ments.

‘‘(4) TREATMENT OF SUBSEQUENT PUR-CHASERS.—The term ‘qualified equity invest-

ment’ includes any equity investment whichwould (but for paragraph (1)(A)) be a quali-fied equity investment in the hands of thetaxpayer if such investment was a qualifiedequity investment in the hands of a priorholder.

‘‘(5) REDEMPTIONS.—A rule similar to therule of section 1202(c)(3) shall apply for pur-poses of this subsection.

‘‘(6) EQUITY INVESTMENT.—The term ‘equityinvestment’ means—

‘‘(A) any stock in a qualified communitydevelopment entity which is a corporation,and

‘‘(B) any capital interest in a qualifiedcommunity development entity which is apartnership.

‘‘(c) QUALIFIED COMMUNITY DEVELOPMENTENTITY.—For purposes of this section—

‘‘(1) IN GENERAL.—The term ‘qualified com-munity development entity’ means any do-mestic corporation or partnership if—

‘‘(A) the primary mission of the entity isserving, or providing investment capital for,low-income communities or low-income per-sons,

‘‘(B) the entity maintains accountabilityto residents of low-income communitiesthrough representation on governing or advi-sory boards or otherwise, and

‘‘(C) the entity is certified by the Sec-retary for purposes of this section as being aqualified community development entity.

‘‘(2) SPECIAL RULES FOR CERTAIN ORGANIZA-TIONS.—The requirements of paragraph (1)shall be treated as met by—

‘‘(A) any specialized small business invest-ment company (as defined in section1044(c)(3)), and

‘‘(B) any community development finan-cial institution (as defined in section 103 ofthe Community Development Banking andFinancial Institutions Act of 1994 (12 U.S.C.4702)).

‘‘(d) QUALIFIED LOW-INCOME COMMUNITY IN-VESTMENTS.—For purposes of this section—

‘‘(1) IN GENERAL.—The term ‘qualified low-income community investment’ means—

‘‘(A) any equity investment in, or loan to,any qualified active low-income communitybusiness,

‘‘(B) the purchase from another commu-nity development entity of any loan made bysuch entity which is a qualified low-incomecommunity investment if the amount re-ceived by such other entity from such pur-chase is used by such other entity to makequalified low-income community invest-ments,

‘‘(C) financial counseling and other serv-ices specified in regulations prescribed bythe Secretary to businesses located in, andresidents of, low-income communities, and

‘‘(D) any equity investment in, or loan to,any qualified community development enti-ty if substantially all of the investment orloan is used by such entity to make qualifiedlow-income community investments de-scribed in subparagraphs (A), (B), and (C).

‘‘(2) QUALIFIED ACTIVE LOW-INCOME COMMU-NITY BUSINESS.—

‘‘(A) IN GENERAL.—For purposes of para-graph (1), the term ‘qualified active low-in-come community business’ means, with re-spect to any taxable year, any corporation orpartnership if for such year—

‘‘(i) at least 50 percent of the total grossincome of such entity is derived from the ac-tive conduct of a qualified business withinany low-income community,

‘‘(ii) a substantial portion of the use of thetangible property of such entity (whetherowned or leased) is within any low-incomecommunity,

‘‘(iii) a substantial portion of the servicesperformed for such entity by its employeesare performed in any low-income commu-nity,


CONGRESSIONAL RECORD — SENATE S6727July 13, 2000‘‘(iv) less than 5 percent of the average of

the aggregate unadjusted bases of the prop-erty of such entity is attributable to collect-ibles (as defined in section 408(m)(2)) otherthan collectibles that are held primarily forsale to customers in the ordinary course ofsuch business, and

‘‘(v) less than 5 percent of the average ofthe aggregate unadjusted bases of the prop-erty of such entity is attributable to non-qualified financial property (as defined insection 1397C(e)).

‘‘(B) PROPRIETORSHIP.—Such term shall in-clude any business carried on by an indi-vidual as a proprietor if such business wouldmeet the requirements of subparagraph (A)were it incorporated.

‘‘(C) PORTIONS OF BUSINESS MAY BE QUALI-FIED ACTIVE LOW-INCOME COMMUNITY BUSI-NESS.—The term ‘qualified active low-incomecommunity business’ includes any trades orbusinesses which would qualify as a qualifiedactive low-income community business ifsuch trades or businesses were separately in-corporated.

‘‘(3) QUALIFIED BUSINESS.—For purposes ofthis subsection, the term ‘qualified business’has the meaning given to such term by sec-tion 1397C(d); except that—

‘‘(A) in lieu of applying paragraph (2)(B)thereof, the rental to others of real propertylocated in any low-income community shallbe treated as a qualified business if there aresubstantial improvements located on suchproperty,

‘‘(B) paragraph (3) thereof shall not apply,and

‘‘(C) such term shall not include any busi-ness if a significant portion of the equity in-terests in such business are held by any per-son who holds a significant portion of the eq-uity investments in the community develop-ment entity.

‘‘(e) LOW-INCOME COMMUNITY.—For pur-poses of this section—

‘‘(1) IN GENERAL.—The term ‘low-incomecommunity’ means any population censustract if—

‘‘(A) the poverty rate for such tract is atleast 20 percent,

‘‘(B)(i) in the case of a tract not locatedwithin a metropolitan area, the median fam-ily income for such tract does not exceed 80percent of statewide median family income,or

‘‘(ii) in the case of a tract located within ametropolitan area, the median family in-come for such tract does not exceed 80 per-cent of the greater of statewide median fam-ily income or the metropolitan area medianfamily income, or

‘‘(C) as determined by the Secretary basedon objective criteria, a substantial popu-lation of low-income individuals reside insuch tract, an inadequate access to invest-ment capital exists in such tract, or otherindications of economic distress exist in suchtract.

‘‘(2) AREAS NOT WITHIN CENSUS TRACTS.—Inthe case of an area which is not tracted forpopulation census tracts, the equivalentcounty divisions (as defined by the Bureau ofthe Census for purposes of defining povertyareas) shall be used for purposes of deter-mining poverty rates and median family in-come.

‘‘(f) NATIONAL LIMITATION ON AMOUNT OFINVESTMENTS DESIGNATED.—

‘‘(1) IN GENERAL.—There is a new marketstax credit limitation for each calendar year.Such limitation is—

‘‘(A) $500,000,000 for 2001,‘‘(B) $1,500,000,000 for 2002 and 2003,‘‘(C) $2,500,000,000 for 2004 and 2005,‘‘(D) $3,000,000,000 for 2006,‘‘(E) $3,500,000,000 for 2007.‘‘(2) ALLOCATION OF LIMITATION.—The limi-

tation under paragraph (1) shall be allocated

by the Secretary among qualified commu-nity development entities selected by theSecretary. In making allocations under thepreceding sentence, the Secretary shall givepriority to entities with records of havingsuccessfully provided capital or technical as-sistance to disadvantaged businesses or com-munities.

‘‘(3) CARRYOVER OF UNUSED LIMITATION.—Ifthe new markets tax credit limitation forany calendar year exceeds the aggregateamount allocated under paragraph (2) forsuch year, such limitation for the succeedingcalendar year shall be increased by theamount of such excess.

‘‘(g) RECAPTURE OF CREDIT IN CERTAINCASES.—

‘‘(1) IN GENERAL.—If, at any time duringthe 7-year period beginning on the date ofthe original issue of a qualified equity in-vestment in a qualified community develop-ment entity, there is a recapture event withrespect to such investment, then the tax im-posed by this chapter for the taxable year inwhich such event occurs shall be increasedby the credit recapture amount.

‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur-poses of paragraph (1), the credit recaptureamount is an amount equal to the sum of—

‘‘(A) the aggregate decrease in the creditsallowed to the taxpayer under section 38 forall prior taxable years which would have re-sulted if no credit had been determinedunder this section with respect to such in-vestment, plus

‘‘(B) interest at the overpayment rate es-tablished under section 6621 on the amountdetermined under subparagraph (A) for eachprior taxable year for the period beginningon the due date for filing the return for theprior taxable year involved.No deduction shall be allowed under thischapter for interest described in subpara-graph (B).

‘‘(3) RECAPTURE EVENT.—For purposes ofparagraph (1), there is a recapture event withrespect to an equity investment in a quali-fied community development entity if—

‘‘(A) such entity ceases to be a qualifiedcommunity development entity,

‘‘(B) the proceeds of the investment ceaseto be used as required of subsection (b)(1)(B),or

‘‘(C) such investment is redeemed by suchentity.



‘‘(B) NO CREDITS AGAINST TAX.—Any in-crease in tax under this subsection shall notbe treated as a tax imposed by this chapterfor purposes of determining the amount ofany credit under this chapter or for purposesof section 55.

‘‘(h) BASIS REDUCTION.—The basis of anyqualified equity investment shall be reducedby the amount of any credit determinedunder this section with respect to such in-vestment.

‘‘(i) REGULATIONS.—The Secretary shallprescribe such regulations as may be appro-priate to carry out this section, includingregulations—

‘‘(1) which limit the credit for investmentswhich are directly or indirectly subsidized byother Federal benefits (including the creditunder section 42 and the exclusion from grossincome under section 103),

‘‘(2) which prevent the abuse of the provi-sions of this section through the use of re-lated parties,

‘‘(3) which impose appropriate reporting re-quirements, and

‘‘(4) which apply the provisions of this sec-tion to newly formed entities.’’.

(b) CREDIT MADE PART OF GENERAL BUSI-NESS CREDIT.—

(1) IN GENERAL.—Subsection (b) of section38, as amended by section 201(b), is amendedby striking ‘‘plus’’ at the end of paragraph(12), by striking the period at the end ofparagraph (13) and inserting ‘‘, plus’’, and byadding at the end the following new para-graph:

‘‘(14) the new markets tax credit deter-mined under section 45E(a).’’.

(2) LIMITATION ON CARRYBACK.—Subsection(d) of section 39, as amended by section201(d), is amended by adding at the end thefollowing new paragraph:

‘‘(10) NO CARRYBACK OF NEW MARKETS TAXCREDIT BEFORE JANUARY 1, 2001.—No portion ofthe unused business credit for any taxableyear which is attributable to the creditunder section 45E may be carried back to ataxable year ending before January 1, 2001.’’.

(c) DEDUCTION FOR UNUSED CREDIT.—Sub-section (c) of section 196 is amended by strik-ing ‘‘and’’ at the end of paragraph (7), bystriking the period at the end of paragraph(8) and inserting ‘‘, and’’, and by adding atthe end the following new paragraph:

‘‘(9) the new markets tax credit determinedunder section 45E(a).’’.

(d) CLERICAL AMENDMENT.—The table ofsections for subpart D of part IV of sub-chapter A of chapter 1, as amended by sec-tion 201(e), is amended by adding at the endthe following new item:

‘‘Sec. 45E. New markets tax credit.’’.(e) EFFECTIVE DATE.—The amendments

made by this section shall apply to invest-ments made after December 31, 2000.

(f) REGULATIONS ON ALLOCATION OF NA-TIONAL LIMITATION.—Not later than 90 daysafter the date of the enactment of this Act,the Secretary of the Treasury or the Sec-retary’s delegate shall prescribe regulationswhich specify objective criteria to be used inmaking the allocations under section45E(f)(2) of the Internal Revenue Code of 1986,as added by this section.

TITLE VIII—COMMUNITY DEVELOPMENTAND VENTURE CAPITAL

SEC. 800. SHORT TITLE.This title may be cited as the ‘‘Community

Development and Venture Capital Act of2000’’.

Subtitle A—New Markets Venture CapitalProgram

SEC. 801. NEW MARKETS VENTURE CAPITAL PRO-GRAM.

(a) IN GENERAL.—Title III of the SmallBusiness Investment Act of 1958 (15 U.S.C. 681et seq.) is amended—

(1) by striking the title designation andheading and inserting the following:

‘‘TITLE III—INVESTMENT DIVISIONPROGRAMS

‘‘PART A—SMALL BUSINESS INVESTMENTCOMPANIES’’;

and(2) by adding at the end the following:

‘‘PART B—NEW MARKETS VENTURECAPITAL PROGRAM

‘‘SEC. 351. DEFINITIONS.‘‘In this part—‘‘(1) the term ‘eligible company’ means a

company that—‘‘(A) is a newly formed for-profit entity,

which may be a newly formed for-profit sub-sidiary of an existing entity; and

‘‘(B) has a management team with experi-ence in community development financing orrelevant venture capital financing;


CONGRESSIONAL RECORD — SENATES6728 July 13, 2000‘‘(2) the term ‘low-income individual’

means an individual whose income (adjustedfor family size) does not exceed—

‘‘(A) for metropolitan areas, 80 percent ofthe area median income; and

‘‘(B) for nonmetropolitan areas, the great-er of—

‘‘(i) 80 percent of the area median income;or

‘‘(ii) 80 percent of the statewide nonmetro-politan area median income;

‘‘(3) the term ‘low- or moderate-income ge-ographic area’ means—

‘‘(A) any population census tract (or in thecase of an area that is not tracted for popu-lation census tracts, the equivalent countydivision, as defined by the Bureau of the Cen-sus of the Department of Commerce for pur-poses of defining poverty areas) if—

‘‘(i) the poverty rate for such census tractis not less than 20 percent;

‘‘(ii)(I) in the case of a tract located withina metropolitan area, the median family in-come for such tract does not exceed thegreater of 80 percent of the statewide medianfamily income or 80 percent of the metro-politan area median family income; or

‘‘(II) in the case of a tract not locatedwithin a metropolitan area, the median fam-ily income for such tract does not exceed 80percent of the statewide median family in-come; or

‘‘(iii) as determined by the Administratorbased on objective criteria, a substantialpopulation of low-income individuals reside,an inadequate access to investment capitalexists, or other indications of economic dis-tress exist; or

‘‘(B) any area located within—‘‘(i) a HUBZone (as defined in section 3(p)

of the Small Business Act and the imple-menting regulations issued under that sec-tion);

‘‘(ii) an urban empowerment zone or urbanenterprise community (as designated by theSecretary of Housing and Urban Develop-ment); or

‘‘(iii) a rural empowerment zone or ruralenterprise community (as designated by theSecretary of Agriculture);

‘‘(4) the terms ‘new markets venture cap-ital company’ and ‘NMVC company’ mean acompany that has been designated as a newmarkets venture capital company by the Ad-ministrator under section 354(d);

‘‘(5) the term ‘participation agreement’means an agreement, between the Adminis-trator and a company granted final approvalunder section 354(e), that—

‘‘(A) details the company’s operating planand investment criteria; and

‘‘(B) requires the company to make invest-ments in smaller enterprises at least 80 per-cent of which are located in low- or mod-erate-income geographic areas; and

‘‘(6) the term ‘specialized small businessinvestment company’ means any small busi-ness investment company that—

‘‘(A) invests solely in small business con-cerns that contribute to a well-balanced na-tional economy by facilitating ownership insuch concerns by persons whose participa-tion in the free enterprise system is ham-pered because of social or economic dis-advantages;

‘‘(B) is organized or chartered under Statebusiness or nonprofit corporations statutes,or formed as a limited partnership; and

‘‘(C) was licensed under section 301(d), as ineffect before September 30, 1996.‘‘SEC. 352. PURPOSES.

‘‘The purposes of this part are—‘‘(1) to encourage venture capital invest-

ment in smaller enterprises located withinurban and rural areas;

‘‘(2) to promote the creation of wealth, eco-nomic development, and job opportunities in

low- and moderate-income geographic areas;and

‘‘(3) to establish a venture capital program,which shall be administered by theAdministrator—

‘‘(A) to make grants to NMVC companiesfor the purpose of providing marketing, man-agement, and technical assistance to smallerenterprises financed, or expected to be fi-nanced, by such companies; and

‘‘(B) to guarantee debentures issued byNMVC companies to enable such companiesto make venture capital investments insmaller enterprises within urban and ruralareas.‘‘SEC. 353. PROGRAM ESTABLISHMENT.

‘‘There is established a New Markets Ven-ture Capital Program, under which the Ad-ministrator is authorized to—

‘‘(1) make grants to NMVC companies, asprovided in section 355; and

‘‘(2) guarantee debentures issued by NMVCcompanies, as provided in section 356.‘‘SEC. 354. SELECTION OF NMVC COMPANIES.

‘‘(a) APPLICATIONS.—In order to be eligibleto participate in the program under this partas an NMVC company, an eligible companyshall submit to the Administrator an appli-cation, within such period of time as the Ad-ministrator shall establish, which shallinclude—

‘‘(1) a business plan that describes themanner and geographic areas in which theapplicant will make successful venture cap-ital investments in smaller enterprises de-scribed in subparagraphs (A) and (B) of sec-tion 351(5) and provide marketing, manage-ment, and technical assistance to those en-terprises;

‘‘(2) the qualifications and general businessreputation of the management of the appli-cant, specifically addressing—

‘‘(A) the experience of the management inmaking venture capital investments insmaller enterprises described in subpara-graphs (A) and (B) of section 351(5); and

‘‘(B) the success of those investments interms of business growth, jobs created, andsuch other factors as the Administrator mayrequire; and

‘‘(3) a description of the manner in whichthe applicant will interface with communityorganizations;

‘‘(4) a proposal describing the manner inwhich grant amounts made available underthis part would provide marketing, manage-ment, and technical assistance to smallerenterprises expected to be financed by theapplicant;

‘‘(5) proposed criteria by which to evaluatethe performance of the applicant in meetingprogram objectives;

‘‘(6) the management and financialstrength of any parent or affiliated firm, orany firm essential to the success of the busi-ness plan of the applicant;

‘‘(7) with respect to binding commitmentsto be made to the company under this part,an estimate of the ratio of cash to in-kindcontributions; and

‘‘(8) such other information as the Admin-istrator may require.

‘‘(b) CRITERIA FOR CONDITIONAL AP-PROVAL.—

‘‘(1) IN GENERAL.—Upon receipt of an appli-cation submitted under subsection (a), theAdministrator shall review the applicationand make a determination regarding wheth-er to grant conditional approval to the appli-cant to operate as an NMVC company duringthe time period described in subsection (c),based on—

‘‘(A) the geographic area and employmentcharacteristics of the smaller enterprises inwhich the proposed investments of theNMVC company will be made (in order topromote investment nationwide);

‘‘(B) the likelihood that the applicant willmeet the goals of the business plan of the ap-plicant;

‘‘(C) the experience and background of thecompany’s management team;

‘‘(D) the need for equity or equity-type in-vestments within the proposed investmentareas;

‘‘(E) the extent to which the applicant willconcentrate its activities on serving its in-vestment areas;

‘‘(F) the likelihood that the applicant willbe able to satisfy the requirements of sub-section (c);

‘‘(G) the extent to which the proposed ac-tivities will expand economic opportunitieswithin the investment areas; and

‘‘(H) such other factors as the Adminis-trator determines to be appropriate.

‘‘(2) NATIONWIDE DISTRIBUTION.—The Ad-ministrator shall select companies underparagraph (1) in such a way that promotesinvestment nationwide.

‘‘(c) REQUIREMENTS FOR FINAL APPROVAL.—‘‘(1) IN GENERAL.—Subject to paragraph (2),

each applicant that is granted conditionalapproval by the Administrator to operate asan NMVC company under subsection (b),shall, before the expiration of a time periodestablished by the Administrator not to ex-ceed 24 months, beginning on the date onwhich such conditional approval is granted—

‘‘(A) raise not less than $5,000,000 of con-tributed capital or binding capital commit-ments from 1 or more investors (other thanan agency of the Federal Government) thatmeet criteria established by the Adminis-trator; and

‘‘(B) in order to provide marketing, man-agement, and technical assistance, have—

‘‘(i) cash or binding commitments for con-tributions (in cash or in-kind) from 1 or moresources other than the Administration thatmeet criteria established by the Adminis-trator, payable or available over a multiyearperiod acceptable to the Administrator (notto exceed 10 years), in an amount equal to 30percent of the capital and commitmentsraised under subparagraph (A);

‘‘(ii) purchased an annuity from an insur-ance company acceptable to the Adminis-trator, using amounts (other than theamounts raised to satisfy the requirementsof subparagraph (A)) from any source otherthan the Administration, that would yieldcash payments over a multiyear period ac-ceptable to the Administrator (not to exceed10 years), in an amount equal to 30 percent ofthe capital and commitments raised undersubparagraph (A); or

‘‘(iii) cash or binding commitments forcontributions (in cash or in-kind) of the typedescribed in clause (i) and have purchased anannuity of the type described in clause (ii),that in the aggregate make available, over amultiyear period acceptable to the Adminis-trator (not to exceed 10 years), an amountequal to 30 percent of the capital and com-mitments raised under subparagraph (A).

‘‘(2) EXCEPTION.—The Administrator may,in the discretion of the Administrator andbased upon a showing of special cir-cumstances and good cause, consider an ap-plicant to have satisfied the requirements ofparagraph (1)(B) if the applicant has—

‘‘(A) a viable plan that reasonably projectsthe capacity of the applicant to raise theamount (in cash or in-kind) required underparagraph (1)(B); and

‘‘(B) binding commitments in an amountnot less than 20 percent of the total amountrequired under paragraph (1)(B).

‘‘(d) GRANT OF FINAL APPROVAL; DESIGNA-TION.—The Administrator shall, with respectto each applicant conditionally approved tooperate as an NMVC company under sub-section (b), either—


CONGRESSIONAL RECORD — SENATE S6729July 13, 2000‘‘(1) grant final approval to the applicant

to operate as an NMVC company under thispart and designate the applicant as an NMVCcompany, if the applicant—

‘‘(A) satisfies the requirements of sub-section (c) on or before the expiration of thetime period described in that subsection; and

‘‘(B) enters into a participation agreementwith the Administrator; or

‘‘(2) if the applicant fails to satisfy the re-quirements of subsection (c) on or before theexpiration of the time period described inthat subsection, revoke the conditional ap-proval granted under that subsection.‘‘SEC. 355. TECHNICAL ASSISTANCE GRANTS.

‘‘(a) GRANTS.—‘‘(1) IN GENERAL.—The Administrator, in

accordance with such terms and conditionsas the Administrator may require, is author-ized to award 1 or more grants to each NMVCcompany or to any other entity, as author-ized by this part, which shall be used to pro-vide marketing, management, and technicalassistance for the benefit of smaller enter-prises financed, or expected to be financed,by the NMVC company or other authorizedentity.

‘‘(2) MULTIYEAR GRANTS.—Amounts from agrant awarded under this section shall bepaid upon the direction of the Administratorover a multiyear period of not to exceed 10years.

‘‘(3) GRANTS TO SPECIALIZED SMALL BUSI-NESS INVESTMENT COMPANIES.—

‘‘(A) AUTHORITY.—In accordance with thissection, the Administrator may make grantsto specialized small business investmentcompanies to provide marketing, manage-ment, and technical assistance to smallerenterprises financed, or expected to be fi-nanced, by such companies after the effec-tive date of the Community Developmentand Venture Capital Act of 2000.

‘‘(B) USE OF FUNDS.—The proceeds of agrant made under this paragraph may beused by the company receiving such grantonly to provide marketing, management, andtechnical assistance in connection with anequity or equity-type investment (made withcapital raised after the effective date of theCommunity Development and Venture Cap-ital Act of 2000) in a business located in alow- or moderate-income geographic area.

‘‘(C) SUBMISSION OF PLANS.—A specializedsmall business investment company shall beeligible for a grant under this section only ifthe company submits to the Administrator,in such form and manner as the Adminis-trator may require, a plan for use of thegrant.

‘‘(4) GRANT AMOUNT.—‘‘(A) IN GENERAL.—Subject to subparagraph

(B), the amount of a grant awarded to anNMVC company or other authorized entityunder this subsection shall be equal to 30percent of the amount of capital and com-mitments raised under section 354(c)(1)(A).

‘‘(B) MATCHING REQUIREMENT.—In order toreceive funds under a grant awarded underthis subsection, an NMVC company or otherauthorized entity shall provide a matchingcontribution (in cash or in-kind) fromsources other than the Administration, in anamount equal to the funds to received.

‘‘(5) PRO RATA REDUCTIONS.—If the amountmade available to carry out this section fora fiscal year is insufficient for the Adminis-trator to award grants in the amounts re-quired under paragraph (4), the Adminis-trator shall make pro rata reductions in theamounts otherwise payable to each NMVCcompany or other authorized entity underthat paragraph.

‘‘(b) SUPPLEMENTAL GRANTS.—‘‘(1) IN GENERAL.—In addition to any grant

under subsection (a), the Administrator, inaccordance with such terms and conditions

as the Administrator may require, maymake 1 or more supplemental grants to anNMVC company or other authorized entity,which shall be used to provide additionalmarketing, management, and technical as-sistance for the benefit of smaller enter-prises financed, or expected to be financed,by the NMVC company or other authorizedentity.

‘‘(2) MATCHING REQUIREMENT.—The Admin-istrator may require, as a condition of anysupplemental grant made under this sub-section, that the NMVC company provide amatching contribution (in cash or in-kind)from 1 or more sources other than the Ad-ministrator in an amount equal to theamount of the supplemental grant.

‘‘(c) LIMITATION.—No part of any grantmade available under this section may beused for any purpose other than to providedirect technical and financial assistance tosmaller enterprises financed, or expected tobe financed, by the NMVC companies orother authorized entities.‘‘SEC. 356. DEBENTURES.

‘‘(a) IN GENERAL.—The Administrator isauthorized to guarantee the timely paymentof principal and interest as scheduled on de-bentures issued by NMVC companies, in ac-cordance with such terms and conditions theAdministrator determines to be appropriate.

‘‘(b) FULL FAITH AND CREDIT.—The fullfaith and credit of the United States ispledged to the payment of all amounts thatmay be required to be paid under any guar-antee under this section.

‘‘(c) DEBENTURE REQUIREMENTS.—A deben-ture guaranteed under this section—

‘‘(1) may be issued for a term of not to ex-ceed 15 years;

‘‘(2) shall bear interest at a rate approvedby the Administrator; and

‘‘(3) shall contain such other terms andconditions as the Administrator may re-quire.

‘‘(d) TOTAL FACE VALUE.—The total faceamount of debentures issued by an NMVCcompany and guaranteed under this sectionthat may be outstanding at any 1 time shallnot exceed 150 percent of the contributedcapital of the NMVC company, as determinedby the Administrator. For purposes of thissubsection, the contributed capital of anNMVC company includes capital that isdeemed to be Federal funds contributed byan investor other than an agency of the Fed-eral Government.‘‘SEC. 357. ISSUANCE AND GUARANTEE OF TRUST

CERTIFICATES.‘‘(a) IN GENERAL.—The Administrator (or

an agent of the Administrator) is authorizedto issue trust certificates representing own-ership of all or a fractional part of deben-tures guaranteed by the Administrator undersection 356, if such trust certificates arebased on and backed by a trust or pool ap-proved by the Administrator and composedsolely of debentures guaranteed under sec-tion 356.

‘‘(b) GUARANTEE AUTHORITY.—‘‘(1) IN GENERAL.—The Administrator is au-

thorized to, upon such terms and conditionsas the Administrator determines to be appro-priate, guarantee the timely payment of theprincipal of and interest on any trust certifi-cate issued under this section.

‘‘(2) LIMITATION.—A guarantee under thissubsection shall be limited to the extent ofthe principal of and interest on the guaran-teed debentures that compose the trust orpool described in subsection (a).

‘‘(3) REDUCTION.—If a debenture in a trustor pool described in subsection (a) is prepaid,or in the event of default of a debenture, theguarantee of timely payment of principaland interest on the related trust certificateissued under this section shall be reduced in

proportion to the amount of principal and in-terest that such prepaid debenture rep-resents in that trust or pool.

‘‘(4) ACCRUAL OF INTEREST.—Interest onprepaid or defaulted debentures shall accrueand be guaranteed by the Administrator onlythrough the date of payment of the guar-antee.

‘‘(5) REDEMPTION OF TRUST CERTIFICATES.—During the term of any trust certificateissued under this subsection, the trust cer-tificate may be called for redemption due toprepayment or default of all debentures inthe trust or pool.

‘‘(c) FULL FAITH AND CREDIT.—The fullfaith and credit of the United States ispledged to the payment of all amounts thatmay be required to be paid under any guar-antee of a trust certificate issued under thissection.

‘‘(d) FEES.—The Administrator shall notcollect a fee for any guarantee of a trust cer-tificate issued under this section, exceptthat nothing in this subsection may be con-strued to preclude an agent of the Adminis-trator from collecting a fee approved by theAdministrator for the functions described insubsection (f)(2).

‘‘(e) SUBROGATION.—‘‘(1) IN GENERAL.—If the Administrator

pays a claim under a guarantee issued underthis section, the Administration shall besubrogated fully to the rights satisfied bysuch payment.

‘‘(2) OWNERSHIP RIGHTS.—No Federal, State,or local law shall preclude or limit the exer-cise by the Administrator of the ownershiprights of the Administrator in the deben-tures residing in a trust or pool againstwhich trust certificates are issued under thissection.

‘‘(f) CENTRAL REGISTRATION.—‘‘(1) IN GENERAL.—The Administrator may

provide for a central registration of all trustcertificates issued under this section.

‘‘(2) CONTRACTING OF FUNCTIONS.—‘‘(A) IN GENERAL.—The Administrator may

contract with an agent or agents to carryout on behalf of the Administrator the pool-ing and the central registration functions ofthis section including, notwithstanding anyother provision of law—

‘‘(i) maintenance on behalf of and underthe direction of the Administrator of suchcommercial bank accounts or investments inobligations of the United States as may benecessary to facilitate trusts or pools backedby debentures guaranteed under this part;and

‘‘(ii) the issuance of trust certificates to fa-cilitate such poolings.

‘‘(B) FIDELITY BOND OR INSURANCE RE-QUIRED.—An agent contracting with the Ad-ministrator under this paragraph shall be re-quired to provide a fidelity bond or insurancein such amounts as the Administrator deter-mines to be necessary to fully protect the in-terests of the Government.

‘‘(3) REGULATION OF BROKERS AND DEAL-ERS.—Notwithstanding section 3(a)(42) of theSecurities Exchange Act of 1934 (15 U.S.C.78c(a)(42)), the Administrator may regulatebrokers and dealers in trust certificatesissued under this section.

‘‘(4) ELECTRONIC REGISTRATION.—Nothing inthis subsection may be construed to prohibitthe use of a book-entry or other electronicform of registration for trust certificatesissued under this section.

‘‘SEC. 358. FEES.

‘‘Except as provided under section 357(d),the Administrator may charge such fees asthe Administrator determines to be appro-priate with respect to any guarantee issuedor grant awarded under this part.


CONGRESSIONAL RECORD — SENATES6730 July 13, 2000‘‘SEC. 359. BANK PARTICIPATION.

‘‘Any national bank, or any member bankof the Federal Reserve System or non-member insured bank to the extent per-mitted under applicable State law, may in-vest in any 1 or more NMVC companies, or inany entity established to invest solely inNMVC companies, except that in no eventshall the total amount of such investmentsof any such bank exceed 5 percent of thetotal capital and surplus of the bank.‘‘SEC. 360. FEDERAL FINANCING BANK.

‘‘Section 318 shall not apply to any deben-ture issued by a NMVC company under thispart.‘‘SEC. 361. REPORTING REQUIREMENTS.

‘‘Each NMVC company shall provide to theAdministrator such information as the Ad-ministrator may request, including—

‘‘(1) information related to the measure-ment criteria that the NMVC company pro-posed in the application submitted undersection 354(a);

‘‘(2) documentation on the use of technicalassistance grants under this part; and

‘‘(3) in each case in which the companyunder this part makes an investment in, or aloan or grant to, a business that is not lo-cated in a low- or moderate-income geo-graphic area, a report on the number andpercentage of employees of the business whoreside in such areas.‘‘SEC. 362. EXAMINATIONS.

‘‘(a) IN GENERAL.—Each NMVC companyshall be subject to examinations made at thedirection of the Investment Division of theAdministration, which may be conductedwith the assistance of a private sector entitythat has both the qualifications to conductand the expertise in conducting such exami-nations.

‘‘(b) ASSESSMENT OF COSTS.—The cost ofsuch examinations, including the compensa-tion of the examiners, may in the discretionof the Administrator be assessed against thecompany examined and when so assessedshall be paid by such company.

‘‘(c) DEPOSIT OF FEES.—Fees collectedunder this section shall be deposited in theaccount for salaries and expenses of the Ad-ministration.‘‘SEC. 363. INJUNCTIONS AND OTHER ORDERS.

‘‘(a) IN GENERAL.—If, in the judgment ofthe Administrator, an NMVC company orany other person has engaged or is about toengage in any act or practice that con-stitutes or will constitute a violation of anyprovision of this title (or any rule, regula-tion, or order issued under this title) or of aparticipation agreement entered into underthis part—

‘‘(1) the Administrator may make applica-tion to the proper district court of theUnited States or a United States court ofany place subject to the jurisdiction of theUnited States for an order enjoining such actor practice, or for an order enforcing compli-ance with such provision; and

‘‘(2) such court shall—‘‘(A) have jurisdiction over such applica-

tion and any ensuing proceedings; and‘‘(B) upon a showing by the Administrator

that such NMVC company or other personhas engaged or is about to engage in anysuch act or practice, grant without bond apermanent or temporary injunction, re-straining order, or other appropriate order.

‘‘(b) POWERS OF COURT.—In any proceedingunder subsection (a)—

‘‘(1) the court as a court of equity may, tosuch extent as the court determines to benecessary, take exclusive jurisdiction of theNMVC company and the assets thereof,wherever located; and

‘‘(2) the court shall have jurisdiction inany such proceeding to appoint a trustee orreceiver to hold or administer under the di-rection of the court the assets so possessed.

‘‘(c) TRUSTEE OR RECEIVER.—The Adminis-trator is authorized to act as trustee or re-ceiver of the NMVC company. Upon requestby the Administrator, the court may appointthe Administrator to act in such capacityunless the court determines such appoint-ment to be inequitable or otherwise inappro-priate based on the special circumstances atissue.‘‘SEC. 364. UNLAWFUL ACTS AND OMISSIONS BY

OFFICERS, DIRECTORS, EMPLOYEES,OR AGENTS; BREACH OF FIDUCIARYDUTY.

‘‘(a) IN GENERAL.—If an NMVC companyviolates any provision of this title (or anyrule or regulation issued under this title), orof a participation agreement entered intounder this part, by failing to comply withthe terms thereof or by engaging in any actor practice that constitutes or will con-stitute a violation thereof, such violationshall be deemed to be also a violation and anunlawful act on the part of any person who,directly or indirectly, authorizes, orders,participates in, or causes, brings about,counsels, aids, or abets in the commission ofany act, practice, or transaction that con-stitutes or will constitute, in whole or inpart, such violation.

‘‘(b) BREACH OF FIDUCIARY DUTY.—It shallbe unlawful for any officer, director, em-ployee, agent, or other participant in themanagement or conduct of the affairs of anNMVC company to engage in any act orpractice, or to omit any act, in breach of thefiduciary duty of such officer, director, em-ployee, agent, or participant, if, as a resultthereof, the NMVC company has suffered oris in imminent danger of suffering financialloss or other damage.

‘‘(c) OTHER PROHIBITIONS.—Except with thewritten consent of the Administrator, itshall be unlawful—

‘‘(1) for any person to take office as an offi-cer, director, or employee of an NMVC com-pany, or to become an agent or participantin the conduct of the affairs or managementof an NMVC company, if that person—

‘‘(A) has been convicted of a felony, or anyother criminal offense involving dishonestyor breach of trust; or

‘‘(B) has been found civilly liable in dam-ages, or has been permanently or tempo-rarily enjoined by order, judgment, or decreeof a court of competent jurisdiction, by rea-son of any act or practice involving fraud orbreach of trust; or

‘‘(2) for any person to continue to serve inany of the above-described capacities, if thatperson is subsequently—

‘‘(A) convicted of a felony, or any othercriminal offense involving dishonesty orbreach of trust; or

‘‘(B) found civilly liable in damages, or ispermanently or temporarily enjoined by anorder, judgment, or decree of a court of com-petent jurisdiction, by reason of any act orpractice involving fraud or breach of trust.

‘‘(d) NOTICE.—The Administrator mayserve upon any officer, director, employee,or other participant in the conduct of themanagement or other affairs of an NMVCcompany a written notice of the intention ofthe Administrator to remove that personfrom his or her position whenever, in theopinion of the Administrator, that person—

‘‘(1) has willfully committed any substan-tial violation of—

‘‘(A) this title (or any rule, regulation, ororder issued under this title); or

‘‘(B) a participation agreement enteredinto under this part; or

‘‘(C) a cease-and-desist order that has be-come final; or

‘‘(2) has willfully committed or engaged inany act, omission, or practice that con-stitutes a substantial breach of fiduciaryduty, and that such violation or such breach

of fiduciary duty is one involving personaldishonesty on the part of such person.

‘‘(e) SUSPENSION OR REMOVAL.—The Admin-istrator may suspend or remove from officeany person upon whom the Administratorhas served a notice under subsection (d), inaccordance with the procedures set forth insection 313.‘‘SEC. 365. REGULATIONS.

‘‘The Administrator may promulgate suchregulations as the Administrator determinesto be necessary to carry out this part.‘‘SEC. 366. AUTHORIZATIONS.

‘‘(a) IN GENERAL.—For fiscal years 2000through 2005, the Administration is author-ized to be appropriated, to remain availableuntil expended—

‘‘(1) such subsidy budget authority as maybe necessary to guarantee $150,000,000 of de-bentures under this part; and

‘‘(2) $30,000,000 to make grants under thispart.

‘‘(b) FUNDS COLLECTED FOR EXAMINA-TIONS.—Funds deposited under section 362(c)are authorized to be appropriated only forthe costs of examinations under section 362and for the costs of other oversight activitieswith respect to the program establishedunder this part.’’.

(b) CONFORMING AMENDMENT.—Section20(e)(1)(C) of the Small Business Act (15U.S.C. 631 note) is amended by inserting‘‘part A of’’ before ‘‘title III’’.SEC. 802. BANKRUPTCY EXEMPTION FOR NMVC

COMPANIES.Section 109(b)(2) of title 11, United States

Code, is amended by inserting after ‘‘home-stead association,’’ the following: ‘‘a newmarkets venture capital company (as definedin section 351 of the Small Business Invest-ment Act of 1958),’’.SEC. 803. FEDERAL SAVINGS ASSOCIATIONS.

Section 5(c)(4) of the Home Owners’ LoanAct (12 U.S.C. 1464(c)(4)) is amended by add-ing at the end the following:

‘‘(F) NEW MARKETS VENTURE CAPITAL COM-PANIES.—A Federal savings association mayinvest in stock, obligations, or other securi-ties of any new markets venture capitalcompany (as defined in section 351 of theSmall Business Investment Act of 1958). AFederal savings association may not makeany investment under this subparagraph ifits aggregate outstanding investment underthis subparagraph would exceed 5 percent ofthe capital and surplus of such savings asso-ciation.’’.

Subtitle B—Community DevelopmentVenture Capital Assistance

SEC. 811. FINDINGS.Congress finds that—(1) there is a need for the development and

expansion of organizations that provide pri-vate equity capital to smaller businesses inareas in which equity-type capital is scarce,such as inner cities and rural areas, in orderto create and retain jobs for low-income resi-dents of those areas;

(2) to invest successfully in smaller busi-nesses, particularly in inner cities and ruralareas, requires highly specialized investmentand management skills;

(3) there is a shortage of professionals whopossess such skills and there are few traininggrounds for individuals to obtain thoseskills;

(4) providing assistance to organizationsthat provide specialized technical assistanceand training to individuals and organizationsseeking to enter or expand in this segment ofthe market would stimulate small businessdevelopment and entrepreneurship in eco-nomically distressed communities; and

(5) assistance from the Federal Govern-ment could act as a catalyst to attract in-vestment from the private sector and would


CONGRESSIONAL RECORD — SENATE S6731July 13, 2000help to develop a specialized venture capitalindustry focused on creating jobs, increasingbusiness ownership, and generating wealth inlow-income communities.SEC. 812. COMMUNITY DEVELOPMENT VENTURE

CAPITAL ACTIVITIES.(a) IN GENERAL.—The Small Business Act

(15 U.S.C. 631 et seq.) is amended—(1) by redesignating section 34 as section

35; and(2) by inserting after section 33 the fol-

lowing:‘‘SEC. 34. COMMUNITY DEVELOPMENT VENTURE

CAPITAL ACTIVITIES.‘‘(a) DEFINITIONS.—In this section:‘‘(1) COMMUNITY DEVELOPMENT VENTURE

CAPITAL ORGANIZATION.—The term ‘commu-nity development venture capital organiza-tion’ means a privately-controlled organiza-tion that—

‘‘(A) has a primary mission of promotingcommunity development in low-income com-munities, as defined by the Administrator,through investment in private business en-terprises; or

‘‘(B) administers or is in the process of es-tablishing a community development ven-ture capital fund for the purpose of makingequity investments in private business enter-prises in such communities.

‘‘(2) DEVELOPMENTAL ORGANIZATION.—Theterm ‘developmental organization’—

‘‘(A) means a public or private entity, in-cluding a college or university, that providestechnical assistance to community develop-ment venture capital organizations or thatconducts research or training in communitydevelopment venture capital investment;and

‘‘(B) may include an intermediary organi-zation.

‘‘(3) INTERMEDIARY ORGANIZATION.—Theterm ‘intermediary organization’—

‘‘(A) means a private, nonprofit entity thathas—

‘‘(i) a primary mission of promoting com-munity development through investment inprivate businesses in low-income commu-nities; and

‘‘(ii) significant prior experience in pro-viding technical assistance or financial as-sistance to community development venturecapital organizations;

‘‘(B) may include community developmentventure capital organizations.

‘‘(b) AUTHORITY.—In order to promote thedevelopment of community developmentventure capital organizations, the Adminis-trator, may—

‘‘(1) enter into contracts with 1 or more de-velopmental organizations to carry outtraining and research activities under sub-section (c); and

‘‘(2) make grants in accordance with thissection—

‘‘(A) to developmental organizations tocarry out training and research activitiesunder subsection (c); and

‘‘(B) to intermediary organizations to pro-vide intensive marketing, management, andtechnical assistance and training to commu-nity development venture capital organiza-tions under subsection (d).

‘‘(c) TRAINING AND RESEARCH ACTIVITIES.—‘‘(1) IN GENERAL.—Subject to paragraph (2),

a developmental organization that receives agrant under subsection (b) shall use thefunds made available through the grant for 1or more of the following training and re-search activities:

‘‘(A) STRENGTHENING PROFESSIONALSKILLS.—Creating and operating trainingprograms to enhance the professional skillsfor individuals in community developmentventure capital organizations or operatingprivate community development venturecapital funds.

‘‘(B) INCREASING INTEREST IN COMMUNITYDEVELOPMENT VENTURE CAPITAL.—Creatingand operating a program to select and placestudents and recent graduates from businessand related professional schools as internswith community development venture cap-ital organizations and intermediary organi-zations for a period of up to 1 year, and toprovide stipends for such interns during theinternship period.

‘‘(C) PROMOTING ‘BEST PRACTICES’.—Orga-nizing an annual national conference forcommunity development venture capital or-ganizations to discuss and share informationon the best practices regarding issues rel-evant to the creation and operation of com-munity development venture capital organi-zations.

‘‘(D) MOBILIZING ACADEMIC RESOURCES.—En-couraging the formation of 1 or more centersfor the study of community developmentventure capital at graduate schools of busi-ness and management, providing funding forthe development of materials for courses ontopics in this area, and providing funding forresearch on economic, operational, and pol-icy issues relating to community develop-ment venture capital.

‘‘(2) LIMITATION.—The Administrator shallensure that not more than 25 percent of theamount made available to carry out this sec-tion is used for activities described in para-graph (1).

‘‘(d) INTENSIVE MARKETING, MANAGEMENT,AND TECHNICAL ASSISTANCE AND TRAINING.—An intermediary organization that receives agrant under subsection (b) shall use thefunds made available through the grant toprovide intensive marketing, management,and technical assistance and training to pro-mote the development of community devel-opment venture capital organizations, whichassistance may include grants to communitydevelopment venture capital organizationsfor the start up costs and operating supportof those organizations.

‘‘(e) MATCHING CONTRIBUTION REQUIRE-MENT.—The Administrator shall require, as acondition of any grant made to an inter-mediary organization under this section,that a matching contribution equal to theamount of such grant be provided fromsources other than the Federal Government.

‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to be appropriated tocarry out this section $20,000,000 for fiscalyears 2000 through 2003, to remain availableuntil expended.’’.

(b) REQUIREMENTS.—The Administrator ofthe Small Business Administration may pro-mulgate such regulations as may be nec-essary to carry out section 34 of the SmallBusiness Act, as amended by this section,which regulations may take effect uponissuance.

Subtitle C—Business LINCSEC. 821. GRANTS AUTHORIZED.

Section 8 of the Small Business Act (15U.S.C. 637) is amended by adding at the endthe following:

‘‘(m) BUSINESS LINC GRANTS.—‘‘(1) IN GENERAL.—The Administrator may

make grants to and enter into cooperativeagreements with any coalition of private orpublic sector participants that—

‘‘(A) expand business-to-business relation-ships between large and small businesses;and

‘‘(B) provide businesses, directly or indi-rectly, with online information and a data-base of companies that are interested inmentor-protegee programs or community-based, state-wide, or local business develop-ment programs.

‘‘(2) MATCHING REQUIREMENTS.—‘‘(A) IN GENERAL.—Subject to subparagraph

(B), the Administrator may make grants to

and enter into cooperative agreements withany coalition of private or public sector par-ticipants if the coalition provides a match-ing amount, either in-kind or in cash, equalto the grant amount.

‘‘(B) WAIVER.—In the best interests of theprogram, the Administrator may waive therequirements for matching funds to be pro-vided by the coalition.

‘‘(3) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to be appropriated tocarry out this subsection $6,600,000 for eachof fiscal years 2000 through 2003, to remainavailable until expended.’’.SEC. 822. REGULATIONS.

The Administrator of the Small BusinessAdministration may promulgate such regu-lations as the Administration determines tobe necessary to carry out this title and theamendment made by this title.TITLE IX—BOND VOLUME CAP AND LOW-

INCOME HOUSING CREDIT INCREASESSEC. 901. INCREASE IN STATE CEILING ON PRI-

VATE ACTIVITY BONDS.(a) IN GENERAL.—Paragraphs (1) and (2) of

section 146(d) (relating to State ceiling) areamended to read as follows:

‘‘(1) IN GENERAL.—The State ceiling appli-cable to any State for any calendar yearshall be the greater of—

‘‘(A) an amount equal to $75 multiplied bythe State population, or

‘‘(B) $225,000,000.

Subparagraph (B) shall not apply to any pos-session of the United States.

‘‘(2) INFLATION ADJUSTMENT.—In the case ofa calendar year after 2001, each of the dollaramounts contained in paragraph (1) shall beincreased by an amount equal to—

‘‘(A) such dollar amount, multiplied by‘‘(B) the cost-of-living adjustment deter-

mined under section 1(f)(3) for such calendaryear by substituting ‘calendar year 2000’ for‘calendar year 1992’ in subparagraph (B)thereof.

If any increase determined under the pre-ceding sentence is not a multiple of $1 ($250in the case of the dollar amount in para-graph (1)(B), such increase shall be roundedto the nearest multiple thereof.’’

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to calendaryears after 2000.SEC. 902. INCREASE IN STATE CEILING ON LOW-

INCOME HOUSING CREDIT.(a) IN GENERAL.—Clause (i) of section

42(h)(3)(C) (relating to State housing creditceiling) is amended by striking ‘‘$1.25’’ andinserting ‘‘$1.75’’.

(b) ADJUSTMENT OF STATE CEILING FOR IN-CREASES IN COST-OF-LIVING.—Paragraph (3) ofsection 42(h) (relating to housing credit dol-lar amount for agencies) is amended by add-ing at the end the following new subpara-graph:

‘‘(H) COST-OF-LIVING ADJUSTMENT.—‘‘(i) IN GENERAL.—In the case of a calendar

year after 2001, the dollar amount containedin subparagraph (C)(i) shall be increased byan amount equal to—


mined under section 1(f)(3) for such calendaryear by substituting ‘calendar year 2000’ for‘calendar year 1992’ in subparagraph (B)thereof.

‘‘(ii) ROUNDING.—If any increase underclause (i) is not a multiple of 5 cents, suchincrease shall be rounded to the next lowestmultiple of 5 cents.’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to calendaryears after 2000.

TITLE X—INDIVIDUAL DEVELOPMENTACCOUNTS

SEC. 1001. FINDINGS.Congress makes the following findings:


CONGRESSIONAL RECORD — SENATES6732 July 13, 2000(1) One-third of all Americans have no as-

sets available for investment, and another 20percent have only negligible assets. Thehousehold savings rate of the United Stateslags far behind other industrial nations, pre-senting a barrier to national economicgrowth and preventing many Americansfrom entering the economic mainstream bybuying a house, obtaining an adequate edu-cation, or starting a business.

(2) By building assets, Americans can im-prove their economic independence and sta-bility, stimulate the development of humanand other capital, and work toward a viableand hopeful future for themselves and theirchildren. Thus, economic well-being does notcome solely from income, spending, and con-sumption, but also requires savings, invest-ment, and accumulation of assets.

(3) Traditional public assistance programsbased on income and consumption have rare-ly been successful in promoting and sup-porting the transition to increased economicself-sufficiency. Income-based social policiesthat meet consumption needs (includingfood, child care, rent, clothing, and healthcare) should be complemented by asset-basedpolicies that can provide the means toachieve long-term independence and eco-nomic well-being.

(4) Individual Development Accounts(IDAs) can provide working Americans withstrong incentives to build assets, basic finan-cial management training, and access to se-cure and relatively inexpensive bankingservices.

(5) There is reason to believe that Indi-vidual Development Accounts would also fos-ter greater participation in electric fundtransfers (EFT), generate financial returns,including increased income, tax revenue, anddecreased welfare cash assistance, that willfar exceed the cost of public investment inthe program.

SEC. 1002. PURPOSES.

The purposes of this title are to provide forthe establishment of individual developmentaccount programs that will—

(1) provide individuals and families withlimited means an opportunity to accumulateassets and to enter the financial main-stream;

(2) promote education, homeownership, andthe development of small businesses;

(3) stabilize families and build commu-nities; and

(4) support continued United States eco-nomic expansion.

SEC. 1003. DEFINITIONS.

As used in this title:(1) ELIGIBLE INDIVIDUAL.—(A) IN GENERAL.—The term ‘‘eligible indi-

vidual’’ means an individual who—(i) has attained the age of 18 years;(ii) is a citizen or legal resident of the

United States; and(iii) is a member of a household the gross

income of which does not exceed 80 percentof the median family income for the area inwhich such individual resides (as publishedby the Department of Housing and Urban Af-fairs).

(B) HOUSEHOLD.—The term ‘‘household’’means all individuals who share use of adwelling unit as primary quarters for livingand eating separate from other individuals.

(2) INDIVIDUAL DEVELOPMENT ACCOUNT.—Theterm ‘‘Individual Development Account’’means an account established for an eligibleindividual as part of a qualified individualdevelopment account program, but only ifthe written governing instrument creatingthe account meets the following require-ments:

(A) The sole owner of the account is the el-igible individual.

(B) No contribution will be accepted unlessit is in cash, by check, by electronic fundtransfer, or by electronic money order.

(C) The holder of the account is a qualifiedfinancial institution, a qualified nonprofitorganization, or an Indian tribe.

(D) The assets of the account will not becommingled with other property except in acommon trust fund or common investmentfund.

(E) Except as provided in section 1015(b),any amount in the account may be paid outonly for the purpose of paying the qualifiedexpenses of the eligible individual.

(3) PARALLEL ACCOUNT.—The term ‘‘parallelaccount’’ means a separate, parallel indi-vidual or pooled account for all matchingfunds and earnings dedicated to an eligibleindividual as part of a qualified individualaccount program, the sole owner of which isa qualified financial institution, a qualifiednonprofit organization, or an Indian tribe.

(4) QUALIFIED FINANCIAL INSTITUTION.—(A) IN GENERAL.—The term ‘‘qualified fi-

nancial institution’’ means any person au-thorized to be a trustee of any individual re-tirement account under section 408(a)(2).

(B) RULE OF CONSTRUCTION.—Nothing inthis paragraph shall be construed as pre-venting a person described in subparagraph(A) from collaborating with 1 or more quali-fied nonprofit organizations or Indian tribesto carry out an individual development ac-count program established under section1011.

(5) QUALIFIED NONPROFIT ORGANIZATION.—The term ‘‘qualified nonprofit organization’’means—

(A)(i) any organization described in section501(c)(3) of the Internal Revenue Code of 1986and exempt from taxation under section501(a) of such Code;

(ii) any community development financialinstitution as certified by the CommunityDevelopment Financial Institution Fund; or

(iii) any credit union certified by the Na-tional Credit Union Administration,that meets standards for financial manage-ment and fiduciary responsibility as definedby the Secretary or an organization des-ignated by the Secretary.

(6) INDIAN TRIBE.—The term ‘‘Indian tribe’’means any Indian tribe as defined in section4(12) of the Native American Housing Assist-ance and Self-Determination Act of 1996 (25U.S.C. 4103(12), and includes any tribal sub-sidiary, subdivision, or other wholly ownedtribal entity.

(7) QUALIFIED INDIVIDUAL DEVELOPMENT AC-COUNT PROGRAM.—The term ‘‘qualified indi-vidual development program’’ means a pro-gram established under section 1011 underwhich—

(A) individual development accounts andparallel accounts are held by a qualified fi-nancial institution, a qualified nonprofit or-ganization, or an Indian tribe; and

(B) additional activities determined by theSecretary, or an organization designated bythe Secretary, as necessary to responsiblydevelop and administer accounts, includingrecruiting, providing financial education andother training to account holders, and reg-ular program monitoring, are carried out bysuch qualified financial institution, qualifiednonprofit organization, or Indian tribe.

(8) QUALIFIED EXPENSE DISTRIBUTION.—(A) IN GENERAL.—The term ‘‘qualified ex-

pense distribution’’ means any amount paid(including through electronic payments) ordistributed out of an Individual DevelopmentAccount and a parallel account establishedfor an eligible individual if such amount—

(i) is used exclusively to pay the qualifiedexpenses of such individual or such individ-ual’s spouse or dependents,

(ii) is paid by the qualified financial insti-tution, qualified nonprofit organization, or

Indian tribe directly to the person to whomthe amount is due or to another IndividualDevelopment Account, and

(iii) is paid after the holder of the Indi-vidual Development Account has completeda financial education course as requiredunder section 1012(b).

(B) QUALIFIED EXPENSES.—(i) IN GENERAL.—The term ‘‘qualified ex-

penses’’ means any of the following:(I) Qualified higher education expenses.(II) Qualified first-time homebuyer costs.(III) Qualified business capitalization or

expansion costs.(IV) Qualified rollovers.(ii) QUALIFIED HIGHER EDUCATION EX-

PENSES.—(I) IN GENERAL.—The term ‘‘qualified high-

er education expenses’’ has the meaninggiven such term by section 72(t)(7) of the In-ternal Revenue Code of 1986, determined bytreating postsecondary vocational edu-cational schools as eligible educational insti-tutions.

(II) POSTSECONDARY VOCATIONAL EDUCATIONSCHOOL.—The term ‘‘postsecondary voca-tional educational school’’ means an area vo-cational education school (as defined in sub-paragraph (C) or (D) of section 521(4) of theCarl D. Perkins Vocational and AppliedTechnology Education Act (20 U.S.C. 2471(4)))which is in any State (as defined in section521(33) of such Act), as such sections are ineffect on the date of enactment of this Act.

(III) COORDINATION WITH OTHER BENEFITS.—The amount of qualified higher education ex-penses for any taxable year shall be reducedas provided in section 25A(g)(2) of such Codeand by the amount of such expenses forwhich a credit or exclusion is allowed underchapter 1 of such Code for such taxable year.

(iii) QUALIFIED FIRST-TIME HOMEBUYERCOSTS.—The term ‘‘qualified first-time home-buyer costs’’ means qualified acquisitioncosts (as defined in section 72(t)(8) of suchCode without regard to subparagraph (B)thereof) with respect to a principal residence(within the meaning of section 121 of suchCode) for a qualified first-time homebuyer(as defined in section 72(t)(8) of such Code).

(iv) QUALIFIED BUSINESS CAPITALIZATION OREXPANSION COSTS.—

(I) IN GENERAL.—The term ‘‘qualified busi-ness capitalization or expansion costs’’means qualified expenditures for the capital-ization or expansion of a qualified businesspursuant to a qualified business plan.

(II) QUALIFIED EXPENDITURES.—The term‘‘qualified expenditures’’ means expendituresincluded in a qualified business plan, includ-ing capital, plant, equipment, working cap-ital, inventory expenses, attorney and ac-counting fees, and other costs normally asso-ciated with starting or expanding a business.

(III) QUALIFIED BUSINESS.—The term‘‘qualified business’’ means any businessthat does not contravene any law.

(IV) QUALIFIED BUSINESS PLAN.—The term‘‘qualified business plan’’ means a businessplan which meets such requirements as theSecretary or an organization designated bythe Secretary may specify.

(v) QUALIFIED ROLLOVERS.—The term‘‘qualified rollover’’ means, with respect toany distribution from an Individual Develop-ment Account, the payment, within 120 daysof such distribution, of all or a portion ofsuch distribution to such account or to an-other Individual Development Account es-tablished in another qualified financial insti-tution, qualified nonprofit organization, orIndian tribe for the benefit of the eligible in-dividual. Rules similar to the rules of section408(d)(3) of such Code (other than subpara-graph (C) thereof) shall apply for purposes ofthis clause.

(9) SECRETARY.—The term ‘‘Secretary’’means the Secretary of the Treasury.


CONGRESSIONAL RECORD — SENATE S6733July 13, 2000Subtitle A—Individual Development Accounts

for Low-Income WorkersSEC. 1011. STRUCTURE AND ADMINISTRATION OF

QUALIFIED INDIVIDUAL DEVELOP-MENT ACCOUNT PROGRAMS.

(a) ESTABLISHMENT OF QUALIFIED INDI-VIDUAL DEVELOPMENT ACCOUNT PROGRAMS.—Any qualified financial institution, qualifiednonprofit organization, or Indian tribe mayestablish 1 or more qualified individual de-velopment account programs which meet therequirements of this title.

(b) BASIC PROGRAM STRUCTURE.—(1) IN GENERAL.—All qualified individual

development account programs shall consistof the following 2 components:

(A) An Individual Development Account towhich an eligible individual may contributemoney in accordance with section 1013.

(B) A parallel account to which all match-ing funds shall be deposited in accordancewith section 1014.

(2) TAILORED IDA PROGRAMS.—A qualified fi-nancial institution, qualified nonprofit orga-nization, or Indian tribe may tailor its quali-fied individual development account pro-gram to allow matching funds to be spent on1 or more of the categories of qualified ex-penses.

(c) ACCOUNT POPULATION DISTRIBUTION RE-QUIREMENT.—An individual development ac-count program shall be treated as qualifiedunder this title only if not less than onethird of the Individual Development Ac-counts under such program are owned by eli-gible individuals each of whom is a memberof a household the gross income of whichdoes not exceed 50 percent of the medianfamily income for the area in which such in-dividuals reside (as published by the Depart-ment of Housing and Urban Affairs).

(d) TAX TREATMENT OF ACCOUNTS.—Any ac-count described in subparagraph (B) of sub-section (b)(1) is exempt from taxation underthe Internal Revenue Code of 1986 unlesssuch account has ceased to be such an ac-count by reason of section 1015(c) or the ter-mination of the qualified individual develop-ment account program under section 1016(b).SEC. 1012. PROCEDURES FOR OPENING AN INDI-

VIDUAL DEVELOPMENT ACCOUNTAND QUALIFYING FOR MATCHINGFUNDS.

(a) OPENING AN ACCOUNT.—An eligible indi-vidual must open an Individual DevelopmentAccount with a qualified financial institu-tion, qualified nonprofit organization, or In-dian tribe and contribute money in accord-ance with section 1013 to qualify for match-ing funds in a parallel account.

(b) REQUIRED COMPLETION OF FINANCIALEDUCATION COURSE.—

(1) IN GENERAL.—Before becoming eligibleto withdraw matching funds to pay for quali-fied expenses, holders of Individual Develop-ment Accounts must complete a financialeducation course offered by a qualified finan-cial institution, a qualified nonprofit organi-zation, an Indian tribe, or a government en-tity.

(2) STANDARD AND APPLICABILITY OFCOURSE.—The Secretary or an organizationdesignated by the Secretary, in consultationwith representatives of qualified individualdevelopment account programs and financialeducators, shall establish minimum perform-ance standards for financial educationcourses offered under paragraph (1) and aprotocol to exempt eligible individuals fromthe requirement under paragraph (1) becauseof hardship or lack of need.SEC. 1013. CONTRIBUTIONS TO INDIVIDUAL DE-

VELOPMENT ACCOUNTS.(a) IN GENERAL.—Except in the case of a

qualified rollover, individual contributionsto an Individual Development Account willnot be accepted for the taxable year in ex-cess of the lesser of—

(1) $2,000; or(2) an amount equal to the sum of—(A) the compensation (as defined in section

219(f)(1) of the Internal Revenue Code of 1986)includible in the individual’s gross incomefor such taxable year; and

(B) in the case of an eligible individual whohas attained age 65 or retired on disability(within the meaning of section 22 of the In-ternal Revenue Code of 1986) before the closeof the taxable year, any amount received asa pension or annuity or as a disability ben-efit and excluded from the individual’s grossincome for such taxable year.

(b) PROOF OF COMPENSATION AND STATUS ASAN ELIGIBLE INDIVIDUAL.—Federal W–2 formsand other forms specified by the Secretaryproving the eligible individual’s wages andother compensation (including amounts de-scribed in subsection (a)(2)(B)) and the statusof the individual as an eligible individualshall be presented at the time of the estab-lishment of the Individual Development Ac-count and at least once annually thereafter.

(c) TIME WHEN CONTRIBUTIONS DEEMEDMADE.—For purposes of this section, a tax-payer shall be deemed to have made a con-tribution to an Individual Development Ac-count on the last day of the preceding tax-able year if the contribution is made on ac-count of such taxable year and is made notlater than the time prescribed by law for fil-ing the Federal income tax return for suchtaxable year (not including extensions there-of).

(d) DEEMED WITHDRAWALS OF EXCESS CON-TRIBUTIONS.—If the individual for whose ben-efit an Individual Development Account isestablished contributes an amount in excessof the amount allowed under subsection (a)and fails to withdraw the excess contributionplus the amount of net income attributableto such excess contribution on or before theday prescribed by law (including extensionsof time) for filing such individual’s return oftax for the taxable year, such excess con-tribution and net income shall be deemed tohave been withdrawn on such day by such in-dividual for purposes other than to payqualified expenses.

(e) CROSS REFERENCE.—For designation of earned income tax cred-

it payments for deposit to an Individual De-velopment Account, see section 32(o) of theInternal Revenue Code of 1986.SEC. 1014. DEPOSITS BY QUALIFIED INDIVIDUAL

DEVELOPMENT ACCOUNT PRO-GRAMS.

(a) PARALLEL ACCOUNTS.—The qualified fi-nancial institution, qualified nonprofit orga-nization, or Indian tribe shall deposit allmatching funds for each Individual Develop-ment Account into a parallel account at aqualified financial institution, qualified non-profit organization, or Indian tribe.

(b) REGULAR DEPOSITS OF MATCHINGFUNDS.—

(1) IN GENERAL.—Subject to paragraph (2),the qualified financial institution, qualifiednonprofit organization, or Indian tribe shallnot less than annually deposit into the par-allel account with respect to each eligible in-dividual the following:

(A) A dollar-for-dollar match for the first$500 contributed by the eligible individualinto an Individual Development Accountwith respect to any taxable year.

(B) Any matching funds provided by State,local, or private sources in accordance to thematching ratio set by those sources.

(2) CROSS REFERENCE.—For allowance of tax credit for Individual

Development Account subsidies, includingmatching funds, see section 30B of the Inter-nal Revenue Code of 1986.

(c) FORFEITURE OF MATCHING FUNDS.—Matching funds that are forfeited under sec-

tion 1015(b) shall be used by the qualified fi-nancial institution, qualified nonprofit orga-nization, or Indian tribe to pay matches forother Individual Development Account con-tributions by eligible individuals.

(d) UNIFORM ACCOUNTING REGULATIONS.—The Secretary shall prescribe regulationswith respect to accounting for matchingfunds from all possible sources in the par-allel accounts.

(e) REGULAR REPORTING OF ACCOUNTS.—Any qualified financial institution, qualifiednonprofit organization, or Indian tribe shallreport the balances in any Individual Devel-opment Account and parallel account of aneligible individual on not less than an annualbasis.SEC. 1015. WITHDRAWAL PROCEDURES.

(a) WITHDRAWALS FOR QUALIFIED EX-PENSES.—To withdraw money from an eligi-ble individual’s Individual Development Ac-count to pay qualified expenses of such indi-vidual or such individual’s spouse or depend-ents, the qualified financial institution,qualified nonprofit organization, or Indiantribe shall directly transfer such funds fromthe Individual Development Account, and, ifapplicable, from the parallel account elec-tronically to the vendor or other IndividualDevelopment Account. If the vendor is notequipped to receive funds electronically, thequalified financial institution, qualified non-profit organization, or Indian tribe mayissue such funds by paper check to the ven-dor.

(b) WITHDRAWALS FOR NONQUALIFIED EX-PENSES.—An Individual Development Ac-count holder may unilaterally withdrawfunds from the Individual Development Ac-count for purposes other than to pay quali-fied expenses, but shall forfeit the cor-responding matching funds and interestearned on the matching funds by doing so,unless such withdrawn funds are recontrib-uted to such Account by September 30 fol-lowing the withdrawal.

(c) DEEMED WITHDRAWALS FROM ACCOUNTSOF NONELIGIBLE INDIVIDUALS.—If the indi-vidual for whose benefit an Individual Devel-opment Account is established ceases to bean eligible individual, such account shallcease to be an Individual Development Ac-count as of the first day of the taxable yearof such individual and any balance in suchaccount shall be deemed to have been with-drawn on such first day by such individualfor purposes other than to pay qualified ex-penses.

(d) TAX TREATMENT OF MATCHING FUNDS.—Any amount withdrawn from a parallel ac-count shall not be includible in an eligibleindividual’s gross income.SEC. 1016. CERTIFICATION AND TERMINATION OF

QUALIFIED INDIVIDUAL DEVELOP-MENT ACCOUNT PROGRAMS.

(a) CERTIFICATION PROCEDURES.—Upon es-tablishing a qualified individual develop-ment account program under section 1011, aqualified financial institution, qualified non-profit organization, or Indian tribe shall cer-tify to the Secretary, or an organization des-ignated by the Secretary, on forms pre-scribed by the Secretary or such organiza-tion and accompanied by any documentationrequired by the Secretary or such organiza-tion, that—

(1) the accounts described in subparagraphs(A) and (B) of section 1011(b)(1) are operatingpursuant to all the provisions of this title;and

(2) the qualified financial institution,qualified nonprofit organization, or Indiantribe agrees to implement an informationsystem necessary to monitor the cost andoutcomes of the qualified individual develop-ment account program.


CONGRESSIONAL RECORD — SENATES6734 July 13, 2000(b) AUTHORITY TO TERMINATE QUALIFIED

IDA PROGRAM.—If the Secretary, or an orga-nization designated by the Secretary, deter-mines that a qualified financial institution,qualified nonprofit organization, or Indiantribe under this title is not operating aqualified individual development accountprogram in accordance with the require-ments of this title (and has not implementedany corrective recommendations directed bythe Secretary or such organization), the Sec-retary or such organization shall terminatesuch institution’s, nonprofit organization’s,or Indian tribe’s authority to conduct theprogram. If the Secretary, or an organizationdesignated by the Secretary, is unable toidentify a qualified financial institution,qualified nonprofit organization, or Indiantribe to assume the authority to conductsuch program, then any account establishedfor the benefit of any eligible individualunder such program shall cease to be an Indi-vidual Development Account as of the firstday of such termination and any balance insuch account shall be deemed to have beenwithdrawn on such first day by such indi-vidual for purposes other than to pay quali-fied expenses.SEC. 1017. REPORTING, MONITORING, AND EVAL-

UATION.

(a) RESPONSIBILITIES OF QUALIFIED FINAN-CIAL INSTITUTIONS, QUALIFIED NONPROFIT OR-GANIZATIONS, AND INDIAN TRIBES.—Eachqualified financial institution, qualified non-profit organization, or Indian tribe that es-tablishes a qualified individual developmentaccount program under section 1011 shall re-port annually to the Secretary, directly orthrough an organization designated by theSecretary, within 90 days after the end ofeach calendar year on—

(1) the number of eligible individuals mak-ing contributions into Individual Develop-ment Accounts;

(2) the amounts contributed into Indi-vidual Development Accounts and depositedinto parallel accounts for matching funds;

(3) the amounts withdrawn from IndividualDevelopment Accounts and parallel ac-counts, and the purposes for which suchamounts were withdrawn;

(4) the balances remaining in IndividualDevelopment Accounts and parallel ac-counts; and

(5) such other information needed to helpthe Secretary, or an organization designatedby the Secretary, monitor the cost and out-comes of the qualified individual develop-ment account program.

(b) RESPONSIBILITIES OF THE SECRETARY ORDESIGNATED ORGANIZATION.—

(1) MONITORING PROTOCOL.—Not later than12 months after the date of enactment of thisAct, the Secretary, or an organization des-ignated by the Secretary, shall develop andimplement a protocol and process to monitorthe cost and outcomes of the qualified indi-vidual development account programs estab-lished under section 1011.

(2) ANNUAL REPORTS.—In each year afterthe date of enactment of this Act, the Sec-retary, or an organization designated by theSecretary, shall issue a progress report onthe status of such qualified individual devel-opment account programs. Such report shallinclude from a representative sample ofqualified financial institutions, qualifiednonprofit organizations, and Indian tribes areport on—

(A) the characteristics of participants, in-cluding age, gender, race or ethnicity, mar-ital status, number of children, employmentstatus, and monthly income;

(B) individual level data on deposits, with-drawals, balances, uses of Individual Devel-opment Accounts, and participant character-istics;

(C) the characteristics of qualified indi-vidual development account programs, in-cluding match rate, economic education re-quirements, permissible uses of accounts,staffing of programs in full time employees,and the total costs of programs; and

(D) process information on program imple-mentation and administration, especially onproblems encountered and how problemswere solved.

(3) APPROPRIATIONS FOR MONITORING.—There is authorized to be appropriated$5,000,000 for the purposes of monitoringqualified individual development accountprograms established under section 1011, toremain available until expended.SEC. 1018. CERTAIN ACCOUNT FUNDS OF PRO-

GRAM PARTICIPANTS DISREGARDEDFOR PURPOSES OF CERTAIN MEANS-TESTED FEDERAL PROGRAMS.

Notwithstanding any provision of the In-ternal Revenue Code of 1986 or the Social Se-curity Act that requires consideration of 1 ormore financial circumstances of an indi-vidual, for the purposes of determining eligi-bility to receive, or the amount of, any as-sistance or benefit authorized by such provi-sion to be provided to or for the benefit ofsuch individual, the sum of—

(1) the lesser of—(A) the sum of all contributions by an eli-

gible individual (including earnings thereon)to any Individual Development Account; or

(B) $10,000; plus(2) the sum of the matching deposits made

on behalf of such individual (including earn-ings thereon) in any parallel account,shall be disregarded for such purpose with re-spect to any period during which the indi-vidual participates in a qualified individualdevelopment account program establishedunder section 1011.

Subtitle B—Qualified Individual Develop-ment Account Program Investment Credits

SEC. 1021. QUALIFIED INDIVIDUAL DEVELOP-MENT ACCOUNT PROGRAM INVEST-MENT CREDITS.

(a) IN GENERAL.—Subpart B of part IV ofsubchapter A of chapter 1 (relating to othercredits) is amended by inserting after section30A the following:‘‘SEC. 30B. QUALIFIED INDIVIDUAL DEVELOP-

MENT ACCOUNT PROGRAM INVEST-MENT CREDIT.

‘‘(a) DETERMINATION OF AMOUNT.—Thereshall be allowed as a credit against the appli-cable tax for the taxable year an amountequal to the qualified individual develop-ment account program investment providedby a taxpayer during the taxable year undera qualified individual development accountprogram established under section 1011 of theAmerican Community Renewal and NewMarkets Empowerment Act.

‘‘(b) APPLICABLE TAX.—For the purposes ofthis section, the term ‘applicable tax’ meansthe excess (if any) of—

‘‘(1) the tax imposed under this chapter(other than the taxes imposed under the pro-visions described in subparagraphs (C)through (Q) of section 26(b)(2)), over

‘‘(2) the credits allowable under subpart B(other than this section) and subpart D ofthis part.

‘‘(c) QUALIFIED INDIVIDUAL DEVELOPMENTACCOUNT PROGRAM INVESTMENT.—For pur-poses of this section, the term ‘qualified in-dividual development account program in-vestment’ means an amount equal to—

‘‘(1) in the case of a taxpayer which is aqualified financial institution, the sum of—

‘‘(A) the lesser of—‘‘(i) 90 percent of the aggregate amount of

dollar-for-dollar matches under any qualifiedindividual development account program bysuch taxpayer under section 1014 of theAmerican Community Renewal and New

Markets Empowerment Act for such taxableyear, or

‘‘(ii) $90,000,000, plus‘‘(B) the lesser of—‘‘(i) 50 percent of the aggregate costs paid

or incurred under such program by the tax-payer during such taxable year—

‘‘(I) to provide financial education coursesto Individual Development Account holdersunder section 1012(b) of such Act, and

‘‘(II) to underwrite program activities de-scribed in section 503(6)(B) of such Act), or

‘‘(ii) $1,500,000, and‘‘(2) in the case of a taxpayer which is not

a qualified financial institution and whichmeets the requirement described in para-graph (2) of subsection (d), the lesser of—

‘‘(A) the sum of—‘‘(i) 50 percent of the aggregate amount of

such dollar-for-dollar matches by such tax-payer for such taxable year, plus

‘‘(ii) 50 percent of the aggregate costs de-scribed in paragraph (1)(B)(i) paid under suchprogram by the taxpayer during such taxableyear, or

‘‘(B) $5,000,000.‘‘(d) DEFINITIONS AND SPECIAL RULES.—‘‘(1) IN GENERAL.—For purposes of this sec-

tion, the terms ‘Individual Development Ac-count’ , ‘qualified individual development ac-count program’, and ‘qualified financial in-stitution’ have the meanings given suchterms by section 1003 of the American Com-munity Renewal and New Markets Empower-ment Act.

‘‘(2) REQUIREMENT FOR TAXPAYERS WHICHARE NOT QUALIFIED FINANCIAL INSTITUTIONS.—The requirement described in this paragraphwith respect to any taxpayer which is not aqualified financial institution is the require-ment that at least 70 percent of the expendi-tures by such taxpayer with respect to anyqualified individual development accountprogram for any taxable year are describedin subsection (c)(2)(A).

‘‘(3) CERTAIN RULES MADE APPLICABLE.—Rules similar to the rules of paragraphs (1)and (2) of section 41(f) shall apply for pur-poses of this section.

‘‘(4) DENIAL OF DOUBLE BENEFIT.—No de-duction or credit under any other provisionof this chapter shall be allowed with respectto qualified individual development accountprogram investments taken into accountunder subsection (a).

‘‘(e) REGULATIONS.—The Secretary mayprescribe such regulations as may be nec-essary or appropriate to carry out this sec-tion, including regulations providing for areduction of the credit allowed under thissection for any taxable year by the amountof any forfeiture under section 1015(b) of theAmerican Community Renewal and NewMarkets Empowerment Act in such taxableyear of any amount which was taken into ac-count in determining the amount of suchcredit in a preceding taxable year.

‘‘(f) TERMINATION.—This section shall notapply to any taxable year beginning afterDecember 31, 2006.’’.

(b) CONFORMING AMENDMENT.—The table ofsections for subpart B of part IV of sub-chapter A of chapter 1 is amended by insert-ing after the item relating to section 30A thefollowing:‘‘Sec. 30B. Qualified individual development

account program investmentcredit.’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2001.SEC. 1022. CRA CREDIT TREATMENT FOR QUALI-

FIED INDIVIDUAL DEVELOPMENTACCOUNT PROGRAM INVESTMENTS.

Qualified financial institutions which es-tablish qualified individual development ac-count programs under section 1011 shall not


CONGRESSIONAL RECORD — SENATE S6735July 13, 2000receive credit for funding, administration,and education expenses under any test con-tained in regulations for the Community Re-investment Act of 1977 for those activitiesand expenses related to such programs andtaken into account for purposes of the taxcredit allowed under section 30B of the Inter-nal Revenue Code of 1986.SEC. 1023. DESIGNATION OF EARNED INCOME

TAX CREDIT PAYMENTS FOR DE-POSIT TO INDIVIDUAL DEVELOP-MENT ACCOUNTS.

(a) IN GENERAL.—Section 32 (relating toearned income credit) is amended by addingat the end the following:

‘‘(o) DESIGNATION OF CREDIT FOR DEPOSITTO INDIVIDUAL DEVELOPMENT ACCOUNT.—

‘‘(1) IN GENERAL.—With respect to the re-turn of any eligible individual (as defined insection 1003(1) of the American CommunityRenewal and New Markets EmpowermentAct) for the taxable year of the tax imposedby this chapter, such individual may des-ignate that a specified portion (not less than$1) of any overpayment of tax for such tax-able year which is attributable to the creditallowed under this section shall be depositedby the Secretary into an Individual Develop-ment Account (as defined in section 1003(2) ofsuch Act) of such individual. The Secretaryshall so deposit such portion designatedunder this paragraph.

‘‘(2) MANNER AND TIME OF DESIGNATION.—Adesignation under paragraph (1) may bemade with respect to any taxable year—

‘‘(A) at the time of filing the return of thetax imposed by this chapter for such taxableyear, or

‘‘(B) at any other time (after the time offiling the return of the tax imposed by thischapter for such taxable year) specified inregulations prescribed by the Secretary.Such designation shall be made in such man-ner as the Secretary prescribes by regula-tions.

‘‘(3) PORTION ATTRIBUTABLE TO EARNED IN-COME TAX CREDIT.—For purposes of paragraph(1), an overpayment for any taxable yearshall be treated as attributable to the creditallowed under this section for such taxableyear to the extent that such overpaymentdoes not exceed the credit so allowed.

‘‘(4) OVERPAYMENTS TREATED AS RE-FUNDED.—For purposes of this title, any por-tion of an overpayment of tax designatedunder paragraph (1) shall be treated as beingrefunded to the taxpayer as of the last dateprescribed for filing the return of tax im-posed by this chapter (determined withoutregard to extensions) or, if later, the datethe return is filed.

‘‘(5) TERMINATION.—This subsection shallnot apply to any taxable year beginningafter December 31, 2006.’’.


TITLE XI—CHARITABLE CHOICEEXPANSION

SEC. 1101. PROVISION OF ASSISTANCE UNDERGOVERNMENT PROGRAMS BY RELI-GIOUS ORGANIZATIONS.

Title XXIV of the Revised Statutes isamended by inserting after section 1990 (42U.S.C. 1994) the following:‘‘SEC. 1994A. CHARITABLE CHOICE.

‘‘(a) SHORT TITLE.—This section may becited as the ‘Charitable Choice ExpansionAct of 2000’.

‘‘(b) PURPOSE.—The purposes of this sec-tion are—

‘‘(1) to prohibit discrimination againstnongovernmental organizations and certainindividuals on the basis of religion in the dis-tribution of government funds to providegovernment assistance and distribution ofsuch assistance, under government programsdescribed in subsection (c); and

‘‘(2) to allow such organizations to acceptsuch funds to provide such assistance to suchindividuals without impairing the religiouscharacter of such organizations or the reli-gious freedom of such individuals.

‘‘(c) RELIGIOUS ORGANIZATIONS INCLUDED ASNONGOVERNMENTAL PROVIDERS.—For any pro-gram carried out by the Federal Govern-ment, or by a State or local governmentwith Federal funds, in which the Federal,State, or local government is authorized touse nongovernmental organizations, throughcontracts, grants, certificates, vouchers, orother forms of disbursement, to provide as-sistance to beneficiaries under the program,the government shall consider, on the samebasis as other nongovernmental organiza-tions, religious organizations to provide theassistance under the program, so long as theprogram is implemented in a manner con-sistent with the Establishment Clause of thefirst amendment to the Constitution. Nei-ther the Federal Government nor a State orlocal government receiving funds under suchprogram shall discriminate against an orga-nization that provides assistance under, orapplies to provide assistance under, such pro-gram, on the basis that the organization hasa religious character.

‘‘(d) EXCLUSIONS.—As used in subsection(c), the term ‘program’ does not include ac-tivities carried out under—

‘‘(1) Federal programs providing educationto children eligible to attend elementaryschools or secondary schools, as defined insection 14101 of the Elementary and Sec-ondary Education Act of 1965 (20 U.S.C. 8801)(except for activities to assist students in ob-taining the recognized equivalents of sec-ondary school diplomas);

‘‘(2) the Higher Education Act of 1965 (20U.S.C. 1001 et seq.);

‘‘(3) the Head Start Act (42 U.S.C. 9831 etseq.); or

‘‘(4) the Child Care and Development BlockGrant Act of 1990 (42 U.S.C. 9858 et seq.).

‘‘(e) RELIGIOUS CHARACTER AND INDEPEND-ENCE.—

‘‘(1) IN GENERAL.—A religious organizationthat provides assistance under a program de-scribed in subsection (c) shall retain its inde-pendence from Federal, State, and local gov-ernments, including such organization’s con-trol over the definition, development, prac-tice, and expression of its religious beliefs.

‘‘(2) ADDITIONAL SAFEGUARDS.—Neither theFederal Government nor a State or localgovernment shall require a religiousorganization—

‘‘(A) to alter its form of internal govern-ance; or

‘‘(B) to remove religious art, icons, scrip-ture, or other symbols;in order to be eligible to provide assistanceunder a program described in subsection (c).

‘‘(f) EMPLOYMENT PRACTICES.—‘‘(1) TENETS AND TEACHINGS.—A religious

organization that provides assistance undera program described in subsection (c) mayrequire that its employees providing assist-ance under such program adhere to the reli-gious tenets and teachings of such organiza-tion, and such organization may require thatthose employees adhere to rules forbiddingthe use of drugs or alcohol.

‘‘(2) TITLE VII EXEMPTION.—The exemptionof a religious organization provided undersection 702 or 703(e)(2) of the Civil Rights Actof 1964 (42 U.S.C. 2000e–1, 2000e–2(e)(2)) regard-ing employment practices shall not be af-fected by the religious organization’s provi-sion of assistance under, or receipt of fundsfrom, a program described in subsection (c).

‘‘(g) RIGHTS OF BENEFICIARIES OF ASSIST-ANCE.—

‘‘(1) IN GENERAL.—If an individual de-scribed in paragraph (3) has an objection tothe religious character of the organization

from which the individual receives, or wouldreceive, assistance funded under any pro-gram described in subsection (c), the appro-priate Federal, State, or local governmentalentity shall provide to such individual (ifotherwise eligible for such assistance) withina reasonable period of time after the date ofsuch objection, assistance that—

‘‘(A) is from an alternative organizationthat is accessible to the individual; and

‘‘(B) has a value that is not less than thevalue of the assistance that the individualwould have received from such organization.

‘‘(2) NOTICE.—The appropriate Federal,State, or local governmental entity shall en-sure that notice is provided to individualsdescribed in paragraph (3) of the rights ofsuch individuals under this section.

‘‘(3) INDIVIDUAL DESCRIBED.—An individualdescribed in this paragraph is an individualwho receives or applies for assistance undera program described in subsection (c).

‘‘(h) NONDISCRIMINATION AGAINST BENE-FICIARIES.—

‘‘(1) GRANTS AND CONTRACTS.—A religiousorganization providing assistance through agrant or contract under a program describedin subsection (c) shall not discriminate, incarrying out the program, against an indi-vidual described in subsection (g)(3) on thebasis of religion, a religious belief, a refusalto hold a religious belief, or a refusal to ac-tively participate in a religious practice.

‘‘(2) INDIRECT FORMS OF DISBURSEMENT.—Areligious organization providing assistancethrough a voucher, certificate, or other formof indirect disbursement under a program de-scribed in subsection (c) shall not deny an in-dividual described in subsection (g)(3) admis-sion into such program on the basis of reli-gion, a religious belief, or a refusal to hold areligious belief.

‘‘(i) FISCAL ACCOUNTABILITY.—‘‘(1) IN GENERAL.—Except as provided in

paragraph (2), any religious organizationproviding assistance under any program de-scribed in subsection (c) shall be subject tothe same regulations as other nongovern-mental organizations to account in accordwith generally accepted accounting prin-ciples for the use of such funds providedunder such program.

‘‘(2) LIMITED AUDIT.—Such organizationshall segregate government funds providedunder such program into a separate account.Only the government funds shall be subjectto audit by the government.

‘‘(j) COMPLIANCE.—A party alleging thatthe rights of the party under this sectionhave been violated by a State or local gov-ernment may bring a civil action pursuantto section 1979 against the official or govern-ment agency that has allegedly committedsuch violation. A party alleging that therights of the party under this section havebeen violated by the Federal Governmentmay bring a civil action for appropriate re-lief in an appropriate Federal district courtagainst the official or government agencythat has allegedly committed such violation.

‘‘(k) LIMITATIONS ON USE OF FUNDS FORCERTAIN PURPOSES.—No funds providedthrough a grant or contract to a religious or-ganization to provide assistance under anyprogram described in subsection (c) shall beexpended for sectarian worship, instruction,or proselytization.

‘‘(l) EFFECT ON STATE AND LOCAL FUNDS.—If a State or local government contributesState or local funds to carry out a programdescribed in subsection (c), the State or localgovernment may segregate the State or localfunds from the Federal funds provided tocarry out the program or may comminglethe State or local funds with the Federalfunds. If the State or local government com-mingles the State or local funds, the provi-sions of this section shall apply to the com-mingled funds in the same manner, and to


CONGRESSIONAL RECORD — SENATES6736 July 13, 2000the same extent, as the provisions apply tothe Federal funds.

‘‘(m) TREATMENT OF INTERMEDIATE CON-TRACTORS.—If a nongovernmental organiza-tion (referred to in this subsection as an ‘in-termediate organization’), acting under acontract or other agreement with the Fed-eral Government or a State or local govern-ment, is given the authority under the con-tract or agreement to select nongovern-mental organizations to provide assistanceunder the programs described in subsection(c), the intermediate organization shall havethe same duties under this section as thegovernment but shall retain all other rightsof a nongovernmental organization underthis section.’’.

TITLE XII—ANTHRACITE REGIONREDEVELOPMENT

SEC. 1201. CREDIT TO HOLDERS OF QUALIFIEDANTHRACITE REGION REDEVELOP-MENT BONDS.

(a) IN GENERAL.—Subpart B of part IV ofsubchapter A of chapter 1, as amended bysection 1021(a), is amended by adding at theend the following new section:‘‘SEC. 30C. CREDIT TO HOLDERS OF QUALIFIED

ANTHRACITE REGION REDEVELOP-MENT BONDS.

‘‘(a) ALLOWANCE OF CREDIT.—In the case ofa taxpayer who holds a qualified anthraciteregion redevelopment bond on a credit allow-ance date of such bond which occurs duringthe taxable year, there shall be allowed as acredit against the tax imposed by this chap-ter for such taxable year an amount equal tothe sum of the credits determined under sub-section (b) with respect to credit allowancedates during such year on which the tax-payer holds such bond.

‘‘(b) AMOUNT OF CREDIT.—‘‘(1) IN GENERAL.—The amount of the credit

determined under this subsection with re-spect to any credit allowance date for aqualified anthracite region redevelopmentbond is 25 percent of the annual credit deter-mined with respect to such bond.

‘‘(2) ANNUAL CREDIT.—The annual credit de-termined with respect to any qualified an-thracite region redevelopment bond is theproduct of—

‘‘(A) the applicable credit rate, multipliedby

‘‘(B) the outstanding face amount of thebond.

‘‘(3) APPLICABLE CREDIT RATE.—For pur-poses of paragraph (1), the applicable creditrate with respect to an issue is the rateequal to an average market yield (as of theday before the date of issuance of the issue)on outstanding long-term corporate debt ob-ligations (determined under regulations pre-scribed by the Secretary).

‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE-DEMPTION.—In the case of a bond which isissued during the 3-month period ending on acredit allowance date, the amount of thecredit determined under this subsection withrespect to such credit allowance date shallbe a ratable portion of the credit otherwisedetermined based on the portion of the 3-month period during which the bond is out-standing. A similar rule shall apply when thebond is redeemed.

‘‘(c) QUALIFIED ANTHRACITE REGION REDE-VELOPMENT BOND.—For purposes of thissection—

‘‘(1) IN GENERAL.—The term ‘qualified an-thracite region redevelopment bond’ meansany bond issued as part of an issue if—

‘‘(A) the issuer is an approved special pur-pose entity,

‘‘(B) all of the net proceeds of the issue aredeposited into either—

‘‘(i) an approved segregated program fund,or

‘‘(ii) a sinking fund for payment of prin-cipal on the bonds at maturity,

‘‘(C) the issuer designates such bond forpurposes of this section, and

‘‘(D) the term of each bond which is part ofsuch issue does not exceed 30 years.Not more than 1⁄6 of the net proceeds of anissue may be deposited into a sinking fundreferred to in subparagraph (B)(ii).

‘‘(2) LIMITATION ON AMOUNT OF BONDS DES-IGNATED.—The maximum aggregate faceamount of bonds which may be designatedunder paragraph (1) shall not exceed$1,200,000,000.

‘‘(3) APPROVED SPECIAL PURPOSE ENTITY.—The term ‘approved special purpose entity’means a State or local governmental entity,or an entity described in section 501(c) andexempt from tax under section 501(a), if—

‘‘(A) such entity is established and oper-ated exclusively to carry out qualified pur-poses,

‘‘(B) such entity has a comprehensive planto restore and redevelop abandoned mineland in an anthracite region, and

‘‘(C) such entity and plan are approved bythe Administrator of the EnvironmentalProtection Agency.

‘‘(4) APPROVED SEGREGATED PROGRAMFUND.—The term ‘approved segregated pro-gram fund’ means any segregated fund theamounts in which may be used only forqualified purposes, but only if such fund hassafeguards approved by such Administratorto assure that such amounts are only usedfor such purposes.

‘‘(d) LIMITATION BASED ON AMOUNT OFTAX.—

‘‘(1) IN GENERAL.—The credit allowed undersubsection (a) for any taxable year shall notexceed the excess of—

‘‘(A) the sum of the regular tax liability(as defined in section 26(b)) plus the tax im-posed by section 55, over

‘‘(B) the sum of the credits allowable underpart IV of subchapter A (other than this sec-tion and subpart C thereof, relating to re-fundable credits).

‘‘(2) CARRYOVER OF UNUSED CREDIT.—If thecredit allowable under subsection (a) exceedsthe limitation imposed by paragraph (1) forsuch taxable year, such excess shall be car-ried to the succeeding taxable year andadded to the credit allowable under sub-section (a) for such taxable year.

‘‘(e) OTHER DEFINITIONS.—For purposes ofthis section—

‘‘(1) ANTHRACITE REGION.—The term ‘an-thracite region’ means any area in theUnited States with anthracite deposits.

‘‘(2) QUALIFIED PURPOSE.—The term ‘quali-fied purpose’ means, with respect to anyqualified anthracite region redevelopmentbond—

‘‘(A) the purchase, restoration, and rede-velopment of abandoned mine land and otherreal, personal, and mixed property in an an-thracite region,

‘‘(B) the cleanup of waterways and theirtributaries, both surface and subsurface insuch region from acid mine drainage andother pollution,

‘‘(C) the provision of financial and tech-nical assistance for infrastructure construc-tion and upgrading water and sewer systemsin such region,

‘‘(D) research and development,‘‘(E) other environmental and economic de-

velopment purposes in such region, and‘‘(F) such other purposes as are set forth in

the comprehensive plan prepared by theissuer and approved by the Administrator ofthe Environmental Protection Agency.

‘‘(3) CREDIT ALLOWANCE DATE.—The term‘credit allowance date’ means—

‘‘(A) March 15,‘‘(B) June 15,‘‘(C) September 15, and‘‘(D) December 15.

Such term includes the last day on which thebond is outstanding.

‘‘(4) BOND.—The term ‘bond’ includes anyobligation.

‘‘(f) CREDIT INCLUDED IN GROSS INCOME.—Gross income includes the amount of thecredit allowed to the taxpayer under thissection (determined without regard to sub-section (d)) and the amount so included shallbe treated as interest income.

‘‘(g) BONDS HELD BY REGULATED INVEST-MENT COMPANIES.—If any qualified anthra-cite region redevelopment bond is held by aregulated investment company, the creditdetermined under subsection (a) shall be al-lowed to shareholders of such company underprocedures prescribed by the Secretary.

‘‘(h) CREDITS MAY BE STRIPPED.—Underregulations prescribed by the Secretary—

‘‘(1) IN GENERAL.—There may be a separa-tion (including at issuance) of the ownershipof a qualified anthracite region redevelop-ment bond and the entitlement to the creditunder this section with respect to such bond.In case of any such separation, the creditunder this section shall be allowed to theperson who on the credit allowance dateholds the instrument evidencing the entitle-ment to the credit and not to the holder ofthe bond.

‘‘(2) CERTAIN RULES TO APPLY.—In the caseof a separation described in paragraph (1),the rules of section 1286 shall apply to thequalified anthracite region redevelopmentbond as if it were a stripped bond and to thecredit under this section as if it were astripped coupon.

‘‘(i) TREATMENT FOR ESTIMATED TAX PUR-POSES.—Solely for purposes of sections 6654and 6655, the credit allowed by this sectionto a taxpayer by reason of holding a quali-fied anthracite region redevelopment bondon a credit allowance date shall be treated asif it were a payment of estimated tax madeby the taxpayer on such date.

‘‘(j) CREDIT MAY BE TRANSFERRED.—Noth-ing in any law or rule of law shall be con-strued to limit the transferability of thecredit allowed by this section through saleand repurchase agreements.

‘‘(k) REPORTING.—The issuer shall submitreports similar to the reports required undersection 149(e).

‘‘(l) TERMINATION.—This section shall notapply to any bond issued more than 10 yearsafter the date that the first qualified anthra-cite region redevelopment bond is issued.’’

(b) REPORTING.—Subsection (d) of section6049 (relating to returns regarding paymentsof interest) is amended by adding at the endthe following new paragraph:

‘‘(8) REPORTING OF CREDIT ON QUALIFIED AN-THRACITE REGION REDEVELOPMENT BONDS.—

‘‘(A) IN GENERAL.—For purposes of sub-section (a), the term ‘interest’ includesamounts includible in gross income undersection 30C(f) and such amounts shall betreated as paid on the credit allowance date(as defined in section 30C(e)(3)).

‘‘(B) REPORTING TO CORPORATIONS, ETC.—Except as otherwise provided in regulations,in the case of any interest described in sub-paragraph (A) of this paragraph, subsection(b)(4) of this section shall be applied withoutregard to subparagraphs (A), (H), (I), (J), (K),and (L)(i).

‘‘(C) REGULATORY AUTHORITY.—The Sec-retary may prescribe such regulations as arenecessary or appropriate to carry out thepurposes of this paragraph, including regula-tions which require more frequent or moredetailed reporting.’’

(c) CONFORMING AMENDMENT.—The table ofsections for subpart B of part IV of sub-chapter A of chapter 1, as amended by sec-tion 1021(b), is amended by adding at the endthe following new item:


CONGRESSIONAL RECORD — SENATE S6737July 13, 2000‘‘Sec. 30C. Credit to holders of qualified pub-

lic anthracite region redevelop-ment bonds.’’

(d) APPROVAL OF BONDS, ETC., BY ADMINIS-TRATOR OF THE ENVIRONMENTAL PROTECTIONAGENCY.—The Administrator of the Environ-mental Protection Agency shall act on anyrequest for an approval required by section30C of the Internal Revenue Code of 1986 (asadded by this section) not later than 30 daysafter the date such request is submitted tosuch Administrator.

(e) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to obliga-tions issued after December 31, 2000.

KERRY (AND OTHERS)AMENDMENT NO. 3839

Mr. KERRY (for himself, Mr. SAR-BANES, Mr. INOUYE, Mr. DODD, Mr.WELLSTONE, and Mr. LEAHY) proposedan amendment to the bill, H.R. 8,supra; as follows:









is:












‘‘(C) APPLICABLE UNUSED SPOUSAL DEDUC-TION AMOUNT.—With respect to a decedentwhose immediately predeceased spouse diedafter December 31, 2000, and the estate of

such immediately predeceased spouse metthe requirements of subsection (b)(1), the ap-plicable unused spousal deduction amountfor such decedent is equal to the excess of—









TITLE II—NATIONAL AFFORDABLEHOUSING

SEC. 201. SHORT TITLE.This title may be cited as the ‘‘National

Affordable Housing Trust Fund Act of 2000’’.SEC. 202. PURPOSES.

The purposes of this title are to—(1) fill the growing gap in the national abil-

ity to build affordable housing by usingamounts saved by slowing down the repeal ofthe Federal estate and gift taxes and profitsgenerated by Federal housing programs tofund additional housing activities, and notsupplant existing housing appropriations;and

(2) enable rental housing to be built forthose families with the greatest need inareas with the greatest opportunities inmixed-income settings and to promote home-ownership for low-income families.SEC. 203. NATIONAL HOUSING TRUST FUND.

Subchapter A of chapter 98 of the InternalRevenue Code of 1986 (relating to trust funds)is amended by adding at the end the fol-lowing:‘‘SEC. 9511. NATIONAL HOUSING TRUST FUND.

‘‘(a) ESTABLISHMENT OF TRUST FUND.—There is established in the Treasury of theUnited States a trust fund to be known asthe ‘National Affordable Housing TrustFund’ (referred to in this section as the‘Trust Fund’) for the purposes of promotingthe development of affordable housing.

‘‘(b) TRANSFER TO THE TRUST FUND.—TheSecretary shall—

‘‘(1) estimate the amount of the increase infunds in the general fund of the Treasury foreach fiscal year resulting from the amend-ments made by the Estate Tax Relief Act of2000 as compared to such increase resultingfrom the amendments made by H.R. 8 as re-ceived by the Senate from the House of Rep-resentatives on June 12, 2000; and

‘‘(2) transfer, on October 1, 2001, and eachOctober 1 thereafter (if necessary) from thegeneral fund of the Treasury to the TrustFund an amount equivalent to the differencedetermined in paragraph (1), to the extentthe aggregate amount of such transfers doesnot exceed $5,000,000,000.

‘‘(c) EXPENDITURES FROM THE TRUSTFUND.—Beginning in fiscal year 2002,amounts deposited in or transferred to theTrust Fund shall be available to the Sec-retary of Housing and Urban Developmentfor use in accordance with section 204 of theNational Affordable Housing Trust Fund Actof 2000.’’.SEC. 204. ADMINISTRATION OF NATIONAL AF-

FORDABLE HOUSING TRUST FUND.(a) DEFINITIONS.—In this section:

(1) AFFORDABLE HOUSING.—The term ‘‘af-fordable housing’’ means housing for rentalthat bears rents not greater than the lesserof—

(A) the existing fair market rent for com-parable units in the area, as established bythe Secretary under section 8 of the UnitedStates Housing Act of 1937 (42 U.S.C. 1437f);or

(B) a rent that does not exceed 30 percentof the adjusted income of a family whose in-come equals 65 percent of the median incomefor the area, as determined by the Secretary,with adjustment for number of bedrooms inthe unit, except that the Secretary may es-tablish income ceilings higher or lower than65 percent of the median for the area on thebasis of the findings of the Secretary thatsuch variations are necessary because of pre-vailing levels of construction costs or fairmarket rents, or unusually high or low fam-ily incomes.

(2) CONTINUED ASSISTANCE RENTAL SUBSIDYPROGRAM.—The term ‘‘continued assistancerental subsidy program’’ means a programunder which—

(A) project-based assistance is provided fornot more than 3 years to a family in an af-fordable housing unit developed with assist-ance made available under subsection (c) or(d) in a project that partners with a publichousing agency, which agency agrees to pro-vide the assisted family with a priority forthe receipt of a voucher under section 8(o) ofthe United States Housing Act of 1937 (42U.S.C. 1437f(o)) if the family chooses to moveafter an initial year of occupancy and thepublic housing agency agrees to refer eligiblevoucher holders to the property when vacan-cies occur; and

(B) after 3 years, subject to appropriations,continued assistance is provided under sec-tion 8(o) of the United States Housing Act of1937 (42 U.S.C. 1437f(o)), notwithstanding anyprovision to the contrary in that section, ifadministered to provide families with the op-tion of continued assistance with tenant-based vouchers, if such a family chooses tomove after an initial year of occupancy andthe public housing agency agrees to refer eli-gible voucher holders to the property whenvacancies occur.

(3) ELIGIBLE ACTIVITIES.—The term ‘‘eligi-ble activities’’ means activities relating tothe development of affordable housing,including—

(A) the construction of new housing;(B) the acquisition of real property;(C) site preparation and improvement, in-

cluding demolition;(D) substantial rehabilitation of existing

housing; and(E) rental subsidy for not more than 3

years under a continued assistance rentalsubsidy program.

(4) ELIGIBLE ENTITY.—The term ‘‘eligibleentity’’ includes any public or private non-profit or for-profit entity, unit of local gov-ernment, regional planning entity, and anyother entity engaged in the development ofaffordable housing, as determined by theSecretary.

(5) ELIGIBLE INTERMEDIARY.—The term ‘‘eli-gible intermediary’’ means—

(A) a nonprofit community developmentcorporation;

(B) a community development financial in-stitution (as defined in section 103 of theCommunity Development Banking and Fi-nancial Institutions Act of 1994 (12 U.S.C.4702));

(C) a State or local trust fund;(D) any entity eligible for assistance under

section 4 of the HUD Demonstration Act of1993 (42 U.S.C. 9816 note);

(E) a national, regional, or statewide non-profit organization; and


CONGRESSIONAL RECORD — SENATES6738 July 13, 2000(F) any other appropriate nonprofit entity,

as determined by the Secretary.(6) EXTREMELY LOW-INCOME FAMILIES.—The

term ‘‘extremely low-income families’’means very low-income families (as definedin section 3(b) of the United States HousingAct of 1937 (42 U.S.C. 1437a(b)) whose incomesdo not exceed 30 percent of the median fam-ily income for the area, as determined by theSecretary with adjustments for smaller andlarger families, except that the Secretarymay establish income ceilings higher orlower than 30 percent of the median for thearea on the basis of the Secretary’s findingsthat such variations are necessary because ofunusually high or low family incomes.

(7) LOW-INCOME FAMILIES.—The term ‘‘low-income families’’ has the meaning given theterm in section 3(b) of the United StatesHousing Act of 1937 (42 U.S.C. 1437a(b)).

(8) SECRETARY.—The term ‘‘Secretary’’means the Secretary of Housing and UrbanDevelopment.

(9) STATE.—The term ‘‘State’’ has themeaning given the term in section 3(b) of theUnited States Housing Act of 1937 (42 U.S.C.1437a(b)).

(10) TRUST FUND.—The term ‘‘Trust Fund’’means the National Housing Trust Fund es-tablished under section 9511 of the InternalRevenue Code of 1986, as added by section 203of this title.

(b) ALLOCATION TO STATES AND ELIGIBLEINTERMEDIARIES.—The total amount madeavailable for fiscal year 2002 and each fiscalyear thereafter from the Trust Fund shall beallocated by the Secretary as follows:

(1) 75 percent shall be used to award grantsto States in accordance with subsection (c).

(2) 25 percent shall be used to award grantsto eligible intermediaries in accordance withsubsection (d).

(c) GRANTS TO STATES.—(1) IN GENERAL.—Subject to paragraph (2),

from the amount made available for each fis-cal year under subsection (b)(1), the Sec-retary shall award grants to States, in ac-cordance with an allocation formula estab-lished by the Secretary, based on the prorata share of each State of the total needamong all States for an increased supply ofaffordable housing, as determined on thebasis of—

(A) the number and percentage of familiesin the State that live in substandard hous-ing;

(B) the number and percentage of familiesin the State that pay more than 50 percent oftheir annual income for housing costs;

(C) the number and percentage of personsliving at or below the poverty level in theState;

(D) the cost of developing or carrying outsubstantial rehabilitation of housing in theState;

(E) the age of the multifamily housingstock in the State; and

(F) such other factors as the Secretary de-termines to be appropriate.

(2) GRANT AMOUNT.—(A) IN GENERAL.—The amount of a grant

award to a State under this subsection shallbe equal to the lesser of—

(i) 4 times the amount of assistance pro-vided by the State from non-Federal sources;and

(ii) the allocation determined in accord-ance with paragraph (1).

(B) NON-FEDERAL SOURCES.—Fifty percentof funds allocable to tax credits allocatedunder section 42 of the Internal RevenueCode of 1986, revenue from mortgage revenuebonds issued under section 143 of such Code,or proceeds from the sale of tax exemptbonds shall be considered non-Federalsources for purposes of this section.

(3) AWARD OF STATE ALLOCATION TO CERTAINENTITIES.—

(A) IN GENERAL.—If the amount providedby a State from non-Federal sources is lessthan 25 percent of the amount that would beawarded to the State under this subsectionbased on the allocation formula described inparagraph (1), not later than 60 days afterthe date on which the Secretary determinesthat the State is not eligible for the full allo-cation determined under paragraph (1), theSecretary shall issue a notice regarding theavailability of the funds for which the Stateis ineligible.

(B) APPLICATIONS.—Not later than 9months after publication of a notice of fund-ing availability under subparagraph (A), anonprofit or public entity (or a consortiumthereof, which may include units of localgovernment working together on a regionalbasis) may submit to the Secretary an appli-cation for the available assistance, which ap-plication shall include—

(i) a certification that the applicant willprovide assistance from non-Federal sourcesin an amount equal to 25 percent of theamount of assistance made available to theapplicant under this paragraph; and

(ii) an allocation plan that meets the re-quirements of paragraph (4)(B) for distribu-tion in the State of any assistance madeavailable to the applicant under this para-graph and the assistance provided by the ap-plicant for purposes of clause (i).

(C) AWARD OF ASSISTANCE.—The Secretaryshall award the amount that is not awardedto a State by operation of paragraph (2) to 1or more applicants that meet the require-ments of subparagraph (B) of this paragraphthat are selected by the Secretary based onselection criteria, which shall be establishedby the Secretary by regulation.

(4) DISTRIBUTION TO ELIGIBLE ENTITIES.—(A) IN GENERAL.—Each State that receives

a grant award under this subsection shalldistribute the amount made available underthe grant and the assistance provided by theState from non-Federal sources for purposesof paragraph (2)(A) to eligible entities for thepurpose of assisting those entities in car-rying out eligible activities in the State asfollows:

(i) 75 percent shall be distributed to eligi-ble entities for eligible activities relating tothe development of affordable housing forrental by extremely low-income families inthe State.

(ii) 25 percent shall be distributed to eligi-ble entities for eligible activities relating tothe development of affordable housing forrental by low-income families in the State,or for homeownership assistance for low-in-come families in the State.

(B) ALLOCATION PLAN.—Each State shall,after notice to the public, an opportunity forpublic comment, and consideration of publiccomments received, establish an allocationplan for the distribution of assistance underthis paragraph, which shall be submitted tothe Secretary and shall be made available tothe public by the State, and which shallinclude—

(i) application requirements for eligible en-tities seeking to receive such assistance, in-cluding a requirement that each applicationinclude—

(I) a certification by the applicant thatany housing developed with assistance underthis paragraph will remain affordable for ex-tremely low-income families or low-incomefamilies, as applicable, for not less than 40years;

(II) a certification by the applicant thatthe tenant contribution towards rent for afamily residing in a unit developed with as-sistance under this paragraph will not exceed30 percent of the adjusted income of thatfamily; and

(III) a certification by the applicant thatthe owner of a project in which any housing

developed with assistance under this para-graph is located will make a percentage ofunits in the project available to families as-sisted under the voucher program under sec-tion 8(o) of the United States Housing Act of1937 (42 U.S.C. 1437f(o)) on the same basis asother families eligible for the housing (ex-cept that only the voucher holder’s expectedshare of rent shall be considered), which per-centage shall not be less than the percentageof the total cost of developing or rehabili-tating the project that is funded with assist-ance under this paragraph; and

(ii) factors for consideration in selectingamong applicants that meet such applicationrequirements, which shall give preference toapplicants based on—

(I) the amount of assistance for the eligibleactivities leveraged by the applicant fromprivate and other non-Federal sources;

(II) the extent of local assistance that willbe provided in carrying out the eligible ac-tivities, including—

(aa) financial assistance; and(bb) the extent to which the applicant has

worked with the unit of local government inwhich the housing will be located to addressissues of siting and exclusionary zoning orother policies that are barriers to affordablehousing;

(III) the degree to which the developmentin which the housing will be located ismixed-income;

(IV) whether the housing will be located ina census tract in which the poverty rate isless than 20 percent or in a community un-dergoing revitalization;

(V) the extent of employment and otheropportunities for low-income families in thearea in which the housing will be located;and

(VI) the extent to which the applicantdemonstrates the ability to maintain unitsas affordable for extremely low-income orlow-income families, as applicable, throughthe use of assistance made available underthis paragraph, assistance leveraged fromnon-Federal sources, assistance made avail-able under section 8 of the United StatesHousing Act of 1937 (42 U.S.C. 1437f), State orlocal assistance, programs to increase tenantincome, cross-subsidization, and any otherresources.

(C) FORMS OF ASSISTANCE.—(i) IN GENERAL.—Assistance distributed

under this paragraph may be in the form ofcapital grants, non-interest bearing or low-interest loans or advances, deferred paymentloans, guarantees, and any other forms of as-sistance approved by the Secretary.

(ii) REPAYMENTS.—If a State awards assist-ance under this paragraph in the form of aloan or other mechanism by which funds arelater repaid to the State, any repayments re-ceived by the State shall be distributed bythe State in accordance with the allocationplan described in subparagraph (B) the fol-lowing fiscal year.

(D) COORDINATION WITH OTHER ASSIST-ANCE.—In distributing assistance under thisparagraph, each State shall, to the max-imum extent practicable, coordinate suchdistribution with the provision of other af-fordable housing assistance by the State,including—

(i) housing credit dollar amounts allocatedby the State under section 42(h) of the Inter-nal Revenue Code of 1986;

(ii) assistance made available under theHOME Investment Partnerships Act or thecommunity development block grant pro-gram; and

(iii) private activity bonds.(d) NATIONAL COMPETITION.—(1) IN GENERAL.—From the amount made

available for each fiscal year under sub-section (b)(2), the Secretary shall awardgrants on a competitive basis to eligible


CONGRESSIONAL RECORD — SENATE S6739July 13, 2000grants on a competitive basis to eligibleintermediaries, which shall be used in ac-cordance with paragraph (3) of this sub-section.

(2) APPLICATION REQUIREMENTS AND SELEC-TION CRITERIA.—The Secretary by regulationshall establish application requirements andselection criteria for the award of competi-tive grants to eligible intermediaries underthis subsection, which criteria shallinclude—

(A) the ability of the eligible intermediaryto meet housing needs of low-income fami-lies on a national or regional scope;

(B) the capacity of the eligible inter-mediary to use the grant award in accord-ance with paragraph (3), based on the pastperformance and management of the appli-cant; and

(C) the extent to which the eligible inter-mediary has leveraged funding from privateand other non-Federal sources for the eligi-ble activities.

(3) USE OF GRANT AWARD.—(A) IN GENERAL.—Each eligible inter-

mediary that receives a grant award underthis subsection shall ensure that the amountmade available under the grant is used asfollows:

(i) 75 percent shall be used for eligible ac-tivities relating to the development of af-fordable housing for rental by extremelylow-income families.

(ii) 25 percent shall be used for eligible ac-tivities relating to the development of af-fordable housing for rental by low-incomefamilies, or for homeownership assistancefor low-income families.

(B) PLAN OF USE.—Each eligible inter-mediary that receives a grant award underthis subsection shall establish a plan for theuse or distribution of the amount madeavailable under the grant, which shall besubmitted to the Secretary, and which shallinclude information relating to the mannerin which the eligible intermediary will ei-ther use or distribute that amount,including—

(i) a certification that assistance madeavailable under this subsection will be usedto supplement assistance leveraged from pri-vate and other non-Federal sources;

(ii) a certification that local assistancewill be provided in the carrying out the eligi-ble activities, which may include—

(I) financial assistance; and(II) a good faith effort to work with the

unit of local government in which the hous-ing will be located to address issues of sitingand exclusionary zoning or other policiesthat are barriers to affordable housing;

(iii) a certification that any housing devel-oped with assistance under this subsectionwill remain affordable for extremely low-in-come families or low-income families, as ap-plicable, for not less than 40 years;

(iv) a certification that any housing devel-oped by the applicant with assistance underthis subsection will be located—

(I) in a mixed-income development;(II) in a census tract having a poverty rate

of not more than 20 percent or in a commu-nity undergoing revitalization; and

(III) near employment and other opportu-nities for low-income families;

(v) a certification that the tenant con-tribution towards rent for a family residingin a unit developed with assistance underthis paragraph will not exceed 30 percent ofthe adjusted income of that family; and

(vi) a certification by the applicant thatthe owner of a project in which any housingdeveloped with assistance under this sub-section is located will make a percentage ofunits in the project available to families as-sisted under the voucher program under sec-tion 8(o) of the United States Housing Act of1937 (42 U.S.C. 1437f(o)) on the same basis as

other families eligible for the housing (ex-cept that only the voucher holder’s expectedshare of rent shall be considered), which per-centage shall not be less than the percentageof the total cost of developing or rehabili-tating the project that is funded with assist-ance under this subsection.

(C) FORMS OF ASSISTANCE.—(i) IN GENERAL.—An eligible intermediary

may distribute the amount made availableunder a grant under this subsection in theform of capital grants, non-interest bearingor low-interest loans or advances, deferredpayment loans, guarantees, and other formsof assistance.

(ii) REPAYMENTS.—If an eligible inter-mediary awards assistance under this sub-section in the form of a loan or other mecha-nism by which funds are later repaid to theeligible intermediary, any repayments re-ceived by the eligible intermediary shall bedistributed by the eligible intermediary inaccordance with the plan of use described insubparagraph (B) the following fiscal year.SEC. 205. REGULATIONS.

Not later than 6 months after the date ofenactment of this Act, the Secretary ofHousing and Urban Development shall pro-mulgate regulations to carry out this titleand the amendment made by this title.

HARKIN (AND OTHERS)AMENDMENT NO. 3840

Mr. HARKIN (for himself, Mr. FEIN-GOLD, Ms. MIKULSKI, Mr. LEAHY, andMrs. MURRAY) proposed an amendmentto the bill, H.R. 8, supra; as follows:

Strike all after the first word and insert:TITLE l—SOCIAL SECURITY SOLVENCY

AND FAIRNESSSEC. l. ADDITIONAL APPROPRIATIONS TO FED-

ERAL OLD-AGE AND SURVIVORS IN-SURANCE TRUST FUND AND FED-ERAL DISABILITY INSURANCETRUST FUND.

(a) PURPOSE.—The purpose of this sectionis to assure that the interest savings on thedebt held by the public achieved as a resultof Social Security surpluses from 2001 to 2016are dedicated to Social Security solvency.

(b) ADDITIONAL APPROPRIATIONS TO TRUSTFUNDS.—Section 201 of the Social SecurityAct is amended by adding at the end the fol-lowing new subsection:

‘‘(n) ADDITIONAL APPROPRIATION TO TRUSTFUNDS.—

‘‘(1) In addition to the amounts appro-priated to the Trust Funds under subsections(a) and (b), there is hereby appropriated tothe Trust Funds, out of any moneys in theTreasury not otherwise appropriated—

‘‘(A) for the fiscal year ending September30, 2006, and for each fiscal year thereafterthrough the fiscal year ending September 30,2016, an amount equal to the prescribedamount for the fiscal year; and

‘‘(B) for the fiscal year ending September30, 2017, and for each fiscal year thereafterthrough the fiscal year ending September 30,2044, an amount equal to the prescribedamount for the fiscal year ending September30, 2016.

‘‘(2) The amount appropriated by para-graph (1) in each fiscal year shall be trans-ferred in equal monthly installments.

‘‘(3) The amount appropriated by para-graph (1) in each fiscal year shall be allo-cated between the Trust Funds in the sameproportion as the taxes imposed by chapter21 (other than sections 3101(b) and 3111(b)) ofthe Title 26 with respect to wages (as definedin section 3121 of Title 26) reported to theSecretary of the Treasury or his delegatepursuant to subtitle F of Title 26, and thetaxes imposed by chapter 2 (other than sec-tion 1401(b)) of Title 26 with respect to self-employment income (as defined in section1402 of Title 26) reported to the Secretary of

the Treasury or his delegate pursuant to sub-title F of Title 26, are allocated between theTrust Funds in the calendar year that beginsin the fiscal year.

‘‘(4) For purposes of this subsection, the‘‘prescribed amount’’ for any fiscal yearshall be determined by multiplying—

‘‘(A) the excess of—‘‘(i) the sum of—‘‘(I) the face amount of all obligations of

the United States held by the Trust Fundson the last day of the fiscal year imme-diately preceding the fiscal year of deter-mination purchased with amounts appro-priated or credited to the Trust Funds otherthan any amount appropriated under para-graph (1); and

‘‘(II) the sum of the amounts appropriatedunder paragraph (1) and transferred underparagraph (2) through the last day of the fis-cal year immediately preceding the fiscalyear of determination, and an amount equalto the interest that would have been earnedthereon had those amounts been invested inobligations of the United States issued di-rectly to the Trust Funds under subsections(d) and (f); over

‘‘(ii) the face amount of all obligations ofthe United States held by the Trust Fundson September 30, 2000,times—

‘‘(B) a rate of interest determined by theSecretary of the Treasury, at the beginningof the fiscal year of determination, as fol-lows:

‘‘(i) if there are any marketable interest-bearing obligations of the United States thenforming a part of the public debt, a rate ofinterest determined by taking into consider-ation the average market yield (computed onthe basis of daily closing market bidquotations or prices during the calendarmonth immediately preceding the deter-mination of the rate of interest) on such ob-ligations; and

‘‘(ii) if there are no marketable interest-bearing obligations of the United States thenforming a part of the public debt, a rate ofinterest determined to be the best approxi-mation of the rate of interest described inclause (i), taking into consideration the av-erage market yield (computed on the basis ofdaily closing market bid quotations or pricesduring the calendar month immediately pre-ceding the determination of the rate of inter-est) on investment grade corporate obliga-tions selected by the Secretary of the Treas-ury, less an adjustment made by the Sec-retary of the Treasury to take into accountthe difference between the yields on cor-porate obligations comparable to the obliga-tions selected by the Secretary of the Treas-ury and yields on obligations of comparablematurities issued by risk-free governmentissuers selected by the Secretary of theTreasury.’’.

SEC. 602. INCREASE IN NUMBER OF YEARS DIS-REGARDED.

(a) IN GENERAL.—Section 215(b)(2) of theSocial Security Act (42 U.S.C. 415(b)(2)) isamended—

(1) by striking the period at the end ofclause (ii) of subparagraph (A) and insertinga comma;

(2) by striking ‘‘Clause (ii), once’’ after andbelow clause (ii) of subparagraph (A) and in-serting the following:

‘‘and reduced further to the extent pro-vided in subparagraph (B). Clause (ii), once’’;

(3) by striking ‘‘If an individual’’ in thematter following clause (ii) of subparagraph(A) and all that follows through the end ofsubparagraph (A);

(4) by redesignating subparagraph (B) assubparagraph (F); and

(5) by inserting after subparagraph (A) thefollowing new subparagraphs:


CONGRESSIONAL RECORD — SENATES6740 July 13, 2000‘‘(B) Subject to subparagraph (C), in any

case in which—‘‘(i) in any calendar year which is included

in an individual’s computation base years—‘‘(I) such individual is living with a child

(of such individual or his or her spouse)under the age of 12; or

‘‘(II) such individual is living with a child(of such individual or his or her spouse), aparent (of such individual or his or herspouse), or such individual’s spouse whilesuch child, parent, or spouse is a chronicallydependent individual;

‘‘(ii) such calendar year is not disregardedpursuant to subparagraphs (A) and (E) (in de-termining such individual’s benefit computa-tion years) by reason of the reduction in thenumber of such individual’s elapsed yearsunder subparagraph (A); and

‘‘(iii) such individual submits to the Sec-retary, in such form as the Secretary shallprescribe by regulations, a written state-ment that the requirements of clause (i) aremet with respect to such calendar year,

then the number by which such elapsed yearsare reduced under this paragraph pursuantto subparagraph (A) shall be increased byone (up to a combined total not exceeding 5)for each such calendar year.

‘‘(C)(i)(I) No calendar year shall be dis-regarded by reason of subparagraph (B) (indetermining such individual’s benefit com-putation years) unless the individual hadless than the applicable dollar amount (in ef-fect for such calendar year under subclause(II)) of earnings as described in section203(f)(5) for such year.

‘‘(II) Except as otherwise provided in thissubclause, the applicable dollar amount ineffect under this subclause for any calendaryear is $3,000. In each calendar year after2006, the Secretary shall determine and pub-lish in the Federal Register, on or before No-vember 1 of such calendar year, the applica-ble dollar amount which shall be effectiveunder this subclause for the next calendaryear. Such dollar amount shall be equal tothe applicable dollar amount which is effec-tive under this subclause for the calendaryear in which such determination is made,increased by a percentage equal to the per-centage (rounded to the nearest 1⁄10 of 1 per-cent) by which the Consumer Price Index(prepared by the Department of Labor andused in determining increases in benefitspursuant to section 215(i)) for the calendarquarter ending on September 30 of such cal-endar year exceeds such index for the cal-endar quarter ending on September 30 of thelast preceding calendar year in which a cost-of-living increase in benefits became effec-tive under section 215(i).

‘‘(ii) No calendar year shall be disregardedby reason of subparagraph (B) (in deter-mining such individual’s benefit computa-tion years) in connection with a child re-ferred to in subparagraph (B)(i)(I) (and notreferred to in subparagraph (B)(i)(II)) unlessthe individual was living with the child sub-stantially throughout the period in suchyear in which the child was alive and underthe age of 12 in such year.

‘‘(iii) No calendar year shall be disregardedby reason of subparagraph (B) (in deter-mining such individual’s benefit computa-tion years) in connection with a child, par-ent, or spouse referred to in subparagraph(B)(i)(II) unless the individual was livingwith such child, parent, or spouse substan-tially throughout a period of 180 consecutivedays in such year throughout which suchchild, parent, or spouse was a chronically de-pendent individual.

‘‘(iv) The particular calendar years to bedisregarded under this subparagraph (in de-termining such benefit computation years)shall be those years (not otherwise dis-

regarded under subparagraph (A)) which, be-fore the application of subsection (f), meetthe conditions of the preceding provisions ofthis clause.

‘‘(v) This subparagraph shall apply only tothe extent that—

‘‘(I) its application would not result in alower primary insurance amount; and

‘‘(II) it does not raise the primary insur-ance amount to a level greater than the av-erage old-age insurance benefit paid underthis title.

‘‘(D)(i) For purposes of this paragraph, theterm ‘chronically dependent individual’means an individual who—

‘‘(I) is dependent on a daily basis on an-other person who is living with the indi-vidual and is assisting the individual with-out monetary compensation in the perform-ance of at least 2 of the activities of dailyliving (described in clause (ii)), and

‘‘(II) without such assistance could notperform such activities of daily living.

‘‘(ii) The ‘activities of daily living’, re-ferred to in clause (i), are the following:

‘‘(I) Eating.‘‘(II) Bathing.‘‘(III) Dressing.‘‘(IV) Toileting.‘‘(V) Transferring in and out of a bed or in

and out of a chair.‘‘(E) The number of an individual’s benefit

computation years as determined under thisparagraph shall in no case be less than 2.’’.

(b) EFFECTIVE DATE AND RELATED PROVI-SIONS.—

(1) IN GENERAL.—The amendments made bythis Act shall apply with respect to com-putation base years ending before, on, orafter the date of enactment of this Act, butonly with respect to benefits payable formonths after December 2001.

(2) NOTICE AND PROCEDURES.—(A) 60-DAY FILING PERIOD AFTER ISSUANCE

OF REGULATIONS FOR CALENDAR YEARS BEFORE2001.—The requirements of clause (iii) of sec-tion 215(b)(2)(B) of the Social Security Act(as amended by this section) shall be treatedas satisfied, in the case of a statement withrespect to any calendar year before 2001, onlyif such statement is submitted to the Sec-retary of Health and Human Services notlater than 60 days after the date of the firstissuance in final form of the regulations re-quired under such clause.

(B) NOTICE REQUIREMENTS.—The Secretaryof Health and Human Services shall issue,not later than the date of the first issuancein final form of the regulations described inparagraph (1), regulations establishing pro-cedures to ensure that—

(i) persons who are, as of such date, recipi-ents of monthly benefits under section 202(a)or 223 of the Social Security Act, or appli-cants for such benefits, are fully informed ofthe amendments made by this section; and

(ii) such persons are invited to comply, andgiven a reasonable opportunity to comply,with the requirements of section215(b)(2)(B)(iii) of the Social Security Act (asamended by this section), as provided in sub-paragraph (A).Upon receiving from a recipient described inclauses (i) and (ii) a written statement re-ferred to in clause (iii) of section 215(b)(2)(B)of the Social Security Act (as amended bythis section) with respect to which the re-quirements of such clause are satisfied, theSecretary shall redetermine the amount ofsuch benefits to the extent necessary to takeinto account the amendments made by thissection (and if such redetermination resultsin an increase in such amount the increaseshall be effective as provided in paragraph(1)). Such regulations described in subpara-graph (A) shall also provide procedures to en-sure that applicants for benefits under sec-tion 202(a) or 223 of the Social Security Act

are given the opportunity, at the time oftheir application, to indicate and verify anyadditional years which may be disregardedunder section 215(b)(2)(B) of the Social Secu-rity Act (as amended by this section).SEC. l. INCREASE IN WIDOWS’ AND WIDOWERS’

INSURANCE BENEFITS.(a) WIDOW’S BENEFIT.—Section 202(e)(2)(A)

of the Social Security Act (42 U.S.C.402(e)(2)(A)) is amended by striking ‘‘equalto’’ and all that follows and inserting ‘‘equalto the greater of—

‘‘(i) the primary insurance amount (as de-termined for purposes of this subsectionafter application of subparagraphs (B) and(C)) of such deceased individual, or

‘‘(ii) the lesser of—‘‘(I) 75 percent of the joint benefit which

would have been received by the widow orsurviving divorced wife and the deceased in-dividual for such month if such individualhad not died, or

‘‘(II) the average old-age insurance benefitpaid under this title.’’.

(b) WIDOWER’S BENEFIT.—Section202(f)(3)(A) of the Social Security Act (42U.S.C. 402(b)(3)(A)) is amended by striking‘‘equal to’’ and all that follows and inserting‘‘equal to the greater of—‘‘(i) the primary insurance amount (as deter-mined for purposes of this subjection afterapplication of subparagraphs (B) and (C)) ofsuch deceased individual, or‘‘(ii) the lesser of—(I) 75 percent of the joint benefit whichwould have been received by the widow orsurviving divorced wife and the deceased in-dividual for such month if such individualhad not died, or‘‘(II) the average old-age insurance benefitpaid under this title.’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to benefitspayable for months after December 2000.SECl. SHORT TITLE.


(b) AMENDMENT OF 1986 CODE.—Except asotherwise expressly provided, whenever inthis Act an amendment or repeal is ex-pressed in terms of an amendment to, or re-peal of, a section or other provision, the ref-erence shall be considered to be made to asection or other provision of the InternalRevenue Code of 1986.SEC. l. INCREASE IN AMOUNT OF UNIFIED





is:


(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply to the es-tates of decedents dying, and gifts made,after December 31, 2000.SEC. l. INCREASE IN QUALIFIED FAMILY-OWNED







CONGRESSIONAL RECORD — SENATE S6741July 13, 2000‘‘(B) APPLICABLE DEDUCTION AMOUNT.—For

purposes of this subparagraph (A)(i), the ap-plicable deduction amount is determined inaccordance with the following table:‘‘In the case of estates












(c) EFFECTIVE DATE.—The amendmentmade by this section shall apply to the es-tates of decedents dying, and gifts made,after December 31, 2000.SEC. l. SENSE OF SENATE REGARDING SAVINGS.

It is the sense of the Senate that the re-duced cost to the Federal Treasury resultingfrom the amendments made by this Act ascompared to the cost to the Federal Treas-ury of H.R. 8 as received by the Senate fromthe House of Representatives on June 12,2000, should be used exclusively to reduce theFederal debt held by the public.

ROTH AMENDMENT NO. 3841

Mr. ROTH proposed an amendment tothe bill, H.R. 8, supra; as follows:


SEC. 601. TABLE OF CONTENTS; ETC.(a) SECTION 15 NOT TO APPLY.—No amend-

ment made by this title shall be treated as achange in a rate of tax for purposes of sec-tion 15 of the Internal Revenue Code of 1986.

(b) TABLE OF CONTENTS.—The table of con-tents for this title is as follows:TITLE VI—MISCELLANEOUS PROVISIONSSec. 601. Table of contents; etc.

Subtitle A—Individual RetirementArrangements

Sec. 611. Modification of deduction limitsfor IRA contributions.

Sec. 612. Modification of income limits oncontributions and rollovers toRoth IRAs.

Sec. 613. Deemed IRAs under employerplans.

Subtitle B—Expanding CoverageSec. 621. Option to treat elective deferrals as

after-tax contributions.Sec. 622. Increase in benefit and contribu-

tion limits.Sec. 623. Plan loans for subchapter S owners,

partners, and sole proprietors.Sec. 624. Elective deferrals not taken into

account for purposes of deduc-tion limits.

Sec. 625. Reduced PBGC premium for newplans of small employers.

Sec. 626. Reduction of additional PBGC pre-mium for new plans.

Sec. 627. Elimination of user fee for requeststo IRS regarding new pensionplans.

Sec. 628. Modification of top-heavy rules.Sec. 629. Repeal of coordination require-

ments for deferred compensa-tion plans of State and localgovernments and tax-exemptorganizations.

Subtitle C—Enhancing Fairness for WomenSec. 631. Catchup contributions for individ-

uals age 50 or over.Sec. 632. Equitable treatment for contribu-

tions of employees to definedcontribution plans.

Sec. 633. Clarification of tax treatment ofdivision of section 457 plan ben-efits upon divorce.

Sec. 634. Modification of safe harbor relieffor hardship withdrawals fromcash or deferred arrangements.

Sec. 635. Faster vesting of certain employermatching contributions.

Subtitle D—Increasing Portability forParticipants

Sec. 641. Rollovers allowed among varioustypes of plans.

Sec. 642. Rollovers of IRAs into workplaceretirement plans.

Sec. 643. Rollovers of after-tax contribu-tions.

Sec. 644. Hardship exception to 60-day rule.Sec. 645. Treatment of forms of distribution.Sec. 646. Rationalization of restrictions on

distributions.Sec. 647. Purchase of service credit in gov-

ernmental defined benefitplans.

Sec. 648. Employers may disregard rolloversfor purposes of cash-outamounts.

Sec. 649. Inclusion requirements for section457 plans.

Subtitle E—Strengthening Pension Securityand Enforcement

Sec. 651. Repeal of 150 percent of current li-ability funding limit.

Sec. 652. Extension of missing participantsprogram to multiemployerplans.

Sec. 653. Excise tax relief for sound pensionfunding.

Sec. 654. Excise tax on failure to provide no-tice by defined benefit planssignificantly reducing futurebenefit accruals.

Sec. 655. Protection of investment of em-ployee contributions to 401(k)plans.

Sec. 656. Treatment of multiemployer plansunder section 415.

Sec. 657. Maximum contribution deductionrules modified and applied toall defined benefit plans.

Sec. 658. Increase in section 415 early retire-ment limit for governmentaland other plans.

Subtitle F—Encouraging RetirementEducation

Sec. 661. Periodic pension benefits State-ments.

Sec. 662. Clarification of treatment of em-ployer-provided retirement ad-vice.

Subtitle G—Reducing Regulatory Burdens

Sec. 671. Flexibility in nondiscriminationand coverage rules.

Sec. 672. Modification of timing of planvaluations.

Sec. 673. Substantial owner benefits in ter-minated plans.

Sec. 674. ESOP dividends may be reinvestedwithout loss of dividend deduc-tion.

Sec. 675. Notice and consent period regard-ing distributions.

Sec. 676. Repeal of transition rule relatingto certain highly compensatedemployees.

Sec. 677. Employees of tax-exempt entities.Sec. 678. Extension to international organi-

zations of moratorium on appli-cation of certain non-discrimination rules applicableto State and local plans.

Sec. 679. Annual report dissemination.Sec. 680. Modification of exclusion for em-

ployer provided transit passes.Sec. 681. Reporting simplification.Sec. 682. Repeal of the multiple use test.

Subtitle H—Plan AmendmentsSec. 691. Provisions relating to plan amend-

ments.Subtitle A—Individual Retirement

ArrangementsSEC. 611. MODIFICATION OF DEDUCTION LIMITS

FOR IRA CONTRIBUTIONS.(a) INCREASE IN CONTRIBUTION LIMIT.—(1) IN GENERAL.—Paragraph (1)(A) of sec-

tion 219(b) (relating to maximum amount ofdeduction) is amended by striking ‘‘$2,000’’and inserting ‘‘the deductible amount’’.

(2) DEDUCTIBLE AMOUNT.—Section 219(b) isamended by adding at the end the followingnew paragraph:

‘‘(5) DEDUCTIBLE AMOUNT.—For purposes ofparagraph (1)(A)—

‘‘(A) IN GENERAL.—The deductible amountshall be determined in accordance with thefollowing table:‘‘For taxable years The deductiblebeginning in: amount is:

2001 .................................................. $3,0002002 .................................................. $4,0002003 and thereafter .......................... $5,000.‘‘(B) COST-OF-LIVING ADJUSTMENT.—‘‘(i) IN GENERAL.—In the case of any tax-

able year beginning in a calendar year after2003, the $5,000 amount under subparagraph(A) shall be increased by an amount equalto—


mined under section 1(f)(3) for the calendaryear in which the taxable year begins, deter-mined by substituting ‘calendar year 2002’for ‘calendar year 1992’ in subparagraph (B)thereof.

‘‘(ii) ROUNDING RULES.—If any amount afteradjustment under clause (i) is not a multipleof $100, such amount shall be rounded to thenext lower multiple of $100.’’

(b) INCREASE IN ADJUSTED GROSS INCOMELIMITS FOR ACTIVE PARTICIPANTS.—

(1) IN GENERAL.—Subparagraph (B) of sec-tion 219(g)(3) (relating to applicable dollaramount) is amended to read as follows:

‘‘(B) APPLICABLE DOLLAR AMOUNT.—Theterm ‘applicable dollar amount’ means thefollowing:

‘‘(i) In the case of a taxpayer filing a jointreturn:‘‘For taxable years The applicablebeginning in: dollar amount is:

2001 .................................................. $53,0002002 .................................................. $54,0002003 .................................................. $60,0002004 .................................................. $65,0002005 .................................................. $70,0002006 .................................................. $75,0002007 .................................................. $80,0002008 .................................................. $84,0002009 .................................................. $89,0002010 and thereafter .......................... $94,000.‘‘(ii) In the case of any other taxpayer

(other than a married individual filing a sep-arate return):


CONGRESSIONAL RECORD — SENATES6742 July 13, 2000‘‘For taxable years be-

ginning in:The applicable dollar

amount is:2001 .................................................. $33,0002002 .................................................. $34,0002003 .................................................. $40,0002004 .................................................. $45,0002005, 2006, and 2007 ........................... $50,0002008 .................................................. $52,0002009 .................................................. $54,5002010 and thereafter ..........................$57,000.’’(2) COST-OF-LIVING ADJUSTMENT.—Section

219(g)(3) is amended by adding at the end thefollowing new subparagraph:

‘‘(C) COST-OF-LIVING ADJUSTMENT.—‘‘(i) IN GENERAL.—In the case of any tax-

able year beginning in a calendar year after2010, the $94,000 amount in subparagraph(B)(i) and the $57,000 amount in subpara-graph(B)(ii) shall each be increased by anamount equal to—



‘‘(ii) ROUNDING RULES.—If any amount afteradjustment under clause (i) is not a multipleof $1,000, such amount shall be reduced to thenext lowest multiple of $1,000.’’

(c) CONFORMING AMENDMENTS.—(1) Section 408(a)(1) is amended by striking

‘‘in excess of $2,000 on behalf of any indi-vidual’’ and inserting ‘‘on behalf of any indi-vidual in excess of the amount in effect forsuch taxable year under section 219(b)(1)(A)’’.

(2) Section 408(b)(2)(B) is amended by strik-ing ‘‘$2,000’’ and inserting ‘‘the dollaramount in effect under section 219(b)(1)(A)’’.

(3) Section 408(b) is amended by striking‘‘$2,000’’ in the matter following paragraph(4) and inserting ‘‘the dollar amount in effectunder section 219(b)(1)(A)’’.

(4) Section 408(j) is amended by striking‘‘$2,000’’.

(5) Section 408(p)(8) is amended by striking‘‘$2,000’’ and inserting ‘‘the dollar amount ineffect under section 219(b)(1)(A)’’

(d) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2001.SEC. 612. MODIFICATION OF INCOME LIMITS ON

CONTRIBUTIONS AND ROLLOVERSTO ROTH IRAS.

(a) REPEAL OF AGI LIMIT ON CONTRIBU-TIONS.—Section 408A(c)(3) (relating to limitsbased on modified adjusted gross income) isamended by striking subparagraph (A) andby redesignating subparagraphs (B), (C), and(D) as subparagraphs (A), (B), and (C), respec-tively.

(b) INCREASE IN AGI LIMIT FOR ROLLOVER

CONTRIBUTIONS.—Section 408A(c)(3)(A) (relat-ing to rollover from IRA), as redesignated bysubsection (a), is amended to read as follows:

‘‘(A) ROLLOVER FROM IRA.—A taxpayershall not be allowed to make a qualified roll-over contribution from an individual retire-ment plan other than a Roth IRA during anytaxable year if, for the taxable year of thedistribution to which the contribution re-lates, the taxpayer’s adjusted gross incomeexceeds $1,000,000.’’.

(c) CONFORMING AMENDMENTS.—(1) Subparagraph (B) of section 408A(c)(3),

as redesignated by subsection (a) and as ineffect before and after the amendments madeby the Internal Revenue Service Restruc-turing and Reform Act of 1998, is amended toread as follows:

‘‘(B) DEFINITION OF ADJUSTED GROSS IN-COME.—For purposes of subparagraph (A), ad-justed gross income shall be determined—

‘‘(i) after application of sections 86 and 469,and

‘‘(ii) without regard to sections 135, 137,221, and 911, the deduction allowable undersection 219, or any amount included in grossincome under subsection (d)(3).’’.

(2) Subparagraph (B) of section 408A(c)(3),as amended by paragraph (1), is amended byinserting ‘‘or by reason of a required dis-tribution under a provision described inparagraph (5)’’ before the period at the end.

(d) EFFECTIVE DATES.—(1) IN GENERAL.—The amendments made by

this section shall apply to taxable years be-ginning after December 31, 2001.

(2) ROLLOVERS.—The amendment made bysubsection (b) shall apply to taxable yearsbeginning after December 31, 2001.

(3) ADJUSTED GROSS INCOME.—The amend-ment made by subsection (c)(2) shall apply totaxable years beginning after December 31,2004.SEC. 613. DEEMED IRAS UNDER EMPLOYER

PLANS.(a) IN GENERAL.—Section 408 (relating to

individual retirement accounts) is amendedby redesignating subsection (q) as subsection(r) and by inserting after subsection (p) thefollowing new subsection:

‘‘(q) DEEMED IRAS UNDER QUALIFIED EM-PLOYER PLANS.—

‘‘(1) GENERAL RULE.—If—‘‘(A) a qualified employer plan elects to

allow employees to make voluntary em-ployee contributions to a separate accountor annuity established under the plan, and

‘‘(B) under the terms of the qualified em-ployer plan, such account or annuity meetsthe applicable requirements of this sectionor section 408A for an individual retirementaccount or annuity,then such account or annuity shall be treat-ed for purposes of this title in the same man-ner as an individual retirement plan (andcontributions to such account or annuity ascontributions to an individual retirementplan). For purposes of subparagraph (B), therequirements of subsection (a)(5) shall notapply.

‘‘(2) SPECIAL RULES FOR QUALIFIED EM-PLOYER PLANS.—For purposes of this title—

‘‘(A) a qualified employer plan shall notfail to meet any requirement of this titlesolely by reason of establishing and main-taining a program described in paragraph (1),and

‘‘(B) any account or annuity described inparagraph (1), and any contribution to theaccount or annuity, shall not be subject toany requirement of this title applicable to aqualified employer plan or taken into ac-count in applying any such requirement toany other contributions under the plan.

‘‘(3) DEFINITIONS.—For purposes of thissubsection—

‘‘(A) QUALIFIED EMPLOYER PLAN.—The term‘qualified employer plan’ has the meaninggiven such term by section 72(p)(4).

‘‘(B) VOLUNTARY EMPLOYEE CONTRIBUTION.—The term ‘voluntary employee contribution’means any contribution (other than a man-datory contribution within the meaning ofsection 411(c)(2)(C))—

‘‘(i) which is made by an individual as anemployee under a qualified employer planwhich allows employees to elect to makecontributions described in paragraph (1), and

‘‘(ii) with respect to which the individualhas designated the contribution as a con-tribution to which this subsection applies.’’.

(b) AMENDMENT OF ERISA.—(1) IN GENERAL.—Section 4 of the Employee

Retirement Income Security Act of 1974 (29U.S.C. 1003) is amended by adding at the endthe following new subsection:

‘‘(c) If a pension plan allows an employeeto elect to make voluntary employee con-tributions to accounts and annuities as pro-

vided in section 408(q) of the Internal Rev-enue Code of 1986, such accounts and annu-ities (and contributions thereto) shall not betreated as part of such plan (or as a separatepension plan) for purposes of any provision ofthis title other than section 403(c), 404, or 405(relating to exclusive benefit, and fiduciaryand co-fiduciary responsibilities).’’.

(2) CONFORMING AMENDMENT.—Section 4(a)of such Act (29 U.S.C. 1003(a)) is amended byinserting ‘‘or (c)’’ after ‘‘subsection (b)’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to planyears beginning after December 31, 2001.

Subtitle B—Expanding Coverage

SEC. 621. OPTION TO TREAT ELECTIVE DEFER-RALS AS AFTER-TAX CONTRIBU-TIONS.

(a) IN GENERAL.—Subpart A of part I ofsubchapter D of chapter 1 (relating to de-ferred compensation, etc.) is amended by in-serting after section 402 the following newsection:

‘‘SEC. 402A. OPTIONAL TREATMENT OF ELECTIVEDEFERRALS AS PLUS CONTRIBU-TIONS.

‘‘(a) GENERAL RULE.—If an applicable re-tirement plan includes a qualified plus con-tribution program—

‘‘(1) any designated plus contribution madeby an employee pursuant to the programshall be treated as an elective deferral forpurposes of this chapter, except that suchcontribution shall not be excludable fromgross income, and

‘‘(2) such plan (and any arrangement whichis part of such plan) shall not be treated asfailing to meet any requirement of this chap-ter solely by reason of including such pro-gram.

‘‘(b) QUALIFIED PLUS CONTRIBUTION PRO-GRAM.—For purposes of this section—

‘‘(1) IN GENERAL.—The term ‘qualified pluscontribution program’ means a programunder which an employee may elect to makedesignated plus contributions in lieu of all ora portion of elective deferrals the employeeis otherwise eligible to make under the ap-plicable retirement plan.

‘‘(2) SEPARATE ACCOUNTING REQUIRED.—Aprogram shall not be treated as a qualifiedplus contribution program unless the appli-cable retirement plan—

‘‘(A) establishes separate accounts (‘des-ignated plus accounts’) for the designatedplus contributions of each employee and anyearnings properly allocable to the contribu-tions, and

‘‘(B) maintains separate recordkeepingwith respect to each account.

‘‘(c) DEFINITIONS AND RULES RELATING TO

DESIGNATED PLUS CONTRIBUTIONS.—For pur-poses of this section—

‘‘(1) DESIGNATED PLUS CONTRIBUTION.—Theterm ‘designated plus contribution’ meansany elective deferral which—

‘‘(A) is excludable from gross income of anemployee without regard to this section, and

‘‘(B) the employee designates (at such timeand in such manner as the Secretary mayprescribe) as not being so excludable.

‘‘(2) DESIGNATION LIMITS.—The amount ofelective deferrals which an employee maydesignate under paragraph (1) shall not ex-ceed the excess (if any) of—

‘‘(A) the maximum amount of elective de-ferrals excludable from gross income of theemployee for the taxable year (without re-gard to this section), over

‘‘(B) the aggregate amount of elective de-ferrals of the employee for the taxable yearwhich the employee does not designate underparagraph (1).

‘‘(3) ROLLOVER CONTRIBUTIONS.—


CONGRESSIONAL RECORD — SENATE S6743July 13, 2000‘‘(A) IN GENERAL.—A rollover contribution

of any payment or distribution from a des-ignated plus account which is otherwise al-lowable under this chapter may be madeonly if the contribution is to—

‘‘(i) another designated plus account of theindividual from whose account the paymentor distribution was made, or

‘‘(ii) a Roth IRA of such individual.‘‘(B) COORDINATION WITH LIMIT.—Any roll-

over contribution to a designated plus ac-count under subparagraph (A) shall not betaken into account for purposes of paragraph(1).

‘‘(d) DISTRIBUTION RULES.—For purposes ofthis title—

‘‘(1) EXCLUSION.—Any qualified distribu-tion from a designated plus account shall notbe includible in gross income.

‘‘(2) QUALIFIED DISTRIBUTION.—For purposesof this subsection—

‘‘(A) IN GENERAL.—The term ‘qualified dis-tribution’ has the meaning given such termby section 408A(d)(2)(A) (without regard toclause (iv) thereof).

‘‘(B) DISTRIBUTIONS WITHIN NONEXCLUSIONPERIOD.—A payment or distribution from adesignated plus account shall not be treatedas a qualified distribution if such payment ordistribution is made within the 5-taxable-year period beginning with the earlier of—

‘‘(i) the 1st taxable year for which the indi-vidual made a designated plus contributionto any designated plus account establishedfor such individual under the same applica-ble retirement plan, or

‘‘(ii) if a rollover contribution was made tosuch designated plus account from a des-ignated plus account previously establishedfor such individual under another applicableretirement plan, the 1st taxable year forwhich the individual made a designated pluscontribution to such previously establishedaccount.

‘‘(C) DISTRIBUTIONS OF EXCESS DEFERRALSAND EARNINGS.—The term ‘qualified distribu-tion’ shall not include any distribution ofany excess deferral under section 402(g)(2)and any income on the excess deferral.

‘‘(3) AGGREGATION RULES.—Section 72 shallbe applied separately with respect to dis-tributions and payments from a designatedplus account and other distributions andpayments from the plan.

‘‘(e) OTHER DEFINITIONS.—For purposes ofthis section—

‘‘(1) APPLICABLE RETIREMENT PLAN.—Theterm ‘applicable retirement plan’ means—

‘‘(A) an employees’ trust described in sec-tion 401(a) which is exempt from tax undersection 501(a), and

‘‘(B) a plan under which amounts are con-tributed by an individual’s employer for anannuity contract described in section 403(b).

‘‘(2) ELECTIVE DEFERRAL.—The term ‘elec-tive deferral’ means any elective deferral de-scribed in subparagraph (A) or (C) of section402(g)(3).’’.

(b) EXCESS DEFERRALS.—Section 402(g) (re-lating to limitation on exclusion for electivedeferrals) is amended—

(1) by adding at the end of paragraph (1)the following new sentence: ‘‘The precedingsentence shall not apply to so much of suchexcess as does not exceed the designated pluscontributions of the individual for the tax-able year.’’, and

(2) by inserting ‘‘(or would be included butfor the last sentence thereof)’’ after ‘‘para-graph (1)’’ in paragraph (2)(A).

(c) ROLLOVERS.—Subparagraph (B) of sec-tion 402(c)(8) is amended by adding at the endthe following:‘‘If any portion of an eligible rollover dis-tribution is attributable to payments or dis-tributions from a designated plus account (asdefined in section 402A), an eligible retire-ment plan with respect to such portion shall

include only another designated plus accountand a Roth IRA.’’.

(d) REPORTING REQUIREMENTS.—(1) W–2 INFORMATION.—Section 6051(a)(8) is

amended by inserting ‘‘, including theamount of designated plus contributions (asdefined in section 402A)’’ before the commaat the end.

(2) INFORMATION.—Section 6047 is amendedby redesignating subsection (f) as subsection(g) and by inserting after subsection (e) thefollowing new subsection:

‘‘(f) DESIGNATED PLUS CONTRIBUTIONS.—TheSecretary shall require the plan adminis-trator of each applicable retirement plan (asdefined in section 402A) to make such re-turns and reports regarding designated pluscontributions (as so defined) to the Sec-retary, participants and beneficiaries of theplan, and such other persons as the Sec-retary may prescribe.’’.

(e) CONFORMING AMENDMENTS.—(1) Section 408A(e) is amended by adding

after the first sentence the following newsentence: ‘‘Such term includes a rollovercontribution described in section402A(c)(3)(A).’’.

(2) The table of sections for subpart A ofpart I of subchapter D of chapter 1 is amend-ed by inserting after the item relating tosection 402 the following new item:

‘‘Sec. 402A. Optional treatment of electivedeferrals as plus contribu-tions.’’.

(f) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2001.SEC. 622. INCREASE IN BENEFIT AND CONTRIBU-

TION LIMITS.(a) DEFINED BENEFIT PLANS.—(1) DOLLAR LIMIT.—(A) Subparagraph (A) of section 415(b)(1)

(relating to limitation for defined benefitplans) is amended by striking ‘‘$90,000’’ andinserting ‘‘$160,000’’.

(B) Subparagraphs (C) and (D) of section415(b)(2) are each amended by striking‘‘$90,000’’ each place it appears in the head-ings and the text and inserting ‘‘$160,000’’.

(C) Paragraph (7) of section 415(b) (relatingto benefits under certain collectively bar-gained plans) is amended by striking ‘‘thegreater of $68,212 or one-half the amount oth-erwise applicable for such year under para-graph (1)(A) for ‘$90,000’ ’’ and inserting ‘‘one-half the amount otherwise applicable forsuch year under paragraph (1)(A) for‘$160,000’ ’’.

(2) LIMIT REDUCED WHEN BENEFIT BEGINS BE-FORE AGE 62.—Subparagraph (C) of section415(b)(2) is amended by striking ‘‘the socialsecurity retirement age’’ each place it ap-pears in the heading and text and inserting‘‘age 62’’.

(3) LIMIT INCREASED WHEN BENEFIT BEGINSAFTER AGE 65.—Subparagraph (D) of section415(b)(2) is amended by striking ‘‘the socialsecurity retirement age’’ each place it ap-pears in the heading and text and inserting‘‘age 65’’.

(4) COST-OF-LIVING ADJUSTMENTS.—Sub-section (d) of section 415 (related to cost-of-living adjustments) is amended—

(A) by striking ‘‘$90,000’’ in paragraph(1)(A) and inserting ‘‘$160,000’’, and

(B) in paragraph (3)(A)—(i) by striking ‘‘$90,000’’ in the heading and

inserting ‘‘$160,000’’, and(ii) by striking ‘‘October 1, 1986’’ and in-

serting ‘‘July 1, 2000’’.(5) CONFORMING AMENDMENT.—Section

415(b)(2) is amended by striking subpara-graph (F).

(b) DEFINED CONTRIBUTION PLANS.—(1) DOLLAR LIMIT.—Subparagraph (A) of

section 415(c)(1) (relating to limitation fordefined contribution plans) is amended bystriking ‘‘$30,000’’ and inserting ‘‘$40,000’’.

(2) COST-OF-LIVING ADJUSTMENTS.—Sub-section (d) of section 415 (related to cost-of-living adjustments) is amended—

(A) by striking ‘‘$30,000’’ in paragraph(1)(C) and inserting ‘‘$40,000’’, and

(B) in paragraph (3)(D)—(i) by striking ‘‘$30,000’’ in the heading and

inserting ‘‘$40,000’’, and(ii) by striking ‘‘October 1, 1993’’ and in-

serting ‘‘July 1, 2000’’.(c) QUALIFIED TRUSTS.—(1) COMPENSATION LIMIT.—Sections

401(a)(17), 404(l), 408(k), and 505(b)(7) are eachamended by striking ‘‘$150,000’’ each place itappears and inserting ‘‘$200,000’’.

(2) BASE PERIOD AND ROUNDING OF COST-OF-LIVING ADJUSTMENT.—Subparagraph (B) ofsection 401(a)(17) is amended—

(A) by striking ‘‘October 1, 1993’’ and in-serting ‘‘July 1, 2000’’, and

(B) by striking ‘‘$10,000’’ both places it ap-pears and inserting ‘‘$5,000’’.

(d) ELECTIVE DEFERRALS.—(1) IN GENERAL.—Paragraph (1) of section

402(g) (relating to limitation on exclusion forelective deferrals) is amended to read as fol-lows:

‘‘(1) IN GENERAL.—‘‘(A) LIMITATION.—Notwithstanding sub-

sections (e)(3) and (h)(1)(B), the elective de-ferrals of any individual for any taxable yearshall be included in such individual’s grossincome to the extent the amount of such de-ferrals for the taxable year exceeds the ap-plicable dollar amount.

‘‘(B) APPLICABLE DOLLAR AMOUNT.—Forpurposes of subparagraph (A), the applicabledollar amount shall be the amount deter-mined in accordance with the followingtable:

‘‘For taxable years The applicablebeginning in dollar amount:calendar year:2001 ...................................... $11,0002002 ...................................... $12,0002003 ...................................... $13,0002004 ...................................... $14,0002005 or thereafter ................ $15,000.’’.

(2) COST-OF-LIVING ADJUSTMENT.—Para-graph (5) of section 402(g) is amended to readas follows:

‘‘(5) COST-OF-LIVING ADJUSTMENT.—In thecase of taxable years beginning after Decem-ber 31, 2005, the Secretary shall adjust the$15,000 amount under paragraph (1)(B) at thesame time and in the same manner as undersection 415(d), except that the base periodshall be the calendar quarter beginning July1, 2004, and any increase under this para-graph which is not a multiple of $500 shall berounded to the next lowest multiple of$500.’’.

(3) CONFORMING AMENDMENTS.—(A) Section 402(g) (relating to limitation

on exclusion for elective deferrals), asamended by paragraphs (1) and (2), is furtheramended by striking paragraph (4) and redes-ignating paragraphs (5), (6), (7), (8), and (9) asparagraphs (4), (5), (6), (7), and (8), respec-tively.

(B) Paragraph (2) of section 457(c) isamended by striking ‘‘402(g)(8)(A)(iii)’’ andinserting ‘‘402(g)(7)(A)(iii)’’.

(C) Clause (iii) of section 501(c)(18)(D) isamended by striking ‘‘(other than paragraph(4) thereof)’’.

(e) DEFERRED COMPENSATION PLANS OFSTATE AND LOCAL GOVERNMENTS AND TAX-EX-EMPT ORGANIZATIONS.—

(1) IN GENERAL.—Section 457 (relating todeferred compensation plans of State andlocal governments and tax-exempt organiza-tions) is amended—

(A) in subsections (b)(2)(A) and (c)(1) bystriking ‘‘$7,500’’ each place it appears andinserting ‘‘the applicable dollar amount’’,and


CONGRESSIONAL RECORD — SENATES6744 July 13, 2000(B) in subsection (b)(3)(A) by striking

‘‘$15,000’’ and inserting ‘‘twice the dollaramount in effect under subsection (b)(2)(A)’’.

(2) APPLICABLE DOLLAR AMOUNT; COST-OF-LIVING ADJUSTMENT.—Paragraph (15) of sec-tion 457(e) is amended to read as follows:

‘‘(15) APPLICABLE DOLLAR AMOUNT.—‘‘(A) IN GENERAL.—The applicable dollar

amount shall be the amount determined inaccordance with the following table:

‘‘For taxable years The applicablebeginning in dollar amount:calendar year:2001 ...................................... $11,0002002 ...................................... $12,0002003 ...................................... $13,0002004 ...................................... $14,0002005 or thereafter ................ $15,000.

‘‘(B) COST-OF-LIVING ADJUSTMENTS.—In thecase of taxable years beginning after Decem-ber 31, 2005, the Secretary shall adjust the$15,000 amount specified in the table in sub-paragraph (A) at the same time and in thesame manner as under section 415(d), exceptthat the base period shall be the calendarquarter beginning July 1, 2004, and any in-crease under this paragraph which is not amultiple of $500 shall be rounded to the nextlowest multiple of $500.’’.

(f ) SIMPLE RETIREMENT ACCOUNTS.—(1) LIMITATION.—Clause (ii) of section

408(p)(2)(A) (relating to general rule forqualified salary reduction arrangement) isamended by striking ‘‘$6,000’’ and inserting‘‘the applicable dollar amount’’.

(2) APPLICABLE DOLLAR AMOUNT.—Subpara-graph (E) of 408(p)(2) is amended to read asfollows:

‘‘(E) APPLICABLE DOLLAR AMOUNT; COST-OF-LIVING ADJUSTMENT.—

‘‘(i) IN GENERAL.—For purposes of subpara-graph (A)(ii), the applicable dollar amountshall be the amount determined in accord-ance with the following table:

‘‘For taxable years The applicablebeginning in dollar amount:calendar year:

2001 ................................ $7,0002002 ................................ $8,0002003 ................................ $9,0002004 or thereafter .......... $10,000.

‘‘(ii) COST-OF-LIVING ADJUSTMENT.—In thecase of a year beginning after December 31,2004, the Secretary shall adjust the $10,000amount under clause (i) at the same timeand in the same manner as under section415(d), except that the base period taken intoaccount shall be the calendar quarter begin-ning July 1, 2003, and any increase under thissubparagraph which is not a multiple of $500shall be rounded to the next lower multipleof $500.’’.

(3) CONFORMING AMENDMENTS.—(A) Clause (I) of section 401(k)(11)(B)(i) is

amended by striking ‘‘$6,000’’ and inserting‘‘the amount in effect under section408(p)(2)(A)(ii)’’.

(B) Section 401(k)(11) is amended by strik-ing subparagraph (E).

(g) ROUNDING RULE RELATING TO DEFINEDBENEFIT PLANS AND DEFINED CONTRIBUTIONPLANS.—Paragraph (4) of section 415(d) isamended to read as follows:

‘‘(4) ROUNDING.—‘‘(A) $160,000 AMOUNT.—Any increase under

subparagraph (A) of paragraph (1) which isnot a multiple of $5,000 shall be rounded tothe next lowest multiple of $5,000.

‘‘(B) $40,000 AMOUNT.—Any increase undersubparagraph (C) of paragraph (1) which isnot a multiple of $1,000 shall be rounded tothe next lowest multiple of $1,000.’’.

(h) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to years be-ginning after December 31, 2001.

SEC. 623. PLAN LOANS FOR SUBCHAPTER S OWN-ERS, PARTNERS, AND SOLE PROPRI-ETORS.

(a) AMENDMENT TO 1986 CODE.—Subpara-graph (B) of section 4975(f)(6) (relating to ex-emptions not to apply to certain trans-actions) is amended by adding at the end thefollowing new clause:

‘‘(iii) LOAN EXCEPTION.—For purposes ofsubparagraph (A)(i), the term ‘owner-em-ployee’ shall only include a person describedin subclause (II) or (III) of clause (i).’’.

(b) AMENDMENT TO ERISA.—Section408(d)(2) of the Employee Retirement IncomeSecurity Act of 1974 (29 U.S.C. 1108(d)(2)) isamended by adding at the end the followingnew subparagraph:

‘‘(C) For purposes of paragraph (1)(A), theterm ‘owner-employee’ shall only include aperson described in clause (ii) or (iii) of sub-paragraph (A).’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to loansmade after December 31, 2001.SEC. 624. ELECTIVE DEFERRALS NOT TAKEN

INTO ACCOUNT FOR PURPOSES OFDEDUCTION LIMITS.

(a) IN GENERAL.—Section 404 (relating todeduction for contributions of an employerto an employees’ trust or annuity plan andcompensation under a deferred paymentplan) is amended by adding at the end thefollowing new subsection:

‘‘(n) ELECTIVE DEFERRALS NOT TAKEN INTOACCOUNT FOR PURPOSES OF DEDUCTION LIM-ITS.—Elective deferrals (as defined in section402(g)(3)) shall not be subject to any limita-tion contained in paragraph (3), (7), or (9) ofsubsection (a), and such elective deferralsshall not be taken into account in applyingany such limitation to any other contribu-tions.’’.

(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply to years be-ginning after December 31, 2001.SEC. 625. REDUCED PBGC PREMIUM FOR NEW

PLANS OF SMALL EMPLOYERS.(a) IN GENERAL.—Subparagraph (A) of sec-

tion 4006(a)(3) of the Employee RetirementIncome Security Act of 1974 (29 U.S.C.1306(a)(3)(A)) is amended—

(1) in clause (i), by inserting ‘‘other than anew single-employer plan (as defined in sub-paragraph (F)) maintained by a small em-ployer (as so defined),’’ after ‘‘single-em-ployer plan,’’,

(2) in clause (iii), by striking the period atthe end and inserting ‘‘, and’’, and

(3) by adding at the end the following newclause:

‘‘(iv) in the case of a new single-employerplan (as defined in subparagraph (F)) main-tained by a small employer (as so defined)for the plan year, $5 for each individual whois a participant in such plan during the planyear.’’.

(b) DEFINITION OF NEW SINGLE-EMPLOYERPLAN.—Section 4006(a)(3) of the EmployeeRetirement Income Security Act of 1974 (29U.S.C. 1306(a)(3)) is amended by adding at theend the following new subparagraph:

‘‘(F)(i) For purposes of this paragraph, asingle-employer plan maintained by a con-tributing sponsor shall be treated as a newsingle-employer plan for each of its first 5plan years if, during the 36-month periodending on the date of the adoption of suchplan, the sponsor or any member of suchsponsor’s controlled group (or any prede-cessor of either) had not established or main-tained a plan to which this title applies withrespect to which benefits were accrued forsubstantially the same employees as are inthe new single-employer plan.

‘‘(ii)(I) For purposes of this paragraph, theterm ‘small employer’ means an employerwhich on the first day of any plan year has,in aggregation with all members of the con-

trolled group of such employer, 100 or feweremployees.

‘‘(II) In the case of a plan maintained by 2or more contributing sponsors that are notpart of the same controlled group, the em-ployees of all contributing sponsors and con-trolled groups of such sponsors shall be ag-gregated for purposes of determining wheth-er any contributing sponsor is a small em-ployer.’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to plans es-tablished after December 31, 2001.SEC. 626. REDUCTION OF ADDITIONAL PBGC PRE-

MIUM FOR NEW PLANS.(a) IN GENERAL.—Subparagraph (E) of sec-

tion 4006(a)(3) of the Employee RetirementIncome Security Act of 1974 (29 U.S.C.1306(a)(3)(E)) is amended by adding at the endthe following new clause:

‘‘(v) In the case of a new defined benefitplan, the amount determined under clause(ii) for any plan year shall be an amountequal to the product of the amount deter-mined under clause (ii) and the applicablepercentage. For purposes of this clause, theterm ‘applicable percentage’ means—

‘‘(I) 0 percent, for the first plan year.‘‘(II) 20 percent, for the second plan year.‘‘(III) 40 percent, for the third plan year.‘‘(IV) 60 percent, for the fourth plan year.‘‘(V) 80 percent, for the fifth plan year.

For purposes of this clause, a defined benefitplan (as defined in section 3(35)) maintainedby a contributing sponsor shall be treated asa new defined benefit plan for its first 5 planyears if, during the 36-month period endingon the date of the adoption of the plan, thesponsor and each member of any controlledgroup including the sponsor (or any prede-cessor of either) did not establish or main-tain a plan to which this title applies withrespect to which benefits were accrued forsubstantially the same employees as are inthe new plan.’’.

(b) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to plans es-tablished after December 31, 2001.SEC. 627. ELIMINATION OF USER FEE FOR RE-

QUESTS TO IRS REGARDING NEWPENSION PLANS.

(a) ELIMINATION OF CERTAIN USER FEES.—The Secretary of the Treasury or the Sec-retary’s delegate shall not require paymentof user fees under the program establishedunder section 7527 of the Internal RevenueCode of 1986 for requests to the Internal Rev-enue Service for ruling letters, opinion let-ters, and determination letters or similar re-quests with respect to the qualified status ofa new pension benefit plan or any trustwhich is part of the plan.

(b) NEW PENSION BENEFIT PLAN.—For pur-poses of this section—

(1) IN GENERAL.—The term ‘‘new pensionbenefit plan’’ means a pension, profit-shar-ing, stock bonus, annuity, or employee stockownership plan which is maintained by oneor more eligible employers if such employer(or any predecessor employer) has not madea prior request described in subsection (a) forsuch plan (or any predecessor plan).

(2) ELIGIBLE EMPLOYER.—The term ‘‘eligi-ble employer’’ means an employer (or anypredecessor employer) which has not estab-lished or maintained a qualified employerplan with respect to which contributionswere made, or benefits were accrued for serv-ice, in the 3 most recent taxable years end-ing prior to the first taxable year in whichthe request is made.

(c) EFFECTIVE DATE.—The provisions ofthis section shall apply with respect to re-quests made after December 31, 2001.SEC. 628. MODIFICATION OF TOP-HEAVY RULES.

(a) SIMPLIFICATION OF DEFINITION OF KEYEMPLOYEE.—


CONGRESSIONAL RECORD — SENATE S6745July 13, 2000(1) IN GENERAL.—Section 416(i)(1)(A) (defin-

ing key employee) is amended—(A) by striking ‘‘or any of the 4 preceding

plan years’’ in the matter preceding clause(i),

(B) by striking clause (i) and inserting thefollowing:

‘‘(i) an officer of the employer having anannual compensation greater than $150,000,’’,

(C) by striking clause (ii) and redesig-nating clauses (iii) and (iv) as clauses (ii) and(iii), respectively, and

(D) by striking the second sentence in thematter following clause (iii), as redesignatedby subparagraph (C).

(2) CONFORMING AMENDMENT.—Section416(i)(1)(B)(iii) is amended by striking ‘‘andsubparagraph (A)(ii)’’.

(b) MATCHING CONTRIBUTIONS TAKEN INTOACCOUNT FOR MINIMUM CONTRIBUTION RE-QUIREMENTS.—Section 416(c)(2)(A) (relatingto defined contribution plans) is amended byadding at the end the following: ‘‘Employermatching contributions (as defined in sec-tion 401(m)(4)(A)) shall be taken into accountfor purposes of this subparagraph.’’.

(c) DISTRIBUTIONS DURING LAST YEAR BE-FORE DETERMINATION DATE TAKEN INTO AC-COUNT.—

(1) IN GENERAL.—Paragraph (3) of section416(g) is amended to read as follows:

‘‘(3) DISTRIBUTIONS DURING LAST YEAR BE-FORE DETERMINATION DATE TAKEN INTO AC-COUNT.—

‘‘(A) IN GENERAL.—For purposes ofdetermining—

‘‘(i) the present value of the cumulative ac-crued benefit for any employee, or

‘‘(ii) the amount of the account of any em-ployee,such present value or amount shall be in-creased by the aggregate distributions madewith respect to such employee under theplan during the 1-year period ending on thedetermination date. The preceding sentenceshall also apply to distributions under a ter-minated plan which if it had not been termi-nated would have been required to be in-cluded in an aggregation group.

‘‘(B) 5-YEAR PERIOD IN CASE OF IN-SERVICEDISTRIBUTION.—In the case of any distribu-tion made for a reason other than separationfrom service, death, or disability, subpara-graph (A) shall be applied by substituting ‘5-year period’ for ‘1-year period’.’’.

(2) BENEFITS NOT TAKEN INTO ACCOUNT.—Subparagraph (E) of section 416(g)(4) isamended—

(A) by striking ‘‘LAST 5 YEARS’’ in the head-ing and inserting ‘‘LAST YEAR BEFORE DETER-MINATION DATE’’, and

(B) by striking ‘‘5-year period’’ and insert-ing ‘‘1-year period’’.

(d) DEFINITION OF TOP-HEAVY PLANS.—Paragraph (4) of section 416(g) (relating toother special rules for top-heavy plans) isamended by adding at the end the followingnew subparagraph:

‘‘(H) CASH OR DEFERRED ARRANGEMENTSUSING ALTERNATIVE METHODS OF MEETING NON-DISCRIMINATION REQUIREMENTS.—The term‘top-heavy plan’ shall not include a planwhich consists solely of—

‘‘(i) a cash or deferred arrangement whichmeets the requirements of section 401(k)(12),and

‘‘(ii) matching contributions with respectto which the requirements of section401(m)(11) are met.If, but for this subparagraph, a plan would betreated as a top-heavy plan because it is amember of an aggregation group which is atop-heavy group, contributions under theplan may be taken into account in deter-mining whether any other plan in the groupmeets the requirements of subsection(c)(2).’’.

(e) FROZEN PLAN EXEMPT FROM MINIMUMBENEFIT REQUIREMENT.—Subparagraph (C) ofsection 416(c)(1) (relating to defined benefitplans) is amended—

(A) by striking ‘‘clause (ii)’’ in clause (i)and inserting ‘‘clause (ii) or (iii)’’, and

(B) by adding at the end the following:‘‘(iii) EXCEPTION FOR FROZEN PLAN.—For

purposes of determining an employee’s yearsof service with the employer, any servicewith the employer shall be disregarded tothe extent that such service occurs during aplan year when the plan benefits (within themeaning of section 410(b)) no employee orformer employee.’’.

(f ) ELIMINATION OF FAMILY ATTRIBUTION.—Section 416(i)(1)(B) (defining 5-percentowner) is amended by adding at the end thefollowing new clause:

‘‘(iv) FAMILY ATTRIBUTION DISREGARDED.—Solely for purposes of applying this para-graph (and not for purposes of any provisionof this title which incorporates by referencethe definition of a key employee or 5-percentowner under this paragraph), section 318shall be applied without regard to subsection(a)(1) thereof in determining whether anyperson is a 5-percent owner.’’.

(g) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to years be-ginning after December 31, 2001.SEC. 629. REPEAL OF COORDINATION REQUIRE-

MENTS FOR DEFERRED COMPENSA-TION PLANS OF STATE AND LOCALGOVERNMENTS AND TAX-EXEMPTORGANIZATIONS.

(a) IN GENERAL.—Subsection (c) of section457 (relating to deferred compensation plansof State and local governments and tax-ex-empt organizations), as amended by section622, is amended to read as follows:

‘‘(c) LIMITATION.—The maximum amount ofthe compensation of any one individualwhich may be deferred under subsection (a)during any taxable year shall not exceed theamount in effect under subsection (b)(2)(A)(as modified by any adjustment providedunder subsection (b)(3)).’’.

(b) EFFECTIVE DATE.—The amendmentmade by subsection (a) shall apply to yearsbeginning after December 31, 2001.

Subtitle C—Enhancing Fairness for WomenSEC. 631. CATCHUP CONTRIBUTIONS FOR INDI-

VIDUALS AGE 50 OR OVER.(a) ELECTIVE DEFERRALS.—Section 414 (re-

lating to definitions and special rules) isamended by adding at the end the followingnew subsection:

‘‘(v) CATCHUP CONTRIBUTIONS FOR INDIVID-UALS AGE 50 OR OVER.—

‘‘(1) IN GENERAL.—An applicable employerplan shall not be treated as failing to meetany requirement of this title solely becausethe plan permits an eligible participant tomake additional elective deferrals in anyplan year.

‘‘(2) LIMITATION ON AMOUNT OF ADDITIONALDEFERRALS.—

‘‘(A) IN GENERAL.—A plan shall not permitadditional elective deferrals under paragraph(1) for any year in an amount greater thanthe lesser of—

‘‘(i) the applicable percentage of the appli-cable dollar amount for such elective defer-rals for such year, or

‘‘(ii) the excess (if any) of—‘‘(I) the participant’s compensation for the

year, over‘‘(II) any other elective deferrals of the

participant for such year which are madewithout regard to this subsection.

‘‘(B) APPLICABLE PERCENTAGE.—For pur-poses of this paragraph, the applicable per-centage shall be determined in accordancewith the following table:‘‘For taxable years be-

ginning in:The applicablepercentage is:

2001 .................................................. 10

‘‘For taxable years be-ginning in:

The applicablepercentage is:

2002 .................................................. 202003 .................................................. 302004 .................................................. 402005 and thereafter .......................... 50.‘‘(3) TREATMENT OF CONTRIBUTIONS.—In the

case of any contribution to a plan underparagraph (1)—

‘‘(A) such contribution shall not, with re-spect to the year in which the contributionis made—

‘‘(i) be subject to any otherwise applicablelimitation contained in section 402(g), 402(h),403(b), 404(a), 404(h), 408, 415, or 457, or

‘‘(ii) be taken into account in applyingsuch limitations to other contributions orbenefits under such plan or any other suchplan, and

‘‘(B) such plan shall not be treated as fail-ing to meet the requirements of section401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11),401(k)(12), 401(m), 403(b)(12), 408(k), 408(p),408B, 410(b), or 416 by reason of the making of(or the right to make) such contribution.

‘‘(4) ELIGIBLE PARTICIPANT.—For purposesof this subsection, the term ‘eligible partici-pant’ means, with respect to any plan year,a participant in a plan—

‘‘(A) who has attained the age of 50 beforethe close of the plan year, and

‘‘(B) with respect to whom no other elec-tive deferrals may (without regard to thissubsection) be made to the plan for the planyear by reason of the application of any limi-tation or other restriction described in para-graph (3) or contained in the terms of theplan.

‘‘(5) OTHER DEFINITIONS AND RULES.—Forpurposes of this subsection—

‘‘(A) APPLICABLE DOLLAR AMOUNT.—Theterm ‘applicable dollar amount’ means, withrespect to any year, the amount in effectunder section 402(g)(1)(B), 408(p)(2)(E)(i), or457(e)(15)(A), whichever is applicable to anapplicable employer plan, for such year.

‘‘(B) APPLICABLE EMPLOYER PLAN.—Theterm ‘applicable employer plan’ means—

‘‘(i) an employees’ trust described in sec-tion 401(a) which is exempt from tax undersection 501(a),

‘‘(ii) a plan under which amounts are con-tributed by an individual’s employer for anannuity contract described in section 403(b),

‘‘(iii) an eligible deferred compensationplan under section 457 of an eligible em-ployer as defined in section 457(e)(1)(A), and

‘‘(iv) an arrangement meeting the require-ments of section 408 (k) or (p).

‘‘(C) ELECTIVE DEFERRAL.—The term ‘elec-tive deferral’ has the meaning given suchterm by subsection (u)(2)(C).

‘‘(D) EXCEPTION FOR SECTION 457 PLANS.—This subsection shall not apply to an appli-cable employer plan described in paragraph(5)(B)(iii) for any year to which section457(b)(3) applies.’’.

(b) INDIVIDUAL RETIREMENT PLANS.—Sec-tion 219(b), as amended by section 611, isamended by adding at the end the followingnew paragraph:

‘‘(6) CATCHUP CONTRIBUTIONS.—‘‘(A) IN GENERAL.—In the case of an indi-

vidual who has attained the age of 50 beforethe close of the taxable year, the dollaramount in effect under paragraph (1)(A) forsuch taxable year shall be equal to the appli-cable percentage of such amount determinedwithout regard to this paragraph.

‘‘(B) APPLICABLE PERCENTAGE.—For pur-poses of this paragraph, the applicable per-centage shall be determined in accordancewith the following table:

‘‘For taxable years be-ginning in:

The applicablepercentage is:

2001 .................................................. 1102002 .................................................. 120


CONGRESSIONAL RECORD — SENATES6746 July 13, 2000‘‘For taxable years be-

ginning in:The applicablepercentage is:

2003 .................................................. 1302004 .................................................. 1402005 and thereafter .......................... 150.’’.(c) EFFECTIVE DATE.—The amendment

made by this section shall apply to contribu-tions in taxable years beginning after De-cember 31, 2001.SEC. 632. EQUITABLE TREATMENT FOR CON-

TRIBUTIONS OF EMPLOYEES TO DE-FINED CONTRIBUTION PLANS.

(a) EQUITABLE TREATMENT.—(1) IN GENERAL.—Subparagraph (B) of sec-

tion 415(c)(1) (relating to limitation for de-fined contribution plans) is amended bystriking ‘‘25 percent’’ and inserting ‘‘100 per-cent’’.

(2) APPLICATION TO SECTION 403(b).—Section403(b) is amended—

(A) by striking ‘‘the exclusion allowancefor such taxable year’’ in paragraph (1) andinserting ‘‘the applicable limit under section415’’,

(B) by striking paragraph (2), and(C) by inserting ‘‘or any amount received

by a former employee after the 5th taxableyear following the taxable year in whichsuch employee was terminated’’ before theperiod at the end of the second sentence ofparagraph (3).

(3) CONFORMING AMENDMENTS.—(A) Subsection (f) of section 72 is amended

by striking ‘‘section 403(b)(2)(D)(iii))’’ and in-serting ‘‘section 403(b)(2)(D)(iii), as in effectbefore the enactment of the Taxpayer Re-fund Act of 1999)’’.

(B) Section 404(a)(10)(B) is amended bystriking ‘‘, the exclusion allowance undersection 403(b)(2),’’.

(C) Section 415(a)(2) is amended by striking‘‘, and the amount of the contribution forsuch portion shall reduce the exclusion al-lowance as provided in section 403(b)(2)’’.

(D) Section 415(c)(3) is amended by addingat the end the following new subparagraph:

‘‘(E) ANNUITY CONTRACTS.—In the case ofan annuity contract described in section403(b), the term ‘participant’s compensation’means the participant’s includible com-pensation determined under section403(b)(3).’’.

(E) Section 415(c) is amended by strikingparagraph (4).

(F) Section 415(c)(7) is amended to read asfollows:

‘‘(7) CERTAIN CONTRIBUTIONS BY CHURCHPLANS NOT TREATED AS EXCEEDING LIMIT.—

‘‘(A) IN GENERAL.—Notwithstanding anyother provision of this subsection, at theelection of a participant who is an employeeof a church or a convention or association ofchurches, including an organization de-scribed in section 414(e)(3)(B)(ii), contribu-tions and other additions for an annuity con-tract or retirement income account de-scribed in section 403(b) with respect to suchparticipant, when expressed as an annual ad-dition to such participant’s account, shall betreated as not exceeding the limitation ofparagraph (1) if such annual addition is notin excess of $10,000.

‘‘(B) $40,000 AGGREGATE LIMITATION.—Thetotal amount of additions with respect toany participant which may be taken into ac-count for purposes of this subparagraph forall years may not exceed $40,000.

‘‘(C) ANNUAL ADDITION.—For purposes ofthis paragraph, the term ‘annual addition’has the meaning given such term by para-graph (2).’’.

(G) Subparagraph (B) of section 402(g)(7)(as redesignated by section 312(a)) is amend-ed by inserting before the period at the endthe following: ‘‘(as in effect before the enact-ment of the Taxpayer Refund Act of 1999)’’.

(3) EFFECTIVE DATE.—The amendmentsmade by this subsection shall apply to yearsbeginning after December 31, 2001.

(b) SPECIAL RULES FOR SECTIONS 403(b) AND408.—

(1) IN GENERAL.—Subsection (k) of section415 is amended by adding at the end the fol-lowing new paragraph:

‘‘(4) SPECIAL RULES FOR SECTIONS 403(b) AND408.—For purposes of this section, any annu-ity contract described in section 403(b) forthe benefit of a participant shall be treatedas a defined contribution plan maintained byeach employer with respect to which the par-ticipant has the control required under sub-section (b) or (c) of section 414 (as modifiedby subsection (h)). For purposes of this sec-tion, any contribution by an employer to asimplified employee pension plan for an indi-vidual for a taxable year shall be treated asan employer contribution to a defined con-tribution plan for such individual for suchyear.’’.

(2) EFFECTIVE DATE.—The amendmentsmade by paragraph (1) shall apply to limita-tion years beginning after December 31, 2000.

(c) DEFERRED COMPENSATION PLANS OFSTATE AND LOCAL GOVERNMENTS AND TAX-EX-EMPT ORGANIZATIONS.—

(1) IN GENERAL.—Subparagraph (B) of sec-tion 457(b)(2) (relating to salary limitationon eligible deferred compensation plans) isamended by striking ‘‘331⁄3 percent’’ and in-serting ‘‘100 percent’’.

(2) EFFECTIVE DATE.—The amendmentmade by this subsection shall apply to yearsbeginning after December 31, 2001.

SEC. 633. CLARIFICATION OF TAX TREATMENT OFDIVISION OF SECTION 457 PLAN BEN-EFITS UPON DIVORCE.

(a) IN GENERAL.—Section 414(p)(11) (relat-ing to application of rules to governmentaland church plans) is amended—

(1) by inserting ‘‘or an eligible deferredcompensation plan (within the meaning ofsection 457(b))’’ after ‘‘subsection (e))’’, and

(2) in the heading, by striking ‘‘GOVERN-MENTAL AND CHURCH PLANS’’ and inserting‘‘CERTAIN OTHER PLANS’’.

(b) WAIVER OF CERTAIN DISTRIBUTION RE-QUIREMENTS.—Paragraph (10) of section 414(p)is amended by striking ‘‘and section 409(d)’’and inserting ‘‘section 409(d), and section457(d)’’.

(c) TAX TREATMENT OF PAYMENTS FROM ASECTION 457 PLAN.—Subsection (p) of section414 is amended by redesignating paragraph(12) as paragraph (13) and inserting afterparagraph (11) the following new paragraph:

‘‘(12) TAX TREATMENT OF PAYMENTS FROM ASECTION 457 PLAN.—If a distribution or pay-ment from an eligible deferred compensationplan described in section 457(b) is made pur-suant to a qualified domestic relations order,rules similar to the rules of section402(e)(1)(A) shall apply to such distributionor payment.’’.

(d) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to transfers,distributions, and payments made after De-cember 31, 2001.

SEC. 634. MODIFICATION OF SAFE HARBOR RE-LIEF FOR HARDSHIP WITHDRAWALSFROM CASH OR DEFERRED AR-RANGEMENTS.

(a) IN GENERAL.—The Secretary of theTreasury shall revise the regulations relat-ing to hardship distributions under section401(k)(2)(B)(i)(IV) of the Internal RevenueCode of 1986 to provide that the period anemployee is prohibited from making electiveand employee contributions in order for adistribution to be deemed necessary to sat-isfy financial need shall be equal to 6months.

(b) EFFECTIVE DATE.—The revised regula-tions under subsection (a) shall apply toyears beginning after December 31, 2001.

SEC. 635. FASTER VESTING OF CERTAIN EM-PLOYER MATCHING CONTRIBU-TIONS.

(a) AMENDMENTS TO 1986 CODE.—Section411(a) (relating to minimum vesting stand-ards) is amended—

(1) in paragraph (2), by striking ‘‘A plan’’and inserting ‘‘Except as provided in para-graph (12), a plan’’, and

(2) by adding at the end the following:‘‘(12) FASTER VESTING FOR MATCHING CON-

TRIBUTIONS.—In the case of matching con-tributions (as defined in section401(m)(4)(A)), paragraph (2) shall be applied—

‘‘(A) by substituting ‘3 years’ for ‘5 years’in subparagraph (A), and

‘‘(B) by substituting the following table forthe table contained in subparagraph (B):‘‘Years of service: The nonforfeitable

percentage is:2 ...................................................... 203 ...................................................... 404 ...................................................... 605 ...................................................... 806 ...................................................... 100.’’.(b) AMENDMENTS TO ERISA.—Section 203(a)

of the Employee Retirement Income Secu-rity Act of 1974 (29 U.S.C. 1053(a)) isamended—

(1) in paragraph (2), by striking ‘‘A plan’’and inserting ‘‘Except as provided in para-graph (4), a plan’’, and

(2) by adding at the end the following:‘‘(4) FASTER VESTING FOR MATCHING CON-

TRIBUTIONS.—In the case of matching con-tributions (as defined in section 401(m)(4)(A)of the Internal Revenue Code of 1986), para-graph (2) shall be applied—

‘‘(A) by substituting ‘3 years’ for ‘5 years’in subparagraph (A), and

‘‘(B) by substituting the following table forthe table contained in subparagraph (B):‘‘Years of service: The nonforfeitable

percentage is:2 ...................................................... 203 ...................................................... 404 ...................................................... 605 ...................................................... 806 ...................................................... 100.’’.(c) EFFECTIVE DATES.—(1) IN GENERAL.—Except as provided in

paragraph (2), the amendments made by thissection shall apply to contributions for planyears beginning after December 31, 2001.

(2) COLLECTIVE BARGAINING AGREEMENTS.—In the case of a plan maintained pursuant to1 or more collective bargaining agreementsbetween employee representatives and 1 ormore employers ratified by the date of en-actment of this Act, the amendments madeby this section shall not apply to contribu-tions on behalf of employees covered by anysuch agreement for plan years beginning be-fore the earlier of—

(A) the later of—(i) the date on which the last of such col-

lective bargaining agreements terminates(determined without regard to any extensionthereof on or after such date of enactment),or

(ii) January 1, 2001, or(B) January 1, 2005.(3) SERVICE REQUIRED.—With respect to any

plan, the amendments made by this sectionshall not apply to any employee before thedate that such employee has 1 hour of serv-ice under such plan in any plan year towhich the amendments made by this sectionapply.

Subtitle D—Increasing Portability forParticipants

SEC. 641. ROLLOVERS ALLOWED AMONG VAR-IOUS TYPES OF PLANS.

(a) ROLLOVERS FROM AND TO SECTION 457PLANS.—

(1) ROLLOVERS FROM SECTION 457 PLANS.—(A) IN GENERAL.—Section 457(e) (relating to

other definitions and special rules) is amend-ed by adding at the end the following:


CONGRESSIONAL RECORD — SENATE S6747July 13, 2000‘‘(16) ROLLOVER AMOUNTS.—‘‘(A) GENERAL RULE.—In the case of an eli-

gible deferred compensation plan establishedand maintained by an employer described insubsection (e)(1)(A), if—

‘‘(i) any portion of the balance to the cred-it of an employee in such plan is paid to suchemployee in an eligible rollover distribution(within the meaning of section 402(c)(4) with-out regard to subparagraph (C) thereof),

‘‘(ii) the employee transfers any portion ofthe property such employee receives in suchdistribution to an eligible retirement plandescribed in section 402(c)(8)(B), and

‘‘(iii) in the case of a distribution of prop-erty other than money, the amount so trans-ferred consists of the property distributed,then such distribution (to the extent sotransferred) shall not be includible in grossincome for the taxable year in which paid.

‘‘(B) CERTAIN RULES MADE APPLICABLE.—The rules of paragraphs (2) through (7) (otherthan paragraph (4)(C)) and (9) of section402(c) and section 402(f) shall apply for pur-poses of subparagraph (A).

‘‘(C) REPORTING.—Rollovers under thisparagraph shall be reported to the Secretaryin the same manner as rollovers from quali-fied retirement plans (as defined in section4974(c)).’’.

(B) DEFERRAL LIMIT DETERMINED WITHOUTREGARD TO ROLLOVER AMOUNTS.—Section457(b)(2) (defining eligible deferred com-pensation plan) is amended by inserting‘‘(other than rollover amounts)’’ after ‘‘tax-able year’’.

(C) DIRECT ROLLOVER.—Paragraph (1) ofsection 457(d) is amended by striking ‘‘and’’at the end of subparagraph (A), by strikingthe period at the end of subparagraph (B) andinserting ‘‘, and’’, and by inserting after sub-paragraph (B) the following:

‘‘(C) in the case of a plan maintained by anemployer described in subsection (e)(1)(A),the plan meets requirements similar to therequirements of section 401(a)(31).Any amount transferred in a direct trustee-to-trustee transfer in accordance with sec-tion 401(a)(31) shall not be includible in grossincome for the taxable year of transfer.’’.

(D) WITHHOLDING.—(i) Paragraph (12) of section 3401(a) is

amended by adding at the end the following:‘‘(E) under or to an eligible deferred com-

pensation plan which, at the time of suchpayment, is a plan described in section 457(b)maintained by an employer described in sec-tion 457(e)(1)(A); or’’.

(ii) Paragraph (3) of section 3405(c) isamended to read as follows:

‘‘(3) ELIGIBLE ROLLOVER DISTRIBUTION.—Forpurposes of this subsection, the term ‘eligi-ble rollover distribution’ has the meaninggiven such term by section 402(f)(2)(A).’’.

(iii) LIABILITY FOR WITHHOLDING.—Subpara-graph (B) of section 3405(d)(2) is amended bystriking ‘‘or’’ at the end of clause (ii), bystriking the period at the end of clause (iii)and inserting ‘‘, or’’, and by adding at theend the following:

‘‘(iv) section 457(b).’’.(2) ROLLOVERS TO SECTION 457 PLANS.—(A) IN GENERAL.—Section 402(c)(8)(B) (de-

fining eligible retirement plan) is amendedby striking ‘‘and’’ at the end of clause (iii),by striking the period at the end of clause(iv) and inserting ‘‘, and’’, and by insertingafter clause (iv) the following new clause:

‘‘(v) an eligible deferred compensation plandescribed in section 457(b) of an employer de-scribed in section 457(e)(1)(A).’’.

(B) SEPARATE ACCOUNTING.—Section 402(c)is amended by adding at the end the fol-lowing new paragraph:

‘‘(11) SEPARATE ACCOUNTING.—Unless a plandescribed in clause (v) of paragraph (8)(B)agrees to separately account for amountsrolled into such plan from eligible retire-

ment plans not described in such clause, theplan described in such clause may not accepttransfers or rollovers from such retirementplans.’’.

(C) 10 PERCENT ADDITIONAL TAX.—Sub-section (t) of section 72 (relating to 10-per-cent additional tax on early distributionsfrom qualified retirement plans) is amendedby adding at the end the following new para-graph:

‘‘(9) SPECIAL RULE FOR ROLLOVERS TO SEC-TION 457 PLANS.—For purposes of this sub-section, a distribution from an eligible de-ferred compensation plan (as defined in sec-tion 457(b)) of an employer described in sec-tion 457(e)(1)(A) shall be treated as a dis-tribution from a qualified retirement plandescribed in 4974(c)(1) to the extent that suchdistribution is attributable to an amounttransferred to an eligible deferred compensa-tion plan from a qualified retirement plan(as defined in section 4974(c)).’’.

(b) ALLOWANCE OF ROLLOVERS FROM AND TO403(b) PLANS.—

(1) ROLLOVERS FROM SECTION 403(b) PLANS.—Section 403(b)(8)(A)(ii) (relating to rolloveramounts) is amended by striking ‘‘such dis-tribution’’ and all that follows and inserting‘‘such distribution to an eligible retirementplan described in section 402(c)(8)(B), and’’.

(2) ROLLOVERS TO SECTION 403(b) PLANS.—Section 402(c)(8)(B) (defining eligible retire-ment plan), as amended by subsection (a), isamended by striking ‘‘and’’ at the end ofclause (iv), by striking the period at the endof clause (v) and inserting‘‘, and’’, and by inserting after clause (v) thefollowing new clause:

‘‘(vi) an annuity contract described in sec-tion 403(b).’’.

(c) EXPANDED EXPLANATION TO RECIPIENTSOF ROLLOVER DISTRIBUTIONS.—Paragraph (1)of section 402(f) (relating to written expla-nation to recipients of distributions eligiblefor rollover treatment) is amended by strik-ing ‘‘and’’ at the end of subparagraph (C), bystriking the period at the end of subpara-graph (D) and inserting ‘‘, and’’, and by add-ing at the end the following new subpara-graph:

‘‘(E) of the provisions under which dis-tributions from the eligible retirement planreceiving the distribution may be subject torestrictions and tax consequences which aredifferent from those applicable to distribu-tions from the plan making such distribu-tion.’’.

(d) SPOUSAL ROLLOVERS.—Section 402(c)(9)(relating to rollover where spouse receivesdistribution after death of employee) isamended by striking ‘‘; except that’’ and allthat follows up to the end period.

(e) CONFORMING AMENDMENTS.—(1) Section 72(o)(4) is amended by striking

‘‘and 408(d)(3)’’ and inserting ‘‘403(b)(8),408(d)(3), and 457(e)(16)’’.

(2) Section 219(d)(2) is amended by striking‘‘or 408(d)(3)’’ and inserting ‘‘408(d)(3), or457(e)(16)’’.

(3) Section 401(a)(31)(B) is amended bystriking ‘‘and 403(a)(4)’’ and inserting ‘‘,403(a)(4), 403(b)(8), and 457(e)(16)’’.

(4) Subparagraph (A) of section 402(f)(2) isamended by striking ‘‘or paragraph (4) of sec-tion 403(a)’’ and inserting ‘‘, paragraph (4) ofsection 403(a), subparagraph (A) of section403(b)(8), or subparagraph (A) of section457(e)(16)’’.

(5) Paragraph (1) of section 402(f) is amend-ed by striking ‘‘from an eligible retirementplan’’.

(6) Subparagraphs (A) and (B) of section402(f)(1) are amended by striking ‘‘anothereligible retirement plan’’ and inserting ‘‘aneligible retirement plan’’.

(7) Subparagraph (B) of section 403(b)(8) isamended to read as follows:

‘‘(B) CERTAIN RULES MADE APPLICABLE.—The rules of paragraphs (2) through (7) and(9) of section 402(c) and section 402(f) shallapply for purposes of subparagraph (A), ex-cept that section 402(f) shall be applied tothe payor in lieu of the plan administrator.’’.

(8) Section 408(a)(1) is amended by striking‘‘or 403(b)(8)’’ and inserting ‘‘, 403(b)(8), or457(e)(16)’’.

(9) Subparagraphs (A) and (B) of section415(b)(2) are each amended by striking ‘‘and408(d)(3)’’ and inserting ‘‘403(b)(8), 408(d)(3),and 457(e)(16)’’.

(10) Section 415(c)(2) is amended by strik-ing ‘‘and 408(d)(3)’’ and inserting ‘‘408(d)(3),and 457(e)(16)’’.

(11) Section 4973(b)(1)(A) is amended bystriking ‘‘or 408(d)(3)’’ and inserting‘‘408(d)(3), or 457(e)(16)’’.

(f) EFFECTIVE DATE; SPECIAL RULE.—(1) EFFECTIVE DATE.—The amendments

made by this section shall apply to distribu-tions after December 31, 2001.

(2) SPECIAL RULE.—Notwithstanding anyother provision of law, subsections (h)(3) and(h)(5) of section 1122 of the Tax Reform Actof 1986 shall not apply to any distributionfrom an eligible retirement plan (as definedin clause (iii) or (iv) of section 402(c)(8)(B) ofthe Internal Revenue Code of 1986) on behalfof an individual if there was a rollover tosuch plan on behalf of such individual whichis permitted solely by reason of any amend-ment made by this section.SEC. 642. ROLLOVERS OF IRAS INTO WORKPLACE

RETIREMENT PLANS.(a) IN GENERAL.—Subparagraph (A) of sec-

tion 408(d)(3) (relating to rollover amounts)is amended by adding ‘‘or’’ at the end ofclause (i), by striking clauses (ii) and (iii),and by adding at the end the following:

‘‘(ii) the entire amount received (includingmoney and any other property) is paid intoan eligible retirement plan for the benefit ofsuch individual not later than the 60th dayafter the date on which the payment or dis-tribution is received, except that the max-imum amount which may be paid into suchplan may not exceed the portion of theamount received which is includible in grossincome (determined without regard to thisparagraph).For purposes of clause (ii), the term ‘eligibleretirement plan’ means an eligible retire-ment plan described in clause (iii), (iv), (v),or (vi) of section 402(c)(8)(B).’’.

(b) CONFORMING AMENDMENTS.—(1) Paragraph (1) of section 403(b) is amend-

ed by striking ‘‘section 408(d)(3)(A)(iii)’’ andinserting ‘‘section 408(d)(3)(A)(ii)’’.

(2) Clause (i) of section 408(d)(3)(D) isamended by striking ‘‘(i), (ii), or (iii)’’ andinserting ‘‘(i) or (ii)’’.

(3) Subparagraph (G) of section 408(d)(3) isamended to read as follows:

‘‘(G) SIMPLE RETIREMENT ACCOUNTS.—In thecase of any payment or distribution out of asimple retirement account (as defined in sub-section (p)) to which section 72(t)(6) applies,this paragraph shall not apply unless suchpayment or distribution is paid into anothersimple retirement account.’’.

(c) EFFECTIVE DATE; SPECIAL RULE.—(1) EFFECTIVE DATE.—The amendments

made by this section shall apply to distribu-tions after December 31, 2001.

(2) SPECIAL RULE.—Notwithstanding anyother provision of law, subsections (h)(3) and(h)(5) of section 1122 of the Tax Reform Actof 1986 shall not apply to any distributionfrom an eligible retirement plan (as definedin clause (iii) or (iv) of section 402(c)(8)(B) ofthe Internal Revenue Code of 1986) on behalfof an individual if there was a rollover tosuch plan on behalf of such individual whichis permitted solely by reason of the amend-ments made by this section.


CONGRESSIONAL RECORD — SENATES6748 July 13, 2000SEC. 643. ROLLOVERS OF AFTER-TAX CONTRIBU-

TIONS.(a) ROLLOVERS FROM EXEMPT TRUSTS.—

Paragraph (2) of section 402(c) (relating tomaximum amount which may be rolled over)is amended by adding at the end the fol-lowing: ‘‘The preceding sentence shall notapply to such distribution to the extent—

‘‘(A) such portion is transferred in a directtrustee-to-trustee transfer to a qualifiedtrust which is part of a plan which is a de-fined contribution plan and which agrees toseparately account for amounts so trans-ferred, including separately accounting forthe portion of such distribution which is in-cludible in gross income and the portion ofsuch distribution which is not so includible,or

‘‘(B) such portion is transferred to an eligi-ble retirement plan described in clause (i) or(ii) of paragraph (8)(B).’’.

(b) OPTIONAL DIRECT TRANSFER OF ELIGIBLEROLLOVER DISTRIBUTIONS.—Subparagraph (B)of section 401(a)(31) (relating to limitation)is amended by adding at the end the fol-lowing: ‘‘The preceding sentence shall notapply to such distribution if the plan towhich such distribution is transferred—

‘‘(i) agrees to separately account foramounts so transferred, including separatelyaccounting for the portion of such distribu-tion which is includible in gross income andthe portion of such distribution which is notso includible, or

‘‘(ii) is an eligible retirement plan de-scribed in clause (i) or (ii) of section402(c)(8)(B).’’.

(c) RULES FOR APPLYING SECTION 72 TOIRAS.—Paragraph (3) of section 408(d) (relat-ing to special rules for applying section 72) isamended by inserting at the end the fol-lowing:

‘‘(H) APPLICATION OF SECTION 72.—‘‘(i) IN GENERAL.—If—‘‘(I) a distribution is made from an indi-

vidual retirement plan, and‘‘(II) a rollover contribution is made to an

eligible retirement plan described in section402(c)(8)(B)(iii), (iv), (v), or (vi) with respectto all or part of such distribution,then, notwithstanding paragraph (2), therules of clause (ii) shall apply for purposes ofapplying section 72.

‘‘(ii) APPLICABLE RULES.—In the case of adistribution described in clause (i)—

‘‘(I) section 72 shall be applied separatelyto such distribution,

‘‘(II) notwithstanding the pro rata alloca-tion of income on, and investment in thecontract, to distributions under section 72,the portion of such distribution rolled overto an eligible retirement plan described inclause (i) shall be treated as from income onthe contract (to the extent of the aggregateincome on the contract from all individualretirement plans of the distributee), and

‘‘(III) appropriate adjustments shall bemade in applying section 72 to other dis-tributions in such taxable year and subse-quent taxable years.’’.

(d) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to distribu-tions made after December 31, 2001.SEC. 644. HARDSHIP EXCEPTION TO 60-DAY RULE.

(a) EXEMPT TRUSTS.—Paragraph (3) of sec-tion 402(c) (relating to transfer must be madewithin 60 days of receipt) is amended to readas follows:

‘‘(3) TRANSFER MUST BE MADE WITHIN 60DAYS OF RECEIPT.—

‘‘(A) IN GENERAL.—Except as provided insubparagraph (B), paragraph (1) shall notapply to any transfer of a distribution madeafter the 60th day following the day on whichthe distributee received the property distrib-uted.

‘‘(B) HARDSHIP EXCEPTION.—The Secretarymay waive the 60-day requirement under

subparagraph (A) where the failure to waivesuch requirement would be against equity orgood conscience, including casualty, dis-aster, or other events beyond the reasonablecontrol of the individual subject to such re-quirement.’’.

(b) IRAS.—Paragraph (3) of section 408(d)(relating to rollover contributions), asamended by section 333, is amended by add-ing after subparagraph (H) the following newsubparagraph:

‘‘(I) WAIVER OF 60-DAY REQUIREMENT.—TheSecretary may waive the 60-day requirementunder subparagraphs (A) and (D) where thefailure to waive such requirement would beagainst equity or good conscience, includingcasualty, disaster, or other events beyondthe reasonable control of the individual sub-ject to such requirement.’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to distribu-tions after December 31, 2001.SEC. 645. TREATMENT OF FORMS OF DISTRIBU-

TION.(a) PLAN TRANSFERS.—(1) AMENDMENT TO INTERNAL REVENUE CODE

OF 1986.—Paragraph (6) of section 411(d) (re-lating to accrued benefit not to be decreasedby amendment) is amended by adding at theend the following:

‘‘(D) PLAN TRANSFERS.—‘‘(i) A defined contribution plan (in this

subparagraph referred to as the ‘transfereeplan’) shall not be treated as failing to meetthe requirements of this subsection merelybecause the transferee plan does not providesome or all of the forms of distribution pre-viously available under another defined con-tribution plan (in this subparagraph referredto as the ‘transferor plan’) to the extentthat—

‘‘(I) the forms of distribution previouslyavailable under the transferor plan appliedto the account of a participant or beneficiaryunder the transferor plan that was trans-ferred from the transferor plan to the trans-feree plan pursuant to a direct transfer rath-er than pursuant to a distribution from thetransferor plan,

‘‘(II) the terms of both the transferor planand the transferee plan authorize the trans-fer described in subclause (I),

‘‘(III) the transfer described in subclause(I) was made pursuant to a voluntary elec-tion by the participant or beneficiary whoseaccount was transferred to the transfereeplan,

‘‘(IV) the election described in subclause(III) was made after the participant or bene-ficiary received a notice describing the con-sequences of making the election,

‘‘(V) if the transferor plan provides for anannuity as the normal form of distributionunder the plan in accordance with section417, the transfer is made with the consent ofthe participant’s spouse (if any), and suchconsent meets requirements similar to therequirements imposed by section 417(a)(2),and

‘‘(VI) the transferee plan allows the partic-ipant or beneficiary described in subclause(III) to receive any distribution to which theparticipant or beneficiary is entitled underthe transferee plan in the form of a singlesum distribution.

‘‘(ii) Clause (i) shall apply to plan mergersand other transactions having the effect of adirect transfer, including consolidations ofbenefits attributable to different employerswithin a multiple employer plan.

‘‘(E) ELIMINATION OF FORM OF DISTRIBU-TION.—Except to the extent provided in regu-lations, a defined contribution plan shall notbe treated as failing to meet the require-ments of this section merely because of theelimination of a form of distribution pre-viously available thereunder. This subpara-graph shall not apply to the elimination of a

form of distribution with respect to any par-ticipant unless—

‘‘(i) a single sum payment is available tosuch participant at the same time or timesas the form of distribution being eliminated,and

‘‘(ii) such single sum payment is based onthe same or greater portion of the partici-pant’s account as the form of distributionbeing eliminated.’’.

(2) AMENDMENT TO ERISA.—Section 204(g) ofthe Employee Retirement Income SecurityAct of 1974 (29 U.S.C. 1054(g)) is amended byadding at the end the following:

‘‘(4)(A) A defined contribution plan (in thissubparagraph referred to as the ‘transfereeplan’) shall not be treated as failing to meetthe requirements of this subsection merelybecause the transferee plan does not providesome or all of the forms of distribution pre-viously available under another defined con-tribution plan (in this paragraph referred toas the ‘transferor plan’) to the extent that—

‘‘(i) the forms of distribution previouslyavailable under the transferor plan appliedto the account of a participant or beneficiaryunder the transferor plan that was trans-ferred from the transferor plan to the trans-feree plan pursuant to a direct transfer rath-er than pursuant to a distribution from thetransferor plan;

‘‘(ii) the terms of both the transferor planand the transferee plan authorize the trans-fer described in clause (i);

‘‘(iii) the transfer described in clause (i)was made pursuant to a voluntary electionby the participant or beneficiary whose ac-count was transferred to the transferee plan;

‘‘(iv) the election described in clause (iii)was made after the participant or bene-ficiary received a notice describing the con-sequences of making the election;

‘‘(v) if the transferor plan provides for anannuity as the normal form of distributionunder the plan in accordance with section417, the transfer is made with the consent ofthe participant’s spouse (if any), and suchconsent meets requirements similar to therequirements imposed by section 417(a)(2);and

‘‘(vi) the transferee plan allows the partici-pant or beneficiary described in subclause(III) to receive any distribution to which theparticipant or beneficiary is entitled underthe transferee plan in the form of a singlesum distribution.

‘‘(B) Subparagraph (A) shall apply to planmergers and other transactions having theeffect of a direct transfer, including consoli-dations of benefits attributable to differentemployers within a multiple employer plan.

‘‘(5) ELIMINATION OF FORM OF DISTRIBU-TION.—Except to the extent provided in regu-lations, a defined contribution plan shall notbe treated as failing to meet the require-ments of this section merely because of theelimination of a form of distribution pre-viously available thereunder. This paragraphshall not apply to the elimination of a formof distribution with respect to any partici-pant unless—

‘‘(A) a single sum payment is available tosuch participant at the same time or timesas the form of distribution being eliminated;and

‘‘(B) such single sum payment is based onthe same or greater portion of the partici-pant’s account as the form of distributionbeing eliminated.’’.

(3) EFFECTIVE DATE.—The amendmentsmade by this subsection shall apply to yearsbeginning after December 31, 2001.

(b) REGULATIONS.—(1) AMENDMENT TO INTERNAL REVENUE CODE

OF 1986.—The last sentence of paragraph (6)(B)of section 411(d) (relating to accrued benefitnot to be decreased by amendment) isamended to read as follows: ‘‘The Secretary


CONGRESSIONAL RECORD — SENATE S6749July 13, 2000may by regulations provide that this sub-paragraph shall not apply to any planamendment that does not adversely affectthe rights of participants in a material man-ner.’’.

(2) AMENDMENT TO ERISA.—The last sen-tence of section 204(g)(2) of the Employee Re-tirement Income Security Act of 1974 (29U.S.C. 1054(g)(2)) is amended to read as fol-lows: ‘‘The Secretary of the Treasury may byregulations provide that this paragraph shallnot apply to any plan amendment that doesnot adversely affect the rights of partici-pants in a material manner.’’.

(3) SECRETARY DIRECTED.—Not later thanDecember 31, 2001, the Secretary of theTreasury is directed to issue final regula-tions under section 411(d)(6) of the InternalRevenue Code of 1986 and section 204(g)(2) ofthe Employee Retirement Income SecurityAct of 1974. Such regulations shall apply toplan years beginning after December 31, 2001,or such earlier date as is specified by theSecretary of the Treasury.SEC. 646. RATIONALIZATION OF RESTRICTIONS

ON DISTRIBUTIONS.(a) MODIFICATION OF SAME DESK EXCEP-

TION.—(1) SECTION 401(k).—(A) Section 401(k)(2)(B)(i)(I) (relating to

qualified cash or deferred arrangements) isamended by striking ‘‘separation from serv-ice’’ and inserting ‘‘severance from employ-ment’’.

(B) Subparagraph (A) of section 401(k)(10)(relating to distributions upon terminationof plan or disposition of assets or subsidiary)is amended to read as follows:

‘‘(A) IN GENERAL.—An event described inthis subparagraph is the termination of theplan without establishment or maintenanceof another defined contribution plan (otherthan an employee stock ownership plan asdefined in section 4975(e)(7)).’’.

(C) Section 401(k)(10) is amended—(i) in subparagraph (B)—(I) by striking ‘‘An event’’ in clause (i) and

inserting ‘‘A termination’’, and(II) by striking ‘‘the event’’ in clause (i)

and inserting ‘‘the termination’’,(ii) by striking subparagraph (C), and(iii) by striking ‘‘OR DISPOSITION OF ASSETS

OR SUBSIDIARY’’ in the heading.(2) SECTION 403(b).—(A) Paragraphs (7)(A)(ii) and (11)(A) of sec-

tion 403(b) are each amended by striking‘‘separates from service’’ and inserting ‘‘hasa severance from employment’’.

(B) The heading for paragraph (11) of sec-tion 403(b) is amended by striking ‘‘SEPARA-TION FROM SERVICE’’ and inserting ‘‘SEVER-ANCE FROM EMPLOYMENT’’.

(3) SECTION 457.—Clause (ii) of section457(d)(1)(A) is amended by striking ‘‘is sepa-rated from service’’ and inserting ‘‘has a sev-erance from employment’’.

(b) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to distribu-tions after December 31, 2001.SEC. 647. PURCHASE OF SERVICE CREDIT IN GOV-

ERNMENTAL DEFINED BENEFITPLANS.

(a) 403(b) PLANS.—Subsection (b) of section403 is amended by adding at the end the fol-lowing new paragraph:

‘‘(13) TRUSTEE-TO-TRUSTEE TRANSFERS TOPURCHASE PERMISSIVE SERVICE CREDIT.—Noamount shall be includible in gross incomeby reason of a direct trustee-to-trusteetransfer to a defined benefit governmentalplan (as defined in section 414(d)) if suchtransfer is—

‘‘(A) for the purchase of permissive servicecredit (as defined in section 415(n)(3)(A))under such plan, or

‘‘(B) a repayment to which section 415 doesnot apply by reason of subsection (k)(3)thereof.’’.

(b) 457 PLANS.—(1) Subsection (e) of section 457 is amended

by adding after paragraph (17) the followingnew paragraph:

‘‘(18) TRUSTEE-TO-TRUSTEE TRANSFERS TOPURCHASE PERMISSIVE SERVICE CREDIT.—Noamount shall be includible in gross incomeby reason of a direct trustee-to-trusteetransfer to a defined benefit governmentalplan (as defined in section 414(d)) if suchtransfer is—

‘‘(A) for the purchase of permissive servicecredit (as defined in section 415(n)(3)(A))under such plan, or

‘‘(B) a repayment to which section 415 doesnot apply by reason of subsection (k)(3)thereof.’’.

(2) Section 457(b)(2) is amended by striking‘‘(other than rollover amounts)’’ and insert-ing ‘‘(other than rollover amounts andamounts received in a transfer referred to insubsection (e)(16))’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to trustee-to-trustee transfers after December 31, 2001.SEC. 648. EMPLOYERS MAY DISREGARD ROLL-

OVERS FOR PURPOSES OF CASH-OUTAMOUNTS.

(a) QUALIFIED PLANS.—(1) AMENDMENT TO INTERNAL REVENUE CODE

OF 1986.—Section 411(a)(11) (relating to re-strictions on certain mandatory distribu-tions) is amended by adding at the end thefollowing:

‘‘(D) SPECIAL RULE FOR ROLLOVER CONTRIBU-TIONS.—A plan shall not fail to meet the re-quirements of this paragraph if, under theterms of the plan, the present value of thenonforfeitable accrued benefit is determinedwithout regard to that portion of such ben-efit which is attributable to rollover con-tributions (and earnings allocable thereto).For purposes of this subparagraph, the term‘rollover contributions’ means any rollovercontribution under sections 402(c), 403(a)(4),403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16).’’.

(2) AMENDMENT TO ERISA.—Section 203(e) ofthe Employee Retirement Income SecurityAct of 1974 (29 U.S.C. 1053(c)) is amended byadding at the end the following:

‘‘(4) A plan shall not fail to meet the re-quirements of this subsection if, under theterms of the plan, the present value of thenonforfeitable accrued benefit is determinedwithout regard to that portion of such ben-efit which is attributable to rollover con-tributions (and earnings allocable thereto).For purposes of this subparagraph, the term‘rollover contributions’ means any rollovercontribution under sections 402(c), 403(a)(4),403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) of theInternal Revenue Code of 1986.’’.

(b) ELIGIBLE DEFERRED COMPENSATIONPLANS.—Clause (i) of section 457(e)(9)(A) isamended by striking ‘‘such amount’’ and in-serting ‘‘the portion of such amount which isnot attributable to rollover contributions (asdefined in section 411(a)(11)(D))’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to distribu-tions after December 31, 2001.SEC. 649. INCLUSION REQUIREMENTS FOR SEC-

TION 457 PLANS.(a) YEAR OF INCLUSION.—Subsection (a) of

section 457 (relating to year of inclusion ingross income) is amended to read as follows:

‘‘(a) YEAR OF INCLUSION IN GROSS INCOME.—‘‘(1) IN GENERAL.—Any amount of com-

pensation deferred under an eligible deferredcompensation plan, and any income attrib-utable to the amounts so deferred, shall beincludible in gross income only for the tax-able year in which such compensation orother income—

‘‘(A) is paid to the participant or otherbeneficiary, in the case of a plan of an eligi-ble employer described in subsection(e)(1)(A), and

‘‘(B) is paid or otherwise made available tothe participant or other beneficiary, in thecase of a plan of an eligible employer de-scribed in subsection (e)(1)(B).

‘‘(2) SPECIAL RULE FOR ROLLOVERAMOUNTS.—To the extent provided in section72(t)(9), section 72(t) shall apply to anyamount includible in gross income under thissubsection.’’.

(b) CONFORMING AMENDMENT.—So much ofparagraph (9) of section 457(e) as precedessubparagraph (A) is amended to read as fol-lows:

‘‘(9) BENEFITS OF TAX EXEMPT ORGANIZATIONPLANS NOT TREATED AS MADE AVAILABLE BYREASON OF CERTAIN ELECTIONS, ETC.—In thecase of an eligible deferred compensationplan of an employer described in paragraph(1)(B)—’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to distribu-tions after December 31, 2001.

Subtitle E—Strengthening Pension Securityand Enforcement

SEC. 651. REPEAL OF 150 PERCENT OF CURRENTLIABILITY FUNDING LIMIT.

(a) AMENDMENT TO INTERNAL REVENUE CODEOF 1986.—Section 412(c)(7) (relating to full-funding limitation) is amended—

(1) by striking ‘‘the applicable percentage’’in subparagraph (A)(i)(I) and inserting ‘‘inthe case of plan years beginning before Janu-ary 1, 2004, the applicable percentage’’, and

(2) by amending subparagraph (F) to readas follows:

‘‘(F) APPLICABLE PERCENTAGE.—For pur-poses of subparagraph (A)(i)(I), the applica-ble percentage shall be determined in accord-ance with the following table:

‘‘In the case of anyplan year beginningin—

The applicablepercentage is—

2001 ...................................... 1602002 ...................................... 1652003 ...................................... 170.’’.

(b) AMENDMENT TO ERISA.—Section302(c)(7) of the Employee Retirement IncomeSecurity Act of 1974 (29 U.S.C. 1082(c)(7)) isamended—

(1) by striking ‘‘the applicable percentage’’in subparagraph (A)(i)(I) and inserting ‘‘inthe case of plan years beginning before Janu-ary 1, 2004, the applicable percentage’’, and

(2) by amending subparagraph (F) to readas follows:

‘‘(F) APPLICABLE PERCENTAGE.—For pur-poses of subparagraph (A)(i)(I), the applica-ble percentage shall be determined in accord-ance with the following table:

‘‘In the case of anyplan year beginningin—

The applicablepercentage is—

2001 ...................................... 1602002 ...................................... 1652003 ...................................... 170.’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to planyears beginning after December 31, 2001.SEC. 652. EXTENSION OF MISSING PARTICIPANTS

PROGRAM TO MULTIEMPLOYERPLANS.

(a) IN GENERAL.—Section 4050 of the Em-ployee Retirement Income Security Act of1974 (29 U.S.C. 1350) is amended by redesig-nating subsection (c) as subsection (d) and byinserting after subsection (b) the following:

‘‘(c) MULTIEMPLOYER PLANS.—The corpora-tion shall prescribe rules similar to the rulesin subsection (a) for multiemployer planscovered by this title that terminate undersection 4041A.’’.

(b) CONFORMING AMENDMENT.—Section206(f) of the Employee Retirement IncomeSecurity Act of 1974 (29 U.S.C. 1056(f)) isamended by striking ‘‘the plan shall providethat,’’.


CONGRESSIONAL RECORD — SENATES6750 July 13, 2000(c) EFFECTIVE DATE.—The amendments

made by this section shall apply to distribu-tions made after final regulations imple-menting subsection (c) of section 4050 of theEmployee Retirement Income Security Actof 1974 (as added by subsection (a)) are pre-scribed.SEC. 653. EXCISE TAX RELIEF FOR SOUND PEN-

SION FUNDING.(a) IN GENERAL.—Subsection (c) of section

4972 (relating to nondeductible contribu-tions) is amended by adding at the end thefollowing new paragraph:

‘‘(7) DEFINED BENEFIT PLAN EXCEPTION.—Indetermining the amount of nondeductiblecontributions for any taxable year, an em-ployer may elect for such year not to takeinto account any contributions to a definedbenefit plan except to the extent that suchcontributions exceed the full-funding limita-tion (as defined in section 412(c)(7), deter-mined without regard to subparagraph(A)(i)(I) thereof). For purposes of this para-graph, the deductible limits under section404(a)(7) shall first be applied to amountscontributed to defined contribution plansand then to amounts described in this para-graph. If an employer makes an electionunder this paragraph for a taxable year,paragraph (6) shall not apply to such em-ployer for such taxable year.’’.

(b) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to years be-ginning after December 31, 2001.SEC. 654. EXCISE TAX ON FAILURE TO PROVIDE

NOTICE BY DEFINED BENEFITPLANS SIGNIFICANTLY REDUCINGFUTURE BENEFIT ACCRUALS.

(a) AMENDMENT TO 1986 CODE.—Chapter 43of subtitle D (relating to qualified pension,etc., plans) is amended by adding at the endthe following new section:‘‘SEC. 4980F. FAILURE OF APPLICABLE PLANS RE-

DUCING BENEFIT ACCRUALS TOSATISFY NOTICE REQUIREMENTS.

‘‘(a) IMPOSITION OF TAX.—There is herebyimposed a tax on the failure of any applica-ble pension plan to meet the requirements ofsubsection (e) with respect to any applicableindividual.

‘‘(b) AMOUNT OF TAX.—‘‘(1) IN GENERAL.—The amount of the tax

imposed by subsection (a) on any failurewith respect to any applicable individualshall be $100 for each day in the noncompli-ance period with respect to such failure.

‘‘(2) NONCOMPLIANCE PERIOD.—For purposesof this section, the term ‘noncompliance pe-riod’ means, with respect to any failure, theperiod beginning on the date the failure firstoccurs and ending on the date the failure iscorrected.

‘‘(c) LIMITATIONS ON AMOUNT OF TAX.—‘‘(1) OVERALL LIMITATION FOR UNINTEN-

TIONAL FAILURES.—In the case of failuresthat are due to reasonable cause and not towillful neglect, the tax imposed by sub-section (a) for failures during the taxableyear of the employer (or, in the case of amultiemployer plan, the taxable year of thetrust forming part of the plan) shall not ex-ceed $500,000. For purposes of the precedingsentence, all multiemployer plans of whichthe same trust forms a part shall be treatedas one plan. For purposes of this paragraph,if not all persons who are treated as a singleemployer for purposes of this section havethe same taxable year, the taxable yearstaken into account shall be determinedunder principles similar to the principles ofsection 1561.

‘‘(2) WAIVER BY SECRETARY.—In the case ofa failure which is due to reasonable causeand not to willful neglect, the Secretary maywaive part or all of the tax imposed by sub-section (a) to the extent that the payment ofsuch tax would be excessive relative to thefailure involved.

‘‘(d) LIABILITY FOR TAX.—The followingshall be liable for the tax imposed by sub-section (a):

‘‘(1) In the case of a plan other than a mul-tiemployer plan, the employer.

‘‘(2) In the case of a multiemployer plan,the plan.

‘‘(e) NOTICE REQUIREMENTS FOR PLANS SIG-NIFICANTLY REDUCING BENEFIT ACCRUALS.—

‘‘(1) IN GENERAL.—If an applicable pensionplan is amended to provide for a significantreduction in the rate of future benefit ac-crual, the plan administrator shall providewritten notice to each applicable individual(and to each employee organization rep-resenting applicable individuals).

‘‘(2) NOTICE.—The notice required by para-graph (1) shall be written in a manner cal-culated to be understood by the average planparticipant and shall provide sufficient in-formation (as determined in accordance withregulations prescribed by the Secretary) toallow applicable individuals to understandthe effect of the plan amendment.

‘‘(3) TIMING OF NOTICE.—Except as providedin regulations, the notice required by para-graph (1) shall be provided within a reason-able time before the effective date of theplan amendment.

‘‘(4) DESIGNEES.—Any notice under para-graph (1) may be provided to a person des-ignated, in writing, by the person to which itwould otherwise be provided.

‘‘(5) NOTICE BEFORE ADOPTION OF AMEND-MENT.—A plan shall not be treated as failingto meet the requirements of paragraph (1)merely because notice is provided before theadoption of the plan amendment if no mate-rial modification of the amendment occursbefore the amendment is adopted.

‘‘(f ) APPLICABLE INDIVIDUAL; APPLICABLEPENSION PLAN.—For purposes of thissection—

‘‘(1) APPLICABLE INDIVIDUAL.—The term‘applicable individual’ means, with respectto any plan amendment—

‘‘(A) any participant in the plan, and‘‘(B) any beneficiary who is an alternate

payee (within the meaning of section414(p)(8)) under an applicable qualified do-mestic relations order (within the meaningof section 414(p)(1)(A)),who may reasonably be expected to be af-fected by such plan amendment.

‘‘(2) APPLICABLE PENSION PLAN.—The term‘applicable pension plan’ means—

‘‘(A) any defined benefit plan, or‘‘(B) an individual account plan which is

subject to the funding standards of section412,which had 100 or more participants who hadaccrued a benefit, or with respect to whomcontributions were made, under the plan(whether or not vested) as of the last day ofthe plan year preceding the plan year inwhich the plan amendment becomes effec-tive. Such term shall not include a govern-mental plan (within the meaning of section414(d)) or a church plan (within the meaningof section 414(e)) with respect to which theelection provided by section 410(d) has notbeen made.’’.

(b) AMENDMENT TO ERISA.—Section 204(h)of the Employee Retirement Income Secu-rity Act or 1974 (29 U.S.C. 1054(h)) is amendedby adding at the end the following new para-graph:

‘‘(3)(A) A plan to which paragraph (1) ap-plies shall not be treated as meeting the re-quirements of such paragraph unless, in ad-dition to any notice required to be providedto an individual or organization under suchparagraph, the plan administrator providesthe notice described in subparagraph (B).

‘‘(B) The notice required by subparagraph(A) shall be written in a manner calculatedto be understood by the average plan partici-pant and shall provide sufficient information

(as determined in accordance with regula-tions prescribed by the Secretary of theTreasury) to allow individuals to understandthe effect of the plan amendment.

‘‘(C) Except as provided in regulations pre-scribed by the Secretary of the Treasury, thenotice required by subparagraph (A) shall beprovided within a reasonable time before theeffective date of the plan amendment.

‘‘(D) A plan shall not be treated as failingto meet the requirements of subparagraph(A) merely because notice is provided beforethe adoption of the plan amendment if nomaterial modification of the amendment oc-curs before the amendment is adopted.’’.

(c) CLERICAL AMENDMENT.—The table ofsections for chapter 43 of subtitle D isamended by adding at the end the followingnew item:

‘‘Sec. 4980F. Failure of applicable plans re-ducing benefit accruals to sat-isfy notice requirements.’’.

(d) EFFECTIVE DATES.—(1) IN GENERAL.—The amendments made by

this section shall apply to plan amendmentstaking effect on or after the date of the en-actment of this Act.

(2) TRANSITION.—Until such time as theSecretary of the Treasury issues regulationsunder sections 4980F(e)(2) and (3) of the In-ternal Revenue Code of 1986 and section204(h)(3) of the Employee Retirement IncomeSecurity Act of 1974 (as added by the amend-ments made by this section), a plan shall betreated as meeting the requirements of suchsections if it makes a good faith effort tocomply with such requirements.

(3) SPECIAL RULE.—The period for providingany notice required by the amendmentsmade by this section shall not end before thedate which is 3 months after the date of theenactment of this Act.SEC. 655. PROTECTION OF INVESTMENT OF EM-

PLOYEE CONTRIBUTIONS TO 401(K)PLANS.

(a) IN GENERAL.—Section 1524(b) of theTaxpayer Relief Act of 1997 is amended toread as follows:

‘‘(b) EFFECTIVE DATE.—‘‘(1) IN GENERAL.—Except as provided in

paragraph (2), the amendments made by thissection shall apply to elective deferrals forplan years beginning after December 31, 2001.

‘‘(2) NONAPPLICATION TO PREVIOUSLY AC-QUIRED PROPERTY.—The amendments madeby this section shall not apply to any elec-tive deferral used to acquire an interest inthe income or gain from employer securitiesor employer real property acquired—

‘‘(A) before January 1, 2002, or‘‘(B) after such date pursuant to a written

contract which was binding on such date andat all times thereafter on such plan.’’.

(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply as if in-cluded in the provision of the Taxpayer Re-lief Act of 1997 to which it relates.SEC. 656. TREATMENT OF MULTIEMPLOYER

PLANS UNDER SECTION 415.(a) COMPENSATION LIMIT.—Paragraph (11) of

section 415(b) (relating to limitation for de-fined benefit plans) is amended to read asfollows:

‘‘(11) SPECIAL LIMITATION RULE FOR GOVERN-MENTAL AND MULTIEMPLOYER PLANS.—In thecase of a governmental plan (as defined insection 414(d)) or a multiemployer plan (asdefined in section 414(f)), subparagraph (B) ofparagraph (1) shall not apply.’’.

(b) COMBINING AND AGGREGATION OFPLANS.—

(1) COMBINING OF PLANS.—Subsection (f) ofsection 415 (relating to combining of plans) isamended by adding at the end the following:

‘‘(3) EXCEPTION FOR MULTIEMPLOYERPLANS.—Notwithstanding paragraph (1) andsubsection (g), a multiemployer plan (as de-fined in section 414(f)) shall not be combined


CONGRESSIONAL RECORD — SENATE S6751July 13, 2000or aggregated with any other plan main-tained by an employer for purposes of apply-ing the limitations established in this sec-tion. The preceding sentence shall not applyfor purposes of applying subsection (b)(1)(A)to a plan which is not a multiemployerplan.’’.

(2) CONFORMING AMENDMENT FOR AGGREGA-TION OF PLANS.—Subsection (g) of section 415(relating to aggregation of plans) is amendedby striking ‘‘The Secretary’’ and inserting‘‘Except as provided in subsection (f)(3), theSecretary’’.

(c) APPLICATION OF SPECIAL EARLY RETIRE-MENT RULES.—Section 415(b)(2)(F) (relatingto plans maintained by governments andtax-exempt organizations) is amended—

(1) by inserting ‘‘a multiemployer plan(within the meaning of section 414(f)),’’ after‘‘section 414(d)),’’, and

(2) by striking the heading and inserting:‘‘(F) SPECIAL EARLY RETIREMENT RULES FOR

CERTAIN PLANS.—’’.(d) EFFECTIVE DATE.—The amendments

made by this section shall apply to years be-ginning after December 31, 2001.SEC. 657. MAXIMUM CONTRIBUTION DEDUCTION

RULES MODIFIED AND APPLIED TOALL DEFINED BENEFIT PLANS.

(a) IN GENERAL.—Subparagraph (D) of sec-tion 404(a)(1) (relating to special rule in caseof certain plans) is amended to read as fol-lows:

‘‘(D) SPECIAL RULE IN CASE OF CERTAINPLANS.—

‘‘(i) IN GENERAL.—In the case of any definedbenefit plan, except as provided in regula-tions, the maximum amount deductibleunder the limitations of this paragraph shallnot be less than the unfunded termination li-ability (determined as if the proposed termi-nation date referred to in section4041(b)(2)(A)(i)(II) of the Employee Retire-ment Income Security Act of 1974 were thelast day of the plan year).

‘‘(ii) PLANS WITH LESS THAN 100 PARTICI-PANTS.—For purposes of this subparagraph,in the case of a plan which has less than 100participants for the plan year, terminationliability shall not include the liability at-tributable to benefit increases for highlycompensated employees (as defined in sec-tion 414(q)) resulting from a plan amendmentwhich is made or becomes effective, which-ever is later, within the last 2 years beforethe termination date.

‘‘(iii) RULE FOR DETERMINING NUMBER OFPARTICIPANTS.—For purposes of determiningwhether a plan has more than 100 partici-pants, all defined benefit plans maintainedby the same employer (or any member ofsuch employer’s controlled group (within themeaning of section 412(l)(8)(C))) shall betreated as 1 plan, but only employees of suchmember or employer shall be taken into ac-count.

‘‘(iv) PLANS ESTABLISHED AND MAINTAIN BYPROFESSIONAL SERVICE EMPLOYERS.—Clause(i) shall not apply to a plan described in sec-tion 4021(b)(13) of the Employee RetirementIncome Security Act of 1974.’’.

(b) CONFORMING AMENDMENT.—Paragraph(6) of section 4972(c) is amended to read asfollows:

‘‘(6) EXCEPTIONS.—In determining theamount of nondeductible contributions forany taxable year, there shall not be takeninto account so much of the contributions to1 or more defined contribution plans whichare not deductible when contributed solelybecause of section 404(a)(7) as does not ex-ceed the greater of—

‘‘(A) the amount of contributions not inexcess of 6 percent of compensation (withinthe meaning of section 404(a)) paid or ac-crued (during the taxable year for which thecontributions were made) to beneficiariesunder the plans, or

‘‘(B) the sum of—‘‘(i) the amount of contributions described

in section 401(m)(4)(A), plus‘‘(ii) the amount of contributions described

in section 402(g)(3)(A).For purposes of this paragraph, the deduct-ible limits under section 404(a)(7) shall firstbe applied to amounts contributed to a de-fined benefit plan and then to amounts de-scribed in subparagraph (B).’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to planyears beginning after December 31, 2001.SEC. 658. INCREASE IN SECTION 415 EARLY RE-

TIREMENT LIMIT FOR GOVERN-MENTAL AND OTHER PLANS.

(a) IN GENERAL.—Subclause (II) of section415(b)(2)(F)(i), as amended by section 346(c),is amended—

(1) by striking ‘‘$75,000’’ and inserting ‘‘80percent of the dollar amount in effect underparagraph (1)(A)’’, and

(2) by striking ‘‘the $75,000 limitation’’ andinserting ‘‘80 percent of such dollaramount’’.

(b) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to years be-ginning after December 31, 2001.

Subtitle F—Encouraging RetirementEducation

SEC. 661. PERIODIC PENSION BENEFITS STATE-MENTS.

(a) IN GENERAL.—Section 105(a) of the Em-ployee Retirement Income Security Act of1974 (29 U.S.C. 1025 (a)) is amended to read asfollows:

‘‘(a)(1) Except as provided in paragraph(2)—

‘‘(A) the administrator of an individual ac-count plan shall furnish a pension benefitstatement—

‘‘(i) to a plan participant at least once an-nually, and

‘‘(ii) to a plan beneficiary upon written re-quest, and

‘‘(B) the administrator of a defined benefitplan shall furnish a pension benefitstatement—

‘‘(i) at least once every 3 years to each par-ticipant with a nonforfeitable accrued ben-efit who is employed by the employer main-taining the plan at the time the statement isfurnished to participants, and

‘‘(ii) to a participant or beneficiary of theplan upon written request.

‘‘(2) Notwithstanding paragraph (1), the ad-ministrator of a plan to which more than 1unaffiliated employer is required to con-tribute shall only be required to furnish apension benefit statement under paragraph(1) upon the written request of a participantor beneficiary of the plan.

‘‘(3) A pension benefit statement underparagraph (1)—

‘‘(A) shall indicate, on the basis of the lat-est available information—

‘‘(i) the total benefits accrued, and‘‘(ii) the nonforfeitable pension benefits, if

any, which have accrued, or the earliest dateon which benefits will become nonforfeit-able,

‘‘(B) shall be written in a manner cal-culated to be understood by the average planparticipant, and

‘‘(C) may be provided in written, elec-tronic, telephonic, or other appropriateform.

‘‘(4) In the case of a defined benefit plan,the requirements of paragraph (1)(B)(i) shallbe treated as met with respect to a partici-pant if the administrator provides the par-ticipant at least once each year with noticeof the availability of the pension benefitstatement and the ways in which the partici-pant may obtain such statement. Such no-tice shall be provided in written, electronic,telephonic, or other appropriate form, and

may be included with other communicationsto the participant if done in a manner rea-sonably designed to attract the attention ofthe participant.’’.

(b) CONFORMING AMENDMENTS.—(1) Section 105 of the Employee Retirement

Income Security Act of 1974 (29 U.S.C. 1025) isamended by striking subsection (d).

(2) Section 105(b) of such Act (29 U.S.C.1025(b)) is amended to read as follows:

‘‘(b) In no case shall a participant or bene-ficiary of a plan be entitled to more than onestatement described in subsection (a)(1)(A)or (a)(1)(B)(ii), whichever is applicable, inany 12-month period.’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to planyears beginning after December 31, 2001.SEC. 662. CLARIFICATION OF TREATMENT OF EM-

PLOYER-PROVIDED RETIREMENTADVICE.

(a) IN GENERAL.—Subsection (a) of section132 (relating to exclusion from gross income)is amended by striking ‘‘or’’ at the end ofparagraph (5), by striking the period at theend of paragraph (6) and inserting ‘‘, or’’, andby adding at the end the following new para-graph:

‘‘(7) qualified retirement planning serv-ices.’’.

(b) QUALIFIED RETIREMENT PLANNING SERV-ICES DEFINED.—Section 132 is amended by re-designating subsection (m) as subsection (n)and by inserting after subsection (l) the fol-lowing:

‘‘(m) QUALIFIED RETIREMENT PLANNINGSERVICES.—

‘‘(1) IN GENERAL.—For purposes of this sec-tion, the term ‘qualified retirement planningservices’ means any retirement planningservice provided to an employee and hisspouse by an employer maintaining a quali-fied employer plan.

‘‘(2) NONDISCRIMINATION RULE.—Subsection(a)(7) shall apply in the case of highly com-pensated employees only if such services areavailable on substantially the same terms toeach member of the group of employees nor-mally provided education and informationregarding the employer’s qualified employerplan.

‘‘(3) QUALIFIED EMPLOYER PLAN.—For pur-poses of this subsection, the term ‘qualifiedemployer plan’ means a plan, contract, pen-sion, or account described in section219(g)(5).’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to years be-ginning after December 31, 2001.

Subtitle G—Reducing Regulatory BurdensSEC. 671. FLEXIBILITY IN NONDISCRIMINATION

AND COVERAGE RULES.(a) NONDISCRIMINATION.—(1) IN GENERAL.—The Secretary of the

Treasury shall, by regulation, provide that aplan shall be deemed to satisfy the require-ments of section 401(a)(4) of the InternalRevenue Code of 1986 if such plan satisfiesthe facts and circumstances test under sec-tion 401(a)(4) of such Code, as in effect beforeJanuary 1, 1994, but only if—

(A) the plan satisfies conditions prescribedby the Secretary to appropriately limit theavailability of such test, and

(B) the plan is submitted to the Secretaryfor a determination of whether it satisfiessuch test.Subparagraph (B) shall only apply to the ex-tent provided by the Secretary.

(2) EFFECTIVE DATES.—(A) REGULATIONS.—The regulation required

by subsection (a) shall apply to years begin-ning after December 31, 2001.

(B) CONDITIONS OF AVAILABILITY.—Any con-dition of availability prescribed by the Sec-retary under paragraph (1)(A) shall not applybefore the first year beginning not less than


CONGRESSIONAL RECORD — SENATES6752 July 13, 2000120 days after the date on which such condi-tion is prescribed.

(b) COVERAGE TEST.—(1) IN GENERAL.—Section 410(b)(1) (relating

to minimum coverage requirements) isamended by adding at the end the following:

‘‘(D) In the case that the plan fails to meetthe requirements of subparagraphs (A), (B)and (C), the plan—

‘‘(i) satisfies subparagraph (B), as in effectimmediately before the enactment of theTax Reform Act of 1986,

‘‘(ii) is submitted to the Secretary for a de-termination of whether it satisfies the re-quirement described in clause (i), and

‘‘(iii) satisfies conditions prescribed by theSecretary by regulation that appropriatelylimit the availability of this subparagraph.Clause (ii) shall apply only to the extent pro-vided by the Secretary.’’.

(2) EFFECTIVE DATES.—(A) IN GENERAL.—The amendment made by

subsection (a) shall apply to years beginningafter December 31, 2001.

(B) CONDITIONS OF AVAILABILITY.—Any con-dition of availability prescribed by the Sec-retary under regulations prescribed by theSecretary under section 410(b)(1)(D) of theInternal Revenue Code of 1986 shall not applybefore the first year beginning not less than120 days after the date on which such condi-tion is prescribed.SEC. 672. MODIFICATION OF TIMING OF PLAN

VALUATIONS.(a) IN GENERAL.—Section 412(c)(9) (relating

to annual valuation) is amended—(1) by striking ‘‘For purposes’’ and insert-

ing the following:‘‘(A) IN GENERAL.—For purposes’’, and(2) by adding at the end the following:‘‘(B) ELECTION TO USE PRIOR YEAR VALU-

ATION.—‘‘(i) IN GENERAL.—Except as provided in

clause (ii), if, for any plan year—‘‘(I) an election is in effect under this sub-

paragraph with respect to a plan, and‘‘(II) the assets of the plan are not less

than 125 percent of the plan’s current liabil-ity (as defined in paragraph (7)(B)), deter-mined as of the valuation date for the pre-ceding plan year,then this section shall be applied using theinformation available as of such valuationdate.

‘‘(ii) EXCEPTIONS.—‘‘(I) ACTUAL VALUATION EVERY 3 YEARS.—

Clause (i) shall not apply for more than 2consecutive plan years and valuation shallbe under subparagraph (A) with respect toany plan year to which clause (i) does notapply by reason of this subclause.

‘‘(II) REGULATIONS.—Clause (i) shall notapply to the extent that more frequent valu-ations are required under the regulationsunder subparagraph (A).

‘‘(iii) ADJUSTMENTS.—Information underclause (i) shall, in accordance with regula-tions, be actuarially adjusted to reflect sig-nificant differences in participants.

‘‘(iv) ELECTION.—An election under thissubparagraph, once made, shall be irrev-ocable without the consent of the Sec-retary.’’.

(b) AMENDMENTS TO ERISA.—Paragraph (9)of section 302(c) of the Employee RetirementIncome Security Act of 1974 (29 U.S.C.1053(c)) is amended—

(1) by inserting ‘‘(A)’’ after ‘‘(9)’’, and(2) by adding at the end the following:‘‘(B)(i) Except as provided in clause (ii), if,

for any plan year—‘‘(I) an election is in effect under this sub-

paragraph with respect to a plan, and‘‘(II) the assets of the plan are not less

than 125 percent of the plan’s current liabil-ity (as defined in paragraph (7)(B)), deter-mined as of the valuation date for the pre-ceding plan year,

then this section shall be applied using theinformation available as of such valuationdate.

‘‘(ii)(I) Clause (i) shall not apply for morethan 2 consecutive plan years and valuationshall be under subparagraph (A) with respectto any plan year to which clause (i) does notapply by reason of this subclause.

‘‘(II) Clause (i) shall not apply to the ex-tent that more frequent valuations are re-quired under the regulations under subpara-graph (A).

‘‘(iii) Information under clause (i) shall, inaccordance with regulations, be actuariallyadjusted to reflect significant differences inparticipants.

‘‘(iv) An election under this subparagraph,once made, shall be irrevocable without theconsent of the Secretary of the Treasury.’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to planyears beginning after December 31, 2001.SEC. 673. SUBSTANTIAL OWNER BENEFITS IN

TERMINATED PLANS.(a) MODIFICATION OF PHASE-IN OF GUAR-

ANTEE.—Section 4022(b)(5) of the EmployeeRetirement Income Security Act of 1974 (29U.S.C. 1322(b)(5)) is amended to read as fol-lows:

‘‘(5)(A) For purposes of this paragraph, theterm ‘majority owner’ means an individualwho, at any time during the 60-month periodending on the date the determination isbeing made—

‘‘(i) owns the entire interest in an unincor-porated trade or business,

‘‘(ii) in the case of a partnership, is a part-ner who owns, directly or indirectly, 50 per-cent or more of either the capital interest orthe profits interest in such partnership, or

‘‘(iii) in the case of a corporation, owns, di-rectly or indirectly, 50 percent or more invalue of either the voting stock of that cor-poration or all the stock of that corporation.For purposes of clause (iii), the constructiveownership rules of section 1563(e) of the In-ternal Revenue Code of 1986 shall apply (de-termined without regard to section1563(e)(3)(C)).

‘‘(B) In the case of a participant who is amajority owner, the amount of benefits guar-anteed under this section shall equal theproduct of—

‘‘(i) a fraction (not to exceed 1) the numer-ator of which is the number of years fromthe later of the effective date or the adoptiondate of the plan to the termination date, andthe denominator of which is 10, and

‘‘(ii) the amount of benefits that would beguaranteed under this section if the partici-pant were not a majority owner.’’.

(b) MODIFICATION OF ALLOCATION OF AS-SETS.—

(1) Section 4044(a)(4)(B) of the EmployeeRetirement Income Security Act of 1974 (29U.S.C. 1344(a)(4)(B)) is amended by striking‘‘section 4022(b)(5)’’ and inserting ‘‘section4022(b)(5)(B)’’.

(2) Section 4044(b) of such Act (29 U.S.C.1344(b)) is amended—

(A) by striking ‘‘(5)’’ in paragraph (2) andinserting ‘‘(4), (5),’’, and

(B) by redesignating paragraphs (3)through (6) as paragraphs (4) through (7), re-spectively, and by inserting after paragraph(2) the following:

‘‘(3) If assets available for allocation underparagraph (4) of subsection (a) are insuffi-cient to satisfy in full the benefits of all in-dividuals who are described in that para-graph, the assets shall be allocated first tobenefits described in subparagraph (A) ofthat paragraph. Any remaining assets shallthen be allocated to benefits described insubparagraph (B) of that paragraph. If assetsallocated to such subparagraph (B) are insuf-ficient to satisfy in full the benefits de-scribed in that subparagraph, the assets

shall be allocated pro rata among individualson the basis of the present value (as of thetermination date) of their respective benefitsdescribed in that subparagraph.’’.

(c) CONFORMING AMENDMENTS.—(1) Section 4021 of the Employee Retire-

ment Income Security Act of 1974 (29 U.S.C.1321) is amended—

(A) in subsection (b)(9), by striking ‘‘as de-fined in section 4022(b)(6)’’, and

(B) by adding at the end the following:‘‘(d) For purposes of subsection (b)(9), the

term ‘substantial owner’ means an indi-vidual who, at any time during the 60-monthperiod ending on the date the determinationis being made—

‘‘(1) owns the entire interest in an unincor-porated trade or business,

‘‘(2) in the case of a partnership, is a part-ner who owns, directly or indirectly, morethan 10 percent of either the capital interestor the profits interest in such partnership, or

‘‘(3) in the case of a corporation, owns, di-rectly or indirectly, more than 10 percent invalue of either the voting stock of that cor-poration or all the stock of that corporation.For purposes of paragraph (3), the construc-tive ownership rules of section 1563(e) of theInternal Revenue Code of 1986 shall apply(determined without regard to section1563(e)(3)(C)).’’.

(2) Section 4043(c)(7) of such Act (29 U.S.C.1343(c)(7)) is amended by striking ‘‘section4022(b)(6)’’ and inserting ‘‘section 4021(d)’’.

(d) EFFECTIVE DATES.—(1) IN GENERAL.—Except as provided in

paragraph (2), the amendments made by thissection shall apply to plan terminations—

(A) under section 4041(c) of the EmployeeRetirement Income Security Act of 1974 (29U.S.C. 1341(c)) with respect to which noticesof intent to terminate are provided undersection 4041(a)(2) of such Act (29 U.S.C.1341(a)(2)) after December 31, 2001, and

(B) under section 4042 of such Act (29 U.S.C.1342) with respect to which proceedings areinstituted by the corporation after suchdate.

(2) CONFORMING AMENDMENTS.—The amend-ments made by subsection (c) shall take ef-fect on the date of enactment of this Act.SEC. 674. ESOP DIVIDENDS MAY BE REINVESTED

WITHOUT LOSS OF DIVIDEND DE-DUCTION.

(a) IN GENERAL.—Section 404(k)(2)(A) (de-fining applicable dividends) is amended bystriking ‘‘or’’ at the end of clause (ii), by re-designating clause (iii) as clause (iv), and byinserting after clause (ii) the following newclause:

‘‘(iii) is, at the election of such partici-pants or their beneficiaries—

‘‘(I) payable as provided in clause (i) or (ii),or

‘‘(II) paid to the plan and reinvested inqualifying employer securities, or’’.

(b) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2001.SEC. 675. NOTICE AND CONSENT PERIOD RE-

GARDING DISTRIBUTIONS.(a) EXPANSION OF PERIOD.—(1) IN GENERAL.—(A) AMENDMENT OF INTERNAL REVENUE CODE

OF 1986.—Subparagraph (A) of section 417(a)(6)is amended by striking ‘‘90-day’’ and insert-ing ‘‘1-year’’.

(B) AMENDMENT TO ERISA.—Subparagraph(A) of section 205(c)(7) of the Employee Re-tirement Income Security Act of 1974 (29U.S.C. 1055(c)(7)) is amended by striking ‘‘90-day’’ and inserting ‘‘1-year’’.

(2) MODIFICATION OF REGULATIONS.—TheSecretary of the Treasury shall modify theregulations under sections 402(f), 411(a)(11),and 417 of the Internal Revenue Code of 1986to substitute ‘‘1-year’’ for ‘‘90 days’’ each


CONGRESSIONAL RECORD — SENATE S6753July 13, 2000place it appears in Treasury Regulations sec-tions 1.402(f)–1, 1.411(a)–11(c), and 1.417(e)–1(b).

(3) EFFECTIVE DATE.—The amendmentsmade by paragraph (1) and the modificationsrequired by paragraph (2) shall apply toyears beginning after December 31, 2001.

(b) CONSENT REGULATION INAPPLICABLE TOCERTAIN DISTRIBUTIONS.—

(1) IN GENERAL.—The Secretary of theTreasury shall modify the regulations undersection 411(a)(11) of the Internal RevenueCode of 1986 to provide that the descriptionof a participant’s right, if any, to defer re-ceipt of a distribution shall also describe theconsequences of failing to defer such receipt.

(2) EFFECTIVE DATE.—The modifications re-quired by paragraph (1) shall apply to yearsbeginning after December 31, 2001.SEC. 676. REPEAL OF TRANSITION RULE RELAT-

ING TO CERTAIN HIGHLY COM-PENSATED EMPLOYEES.

(a) IN GENERAL.—Paragraph (4) of section1114(c) of the Tax Reform Act of 1986 is here-by repealed.

(b) EFFECTIVE DATE.—The repeal made bysubsection (a) shall apply to plan years be-ginning after December 31, 1999.SEC. 677. EMPLOYEES OF TAX-EXEMPT ENTITIES.

(a) IN GENERAL.—The Secretary of theTreasury shall modify Treasury Regulationssection 1.410(b)–6(g) to provide that employ-ees of an organization described in section403(b)(1)(A)(i) of the Internal Revenue Codeof 1986 who are eligible to make contribu-tions under section 403(b) of such Code pursu-ant to a salary reduction agreement may betreated as excludable with respect to a planunder section 401 (k) or (m) of such Code thatis provided under the same general arrange-ment as a plan under such section 401(k), if—

(1) no employee of an organization de-scribed in section 403(b)(1)(A)(i) of such Codeis eligible to participate in such section401(k) plan or section 401(m) plan, and

(2) 95 percent of the employees who are notemployees of an organization described insection 403(b)(1)(A)(i) of such Code are eligi-ble to participate in such plan under suchsection 401 (k) or (m).

(b) EFFECTIVE DATE.—The modification re-quired by subsection (a) shall apply as of thesame date set forth in section 1426(b) of theSmall Business Job Protection Act of 1996.SEC. 678. EXTENSION TO INTERNATIONAL ORGA-

NIZATIONS OF MORATORIUM ON AP-PLICATION OF CERTAIN NON-DISCRIMINATION RULES APPLICA-BLE TO STATE AND LOCAL PLANS.

(a) IN GENERAL.—Subparagraph (G) of sec-tion 401(a)(5), subparagraph (H) of section401(a)(26), subparagraph (G) of section401(k)(3), and paragraph (2) of section 1505(d)of the Taxpayer Relief Act of 1997 are eachamended by inserting ‘‘or by an inter-national organization which is described insection 414(d)’’ after ‘‘or instrumentalitythereof)’’.

(b) CONFORMING AMENDMENTS.—(1) The headings for subparagraph (G) of

section 401(a)(5) and subparagraph (H) of sec-tion 401(a)(26) are each amended by inserting‘‘AND INTERNATIONAL ORGANIZATION’’ after‘‘GOVERNMENTAL’’.

(2) Subparagraph (G) of section 401(k)(3) isamended by inserting ‘‘STATE AND LOCALGOVERNMENTAL AND INTERNATIONAL ORGANI-ZATION PLANS.—’’ after ‘‘(G)’’.

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to years be-ginning after December 31, 2001.SEC. 679. ANNUAL REPORT DISSEMINATION.

(a) IN GENERAL.—Section 104(b)(3) of theEmployee Retirement Income Security Actof 1974 (29 U.S.C. 1024(b)(3)) is amended bystriking ‘‘shall furnish’’ and inserting ‘‘shallmake available for examination (and, uponrequest, shall furnish)’’.

(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply to reportsfor years beginning after December 31, 2001.SEC. 681. REPORTING SIMPLIFICATION.

(a) SIMPLIFIED ANNUAL FILING REQUIRE-MENT FOR OWNERS AND THEIR SPOUSES.—

(1) IN GENERAL.—The Secretary of theTreasury shall modify the requirements forfiling annual returns with respect to one-participant retirement plans to ensure thatsuch plans with assets of $500,000 or less as ofthe close of the plan year need not file a re-turn for that year.

(2) ONE-PARTICIPANT RETIREMENT PLAN DE-FINED.—For purposes of this subsection, theterm ‘‘one-participant retirement plan’’means a retirement plan that—

(A) on the first day of the plan year—(i) covered only the employer (and the em-

ployer’s spouse) and the employer owned theentire business (whether or not incor-porated), or

(ii) covered only one or more partners (andtheir spouses) in a business partnership (in-cluding partners in an S or C corporation),

(B) meets the minimum coverage require-ments of section 410(b) of the Internal Rev-enue Code of 1986 without being combinedwith any other plan of the business that cov-ers the employees of the business,

(C) does not provide benefits to anyone ex-cept the employer (and the employer’sspouse) or the partners (and their spouses),

(D) does not cover a business that is amember of an affiliated service group, a con-trolled group of corporations, or a group ofbusinesses under common control, and

(E) does not cover a business that leasesemployees.

(3) OTHER DEFINITIONS.—Terms used inparagraph (2) which are also used in section414 of the Internal Revenue Code of 1986 shallhave the respective meanings given suchterms by such section.

(b) SIMPLIFIED ANNUAL FILING REQUIRE-MENT FOR PLANS WITH FEWER THAN 25 EM-PLOYEES.—In the case of a retirement planwhich covers less than 25 employees on the1st day of the plan year and meets the re-quirements described in subparagraphs (B),(D), and (E) of subsection (a)(2), the Sec-retary of the Treasury shall provide for thefiling of a simplified annual return that issubstantially similar to the annual returnrequired to be filed by a one-participant re-tirement plan.

(c) EFFECTIVE DATE.—The provisions ofthis section shall take effect on January 1,2001.SEC. 682. REPEAL OF THE MULTIPLE USE TEST.

(a) IN GENERAL.—Paragraph (9) of section401(m) is amended to read as follows:

‘‘(9) REGULATIONS.—The Secretary shallprescribe such regulations as may be nec-essary to carry out the purposes of this sub-section and subsection (k), including regula-tions permitting appropriate aggregation ofplans and contributions.’’.

(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply to years be-ginning after December 31, 2001.

Subtitle H—Plan AmendmentsSEC. 691. PROVISIONS RELATING TO PLAN

AMENDMENTS.(a) IN GENERAL.—If this section applies to

any plan or contract amendment—(1) such plan or contract shall be treated as

being operated in accordance with the termsof the plan during the period described insubsection (b)(2)(A), and

(2) such plan shall not fail to meet the re-quirements of section 411(d)(6) of the Inter-nal Revenue Code of 1986 by reason of suchamendment.

(b) AMENDMENTS TO WHICH SECTION AP-PLIES.—

(1) IN GENERAL.—This section shall apply toany amendment to any plan or annuity con-tract which is made—

(A) pursuant to any amendment made bythis title, or pursuant to any regulationissued under this title, and

(B) on or before the last day of the firstplan year beginning on or after January 1,2003.In the case of a government plan (as definedin section 414(d) of the Internal RevenueCode of 1986), this paragraph shall be appliedby substituting ‘‘2005’’ for ‘‘2003’’.

(2) CONDITIONS.—This section shall notapply to any amendment unless—

(A) during the period—(i) beginning on the date the legislative or

regulatory amendment described in para-graph (1)(A) takes effect (or in the case of aplan or contract amendment not required bysuch legislative or regulatory amendment,the effective date specified by the plan), and

(ii) ending on the date described in para-graph (1)(B) (or, if earlier, the date the planor contract amendment is adopted),the plan or contract is operated as if suchplan or contract amendment were in effect,and

(B) such plan or contract amendment ap-plies retroactively for such period.

LOTT AMENDMENT NO. 3842Mr. GRAMM (for Mr. LOTT) proposed

an amendment to the bill, H.R. 8,supra; as follows:


SEC. 601. MODIFICATIONS TO EDUCATION INDI-VIDUAL RETIREMENT ACCOUNTS.

(a) MAXIMUM ANNUAL CONTRIBUTIONS.—(1) IN GENERAL.—Section 530(b)(1)(A)(iii)

(defining education individual retirement ac-count) is amended by striking ‘‘$500’’ and in-serting ‘‘the contribution limit for such tax-able year’’.

(2) CONTRIBUTION LIMIT.—Section 530(b) (re-lating to definitions and special rules) isamended by adding at the end the followingnew paragraph:

‘‘(4) CONTRIBUTION LIMIT.—The term ‘con-tribution limit’ means $500 ($2,000 in the caseof any taxable year beginning after Decem-ber 31, 1999, and ending before January 1,2004).’’

(3) CONFORMING AMENDMENT.—Section4973(e)(1)(A) is amended by striking ‘‘$500’’and inserting ‘‘the contribution limit (as de-fined in section 530(b)(4)) for such taxableyear’’.

(b) TAX-FREE EXPENDITURES FOR ELEMEN-TARY AND SECONDARY SCHOOL EXPENSES.—

(1) IN GENERAL.—Section 530(b)(2) (definingqualified higher education expenses) isamended to read as follows:

‘‘(2) QUALIFIED EDUCATION EXPENSES.—‘‘(A) IN GENERAL.—The term ‘qualified edu-

cation expenses’ means—‘‘(i) qualified higher education expenses (as

defined in section 529(e)(3)), and‘‘(ii) qualified elementary and secondary

education expenses (as defined in paragraph(5)).Such expenses shall be reduced as providedin section 25A(g)(2).

‘‘(B) QUALIFIED STATE TUITION PROGRAMS.—Such term shall include any contribution toa qualified State tuition program (as definedin section 529(b)) on behalf of the designatedbeneficiary (as defined in section 529(e)(1));but there shall be no increase in the invest-ment in the contract for purposes of apply-ing section 72 by reason of any portion ofsuch contribution which is not includible ingross income by reason of subsection (d)(2).’’

(2) QUALIFIED ELEMENTARY AND SECONDARYEDUCATION EXPENSES.—Section 530(b) (relat-ing to definitions and special rules), as


CONGRESSIONAL RECORD — SENATES6754 July 13, 2000amended by subsection (a)(2), is amended byadding at the end the following new para-graph:

‘‘(5) QUALIFIED ELEMENTARY AND SECONDARYEDUCATION EXPENSES.—

‘‘(A) IN GENERAL.—The term ‘qualified ele-mentary and secondary education expenses’means—

‘‘(i) expenses for tuition, fees, academic tu-toring, special needs services, books, sup-plies, computer equipment (including relatedsoftware and services), and other equipmentwhich are incurred in connection with theenrollment or attendance of the designatedbeneficiary of the trust as an elementary orsecondary school student at a public, pri-vate, or religious school, and

‘‘(ii) expenses for room and board, uni-forms, transportation, and supplementaryitems and services (including extended dayprograms) which are required or provided bya public, private, or religious school in con-nection with such enrollment or attendance.

‘‘(B) SPECIAL RULE FOR HOMESCHOOLING.—Such term shall include expenses describedin subparagraph (A)(i) in connection witheducation provided by homeschooling if therequirements of any applicable State or locallaw are met with respect to such education.

‘‘(C) SCHOOL.—The term ‘school’ means anyschool which provides elementary educationor secondary education (kindergartenthrough grade 12), as determined under Statelaw.’’

(3) SPECIAL RULES FOR APPLYING EXCLUSIONTO ELEMENTARY AND SECONDARY EXPENSES.—Section 530(d)(2) (relating to distributionsfor qualified higher education expenses) isamended by adding at the end the followingnew subparagraph:

‘‘(E) SPECIAL RULES FOR ELEMENTARY ANDSECONDARY EXPENSES.—

‘‘(i) IN GENERAL.—The aggregate amount ofqualified elementary and secondary edu-cation expenses taken into account for pur-poses of this paragraph with respect to anyeducation individual retirement account forall taxable years shall not exceed the sum ofthe aggregate contributions to such accountfor taxable years beginning after December31, 1999, and before January 1, 2004, and earn-ings on such contributions.

‘‘(ii) SPECIAL OPERATING RULES.—For pur-poses of clause (i)—

‘‘(I) the trustee of an education individualretirement account shall keep separate ac-counts with respect to contributions andearnings described in clause (i), and

‘‘(II) if there are distributions in excess ofqualified elementary and secondary edu-cation expenses for any taxable year, suchexcess distributions shall be allocated firstto contributions and earnings not describedin clause (i).’’

(4) CONFORMING AMENDMENTS.—Section 530is amended—

(A) by striking ‘‘higher’’ each place it ap-pears in subsections (b)(1) and (d)(2), and

(B) by striking ‘‘HIGHER’’ in the heading forsubsection (d)(2).

(c) WAIVER OF AGE LIMITATIONS FOR CHIL-DREN WITH SPECIAL NEEDS.—Section 530(b)(1)(defining education individual retirement ac-count) is amended by adding at the end thefollowing flush sentence:‘‘The age limitations in the preceding sen-tence and paragraphs (5) and (6) of subsection(d) shall not apply to any designated bene-ficiary with special needs (as determinedunder regulations prescribed by the Sec-retary).’’

(d) ENTITIES PERMITTED TO CONTRIBUTE TOACCOUNTS.—Section 530(c)(1) (relating to re-duction in permitted contributions based onadjusted gross income) is amended by strik-ing ‘‘The maximum amount which a contrib-utor’’ and inserting ‘‘In the case of a contrib-utor who is an individual, the maximumamount the contributor’’.

(e) TIME WHEN CONTRIBUTIONS DEEMEDMADE.—

(1) IN GENERAL.—Section 530(b) (relating todefinitions and special rules), as amended bysubsection (b)(2), is amended by adding atthe end the following new paragraph:

‘‘(6) TIME WHEN CONTRIBUTIONS DEEMEDMADE.—An individual shall be deemed tohave made a contribution to an education in-dividual retirement account on the last dayof the preceding taxable year if the contribu-tion is made on account of such taxable yearand is made not later than the time pre-scribed by law for filing the return for suchtaxable year (not including extensions there-of).’’

(2) EXTENSION OF TIME TO RETURN EXCESSCONTRIBUTIONS.—Subparagraph (C) of section530(d)(4) (relating to additional tax for dis-tributions not used for educational expenses)is amended—

(A) by striking clause (i) and inserting thefollowing new clause:

‘‘(i) such distribution is made before the1st day of the 6th month of the taxable yearfollowing the taxable year, and’’, and

(B) by striking ‘‘DUE DATE OF RETURN’’ inthe heading and inserting ‘‘JUNE’’.

(f) COORDINATION WITH HOPE AND LIFETIMELEARNING CREDITS AND QUALIFIED TUITIONPROGRAMS.—

(1) IN GENERAL.—Section 530(d)(2)(C) isamended to read as follows:

‘‘(C) COORDINATION WITH HOPE AND LIFETIMELEARNING CREDITS AND QUALIFIED TUITIONPROGRAMS.—

‘‘(i) CREDIT COORDINATION.—‘‘(I) IN GENERAL.—Except as provided in

subclause (II), subparagraph (A) shall notapply for any taxable year to any qualifiedhigher education expenses with respect toany individual if a credit is allowed undersection 25A with respect to such expenses forsuch taxable year.

‘‘(II) SPECIAL COORDINATION RULE.—In thecase of any taxable year beginning after De-cember 31, 1999, and before January 1, 2004,subclause (I) shall not apply, but the totalamount of qualified higher education ex-penses otherwise taken into account undersubparagraph (A) with respect to an indi-vidual for such taxable year shall be reduced(after the application of the reduction pro-vided in section 25A(g)(2)) by the amount ofsuch expenses which were taken into accountin determining the credit allowed to the tax-payer or any other person under section 25Awith respect to such expenses.

‘‘(ii) COORDINATION WITH QUALIFIED TUITIONPROGRAMS.—If the aggregate distributions towhich subparagraph (A) and section529(c)(3)(B) apply exceed the total amount ofqualified higher education expenses other-wise taken into account under subparagraph(A) (after the application of clause (i)) withrespect to an individual for any taxable year,the taxpayer shall allocate such expensesamong such distributions for purposes of de-termining the amount of the exclusion undersubparagraph (A) and section 529(c)(3)(B).’’

(2) CONFORMING AMENDMENTS.—(A) Subsection (e) of section 25A is amend-

ed to read as follows:‘‘(e) ELECTION NOT TO HAVE SECTION

APPLY.—A taxpayer may elect not to havethis section apply with respect to the quali-fied tuition and related expenses of an indi-vidual for any taxable year.’’

(B) Section 135(d)(2)(A) is amended bystriking ‘‘allowable’’ and inserting ‘‘al-lowed’’.

(C) Section 530(b)(2)(A) is amended bystriking ‘‘, reduced as provided in section25A(g)(2)’’.

(D) Section 530(d)(2)(D) is amended—(i) by striking ‘‘or credit’’, and(ii) by striking ‘‘CREDIT OR’’ in the heading.(E) Section 4973(e)(1) is amended by adding

‘‘and’’ at the end of subparagraph (A), by

striking subparagraph (B), and by redesig-nating subparagraph (C) as subparagraph (B).

(g) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2000.

SEC. 602. DEDUCTION FOR HIGHER EDUCATIONEXPENSES.

(a) DEDUCTION ALLOWED.—Part VII of sub-chapter B of chapter 1 (relating to additionalitemized deductions for individuals) isamended by redesignating section 222 as sec-tion 223 and by inserting after section 221 thefollowing:‘‘SEC. 222. HIGHER EDUCATION EXPENSES.

‘‘(a) ALLOWANCE OF DEDUCTION.—‘‘(1) IN GENERAL.—In the case of an indi-

vidual, there shall be allowed as a deductionan amount equal to the applicable dollaramount of the qualified higher education ex-penses paid by the taxpayer during the tax-able year.

‘‘(2) APPLICABLE DOLLAR AMOUNT.—The ap-plicable dollar amount for any taxable yearshall be determined as follows:

Applicable dollaramount:

‘‘Taxable year:2002 .................................................. $4,0002003 .................................................. $8,0002004 and thereafter .......................... $12,000.

‘‘(b) LIMITATION BASED ON MODIFIED AD-JUSTED GROSS INCOME.—

‘‘(1) IN GENERAL.—The amount which would(but for this subsection) be taken into ac-count under subsection (a) shall be reduced(but not below zero) by the amount deter-mined under paragraph (2).

‘‘(2) AMOUNT OF REDUCTION.—The amountdetermined under this paragraph equals theamount which bears the same ratio to theamount which would be so taken into ac-count as—

‘‘(A) the excess of—‘‘(i) the taxpayer’s modified adjusted gross

income for such taxable year, over‘‘(ii) $62,450 ($104,050 in the case of a joint

return, $89,150 in the case of a return filed bya head of household, and $52,025 in the case ofa return by a married individual filing sepa-rately), bears to

‘‘(B) $15,000.‘‘(3) MODIFIED ADJUSTED GROSS INCOME.—

For purposes of this subsection, the term‘modified adjusted gross income’ means theadjusted gross income of the taxpayer for thetaxable year determined—

‘‘(A) without regard to this section andsections 911, 931, and 933, and

‘‘(B) after the application of sections 86,135, 219, 220, and 469.For purposes of the sections referred to insubparagraph (B), adjusted gross incomeshall be determined without regard to thededuction allowed under this section.

‘‘(c) QUALIFIED HIGHER EDUCATION EX-PENSES.—For purposes of this section—

‘‘(1) QUALIFIED HIGHER EDUCATION EX-PENSES.—

‘‘(A) IN GENERAL.—The term ‘qualifiedhigher education expenses’ means tuitionand fees charged by an educational institu-tion and required for the enrollment or at-tendance of—

‘‘(i) the taxpayer,‘‘(ii) the taxpayer’s spouse,‘‘(iii) any dependent of the taxpayer with

respect to whom the taxpayer is allowed adeduction under section 151, or

‘‘(iv) any grandchild of the taxpayer,as an eligible student at an institution ofhigher education.

‘‘(B) ELIGIBLE COURSES.—Amounts paid forqualified higher education expenses of anyindividual shall be taken into account undersubsection (a) only to the extent suchexpenses—


CONGRESSIONAL RECORD — SENATE S6755July 13, 2000‘‘(i) are attributable to courses of instruc-

tion for which credit is allowed toward a bac-calaureate degree by an institution of highereducation or toward a certificate of requiredcourse work at a vocational school, and

‘‘(ii) are not attributable to any graduateprogram of such individual.

‘‘(C) EXCEPTION FOR NONACADEMIC FEES.—Such term does not include any student ac-tivity fees, athletic fees, insurance expenses,or other expenses unrelated to a student’sacademic course of instruction.

‘‘(D) ELIGIBLE STUDENT.—For purposes ofsubparagraph (A), the term ‘eligible student’means a student who—

‘‘(i) meets the requirements of section484(a)(1) of the Higher Education Act of 1965(20 U.S.C. 1091(a)(1)), as in effect on the dateof the enactment of this section, and

‘‘(ii) is carrying at least one-half the nor-mal full-time work load for the course ofstudy the student is pursuing, as determinedby the institution of higher education.

‘‘(E) IDENTIFICATION REQUIREMENT.—No de-duction shall be allowed under subsection (a)to a taxpayer with respect to an eligible stu-dent unless the taxpayer includes the name,age, and taxpayer identification number ofsuch eligible student on the return of tax forthe taxable year.

‘‘(2) INSTITUTION OF HIGHER EDUCATION.—The term ‘institution of higher education’means an institution which—

‘‘(A) is described in section 481 of the High-er Education Act of 1965 (20 U.S.C. 1088), as ineffect on the date of the enactment of thissection, and

‘‘(B) is eligible to participate in programsunder title IV of such Act.

‘‘(d) SPECIAL RULES.—‘‘(1) NO DOUBLE BENEFIT.—‘‘(A) IN GENERAL.—No deduction shall be

allowed under subsection (a) for any expensefor which a deduction is allowable to the tax-payer under any other provision of this chap-ter unless the taxpayer irrevocably waiveshis right to the deduction of such expenseunder such other provision.

‘‘(B) DENIAL OF DEDUCTION IF CREDIT ELECT-ED.—No deduction shall be allowed undersubsection (a) for a taxable year with respectto the qualified higher education expenses ofan individual if the taxpayer elects to havesection 25A apply with respect to such indi-vidual for such year.

‘‘(C) DEPENDENTS.—No deduction shall beallowed under subsection (a) to any indi-vidual with respect to whom a deductionunder section 151 is allowable to another tax-payer for a taxable year beginning in the cal-endar year in which such individual’s taxableyear begins.

‘‘(D) COORDINATION WITH EXCLUSIONS.—Adeduction shall be allowed under subsection(a) for qualified higher education expensesonly to the extent the amount of such ex-penses exceeds the amount excludable undersection 135 or 530(d)(2) for the taxable year.

‘‘(2) LIMITATION ON TAXABLE YEAR OF DE-DUCTION.—

‘‘(A) IN GENERAL.—A deduction shall be al-lowed under subsection (a) for qualified high-er education expenses for any taxable yearonly to the extent such expenses are in con-nection with enrollment at an institution ofhigher education during the taxable year.

‘‘(B) CERTAIN PREPAYMENTS ALLOWED.—Subparagraph (A) shall not apply to qualifiedhigher education expenses paid during a tax-able year if such expenses are in connectionwith an academic term beginning duringsuch taxable year or during the first 3months of the next taxable year.

‘‘(3) ADJUSTMENT FOR CERTAIN SCHOLAR-SHIPS AND VETERANS BENEFITS.—The amountof qualified higher education expenses other-wise taken into account under subsection (a)with respect to the education of an indi-

vidual shall be reduced (before the applica-tion of subsection (b)) by the sum of theamounts received with respect to such indi-vidual for the taxable year as—

‘‘(A) a qualified scholarship which undersection 117 is not includable in gross income,

‘‘(B) an educational assistance allowanceunder chapter 30, 31, 32, 34, or 35 of title 38,United States Code, or

‘‘(C) a payment (other than a gift, bequest,devise, or inheritance within the meaning ofsection 102(a)) for educational expenses, orattributable to enrollment at an eligibleeducational institution, which is exemptfrom income taxation by any law of theUnited States.

‘‘(4) NO DEDUCTION FOR MARRIED INDIVID-UALS FILING SEPARATE RETURNS.—If the tax-payer is a married individual (within themeaning of section 7703), this section shallapply only if the taxpayer and the taxpayer’sspouse file a joint return for the taxableyear.

‘‘(5) NONRESIDENT ALIENS.—If the taxpayeris a nonresident alien individual for any por-tion of the taxable year, this section shallapply only if such individual is treated as aresident alien of the United States for pur-poses of this chapter by reason of an electionunder subsection (g) or (h) of section 6013.

‘‘(6) REGULATIONS.—The Secretary mayprescribe such regulations as may be nec-essary or appropriate to carry out this sec-tion, including regulations requiring record-keeping and information reporting.’’

(b) DEDUCTION ALLOWED IN COMPUTING AD-JUSTED GROSS INCOME.—Section 62(a) isamended by inserting after paragraph (17)the following:

‘‘(18) HIGHER EDUCATION EXPENSES.—The de-duction allowed by section 222.’’

(c) CONFORMING AMENDMENT.—The table ofsections for part VII of subchapter B of chap-ter 1 is amended by striking the item relat-ing to section 222 and inserting the fol-lowing:

‘‘Sec. 222. Higher education expenses.‘‘Sec. 223. Cross reference.’’

(d) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to paymentsmade in taxable years beginning after De-cember 31, 2001.SEC. 603. CREDIT FOR INTEREST ON HIGHER

EDUCATION LOANS.(a) IN GENERAL.—Subpart A of part IV of

subchapter A of chapter 1 (relating to non-refundable personal credits) is amended byinserting after section 25A the following newsection:‘‘SEC. 25B. INTEREST ON HIGHER EDUCATION

LOANS.‘‘(a) ALLOWANCE OF CREDIT.—In the case of

an individual, there shall be allowed as acredit against the tax imposed by this chap-ter for the taxable year an amount equal tothe interest paid by the taxpayer during thetaxable year on any qualified education loan.

‘‘(b) MAXIMUM CREDIT.—‘‘(1) IN GENERAL.—Except as provided in

paragraph (2), the credit allowed by sub-section (a) for the taxable year shall not ex-ceed $1,500.

‘‘(2) LIMITATION BASED ON MODIFIED AD-JUSTED GROSS INCOME.—

‘‘(A) IN GENERAL.—If the modified adjustedgross income of the taxpayer for the taxableyear exceeds $50,000 ($80,000 in the case of ajoint return), the amount which would (butfor this paragraph) be allowable as a creditunder this section shall be reduced (but notbelow zero) by the amount which bears thesame ratio to the amount which would be soallowable as such excess bears to $20,000.

‘‘(B) MODIFIED ADJUSTED GROSS INCOME.—The term ‘modified adjusted gross income’means adjusted gross income determinedwithout regard to sections 911, 931, and 933.

‘‘(C) INFLATION ADJUSTMENT.—In the caseof any taxable year beginning after 2003, the$50,000 and $80,000 amounts referred to in sub-paragraph (A) shall be increased by anamount equal to—


mined under section (1)(f)(3) for the calendaryear in which the taxable year begins, bysubstituting ‘2002’ for ‘1992’.

‘‘(D) ROUNDING.—If any amount as adjustedunder subparagraph (C) is not a multiple of$50, such amount shall be rounded to thenearest multiple of $50.

‘‘(c) DEPENDENTS NOT ELIGIBLE FOR CRED-IT.—No credit shall be allowed by this sec-tion to an individual for the taxable year ifa deduction under section 151 with respect tosuch individual is allowed to another tax-payer for the taxable year beginning in thecalendar year in which such individual’s tax-able year begins.

‘‘(d) LIMIT ON PERIOD CREDIT ALLOWED.—Acredit shall be allowed under this sectiononly with respect to interest paid on anyqualified education loan during the first 60months (whether or not consecutive) inwhich interest payments are required. Forpurposes of this paragraph, any loan and allrefinancings of such loan shall be treated as1 loan.

‘‘(e) DEFINITIONS.—For purposes of thissection—

‘‘(1) QUALIFIED EDUCATION LOAN.—The term‘qualified education loan’ has the meaninggiven such term by section 221(e)(1).

‘‘(2) DEPENDENT.—The term ‘dependent’ hasthe meaning given such term by section 152.

‘‘(f) SPECIAL RULES.—‘‘(1) DENIAL OF DOUBLE BENEFIT.—No credit

shall be allowed under this section for anyamount taken into account for any deduc-tion under any other provision of this chap-ter.

‘‘(2) MARRIED COUPLES MUST FILE JOINT RE-TURN.—If the taxpayer is married at theclose of the taxable year, the credit shall beallowed under subsection (a) only if the tax-payer and the taxpayer’s spouse file a jointreturn for the taxable year.

‘‘(3) MARITAL STATUS.—Marital status shallbe determined in accordance with section7703.’’

(b) CONFORMING AMENDMENT.—The table ofsections for subpart A of part IV of sub-chapter A of chapter 1 is amended by insert-ing after the item relating to section 25A thefollowing new item:

‘‘Sec. 25B. Interest on higher educationloans.’’

(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to anyqualified education loan (as defined in sec-tion 25B(e)(1) of the Internal Revenue Code of1986, as added by this section) incurred on,before, or after the date of the enactment ofthis Act, but only with respect to any loaninterest payment due after December 31,2001.SEC. 604. CERTIFIED TEACHER CREDIT.

(a) FINDINGS.—Congress makes the fol-lowing findings:

(1) Studies have shown that the greatestsingle in-school factor affecting studentachievement is teacher quality.

(2) Most accomplished teachers do not getthe rewards they deserve.

(3) After adjusting amounts for inflation,the average teacher salary for 1997–1998 of$39,347 is just $2 above what it was in 1993.Such salary is also just $1,924 more than theaverage salary recorded in 1972, a real in-crease of only $75 per year.

(4) While K–12 enrollments are steadily in-creasing, the teacher population is aging.There is a need, now more than ever, to at-tract competent, capable, and bright college


CONGRESSIONAL RECORD — SENATES6756 July 13, 2000graduates or mid-career professionals to theteaching profession.

(5) The Department of Education projectsthat 2,000,000 new teachers will have to behired in the next decade. Shortages, if theyoccur, will most likely be felt in urban orrural regions of the country where workingconditions may be difficult or compensationlow.

(6) If students are to receive a high qualityeducation and remain competitive in theglobal market the United States must at-tract talented and motivated people to theteaching profession in large numbers.

(b) ALLOWANCE OF CREDIT.—Subpart C ofpart IV of subchapter A of chapter 1 (relatingto refundable credits) is amended by redesig-nating section 35 as section 36 and by insert-ing after section 34 the following new sec-tion:‘‘SEC. 35. CERTIFIED TEACHER CREDIT.

‘‘(a) ALLOWANCE OF CREDIT.—‘‘(1) IN GENERAL.—In the case of an eligible

teacher, there shall be allowed as a creditagainst the tax imposed by this chapter forthe taxable year $5,000.

‘‘(2) YEAR CREDIT ALLOWED.—The creditunder paragraph (1) shall be allowed in thetaxable year in which the taxpayer becomesa certified individual.

‘‘(b) DEFINITIONS.—For purposes of thissection—

‘‘(1) ELIGIBLE TEACHER.—‘‘(A) IN GENERAL.—The term ‘eligible

teacher’ means a certified individual who isa pre-kindergarten or early childhood educa-tor, or a kindergarten through grade 12classroom teacher, instructor, counselor,aide, or principal in an elementary or sec-ondary school on a full-time basis for an aca-demic year ending during a taxable year.

‘‘(B) CERTIFIED INDIVIDUAL.—The term ‘cer-tified individual’ means an individual whohas successfully completed the requirementsfor advanced certification provided by theNational Board for Professional TeachingStandards.

‘‘(2) ELEMENTARY OR SECONDARY SCHOOL.—The term ‘elementary or secondary school’means a public elementary or secondaryschool which—

‘‘(A) is located in a school district of alocal educational agency which is eligible,during the taxable year, for assistance underpart A of title I of the Elementary and Sec-ondary Education Act of 1965 (20 U.S.C. 6311et seq.), and

‘‘(B) during the taxable year, the Secretaryof Education determines to have an enroll-ment of children counted under section1124(c) of such Act (20 U.S.C. 6333(c)) in anamount in excess of an amount equal to 40percent of the total enrollment of suchschool.

‘‘(c) VERIFICATION.—The credit allowedunder subsection (a) shall be allowed with re-spect to any certified individual only if thecertification is verified in such manner asthe Secretary shall prescribe by regulation.

‘‘(d) ELECTION TO HAVE CREDIT NOTAPPLY.—A taxpayer may elect to have thissection not apply for any taxable year.’’.

(c) EXCLUSION FROM INCOME FOR CERTAINAMOUNTS.—Part III of subchapter B of chap-ter 1 (relating to items specifically excludedfrom gross income) is amended by redesig-nating section 139 as section 140 and insert-ing after section 138 the following new sec-tion:‘‘SEC. 139. CERTAIN AMOUNTS RECEIVED BY CER-

TIFIED TEACHERS.‘‘(a) IN GENERAL.—In the case of a certified

teacher, gross income shall not include thevalue of anything received during the tax-able year solely by reason of such teacherhaving successfully completed the require-ments for advanced certification provided by

the National Board for Professional Teach-ing Standards (such as an incentive pay-ment).

‘‘(b) CERTIFIED TEACHER.—For purposes ofthis section, the term ‘certified teacher’ hasthe meaning given the term ‘eligible teacher’under section 35(b)(1).

‘‘(c) VERIFICATION.—The exclusion undersubsection (a) shall be allowed with respectto any certified teacher only if the certifi-cation is verified in such manner as the Sec-retary shall prescribe by regulation.

‘‘(d) AMOUNTS MUST BE REASONABLE.—Amounts excluded under subsection (a) shallinclude only amounts which are reason-able.’’.

(d) CONFORMING AMENDMENTS.—(1) Section 1324(b)(2) of title 31, United

States Code, is amended by striking ‘‘or’’ be-fore ‘‘enacted’’ and by inserting before theperiod at the end ‘‘, or from section 35 ofsuch Code’’.


‘‘Sec. 35. Certified teacher credit.‘‘Sec. 36. Overpayments of tax.’’

(3) The table of sections for part III of sub-chapter B of chapter 1 is amended by strik-ing the item relating to section 139 and in-serting the following new items:‘‘Sec. 139. Certain amounts received by cer-

tified teachers.‘‘Sec. 140. Cross references to other Acts.’’

(e) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2001.SEC. 605. SENSE OF THE SENATE REGARDING

COVERAGE OF PRESCRIPTIONDRUGS UNDER THE MEDICARE PRO-GRAM.

(a) FINDINGS.—The Senate makes the fol-lowing findings:

(1) Projected on-budget surpluses for thenext 10 years total $1,900,000,000,000, accord-ing to the President’s mid-session review.

(2) Eliminating the death tax would reducerevenues by $104,000,000,000 over 10 years,leaving on-budget surpluses of$1,800,000,000,000.

(3) The medicare program establishedunder title XVIII of the Social Security Act(42 U.S.C. 1395 et seq.) faces the dual problemof inadequate coverage of prescription drugsand rapid escalation of program costs withthe retirement of the baby boom generation.

(4) The concurrent resolution on the budg-et for fiscal year 2001 provides $40,000,000,000for prescription drug coverage in the contextof a reform plan that improves the long-termoutlook for the medicare program.

(5) The Committee on Finance of the Sen-ate currently is working in a bipartisanmanner on reporting legislation that will re-form the medicare program and provide aprescription drug benefit.

(b) SENSE OF THE SENATE.—It is the senseof the Senate that—

(1) on-budget surpluses are sufficient toboth repeal the death tax and improve cov-erage of prescription drugs under the medi-care program and Congress should do boththis year; and

(2) the Senate should pass adequately fund-ed legislation that can effectively—

(A) expand access to outpatient prescrip-tion drugs;

(B) modernize the medicare benefit pack-age;

(C) make structural improvements to im-prove the long term solvency of the medicareprogram;

(D) reduce medicare beneficiaries’ out-of-pocket prescription drug costs, placing thehighest priority on helping the elderly withthe greatest need; and

(E) give the elderly access to the same dis-counted rates on prescription drugs as thoseavailable to Americans enrolled in privateinsurance plans.SEC. 606. DEDUCTION FOR PREMIUMS FOR LONG-

TERM CARE INSURANCE.(a) IN GENERAL.—Part VII of subchapter B

of chapter 1 (relating to additional itemizeddeductions) is amended by redesignating sec-tion 222 as section 223 and by inserting aftersection 221 the following:‘‘SEC. 222. PREMIUMS FOR LONG-TERM CARE IN-

SURANCE.‘‘(a) IN GENERAL.—In the case of an eligible

individual, there shall be allowed as a deduc-tion an amount equal to 100 percent of theamount paid during the taxable year for anycoverage for qualified long-term care serv-ices (as defined in section 7702B(c)) or anyqualified long-term care insurance contract(as defined in section 7702B(b)) which con-stitutes medical care for the taxpayer, hisspouse, and dependents.

‘‘(b) LIMITATIONS.—‘‘(1) DEDUCTION NOT AVAILABLE TO INDIVID-

UALS ELIGIBLE FOR EMPLOYER-SUBSIDIZED COV-ERAGE.—

‘‘(A) IN GENERAL.—Except as provided insubparagraph (B), subsection (a) shall notapply to any taxpayer for any calendarmonth for which the taxpayer is eligible toparticipate in any plan which includes cov-erage for qualified long-term care services(as so defined) or is a qualified long-termcare insurance contract (as so defined) main-tained by any employer (or former employer)of the taxpayer or of the spouse of the tax-payer.

‘‘(B) CONTINUATION COVERAGE.—Coverageshall not be treated as subsidized for pur-poses of this paragraph if—

‘‘(i) such coverage is continuation coverage(within the meaning of section 4980B(f)) re-quired to be provided by the employer, and

‘‘(ii) the taxpayer or the taxpayer’s spouseis required to pay a premium for such cov-erage in an amount not less than 100 percentof the applicable premium (within the mean-ing of section 4980B(f)(4)) for the period ofsuch coverage.

‘‘(2) LIMITATION ON LONG-TERM CARE PRE-MIUMS.—In the case of a qualified long-termcare insurance contract (as so defined), onlyeligible long-term care premiums (as definedin section 213(d)(10)) shall be taken into ac-count under subsection (a)(2).

‘‘(c) SPECIAL RULES.—For purposes of thissection—

‘‘(1) COORDINATION WITH MEDICAL DEDUC-TION, ETC.—Any amount paid by a taxpayerfor insurance to which subsection (a) appliesshall not be taken into account in computingthe amount allowable to the taxpayer as adeduction under section 213(a).

‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM-PLOYMENT TAX PURPOSES.—The deduction al-lowable by reason of this section shall not betaken into account in determining an indi-vidual’s net earnings from self-employment(within the meaning of section 1402(a)) forpurposes of chapter 2.’’.

(b) CONFORMING AMENDMENTS.—(1) Subsection (a) of section 62 is amended

by inserting after paragraph (17) the fol-lowing:

‘‘(18) LONG-TERM CARE INSURANCE COSTS OFCERTAIN INDIVIDUALS.—The deduction al-lowed by section 222.’’.

(2) The table of sections for part VII of sub-chapter B of chapter 1 is amended by strik-ing the last item and inserting the following:‘‘Sec. 222. Premiums for long-term care in-

surance.‘‘Sec. 223. Cross reference.’’.



CONGRESSIONAL RECORD — SENATE S6757July 13, 2000SEC. 607. FULL AVAILABILITY OF MEDICAL SAV-

INGS ACCOUNTS.(a) AVAILABILITY NOT LIMITED TO ACCOUNTS

FOR EMPLOYEES OF SMALL EMPLOYERS ANDSELF-EMPLOYED INDIVIDUALS.—

(1) IN GENERAL.—Section 220(c)(1)(A) (relat-ing to eligible individual) is amended to readas follows:

‘‘(A) IN GENERAL.—The term ‘eligible indi-vidual’ means, with respect to any month,any individual if—

‘‘(i) such individual is covered under a highdeductible health plan as of the 1st day ofsuch month, and

‘‘(ii) such individual is not, while coveredunder a high deductible health plan, coveredunder any health plan—

‘‘(I) which is not a high deductible healthplan, and

‘‘(II) which provides coverage for any ben-efit which is covered under the high deduct-ible health plan.’’.

(2) CONFORMING AMENDMENTS.—(A) Section 220(c)(1) is amended by striking

subparagraphs (C) and (D).(B) Section 220(c) is amended by striking

paragraph (4) (defining small employer) andby redesignating paragraph (5) as paragraph(4).

(C) Section 220(b) is amended by strikingparagraph (4) (relating to deduction limitedby compensation) and by redesignating para-graphs (5), (6), and (7) as paragraphs (4), (5),and (6), respectively.

(b) REMOVAL OF LIMITATION ON NUMBER OFTAXPAYERS HAVING MEDICAL SAVINGS AC-COUNTS.—

(1) IN GENERAL.—Section 220 (relating tomedical savings accounts) is amended bystriking subsections (i) and (j).

(2) MEDICARE+CHOICE.—Section 138 (relat-ing to Medicare+Choice MSA) is amended bystriking subsection (f).

(c) REDUCTION IN HIGH DEDUCTIBLE PLANMINIMUM ANNUAL DEDUCTIBLE.—

(1) IN GENERAL.—Subparagraph (A) of sec-tion 220(c)(2) (defining high deductible healthplan) is amended—

(A) by striking ‘‘$1,500’’ and inserting‘‘$1,000’’, and

(B) by striking ‘‘$3,000’’ in clause (ii) andinserting ‘‘$2,000’’.

(2) CONFORMING AMENDMENT.—Subsection(g) of section 220 is amended—

(A) by striking ‘‘1998’’ and inserting ‘‘1999’’;and

(B) by striking ‘‘1997’’ and inserting ‘‘1998’’.(d) INCREASE IN CONTRIBUTION LIMIT TO 100

PERCENT OF ANNUAL DEDUCTIBLE.—(1) IN GENERAL.—Section 220(b)(2) (relating

to monthly limitation) is amended to read asfollows:

‘‘(2) MONTHLY LIMITATION.—The monthlylimitation for any month is the amountequal to 1⁄12 of the annual deductible of thehigh deductible health plan of the indi-vidual.’’.

(2) CONFORMING AMENDMENT.—Section220(d)(1)(A) is amended by striking ‘‘75 per-cent of’’.

(e) LIMITATION ON ADDITIONAL TAX ON DIS-TRIBUTIONS NOT USED FOR QUALIFIED MED-ICAL EXPENSES.—Section 220(f)(4) (relating toadditional tax on distributions not used forqualified medical expenses) is amended byadding at the end the following:

‘‘(D) EXCEPTION IN CASE OF SUFFICIENT AC-COUNT BALANCE.—Subparagraph (A) shall notapply to any payment or distribution in anytaxable year, but only to the extent suchpayment or distribution does not reduce thefair market value of the assets of the med-ical savings account to an amount less thanthe annual deductible for the high deductiblehealth plan of the account holder (deter-mined as of January 1 of the calendar year inwhich the taxable year begins).’’.

(f) TREATMENT OF NETWORK-BASED MAN-AGED CARE PLANS.—Section 220(c)(2)(B) (re-

lating to special rules for high deductiblehealth plans) is amended by adding at theend the following:

‘‘(iii) TREATMENT OF NETWORK-BASED MAN-AGED CARE PLANS.—A plan that provideshealth care services through a network ofcontracted or affiliated health care pro-viders, if the benefits provided when servicesare obtained through network providersmeet the requirements of subparagraph (A),shall not fail to be treated as a high deduct-ible health plan by reason of providing bene-fits for services rendered by providers whoare not members of the network, so long asthe annual deductible and annual limit onout-of-pocket expenses applicable to servicesreceived from non-network providers are notlower than those applicable to services re-ceived from the network providers.’’.

(g) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2000.SEC. 609. INCREASE IN NUMBER OF YEARS DIS-

REGARDED.(a) IN GENERAL.—Section 215(b)(2) of the

Social Security Act (42 U.S.C. 415(b)(2)) isamended—

(1) by striking the period at the end ofclause (ii) of subparagraph (A) and insertinga comma;

(2) by striking ‘‘Clause (ii), once’’ after andbelow clause (ii) of subparagraph (A) and in-serting the following: ‘‘and reduced furtherto the extent provided in subparagraph (B).Clause (ii), once’’;

(3) by striking ‘‘If an individual’’ in thematter following clause (ii) of subparagraph(A) and all that follows through the end ofsubparagraph (A);

(4) by redesignating subparagraph (B) assubparagraph (F); and

(5) by inserting after subparagraph (A) thefollowing new subparagraphs:

‘‘(B) Subject to subparagraph (C), in anycase in which—

‘‘(i) in any calendar year which is includedin an individual’s computation base years—

‘‘(I) such individual is living with a child(of such individual or his or her spouse)under the age of 12; or

‘‘(II) such individual is living with a child(of such individual or his or her spouse), aparent (of such individual or his or herspouse), or such individual’s spouse whilesuch child, parent, or spouse is a chronicallydependent individual;

‘‘(ii) such calendar year is not disregardedpursuant to subparagraphs (A) and (E) (in de-termining such individual’s benefit computa-tion years) by reason of the reduction in thenumber of such individual’s elapsed yearsunder subparagraph (A); and

‘‘(iii) such individual submits to the Sec-retary, in such form as the Secretary shallprescribe by regulations, a written state-ment that the requirements of clause (i) aremet with respect to such calendar year,then the number by which such elapsed yearsare reduced under this paragraph pursuantto subparagraph (A) shall be increased byone (up to a combined total not exceeding 5)for each such calendar year.

‘‘(C)(i)(I) No calendar year shall be dis-regarded by reason of subparagraph (B) (indetermining such individual’s benefit com-putation years) unless the individual hadless than the applicable dollar amount (in ef-fect for such calendar year under subclause(II)) of earnings as described in section203(f)(5) for such year.

‘‘(II) Except as otherwise provided in thissubclause, the applicable dollar amount ineffect under this subclause for any calendaryear is $3,000. In each calendar year after2006, the Secretary shall determine and pub-lish in the Federal Register, on or before No-vember 1 of such calendar year, the applica-ble dollar amount which shall be effective

under this subclause for the next calendaryear. Such dollar amount shall be equal tothe applicable dollar amount which is effec-tive under this subclause for the calendaryear in which such determination is made,increased by a percentage equal to the per-centage (rounded to the nearest 1⁄10 of 1 per-cent) by which the Consumer Price Index(prepared by the Department of Labor andused in determining increases in benefitspursuant to section 215(i)) for the calendarquarter ending on September 30 of such cal-endar year exceeds such index for the cal-endar quarter ending on September 30 of thelast preceding calendar year in which a cost-of-living increase in benefits became effec-tive under section 215(i).

‘‘(ii) No calendar year shall be disregardedby reason of subparagraph (B) (in deter-mining such individual’s benefit computa-tion years) in connection with a child re-ferred to in subparagraph (B)(i)(I) (and notreferred to in subparagraph (B)(i)(II)) unlessthe individual was living with the child sub-stantially throughout the period in suchyear in which the child was alive and underthe age of 12 in such year.

‘‘(iii) No calendar year shall be disregardedby reason of subparagraph (B) (in deter-mining such individual’s benefit computa-tion years) in connection with a child, par-ent, or spouse referred to in subparagraph(B)(i)(II) unless the individual was livingwith such child, parent, or spouse substan-tially throughout a period of 180 consecutivedays in such year throughout which suchchild, parent, or spouse was a chronically de-pendent individual.

‘‘(iv) The particular calendar years to bedisregarded under this subparagraph (in de-termining such benefit computation years)shall be those years (not otherwise dis-regarded under subparagraph (A)) which, be-fore the application of subsection (f), meetthe conditions of the preceding provisions ofthis clause.

‘‘(v) This subparagraph shall apply only tothe extent that—

‘‘(I) its application would not result in alower primary insurance amount; and

‘‘(II) it does not raise the primary insur-ance amount to a level greater than the av-erage old-age insurance benefit paid underthis title.

‘‘(D)(i) For purposes of this paragraph, theterm ‘chronically dependent individual’means an individual who—

‘‘(I) is dependent on a daily basis on an-other person who is living with the indi-vidual and is assisting the individual with-out monetary compensation in the perform-ance of at least 2 of the activities of dailyliving (described in clause (ii)), and

‘‘(II) without such assistance could notperform such activities of daily living.

‘‘(ii) The ‘activities of daily living’, re-ferred to in clause (i), are the following:

‘‘(I) Eating.‘‘(II) Bathing.‘‘(III) Dressing.‘‘(IV) Toileting.‘‘(V) Transferring in and out of a bed or in

and out of a chair.‘‘(E) The number of an individual’s benefit

computation years as determined under thisparagraph shall in no case be less than 2.’’.

(b) EFFECTIVE DATE AND RELATED PROVI-SIONS.—

(1) IN GENERAL.—The amendments made bythis Act shall apply with respect to com-putation base years ending before, on, orafter the date of enactment of this Act, butonly with respect to benefits payable formonths after December 2005.

(2) NOTICE AND PROCEDURES.—(A) 60-DAY FILING PERIOD AFTER ISSUANCE

OF REGULATIONS FOR CALENDAR YEARS BEFORE


CONGRESSIONAL RECORD — SENATES6758 July 13, 20002001.—The requirements of clause (iii) of sec-tion 215(b)(2)(B) of the Social Security Act(as amended by this section) shall be treatedas satisfied, in the case of a statement withrespect to any calendar year before 2001, onlyif such statement is submitted to the Sec-retary of Health and Human Services notlater than 60 days after the date of the firstissuance in final form of the regulations re-quired under such clause.

(B) NOTICE REQUIREMENTS.—The Secretaryof Health and Human Services shall issue,not later than the date of the first issuancein final form of the regulations described inparagraph (1), regulations establishing pro-cedures to ensure that—

(i) persons who are, as of such date, recipi-ents of monthly benefits under section 202(a)or 223 of the Social Security Act, or appli-cants for such benefits, are fully informed ofthe amendments made by this section; and

(ii) such persons are invited to comply, andgiven a reasonable opportunity to comply,with the requirements of section215(b)(2)(B)(iii) of the Social Security Act (asamended by this section), as provided in sub-paragraph (A).Upon receiving from a recipient described inclauses (i) and (ii) a written statement re-ferred to in clause (iii) of section 215(b)(2)(B)of the Social Security Act (as amended bythis section) with respect to which the re-quirements of such clause are satisfied, theSecretary shall redetermine the amount ofsuch benefits to the extent necessary to takeinto account the amendments made by thissection (and if such redetermination resultsin an increase in such amount the increaseshall be effective as provided in paragraph(1)). Such regulations described in subpara-graph (A) shall also provide procedures to en-sure that applicants for benefits under sec-tion 202(a) or 223 of the Social Security Actare given the opportunity, at the time oftheir application, to indicate and verify anyadditional years which may be disregardedunder section 215(b)(2)(B) of the Social Secu-rity Act (as amended by this section).SEC. 610. INCREASE IN WIDOWS’ AND WIDOWERS’

INSURANCE BENEFITS.(a) WIDOW’S BENEFIT.—Section 202(e)(2)(A)

of the Social Security Act (42 U.S.C.402(e)(2)(A)) is amended by striking ‘‘equalto’’ and all that follows and inserting ‘‘equalto the greater of—





(b) WIDOWER’S BENEFIT.—Section202(f)(3)(A) of the Social Security Act (42U.S.C. 402(b)(3)(A)) is amended by striking‘‘equal to’’ and all that follows and inserting‘‘equal to the greater of—





(c) EFFECTIVE DATE.—The amendmentsmade by this section shall apply individualsentitled to benefits after the date of enact-ment of this Act.

SEC. 611. MODIFICATION OF DEPENDENT CARECREDIT.

(a) INCREASE IN PERCENTAGE OF EMPLOY-MENT-RELATED EXPENSES TAKEN INTO AC-COUNT.—Subsection (a)(2) of section 21 (relat-ing to expenses for household and dependentcare services necessary for gainful employ-ment) is amended—

(1) by striking ‘‘30 percent’’ and inserting‘‘40 percent’’,

(2) by striking ‘‘$2,000’’ and inserting‘‘$1,000’’, and

(3) by striking ‘‘$10,000’’ and inserting‘‘$30,000’’.

(b) INDEXING OF LIMIT ON EMPLOYMENT-RE-LATED EXPENSES.—Section 21(c) (relating todollar limit on amount creditable) is amend-ed to read as follows:

‘‘(c) DOLLAR LIMIT ON AMOUNT CRED-ITABLE.—

‘‘(1) IN GENERAL.—The amount of the em-ployment-related expenses incurred duringany taxable year which may be taken intoaccount under subsection (a) shall notexceed—

‘‘(A) an amount equal to 50 percent of theamount determined under subparagraph (B)if there is 1 qualifying individual with re-spect to the taxpayer for such taxable year,or

‘‘(B) $4,800 if there are 2 or more qualifyingindividuals with respect to the taxpayer forsuch taxable year.The amount determined under subparagraph(A) or (B) (whichever is applicable) shall bereduced by the aggregate amount excludablefrom gross income under section 129 for thetaxable year.

‘‘(2) COST-OF-LIVING ADJUSTMENT.—‘‘(A) IN GENERAL.—In the case of a taxable

year beginning after 2000, the $4,800 amountunder paragraph (1)(B) shall be increased byan amount equal to—



‘‘(B) ROUNDING RULES.—If any amount afteradjustment under subparagraph (A) is not amultiple of $50, such amount shall be round-ed to the next lower multiple of $50.’’.

(c) MINIMUM DEPENDENT CARE CREDIT AL-LOWED FOR STAY-AT-HOME PARENTS.—Section21(e) (relating to special rules) is amended byadding at the end the following:

‘‘(11) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME PARENTS.—

‘‘(A) IN GENERAL.—Notwithstanding sub-section (d), in the case of any taxpayer with1 or more qualifying individuals described insubsection (b)(1)(A) under the age of 1, suchtaxpayer shall be deemed to have employ-ment-related expenses for the taxable yearwith respect to each such qualifying indi-vidual in an amount equal to the sum of—

‘‘(i) $200 for each month in such taxableyear during which such qualifying individualis under the age of 1, and

‘‘(ii) the amount of employment-relatedexpenses otherwise incurred for such quali-fying individual for the taxable year (deter-mined under this section without regard tothis paragraph).

‘‘(B) ELECTION TO NOT APPLY THIS PARA-GRAPH.—This paragraph shall not apply withrespect to any qualifying individual for anytaxable year if the taxpayer elects to nothave this paragraph apply to such qualifyingindividual for such taxable year.’’.

(d) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2000.



CREDIT.‘‘(a) ALLOWANCE OF CREDIT.—For purposes

of section 38, the employer-provided childcare credit determined under this section forthe taxable year is an amount equal to thesum of—











‘‘(ii) for the operating costs of an eligiblequalified child care facility of the taxpayer,including costs related to the training of em-ployees of the child care facility, to scholar-ship programs, to the providing of differen-tial compensation to employees based onlevel of child care training, and to expensesassociated with achieving accreditation, or



‘‘(C) NONDISCRIMINATION.—The term ‘quali-fied child care expenditure’ shall not includeany amount expended in relation to anychild care services unless the providing ofsuch services to employees of the taxpayerdoes not discriminate in favor of highly com-pensated employees (within the meaning ofsection 404(q)).









CONGRESSIONAL RECORD — SENATE S6759July 13, 2000‘‘(iii) at least 30 percent of the enrollees of

such facility are dependents of employees ofthe taxpayer.







‘‘(1) IN GENERAL.—If, as of the close of anytaxable year, there is a recapture event withrespect to any eligible qualified child carefacility of the taxpayer, then the tax of thetaxpayer under this chapter for such taxableyear shall be increased by an amount equalto the product of—




section, the applicable recapture percentageshall be determined from the following table:‘‘If the recapture

event occurs in:The applicable

recapturepercentage is:

Year 1 .......................... 100Year 2 .......................... 80Year 3 .......................... 60Year 4 .......................... 40Year 5 .......................... 20Years 6 and thereafter 0.






‘‘(ii) AGREEMENT TO ASSUME RECAPTURE LI-ABILITY.—Clause (i) shall not apply if theperson acquiring such interest in the facilityagrees in writing to assume the recapture li-ability of the person disposing of such inter-est in effect immediately before such disposi-

tion. In the event of such an assumption, theperson acquiring the interest in the facilityshall be treated as the taxpayer for purposesof assessing any recapture liability (com-puted as if there had been no change in own-ership).








‘‘(3) ALLOCATION IN THE CASE OF PARTNER-SHIPS.—In the case of partnerships, the cred-it shall be allocated among partners underregulations prescribed by the Secretary.




‘‘(B) CERTAIN DISPOSITIONS.—If during anytaxable year there is a recapture amount de-termined with respect to any property thebasis of which was reduced under subpara-graph (A), the basis of such property (imme-diately before the event resulting in such re-capture) shall be increased by an amountequal to such recapture amount. For pur-poses of the preceding sentence, the term ‘re-capture amount’ means any increase in tax(or adjustment in carrybacks or carryovers)determined under subsection (d).

‘‘(2) OTHER DEDUCTIONS AND CREDITS.—Nodeduction or credit shall be allowed underany other provision of this chapter with re-spect to the amount of the credit determinedunder this section.’’.









SEC. 613. MARRIAGE PENALTY RELIEF FOREARNED INCOME CREDIT.

(a) IN GENERAL.—Paragraph (2) of section32(b) (relating to percentages and amounts)is amended—

(1) by striking ‘‘AMOUNTS.—The earned’’and inserting ‘‘AMOUNTS.—

‘‘(A) IN GENERAL.—Subject to subparagraph(B), the earned’’; and


‘‘(B) JOINT RETURNS.—In the case of a jointreturn, the phaseout amount determinedunder subparagraph (A) shall be increased by$2,500.’’.

(b) INFLATION ADJUSTMENT.—Paragraph(1)(B) of section 32( j) (relating to inflationadjustments) is amended to read as follows:

‘‘(B) the cost-of-living adjustment deter-mined under section 1(f )(3) for the calendaryear in which the taxable year begins,determined—

‘‘(i) in the case of amounts in subsections(b)(2)(A) and (i)(1), by substituting ‘calendaryear 1995’ for ‘calendar year 1992’ in subpara-graph (B) thereof, and

‘‘(ii) in the case of the $2,500 amount insubsection (b)(2)(B), by substituting ‘cal-endar year 2000’ for ‘calendar year 1992’ insubparagraph (B) of such section 1.’’.

(c) ROUNDING.—Section 32( j)(2)(A) (relatingto rounding) is amended by striking ‘‘sub-section (b)(2)’’ and inserting ‘‘subsection(b)(2)(A) (after being increased under sub-paragraph (B) thereof)’’.

(d) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2000.

BAYH (AND OTHERS) AMENDMENTNO. 3843

Mr. BAYH (for himself, Mr. DURBIN,Ms. MIKULSKI, Mr. FEINGOLD, Mr. KOHL,Mr. BIDEN, and Mr. GRAHAM) proposedan amendment to the bill, H.R. 8,supra; as follows:

Strike all after the first word and insert:

1. SHORT TITLE.



TITLE I—ESTATE TAX RELIEF

SEC. 101. INCREASE IN AMOUNT OF UNIFIEDCREDIT AGAINST ESTATE AND GIFTTAXES.




is:


(b) EFFECTIVE DATE.—The amendmentmade by this section shall apply to the es-tates of decedents dying, and gifts made,after December 31, 2000.


CONGRESSIONAL RECORD — SENATES6760 July 13, 2000SEC. 102. INCREASE IN QUALIFIED FAMILY-



















TITLE II—HEALTH PROVISIONSSEC. 201. LONG-TERM CARE TAX CREDIT.

(a) ALLOWANCE OF CREDIT.—(1) IN GENERAL.—Section 24(a) (relating to

allowance of child tax credit) is amended toread as follows:

‘‘(a) ALLOWANCE OF CREDIT.—‘‘(1) IN GENERAL.—There shall be allowed as

a credit against the tax imposed by thischapter for the taxable year an amountequal to the sum of—

‘‘(A) $500 multiplied by the number ofqualifying children of the taxpayer, plus

‘‘(B) the applicable dollar amount multi-plied by the number of applicable individualswith respect to whom the taxpayer is an eli-gible caregiver for the taxable year.

‘‘(2) APPLICABLE DOLLAR AMOUNT.—For pur-poses of paragraph (1)(B), the applicable dol-lar amount for taxable years beginning inany calendar year shall be determined in ac-cordance with the following table:

Applicable‘‘Calendar year: dollar amount:

2001 .................................................. $1,0002002 .................................................. $1,5002003 .................................................. $2,0002004 .................................................. $2,5002005 and thereafter .......................... $3,000.’’(2) ADDITIONAL CREDIT FOR TAXPAYER WITH 3

OR MORE SEPARATE CREDIT AMOUNTS.—Somuch of section 24(d) as precedes paragraph(1)(A) thereof is amended to read as follows:

‘‘(d) ADDITIONAL CREDIT FOR TAXPAYERSWITH 3 OR MORE SEPARATE CREDITAMOUNTS.—

‘‘(1) IN GENERAL.—If the sum of the numberof qualifying children of the taxpayer andthe number of applicable individuals with re-spect to which the taxpayer is an eligiblecaregiver is 3 or more for any taxable year,the aggregate credits allowed under subpartC shall be increased by the lesser of—’’.

(3) CONFORMING AMENDMENTS.—(A) The heading for section 32(n) is amend-

ed by striking ‘‘CHILD’’ and inserting ‘‘FAM-ILY CARE’’.

(B) The heading for section 24 is amendedto read as follows:‘‘SEC. 24. FAMILY CARE CREDIT.’’

(C) The table of sections for subpart A ofpart IV of subchapter A of chapter 1 isamended by striking the item relating tosection 24 and inserting the following newitem:‘‘Sec. 24. Family care credit.’’

(b) DEFINITIONS.—Section 24(c) (definingqualifying child) is amended to read as fol-lows:


‘‘(1) QUALIFYING CHILD.—‘‘(A) IN GENERAL.—The term ‘qualifying

child’ means any individual if—‘‘(i) the taxpayer is allowed a deduction

under section 151 with respect to such indi-vidual for the taxable year,

‘‘(ii) such individual has not attained theage of 17 as of the close of the calendar yearin which the taxable year of the taxpayer be-gins, and

‘‘(iii) such individual bears a relationshipto the taxpayer described in section32(c)(3)(B).

‘‘(B) EXCEPTION FOR CERTAIN NONCITIZENS.—The term ‘qualifying child’ shall not includeany individual who would not be a dependentif the first sentence of section 152(b)(3) wereapplied without regard to all that follows‘resident of the United States’.

‘‘(2) APPLICABLE INDIVIDUAL.—‘‘(A) IN GENERAL.—The term ‘applicable in-

dividual’ means, with respect to any taxableyear, any individual who has been certified,before the due date for filing the return oftax for the taxable year (without exten-sions), by a physician (as defined in section1861(r)(1) of the Social Security Act) as beingan individual with long-term care needs de-scribed in subparagraph (B) for a period—

‘‘(i) which is at least 180 consecutive days,and

‘‘(ii) a portion of which occurs within thetaxable year.Such term shall not include any individualotherwise meeting the requirements of thepreceding sentence unless within the 391⁄2month period ending on such due date (orsuch other period as the Secretary pre-scribes) a physician (as so defined) has cer-tified that such individual meets such re-quirements.

‘‘(B) INDIVIDUALS WITH LONG-TERM CARENEEDS.—An individual is described in thissubparagraph if the individual meets any ofthe following requirements:

‘‘(i) The individual is at least 6 years of ageand—

‘‘(I) is unable to perform (without substan-tial assistance from another individual) atleast 3 activities of daily living (as defined insection 7702B(c)(2)(B)) due to a loss of func-tional capacity, or

‘‘(II) requires substantial supervision toprotect such individual from threats tohealth and safety due to severe cognitive im-pairment and is unable to perform at least 1activity of daily living (as so defined) or tothe extent provided in regulations prescribedby the Secretary (in consultation with the

Secretary of Health and Human Services), isunable to engage in age appropriate activi-ties.

‘‘(ii) The individual is at least 2 but not 6years of age and is unable due to a loss offunctional capacity to perform (without sub-stantial assistance from another individual)at least 2 of the following activities: eating,transferring, or mobility.

‘‘(iii) The individual is under 2 years of ageand requires specific durable medical equip-ment by reason of a severe health conditionor requires a skilled practitioner trained toaddress the individual’s condition to beavailable if the individual’s parents orguardians are absent.

‘‘(3) ELIGIBLE CAREGIVER.—‘‘(A) IN GENERAL.—A taxpayer shall be

treated as an eligible caregiver for any tax-able year with respect to the following indi-viduals:

‘‘(i) The taxpayer.‘‘(ii) The taxpayer’s spouse.‘‘(iii) An individual with respect to whom

the taxpayer is allowed a deduction undersection 151 for the taxable year.

‘‘(iv) An individual who would be describedin clause (iii) for the taxable year if section151(c)(1)(A) were applied by substituting forthe exemption amount an amount equal tothe sum of the exemption amount, the stand-ard deduction under section 63(c)(2)(C), andany additional standard deduction under sec-tion 63(c)(3) which would be applicable to theindividual if clause (iii) applied.

‘‘(v) An individual who would be describedin clause (iii) for the taxable year if—

‘‘(I) the requirements of clause (iv) are metwith respect to the individual, and

‘‘(II) the requirements of subparagraph (B)are met with respect to the individual in lieuof the support test of section 152(a).

‘‘(B) RESIDENCY TEST.—The requirementsof this subparagraph are met if an individualhas as his principal place of abode the homeof the taxpayer and—

‘‘(i) in the case of an individual who is anancestor or descendant of the taxpayer orthe taxpayer’s spouse, is a member of thetaxpayer’s household for over half the tax-able year, or

‘‘(ii) in the case of any other individual, isa member of the taxpayer’s household for theentire taxable year.

‘‘(C) SPECIAL RULES WHERE MORE THAN 1 ELI-GIBLE CAREGIVER.—

‘‘(i) IN GENERAL.—If more than 1 individualis an eligible caregiver with respect to thesame applicable individual for taxable yearsending with or within the same calendaryear, a taxpayer shall be treated as the eligi-ble caregiver if each such individual (otherthan the taxpayer) files a written declara-tion (in such form and manner as the Sec-retary may prescribe) that such individualwill not claim such applicable individual forthe credit under this section.

‘‘(ii) NO AGREEMENT.—If each individual re-quired under clause (i) to file a written dec-laration under clause (i) does not do so, theindividual with the highest modified ad-justed gross income (as defined in section32(c)(5)) shall be treated as the eligible care-giver.

‘‘(iii) MARRIED INDIVIDUALS FILING SEPA-RATELY.—In the case of married individualsfiling separately, the determination underthis subparagraph as to whether the husbandor wife is the eligible caregiver shall be madeunder the rules of clause (ii) (whether or notone of them has filed a written declarationunder clause (i)).’’

(c) IDENTIFICATION REQUIREMENTS.—(1) IN GENERAL.—Section 24(e) is amended

by adding at the end the following new sen-tence: ‘‘No credit shall be allowed under this


CONGRESSIONAL RECORD — SENATE S6761July 13, 2000section to a taxpayer with respect to any ap-plicable individual unless the taxpayer in-cludes the name and taxpayer identificationnumber of such individual, and the identi-fication number of the physician certifyingsuch individual, on the return of tax for thetaxable year.’’

(2) ASSESSMENT.—Section 6213(g)(2)(I) ofsuch Code is amended—

(A) by inserting ‘‘or physician identifica-tion’’ after ‘‘correct TIN’’, and

(B) by striking ‘‘child’’ and inserting ‘‘fam-ily care’’.

(d) EFFECTIVE DATE.—The amendmentsmade by this section shall apply to taxableyears beginning after December 31, 2000.SECTION 202. FULL DEDUCTION FOR HEALTH IN-

SURANCE COSTS OF SELF-EM-PLOYED INDIVIDUALS.

(a) IN GENERAL.—Section 162(l)(1) (relatingto special rules for health insurance costs ofself-employed individuals) is amended toread as follows:

‘‘(1) ALLOWANCE OF DEDUCTION.—In the caseof an individual who is an employee withinthe meaning of section 401(c)(1), there shallbe allowed as a deduction under this sectionan amount equal to the amount paid duringthe taxable year for insurance which con-stitutes medical care for the taxpayer, thetaxpayer’s spouse, and dependents.’’.


FEINGOLD AMENDMENT NO. 3844

Mr. FEINGOLD proposed an amend-ment to the bill, H.R. 8, supra; as fol-lows:

On page 2, line 16, after ‘‘is hereby re-pealed’’, insert the following: ‘‘for estates upto $100,000,000 in size’’.

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AUTHORITY FOR COMMITTEES TOMEET

COMMITTEE ON BANKING, HOUSING AND URBANAFFAIRS

Mr. ROTH. Mr. President, I ask unan-imous consent that the Committee onBanking, Housing, and Urban Affairsbe authorized to meet during the ses-sion of the Senate on Thursday, July13, 2000, to conduct a mark-up on ‘‘S.2107, the Competitive Market Super-vision Act; S. 2266, the 2002 WinterOlympic Commemorative Coin Act; S.2453, awarding a Congressional GoldMedal to Pope John Paul II; S. 2459,awarding a Congressional Gold Medalto former President Ronald Reagan andformer first lady Nancy Reagan; a com-mittee print of a substitute amend-ment to S. 2101, the International Mon-etary Stability Act of 2000; and a com-mittee print of a substitute amend-ment to H.R. 3046, providing for semi-annual Federal reserve testimony be-fore Congress.’’

The PRESIDING OFFICER. Withoutobjection, it is so ordered.

COMMITTEE ON ENERGY AND NATURALRESOURCES

Mr. ROTH. Mr. President, I ask unan-imous consent that the Committee onEnergy and Natural Resources be au-thorized to meet during the session ofthe Senate on Thursday, July 13, forpurposes of conducting a Full Com-mittee business meeting which isscheduled to begin at 9:30 a.m. The pur-

pose of this business meeting is to con-sider pending calendar business.


COMMITTEE ON ENERGY AND NATURALRESOURCES

Mr. ROTH. Mr. President, I ask unan-imous consent that the Committee onEnergy and Natural Resources be au-thorized to meet during the session ofthe Senate on Thursday, July 13 imme-diately following the business meetingto conduct an oversight hearing. Thecommittee will receive testimony onGasoline Supply Problems: Are deliver-ability, transportation, and refining/blending resources adequate to supplyAmerica at a reasonable price?

The PRESIDING OFFICER. Withoutobjection, it is so ordered.COMMITTEE ON HEALTH, EDUCATION, LABOR AND

PENSIONS

Mr. ROTH. Mr. President, I ask unan-imous consent that the Committee onHealth, Education, Labor, and Pen-sions, Subcommittee on Employment,Safety, and Training be authorized tomeet for a hearing on ‘‘The Effect ofthe Proposed Ergonomics Standard onMedicaid and Medicare Patients andProviders’’ during the session of theSenate on Thursday, July 13, 2000 at9:30 a.m.


SELECT COMMITTEE ON INTELLIGENCE

Mr. ROTH. Mr. President, I ask unan-imous consent that the Select Com-mittee on Intelligence be authorized tomeet during the session of the Senateon Thursday, July 13, 2000 at 2:30 p.m.to hold a closed hearing on intelligencematters.


SUBCOMMITTEE ON INTERNATIONAL SECURITY,PROLIFERATION, AND FEDERAL SERVICES

Mr. ROTH. Mr. President, I ask unan-imous consent that the GovernmentalAffairs Subcommittee on InternationalSecurity, Proliferation, and FederalServices be authorized to meet duringthe session of the Senate on Thursday,July 13, 2000, at 2:00 p.m. for a hearingon the annual report of the PostmasterGeneral.

The PRESIDING OFFICER. Withoutobjection, it is so ordered.SUBCOMMITTEE ON NATIONAL PARKS, HISTORIC

PRESERVATION AND RECREATION

Mr. ROTH. Mr. President, I ask unan-imous consent that the Subcommitteeon National Parks, Historic Preserva-tion and Recreation of the Committeeon Energy and Natural Resources beauthorized to meet during the sessionof the Senate on Thursday, July 13, at2:30 p.m. to conduct a hearing. The sub-committee will receive testimony on S.2294, a bill to establish the Rosie theRiveter-World War II Home Front Na-tional Historical Park in the State ofCalifornia, and for other purposes; S.2331, a bill to direct the Secretary ofthe Interior to recalculate the fran-chise fee owed by Fort Sumter Tours,Inc., a concessioner providing service

to Fort Sumter National Monument,South Carolina; S. 2598, a bill to au-thorize appropriations for the UnitedStates Holocaust Museum, and forother purposes; and S. Con. Res. 106, aresolution recognizing the HermannMonument and the Herman HeightsPark in New Ulm, Minnesota, as a na-tional symbol of the contributions ofAmericans of German heritage.


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PRIVILEGE OF THE FLOOR

Mr. REID. I ask unanimous consentthat Phoebe Haupt who works in myoffice be extended privileges of thefloor during the pendency of H.R. 8.


Mr. REID. Mr. President, I ask unan-imous consent that Ruth Lodder, anAir Force fellow in the office of FRANKLAUTENBERG, be granted floor privi-leges during the duration of the 106thCongress.


Mr. KERRY. Mr. President, I askunanimous consent that JenniferFogul-Bublick, a fellow in my office, begranted the privilege of the floor dur-ing this debate.


Mr. ROTH. Mr. President, I ask unan-imous consent that the following mem-bers of the staff of the Joint Com-mittee on Taxation have floor privi-leges: Joe Nega, John Navratil, RickGrafmeyer, Todd Simmens, BarryWold, and Tom Barthold.


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NATIONAL FRAGILE XAWARENESS DAY

On July 12, 2000, the Senate passed S.Res. 268, as follows:

S. RES. 268

Whereas Fragile X is the most common in-herited cause of mental retardation, affect-ing people of every race, income level, andnationality;

Whereas 1 in every 260 women is a carrierof the Fragile X defect;

Whereas 1 in every 4,000 children is bornwith the Fragile X defect, and typically re-quires a lifetime of special care at a cost ofover $2,000,000;

Whereas Fragile X remains frequently un-detected due to its recent discovery and thelack of awareness about the disease, evenwithin the medical community;

Whereas the genetic defect causing FragileX has been discovered, and is easily identi-fied by testing;

Whereas inquiry into Fragile X is a power-ful research model for neuropsychiatric dis-orders, such as autism, schizophrenia, perva-sive developmental disorders, and otherforms of X-linked mental retardation;

Whereas individuals with Fragile X canprovide a homogeneous research populationfor advancing the understanding ofneuropsychiatric disorders;

Whereas with concerted research efforts, acure for Fragile X may be developed;


… · s6692 congressional record—senatejuly 13, 2000 of the united mexican states, receiving...

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