To impose withholding on certain payments made by government entities and to use the revenues collected to fund programs under the Low-Income Home Energy Assistance Act of 1981 through a trust fund.

1. Adds SEC. __. IMPOSITION OF WITHHOLDING ON CERTAIN PAYMENTS MADE BY GOVERNMENT ENTITIES AND FUNDING OF LIHEAP TRUST FUND at the end of title IV

   Adds a section

   In S. 2020 · Placed on Calendar Senate

   (d) Effective Date.--The amendments made by this section shall apply to amounts paid or accrued during the period beginning after December 31, 2006, and before January 1, 2008, and properly allocable to such period, with respect to mortgage insurance contracts issued after December 31, 2006.

   Inserted: SEC. __. IMPOSITION OF WITHHOLDING ON CERTAIN PAYMENTS MADE BY GOVERNMENT ENTITIES AND FUNDING OF LIHEAP TRUST FUND.

   Inserted: (a) Imposition of Withholding on Certain Payments Made by Government Entities.--

   Inserted: (1) In general.--Section 3402 is amended by adding at the end the following new subsection:

   Inserted: "(t) Extension of Withholding to Certain Payments Made by Government Entities.--

   Inserted: "(1) General rule.--The Government of the United States, every State, every political subdivision thereof, and every instrumentality of the foregoing (including multi-State agencies) making any payment for goods and services which is subject to withholding shall deduct and withhold form such payment a tax in an amount equal to 1.75 percent of such payment.

   Inserted: "(2) Exceptions.--Paragraph (1) shall not apply to any payment--

   Inserted: "(A) except as provided in subparagraph (B), which is subject to withholding under any other provision of this chapter or chapter 3,

   Inserted: "(B) which is subject to withholding under section 3406 and from which amounts are being withheld under such section, "(C) of interest,

   Inserted: "(D) for real property,

   Inserted: "(E) to any tax-exempt entity, foreign government, or other entity subject to the requirements of paragraph (1),

   Inserted: "(F) made pursuant to a classified or confidential contract (as defined in section 6050M(e)(3)), and

   Inserted: "(G) made by a political subdivision of a State (or any instrumentality thereof) which makes less than $100,000,000 of such payments annually.

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   Inserted: "(3) Coordination with other sections.--For purposes of sections 3403 and 3404 and for purposes of so much of subtitle F (except section 7205) as relates to this chapter, payments to any person of any payment for goods and services which is subject to withholding shall be treated as if such payments were wages paid by an employer to an employee.".

   Inserted: (2) Effective date.--The amendment made by this subsection shall apply to payments made after December 31, 2005.

   Inserted: (b) Low Income Home Energy Assistance Trust Fund.--

   Inserted: (1) In general.--Subchapter A of chapter 98 (relating to trust fund code) is amended by adding at the end the following new section:

   Inserted: "SEC. 9511. LOW-INCOME HOME ENERGY ASSISTANCE TRUST FUND.

   Inserted: "(a) Creation of Trust Fund.--There is established in the Treasury of the United States a trust fund to be known as the 'Low-Income Home Energy Assistance Trust Fund', consisting of any amount appropriated or credited to the Trust Fund as provided in this section or section 9602(b).

   Inserted: "(b) Transfers to Trust Fund.--There are hereby appropriated to the Low-Income Home Energy Assistance Trust Fund amounts equivalent to the increased revenues received in the Treasury as the result of the amendment made by section 410(a) of the Tax Relief Act of 2005.

   Inserted: "(c) Expenditures From Trust Fund.--Amounts in the Low Income Home Energy Assistance Trust Fund not to exceed $2,920,000,000 shall be available for fiscal year 2006, as provided by appropriation Acts, to carry out the program under the Low-Income Home Energy Assistance Act of 1981 through the distribution of funds to all the States in accordance with section 2604 of that Act (42 U.S.C. 8623) (other than subsection (e) of such section), but only if not less than $1,880,000,000 has been appropriated for such program for such fiscal year.".

   Inserted: (2) Clerical amendment.--The table of sections for such subchapter is amended by adding at the end the following new item:

   Inserted: "Sec. 9511. Low-Income Home Energy Assistance Trust Fund.".

   Inserted: (c) Effective Dates.--

   Inserted: (1) In general.--The amendments made by subsection (a) shall take effect as if included in the enactment of the American Jobs Creation Act of 2004.

   Inserted: (2) Subsection (b).--The amendments made by subsection (b) shall take effect on the date of the enactment of this Act.

   Original wording

   At the end of title IV add the following:

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As printed