To reauthorize the Secure Rural Schools and Community Self-Determination Act of 2000.

TEXT OF AMENDMENTS

SA 100. Mr. REID (for Mr. Baucus) proposed an amendment to the bill
H.R. 2, to amend the Fair Labor Standards Act of 1938 to provide for an
increase in the Federal minimum wage; as follows:

Strike all after the enacting clause and insert the
following:

TITLE I--FAIR MINIMUM WAGE

SEC. 100. SHORT TITLE.

This title may be cited as the ``Fair Minimum Wage Act of
2007''.

SEC. 101. MINIMUM WAGE.

(a) In General.--Section 6(a)(1) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to
read as follows:
``(1) except as otherwise provided in this section, not
less than--
``(A) $5.85 an hour, beginning on the 60th day after the
date of enactment of the Fair Minimum Wage Act of 2007;
``(B) $6.55 an hour, beginning 12 months after that 60th
day; and
``(C) $7.25 an hour, beginning 24 months after that 60th
day;''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect 60 days after the date of enactment of this
Act.

SEC. 102. APPLICABILITY OF MINIMUM WAGE TO THE COMMONWEALTH
OF THE NORTHERN MARIANA ISLANDS.

(a) In General.--Section 6 of the Fair Labor Standards Act
of 1938 (29 U.S.C. 206) shall apply to the Commonwealth of
the Northern Mariana Islands.
(b) Transition.--Notwithstanding subsection (a), the
minimum wage applicable to the Commonwealth of the Northern
Mariana Islands under section 6(a)(1) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be--
(1) $3.55 an hour, beginning on the 60th day after the date
of enactment of this Act; and
(2) increased by $0.50 an hour (or such lesser amount as
may be necessary to equal the minimum wage under section
6(a)(1) of such Act), beginning 6 months after the date of
enactment of this Act and every 6 months thereafter until the
minimum wage applicable to the Commonwealth of the Northern
Mariana Islands under this subsection is equal to the minimum
wage set forth in such section.

TITLE II--SMALL BUSINESS TAX INCENTIVES

SEC. 200. SHORT TITLE; AMENDMENT OF CODE.

(a) Short Title.--This title may be cited as the ``Small
Business and Work Opportunity Act of 2007''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this title an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.

Subtitle A--Small Business Tax Relief Provisions

PART I--GENERAL PROVISIONS

SEC. 201. EXTENSION OF INCREASED EXPENSING FOR SMALL
BUSINESSES.

Section 179 (relating to election to expense certain
depreciable business assets) is amended by striking ``2010''
each place it appears and inserting ``2011''.

SEC. 202. EXTENSION AND MODIFICATION OF 15-YEAR STRAIGHT-LINE
COST RECOVERY FOR QUALIFIED LEASEHOLD
IMPROVEMENTS AND QUALIFIED RESTAURANT
IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST
RECOVERY FOR CERTAIN IMPROVEMENTS TO RETAIL
SPACE.

(a) Extension of Leasehold and Restaurant Improvements.--
(1) In general.--Clauses (iv) and (v) of section
168(e)(3)(E) (relating to 15-year property) are each amended
by striking ``January 1, 2008'' and inserting ``April 1,
2008''.
(2) Effective date.--The amendment made by this subsection
shall apply to property placed in service after December 31,
2007.
(b) Modification of Treatment of Qualified Restaurant
Property as 15-Year Property for Purposes of Depreciation
Deduction.--
(1) Treatment to include new construction.--Paragraph (7)
of section 168(e) (relating to classification of property) is
amended to read as follows:
``(7) Qualified restaurant property.--The term `qualified
restaurant property' means any section 1250 property which is
a

[[Page S854]]

building (or its structural components) or an improvement to
such building if more than 50 percent of such building's
square footage is devoted to preparation of, and seating for
on-premises consumption of, prepared meals.''.
(2) Effective date.--The amendment made by this subsection
shall apply to any property placed in service after the date
of the enactment of this Act, the original use of which
begins with the taxpayer after such date.
(c) Recovery Period for Depreciation of Certain
Improvements to Retail Space.--
(1) 15-year recovery period.--Section 168(e)(3)(E)
(relating to 15-year property) is amended by striking ``and''
at the end of clause (vii), by striking the period at the end
of clause (viii) and inserting ``, and'', and by adding at
the end the following new clause:
``(ix) any qualified retail improvement property placed in
service before April 1, 2008.''.
(2) Qualified retail improvement property.--Section 168(e)
is amended by adding at the end the following new paragraph:
``(8) Qualified retail improvement property.--
``(A) In general.--The term `qualified retail improvement
property' means any improvement to an interior portion of a
building which is nonresidential real property if--
``(i) such portion is open to the general public and is
used in the retail trade or business of selling tangible
personal property to the general public, and
``(ii) such improvement is placed in service more than 3
years after the date the building was first placed in
service.
``(B) Improvements made by owner.--In the case of an
improvement made by the owner of such improvement, such
improvement shall be qualified retail improvement property
(if at all) only so long as such improvement is held by such
owner. Rules similar to the rules under paragraph (6)(B)
shall apply for purposes of the preceding sentence.
``(C) Certain improvements not included.--Such term shall
not include any improvement for which the expenditure is
attributable to--
``(i) the enlargement of the building,
``(ii) any elevator or escalator,
``(iii) any structural component benefitting a common area,
or
``(iv) the internal structural framework of the
building.''.
(3) Requirement to use straight line method.--Section
168(b)(3) is amended by adding at the end the following new
subparagraph:
``(I) Qualified retail improvement property described in
subsection (e)(8).''.
(4) Alternative system.--The table contained in section
168(g)(3)(B) is amended by inserting after the item relating
to subparagraph (E)(viii) the following new item:

``(E)(ix).......................................................   39''.

(5) Effective date.--The amendments made by this section
shall apply to property placed in service after the date of
the enactment of this Act.

SEC. 203. CLARIFICATION OF CASH ACCOUNTING RULES FOR SMALL
BUSINESS.

(a) Cash Accounting Permitted.--
(1) In general.--Section 446 (relating to general rule for
methods of accounting) is amended by adding at the end the
following new subsection:
``(g) Certain Small Business Taxpayers Permitted To Use
Cash Accounting Method Without Limitation.--
``(1) In general.--An eligible taxpayer shall not be
required to use an accrual method of accounting for any
taxable year.
``(2) Eligible taxpayer.--For purposes of this subsection,
a taxpayer is an eligible taxpayer with respect to any
taxable year if--
``(A) for each of the prior taxable years ending on or
after the date of the enactment of this subsection, the
taxpayer (or any predecessor) met the gross receipts test in
effect under section 448(c) for such taxable year, and
``(B) the taxpayer is not subject to section 447 or 448.''.
(2) Expansion of gross receipts test.--
(A) In general.--Paragraph (3) of section 448(b) (relating
to entities with gross receipts of not more than $5,000,000)
is amended to read as follows:
``(3) Entities meeting gross receipts test.--Paragraphs (1)
and (2) of subsection (a) shall not apply to any corporation
or partnership for any taxable year if, for each of the prior
taxable years ending on or after the date of the enactment of
the Small Business and Work Opportunity Act of 2007, the
entity (or any predecessor) met the gross receipts test in
effect under subsection (c) for such prior taxable year.''.
(B) Conforming amendments.--Section 448(c) of such Code is
amended--
(i) by striking ``$5,000,000'' in the heading thereof,
(ii) by striking ``$5,000,000'' each place it appears in
paragraph (1) and inserting ``$10,000,000'', and
(iii) by adding at the end the following new paragraph:
``(4) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2008, the dollar
amount contained in paragraph (1) shall be increased by an
amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, by substituting `calendar year 2007' for
`calendar year 1992' in subparagraph (B) thereof.

If any amount as adjusted under this subparagraph is not a
multiple of $100,000, such amount shall be rounded to the
nearest multiple of $100,000.''.
(b) Clarification of Inventory Rules for Small Business.--
(1) In general.--Section 471 (relating to general rule for
inventories) is amended by redesignating subsection (c) as
subsection (d) and by inserting after subsection (b) the
following new subsection:
``(c) Small Business Taxpayers Not Required to Use
Inventories.--
``(1) In general.--A qualified taxpayer shall not be
required to use inventories under this section for a taxable
year.
``(2) Treatment of taxpayers not using inventories.--If a
qualified taxpayer does not use inventories with respect to
any property for any taxable year beginning after the date of
the enactment of this subsection, such property shall be
treated as a material or supply which is not incidental.
``(3) Qualified taxpayer.--For purposes of this subsection,
the term `qualified taxpayer' means--
``(A) any eligible taxpayer (as defined in section
446(g)(2)), and
``(B) any taxpayer described in section 448(b)(3).''.
(2) Conforming amendments.--
(A) Subpart D of part II of subchapter E of chapter 1 is
amended by striking section 474.
(B) The table of sections for subpart D of part II of
subchapter E of chapter 1 is amended by striking the item
relating to section 474.
(c) Effective Date and Special Rules.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after the date of the
enactment of this Act.
(2) Change in method of accounting.--In the case of any
taxpayer changing the taxpayer's method of accounting for any
taxable year under the amendments made by this section--
(A) such change shall be treated as initiated by the
taxpayer;
(B) such change shall be treated as made with the consent
of the Secretary of the Treasury; and
(C) the net amount of the adjustments required to be taken
into account by the taxpayer under section 481 of the
Internal Revenue Code of 1986 shall be taken into account
over a period (not greater than 4 taxable years) beginning
with such taxable year.

SEC. 204. EXTENSION AND MODIFICATION OF COMBINED WORK
OPPORTUNITY TAX CREDIT AND WELFARE-TO-WORK
CREDIT.

(a) Extension.--Section 51(c)(4)(B) (relating to
termination) is amended by striking ``2007'' and inserting
``2012''.
(b) Increase in Maximum Age for Designated Community
Residents.--
(1) In general.--Paragraph (5) of section 51(d) is amended
to read as follows:
``(5) Designated community residents.--
``(A) In general.--The term `designated community resident'
means any individual who is certified by the designated local
agency--
``(i) as having attained age 18 but not age 40 on the
hiring date, and
``(ii) as having his principal place of abode within an
empowerment zone, enterprise community, or renewal community.
``(B) Individual must continue to reside in zone or
community.--In the case of a designated community resident,
the term `qualified wages' shall not include wages paid or
incurred for services performed while the individual's
principal place of abode is outside an empowerment zone,
enterprise community, or renewal community.''.
(2) Conforming amendment.--Subparagraph (D) of section
51(d)(1) is amended to read as follows:
``(D) a designated community resident,''.
(c) Clarification of Treatment of Individuals Under
Individual Work Plans.--Subparagraph (B) of section 51(d)(6)
(relating to vocational rehabilitation referral) is amended
by striking ``or'' at the end of clause (i), by striking the
period at the end of clause (ii) and inserting ``, or'', and
by adding at the end the following new clause:
``(iii) an individual work plan developed and implemented
by an employment network pursuant to subsection (g) of
section 1148 of the Social Security Act with respect to which
the requirements of such subsection are met.''.
(d) Treatment of Disabled Veterans Under the Work
Opportunity Tax Credit.--
(1) Disabled veterans treated as members of targeted
group.--
(A) In general.--Subparagraph (A) of section 51(d)(3)
(relating to qualified veteran) is amended by striking
``agency as being a member of a family'' and all that follows
and inserting ``agency as--
``(i) being a member of a family receiving assistance under
a food stamp program under

[[Page S855]]

the Food Stamp Act of 1977 for at least a 3-month period
ending during the 12-month period ending on the hiring date,
or
``(ii) entitled to compensation for a service-connected
disability incurred after September 10, 2001.''.
(B) Definitions.--Paragraph (3) of section 51(d) is amended
by adding at the end the following new subparagraph:
``(C) Other definitions.--For purposes of subparagraph (A),
the terms `compensation' and `service-connected' have the
meanings given such terms under section 101 of title 38,
United States Code.''.
(2) Increase in amount of wages taken into account for
disabled veterans.--Paragraph (3) of section 51(b) is
amended--
(A) by inserting ``($12,000 per year in the case of any
individual who is a qualified veteran by reason of subsection
(d)(3)(A)(ii))'' before the period at the end, and
(B) by striking ``Only first  $6,000 of'' in the heading
and inserting ``Limitation on''.
(e) Effective Date.--The amendments made by this section
shall apply to individuals who begin work for the employer
after the date of the enactment of this Act, in taxable years
ending after such date.

SEC. 205. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

(a) Employment Taxes.--Chapter 25 (relating to general
provisions relating to employment taxes) is amended by adding
at the end the following new section:

``SEC. 3511. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

``(a) General Rules.--For purposes of the taxes, and other
obligations, imposed by this subtitle--
``(1) a certified professional employer organization shall
be treated as the employer (and no other person shall be
treated as the employer) of any work site employee performing
services for any customer of such organization, but only with
respect to remuneration remitted by such organization to such
work site employee, and
``(2) exclusions, definitions, and other rules which are
based on the type of employer and which would (but for
paragraph (1)) apply shall apply with respect to such taxes
imposed on such remuneration.
``(b) Successor Employer Status.--For purposes of sections
3121(a)(1), 3231(e)(2)(C), and 3306(b)(1)--
``(1) a certified professional employer organization
entering into a service contract with a customer with respect
to a work site employee shall be treated as a successor
employer and the customer shall be treated as a predecessor
employer during the term of such service contract, and
``(2) a customer whose service contract with a certified
professional employer organization is terminated with respect
to a work site employee shall be treated as a successor
employer and the certified professional employer organization
shall be treated as a predecessor employer.
``(c) Liability of Certified Professional Employer
Organization.--Solely for purposes of its liability for the
taxes, and other obligations, imposed by this subtitle--
``(1) a certified professional employer organization shall
be treated as the employer of any individual (other than a
work site employee or a person described in subsection (f))
who is performing services covered by a contract meeting the
requirements of section 7705(e)(2), but only with respect to
remuneration remitted by such organization to such
individual, and
``(2) exclusions, definitions, and other rules which are
based on the type of employer and which would (but for
paragraph (1)) apply shall apply with respect to such taxes
imposed on such remuneration.
``(d) Treatment of Credits.--
``(1) In general.--For purposes of any credit specified in
paragraph (2)--
``(A) such credit with respect to a work site employee
performing services for the customer applies to the customer,
not the certified professional employer organization,
``(B) the customer, and not the certified professional
employer organization, shall take into account wages and
employment taxes--
``(i) paid by the certified professional employer
organization with respect to the work site employee, and
``(ii) for which the certified professional employer
organization receives payment from the customer, and
``(C) the certified professional employer organization
shall furnish the customer with any information necessary for
the customer to claim such credit.
``(2) Credits specified.--A credit is specified in this
paragraph if such credit is allowed under--
``(A) section 41 (credit for increasing research activity),
``(B) section 45A (Indian employment credit),
``(C) section 45B (credit for portion of employer social
security taxes paid with respect to employee cash tips),
``(D) section 45C (clinical testing expenses for certain
drugs for rare diseases or conditions),
``(E) section 51 (work opportunity credit),
``(F) section 51A (temporary incentives for employing long-
term family assistance recipients),
``(G) section 1396 (empowerment zone employment credit),
``(H) 1400(d) (DC Zone employment credit),
``(I) Section 1400H (renewal community employment credit),
and
``(J) any other section as provided by the Secretary.
``(e) Special Rule for Related Party.--This section shall
not apply in the case of a customer which bears a
relationship to a certified professional employer
organization described in section 267(b) or 707(b). For
purposes of the preceding sentence, such sections shall be
applied by substituting `10 percent' for `50 percent'.
``(f) Special Rule for Certain Individuals.--For purposes
of the taxes imposed under this subtitle, an individual with
net earnings from self-employment derived from the customer's
trade or business is not a work site employee with respect to
remuneration paid by a certified professional employer
organization.
``(g) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(b) Certified Professional Employer Organization Defined.--
Chapter 79 (relating to definitions) is amended by adding at
the end the following new section:

``SEC. 7705. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS
DEFINED.

``(a) In General.--For purposes of this title, the term
`certified professional employer organization' means a person
who has been certified by the Secretary for purposes of
section 3511 as meeting the requirements of subsection (b).
``(b) General Requirements.--A person meets the
requirements of this subsection if such person--
``(1) demonstrates that such person (and any owner,
officer, and such other persons as may be specified in
regulations) meets such requirements as the Secretary shall
establish with respect to tax status, background, experience,
business location, and annual financial audits,
``(2) computes its taxable income using an accrual method
of accounting unless the Secretary approves another method,
``(3) agrees that it will satisfy the bond and independent
financial review requirements of subsection (c) on an ongoing
basis,
``(4) agrees that it will satisfy such reporting
obligations as may be imposed by the Secretary,
``(5) agrees to verify on such periodic basis as the
Secretary may prescribe that it continues to meet the
requirements of this subsection, and
``(6) agrees to notify the Secretary in writing within such
time as the Secretary may prescribe of any change that
materially affects whether it continues to meet the
requirements of this subsection.
``(c) Bond and Independent Financial Review Requirements.--
``(1) In general.--An organization meets the requirements
of this paragraph if such organization--
``(A) meets the bond requirements of paragraph (2), and
``(B) meets the independent financial review requirements
of paragraph (3).
``(2) Bond.--
``(A) In general.--A certified professional employer
organization meets the requirements of this paragraph if the
organization has posted a bond for the payment of taxes under
subtitle C (in a form acceptable to the Secretary) in an
amount at least equal to the amount specified in subparagraph
(B).
``(B) Amount of bond.--For the period April 1 of any
calendar year through March 31 of the following calendar
year, the amount of the bond required is equal to the greater
of--
``(i) 5 percent of the organization's liability under
section 3511 for taxes imposed by subtitle C during the
preceding calendar year (but not to exceed $1,000,000), or
``(ii) $50,000.
``(3) Independent financial review requirements.--A
certified professional employer organization meets the
requirements of this paragraph if such organization--
``(A) has, as of the most recent review date, caused to be
prepared and provided to the Secretary (in such manner as the
Secretary may prescribe) an opinion of an independent
certified public accountant that the certified professional
employer organization's financial statements are presented
fairly in accordance with generally accepted accounting
principles, and
``(B) provides, not later than the last day of the second
month beginning after the end of each calendar quarter, to
the Secretary from an independent certified public accountant
an assertion regarding Federal employment tax payments and an
examination level attestation on such assertion.

Such assertion shall state that the organization has withheld
and made deposits of all taxes imposed by chapters 21, 22,
and 24 of the Internal Revenue Code in accordance with
regulations imposed by the Secretary for such calendar
quarter and such examination level attestation shall state
that such assertion is fairly stated, in all material
respects.
``(4) Controlled group rules.--For purposes of the
requirements of paragraphs (2) and (3), all professional
employer organizations that are members of a controlled group
within the meaning of sections 414(b) and (c) shall be
treated as a single organization.
``(5) Failure to file assertion and attestation.--If the
certified professional employer organization fails to file
the assertion and attestation required by paragraph (3) with
respect to any calendar quarter, then the requirements of
paragraph (3) with respect to such failure shall be treated
as not

[[Page S856]]

satisfied for the period beginning on the due date for such
attestation.
``(6) Review date.--For purposes of paragraph (3)(A), the
review date shall be 6 months after the completion of the
organization's fiscal year.
``(d) Suspension and Revocation Authority.--The Secretary
may suspend or revoke a certification of any person under
subsection (b) for purposes of section 3511 if the Secretary
determines that such person is not satisfying the
representations or requirements of subsections (b) or (c), or
fails to satisfy applicable accounting, reporting, payment,
or deposit requirements.
``(e) Work Site Employee.--For purposes of this title--
``(1) In general.--The term `work site employee' means,
with respect to a certified professional employer
organization, an individual who--
``(A) performs services for a customer pursuant to a
contract which is between such customer and the certified
professional employer organization and which meets the
requirements of paragraph (2), and
``(B) performs services at a work site meeting the
requirements of paragraph (3).
``(2) Service contract requirements.--A contract meets the
requirements of this paragraph with respect to an individual
performing services for a customer if such contract is in
writing and provides that the certified professional employer
organization shall--
``(A) assume responsibility for payment of wages to such
individual, without regard to the receipt or adequacy of
payment from the customer for such services,
``(B) assume responsibility for reporting, withholding, and
paying any applicable taxes under subtitle C, with respect to
such individual's wages, without regard to the receipt or
adequacy of payment from the customer for such services,
``(C) assume responsibility for any employee benefits which
the service contract may require the organization to provide,
without regard to the receipt or adequacy of payment from the
customer for such services,
``(D) assume responsibility for hiring, firing, and
recruiting workers in addition to the customer's
responsibility for hiring, firing and recruiting workers,
``(E) maintain employee records relating to such
individual, and
``(F) agree to be treated as a certified professional
employer organization for purposes of section 3511 with
respect to such individual.
``(3) Work site coverage requirement.--The requirements of
this paragraph are met with respect to an individual if at
least 85 percent of the individuals performing services for
the customer at the work site where such individual performs
services are subject to 1 or more contracts with the
certified professional employer organization which meet the
requirements of paragraph (2) (but not taking into account
those individuals who are excluded employees within the
meaning of section 414(q)(5)).
``(f) Determination of Employment Status.--Except to the
extent necessary for purposes of section 3511, nothing in
this section shall be construed to affect the determination
of who is an employee or employer for purposes of this title.
``(g) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(c) Conforming Amendments.--
(1) Section 3302 is amended by adding at the end the
following new subsection:
``(h) Treatment of Certified Professional Employer
Organizations.--If a certified professional employer
organization (as defined in section 7705), or a customer of
such organization, makes a contribution to the State's
unemployment fund with respect to a work site employee, such
organization shall be eligible for the credits available
under this section with respect to such contribution.''.
(2) Section 3303(a) is amended--
(A) by striking the period at the end of paragraph (3) and
inserting ``; and'' and by inserting after paragraph (3) the
following new paragraph:
``(4) if the taxpayer is a certified professional employer
organization (as defined in section 7705) that is treated as
the employer under section 3511, such certified professional
employer organization is permitted to collect and remit, in
accordance with paragraphs (1), (2), and (3), contributions
during the taxable year to the State unemployment fund with
respect to a work site employee.'', and
(B) in the last sentence--
(i) by striking ``paragraphs (1), (2), and (3)'' and
inserting ``paragraphs (1), (2), (3), and (4)'', and
(ii) by striking ``paragraph (1), (2), or (3)'' and
inserting ``paragraph (1), (2), (3), or (4)''.
(3) Section 6053(c) (relating to reporting of tips) is
amended by adding at the end the following new paragraph:
``(8) Certified professional employer organizations.--For
purposes of any report required by this subsection, in the
case of a certified professional employer organization that
is treated under section 3511 as the employer of a work site
employee, the customer with respect to whom a work site
employee performs services shall be the employer for purposes
of reporting under this section and the certified
professional employer organization shall furnish to the
customer any information necessary to complete such reporting
no later than such time as the Secretary shall prescribe.''.
(d) Clerical Amendments.--
(1) The table of sections for chapter 25 is amended by
adding at the end the following new item:

``Sec. 3511. Certified professional employer organizations.''.
(2) The table of sections for chapter 79 is amended by
inserting after the item relating to section 7704 the
following new item:

``Sec. 7705. Certified professional employer organizations defined.''.
(e) Reporting Requirements and Obligations.--The Secretary
of the Treasury shall develop such reporting and
recordkeeping rules, regulations, and procedures as the
Secretary determines necessary or appropriate to ensure
compliance with the amendments made by this section with
respect to entities applying for certification as certified
professional employer organizations or entities that have
been so certified. Such rules shall be designed in a manner
which streamlines, to the extent possible, the application of
requirements of such amendments, the exchange of information
between a certified professional employer organization and
its customers, and the reporting and recordkeeping
obligations of the certified professional employer
organization.
(f) User Fees.--Subsection (b) of section 7528 (relating to
Internal Revenue Service user fees) is amended by adding at
the end the following new paragraph:
``(4) Certified professional employer organizations.--The
fee charged under the program in connection with the
certification by the Secretary of a professional employer
organization under section 7705 shall not exceed $500.''.
(g) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply with respect to wages for services performed on or
after January 1 of the first calendar year beginning more
than 12 months after the date of the enactment of this Act.
(2) Certification program.--The Secretary of the Treasury
shall establish the certification program described in
section 7705(b) of the Internal Revenue Code of 1986, as
added by subsection (b), not later than 6 months before the
effective date determined under paragraph (1).
(h) No Inference.--Nothing contained in this section or the
amendments made by this section shall be construed to create
any inference with respect to the determination of who is an
employee or employer--
(1) for Federal tax purposes (other than the purposes set
forth in the amendments made by this section), or
(2) for purposes of any other provision of law.

PART II--SUBCHAPTER S PROVISIONS

SEC. 211. CAPITAL GAIN OF S CORPORATION NOT TREATED AS
PASSIVE INVESTMENT INCOME.

(a) In General.--Section 1362(d)(3) is amended by striking
subparagraphs (B), (C), (D), (E), and (F) and inserting the
following new subparagraph:
``(B) Passive investment income defined.--
``(i) In general.--Except as otherwise provided in this
subparagraph, the term `passive investment income' means
gross receipts derived from royalties, rents, dividends,
interest, and annuities.
``(ii) Exception for interest on notes from sales of
inventory.--The term `passive investment income' shall not
include interest on any obligation acquired in the ordinary
course of the corporation's trade or business from its sale
of property described in section 1221(a)(1).
``(iii) Treatment of certain lending or finance
companies.--If the S corporation meets the requirements of
section 542(c)(6) for the taxable year, the term `passive
investment income' shall not include gross receipts for the
taxable year which are derived directly from the active and
regular conduct of a lending or finance business (as defined
in section 542(d)(1)).
``(iv) Treatment of certain dividends.--If an S corporation
holds stock in a C corporation meeting the requirements of
section 1504(a)(2), the term `passive investment income'
shall not include dividends from such C corporation to the
extent such dividends are attributable to the earnings and
profits of such C corporation derived from the active conduct
of a trade or business.
``(v) Exception for banks, etc.--In the case of a bank (as
defined in section 581) or a depository institution holding
company (as defined in section 3(w)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(w)(1)), the term `passive
investment income' shall not include--

``(I) interest income earned by such bank or company, or
``(II) dividends on assets required to be held by such bank
or company, including stock in the Federal Reserve Bank, the
Federal Home Loan Bank, or the Federal Agricultural Mortgage
Bank or participation certificates issued by a Federal
Intermediate Credit Bank.''.

(b) Conforming Amendment.--Clause (i) of section
1042(c)(4)(A) is amended by striking ``section
1362(d)(3)(C)'' and inserting ``section 1362(d)(3)(B)''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

[[Page S857]]

SEC. 212. TREATMENT OF BANK DIRECTOR SHARES.

(a) In General.--Section 1361 (defining S corporation) is
amended by adding at the end the following new subsection:
``(f) Restricted Bank Director Stock.--
``(1) In general.--Restricted bank director stock shall not
be taken into account as outstanding stock of the S
corporation in applying this subchapter (other than section
1368(f)).
``(2) Restricted bank director stock.--For purposes of this
subsection, the term `restricted bank director stock' means
stock in a bank (as defined in section 581) or a depository
institution holding company (as defined in section 3(w)(1) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1)), if
such stock--
``(A) is required to be held by an individual under
applicable Federal or State law in order to permit such
individual to serve as a director, and
``(B) is subject to an agreement with such bank or company
(or a corporation which controls (within the meaning of
section 368(c)) such bank or company) pursuant to which the
holder is required to sell back such stock (at the same price
as the individual acquired such stock) upon ceasing to hold
the office of director.
``(3) Cross reference.--

``For treatment of certain distributions with respect to restricted
bank director stock, see section 1368(f)''.
(b) Distributions.--Section 1368 (relating to
distributions) is amended by adding at the end the following
new subsection:
``(f) Restricted Bank Director Stock.--If a director
receives a distribution (not in part or full payment in
exchange for stock) from an S corporation with respect to any
restricted bank director stock (as defined in section
1361(f)), the amount of such distribution--
``(1) shall be includible in gross income of the director,
and
``(2) shall be deductible by the corporation for the
taxable year of such corporation in which or with which ends
the taxable year in which such amount in included in the
gross income of the director.''.
(c) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2006.
(2) Special rule for treatment as second class of stock.--
In the case of any taxable year beginning after December 31,
1996, restricted bank director stock (as defined in section
1361(f) of the Internal Revenue Code of 1986, as added by
this section) shall not be taken into account in determining
whether an S corporation has more than 1 class of stock.

SEC. 213. SPECIAL RULE FOR BANK REQUIRED TO CHANGE FROM THE
RESERVE METHOD OF ACCOUNTING ON BECOMING S
CORPORATION.

(a) In General.--Section 1361, as amended by this Act, is
amended by adding at the end the following new subsection:
``(g) Special Rule for Bank Required to Change From the
Reserve Method of Accounting on Becoming S Corporation.--In
the case of a bank which changes from the reserve method of
accounting for bad debts described in section 585 or 593 for
its first taxable year for which an election under section
1362(a) is in effect, the bank may elect to take into account
any adjustments under section 481 by reason of such change
for the taxable year immediately preceding such first taxable
year.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2006.

SEC. 214. TREATMENT OF THE SALE OF INTEREST IN A QUALIFIED
SUBCHAPTER S SUBSIDIARY.

(a) In General.--Subparagraph (C) of section 1361(b)(3)
(relating to treatment of terminations of qualified
subchapter S subsidiary status) is amended--
(1) by striking ``For purposes of this title,'' and
inserting the following:
``(i) In general.--For purposes of this title,'', and
(2) by inserting at the end the following new clause:
``(ii) Termination by reason of sale of stock.--If the
failure to meet the requirements of subparagraph (B) is by
reason of the sale of stock of a corporation which is a
qualified subchapter S subsidiary, the sale of such stock
shall be treated as if--

``(I) the sale were a sale of an undivided interest in the
assets of such corporation (based on the percentage of the
corporation's stock sold), and
``(II) the sale were followed by an acquisition by such
corporation of all of its assets (and the assumption by such
corporation of all of its liabilities) in a transaction to
which section 351 applies.''.

(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2006 .

SEC. 215. ELIMINATION OF ALL EARNINGS AND PROFITS
ATTRIBUTABLE TO PRE-1983 YEARS FOR CERTAIN
CORPORATIONS.

In the case of a corporation which is--
(1) described in section 1311(a)(1) of the Small Business
Job Protection Act of 1996, and
(2) not described in section 1311(a)(2) of such Act,

the amount of such corporation's accumulated earnings and
profits (for the first taxable year beginning after the date
of the enactment of this Act) shall be reduced by an amount
equal to the portion (if any) of such accumulated earnings
and profits which were accumulated in any taxable year
beginning before January 1, 1983, for which such corporation
was an electing small business corporation under subchapter S
of the Internal Revenue Code of 1986.

SEC. 216. EXPANSION OF QUALIFYING BENEFICIARIES OF AN
ELECTING SMALL BUSINESS TRUST.

(a) No Look Through for Eligibility Purposes.--Clause (v)
of section 1361(c)(2)(B) is amended by adding at the end the
following new sentence: ``This clause shall not apply for
purposes of subsection (b)(1)(C).''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.

Subtitle B--Revenue Provisions

SEC. 221. MODIFICATION OF EFFECTIVE DATE OF LEASING
PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF
2004.

(a) Leases to Foreign Entities.--Section 849(b) of the
American Jobs Creation Act of 2004 is amended by adding at
the end the following new paragraph:
``(5) Leases to foreign entities.--In the case of tax-
exempt use property leased to a tax-exempt entity which is a
foreign person or entity, the amendments made by this part
shall apply to taxable years beginning after December 31,
2006, with respect to leases entered into on or before March
12, 2004.''.
(b) Effective Date.--The amendment made by this section
shall take effect as if included in the enactment of the
American Jobs Creation Act of 2004.

SEC. 222. APPLICATION OF RULES TREATING INVERTED CORPORATIONS
AS DOMESTIC CORPORATIONS TO CERTAIN
TRANSACTIONS OCCURRING AFTER MARCH 20, 2002.

(a) In General.--Section 7874(b) (relating to inverted
corporations treated as domestic corporations) is amended to
read as follows:
``(b) Inverted Corporations Treated as Domestic
Corporations.--
``(1) In general.--Notwithstanding section 7701(a)(4), a
foreign corporation shall be treated for purposes of this
title as a domestic corporation if such corporation would be
a surrogate foreign corporation if subsection (a)(2) were
applied by substituting `80 percent' for `60 percent'.
``(2) Special rule for certain transactions occurring after
march 20, 2002.--
``(A) In general.--If--
``(i) paragraph (1) does not apply to a foreign
corporation, but
``(ii) paragraph (1) would apply to such corporation if, in
addition to the substitution under paragraph (1), subsection
(a)(2) were applied by substituting `March 20, 2002' for
`March 4, 2003' each place it appears,

then paragraph (1) shall apply to such corporation but only
with respect to taxable years of such corporation beginning
after December 31, 2006.
``(B) Special rules.--Subject to such rules as the
Secretary may prescribe, in the case of a corporation to
which paragraph (1) applies by reason of this paragraph--
``(i) the corporation shall be treated, as of the close of
its last taxable year beginning before January 1, 2007, as
having transferred all of its assets, liabilities, and
earnings and profits to a domestic corporation in a
transaction with respect to which no tax is imposed under
this title,
``(ii) the bases of the assets transferred in the
transaction to the domestic corporation shall be the same as
the bases of the assets in the hands of the foreign
corporation, subject to any adjustments under this title for
built-in losses,
``(iii) the basis of the stock of any shareholder in the
domestic corporation shall be the same as the basis of the
stock of the shareholder in the foreign corporation for which
it is treated as exchanged, and
``(iv) the transfer of any earnings and profits by reason
of clause (i) shall be disregarded in determining any deemed
dividend or foreign tax creditable to the domestic
corporation with respect to such transfer.
``(C) Regulations.--The Secretary may prescribe such
regulations as may be necessary or appropriate to carry out
this paragraph, including regulations to prevent the
avoidance of the purposes of this paragraph.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2006.

SEC. 223. DENIAL OF DEDUCTION FOR PUNITIVE DAMAGES.

(a) Disallowance of Deduction.--
(1) In general.--Section 162(g) (relating to treble damage
payments under the antitrust laws) is amended--
(A) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively,
(B) by striking ``If'' and inserting:
``(1) Treble damages.--If'', and
(C) by adding at the end the following new paragraph:
``(2) Punitive damages.--No deduction shall be allowed
under this chapter for any amount paid or incurred for
punitive damages in connection with any judgment in, or
settlement of, any action. This paragraph shall not apply to
punitive damages described in section 104(c).''.

[[Page S858]]

(2) Conforming amendment.--The heading for section 162(g)
is amended by inserting ``Or Punitive Damages'' after
``Laws''.
(b) Inclusion in Income of Punitive Damages Paid by Insurer
or Otherwise.--
(1) In general.--Part II of subchapter B of chapter 1
(relating to items specifically included in gross income) is
amended by adding at the end the following new section:

``SEC. 91. PUNITIVE DAMAGES COMPENSATED BY INSURANCE OR
OTHERWISE.

``Gross income shall include any amount paid to or on
behalf of a taxpayer as insurance or otherwise by reason of
the taxpayer's liability (or agreement) to pay punitive
damages.''.
(2) Reporting requirements.--Section 6041 (relating to
information at source) is amended by adding at the end the
following new subsection:
``(h) Section To Apply to Punitive Damages Compensation.--
This section shall apply to payments by a person to or on
behalf of another person as insurance or otherwise by reason
of the other person's liability (or agreement) to pay
punitive damages.''.
(3) Conforming amendment.--The table of sections for part
II of subchapter B of chapter 1 is amended by adding at the
end the following new item:

``Sec. 91. Punitive damages compensated by insurance or otherwise.''.
(c) Effective Date.--The amendments made by this section
shall apply to damages paid or incurred on or after the date
of the enactment of this Act.

SEC. 224. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES,
AND OTHER AMOUNTS.

(a) In General.--Subsection (f) of section 162 (relating to
trade or business expenses) is amended to read as follows:
``(f) Fines, Penalties, and Other Amounts.--
``(1) In general.--Except as provided in paragraph (2), no
deduction otherwise allowable shall be allowed under this
chapter for any amount paid or incurred (whether by suit,
agreement, or otherwise) to, or at the direction of, a
government or entity described in paragraph (4) in relation
to the violation of any law or the investigation or inquiry
by such government or entity into the potential violation of
any law.
``(2) Exception for amounts constituting restitution or
paid to come into compliance with law.--Paragraph (1) shall
not apply to any amount which--
``(A) the taxpayer establishes--
``(i) constitutes restitution (including remediation of
property) for damage or harm caused by or which may be caused
by the violation of any law or the potential violation of any
law, or
``(ii) is paid to come into compliance with any law which
was violated or involved in the investigation or inquiry, and
``(B) is identified as restitution or as an amount paid to
come into compliance with the law, as the case may be, in the
court order or settlement agreement.

A taxpayer shall not meet the requirements of subparagraph
(A) solely by reason an identification under subparagraph
(B). This paragraph shall not apply to any amount paid or
incurred as reimbursement to the government or entity for the
costs of any investigation or litigation.
``(3) Exception for amounts paid or incurred as the result
of certain court orders.--Paragraph (1) shall not apply to
any amount paid or incurred by order of a court in a suit in
which no government or entity described in paragraph (4) is a
party.
``(4) Certain nongovernmental regulatory entities.--An
entity is described in this paragraph if it is--
``(A) a nongovernmental entity which exercises self-
regulatory powers (including imposing sanctions) in
connection with a qualified board or exchange (as defined in
section 1256(g)(7)), or
``(B) to the extent provided in regulations, a
nongovernmental entity which exercises self-regulatory powers
(including imposing sanctions) as part of performing an
essential governmental function.
``(5) Exception for taxes due.--Paragraph (1) shall not
apply to any amount paid or incurred as taxes due.''.
(b) Reporting of Deductible Amounts.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 is amended by inserting after section 6050V the
following new section:

``SEC. 6050W. INFORMATION WITH RESPECT TO CERTAIN FINES,
PENALTIES, AND OTHER AMOUNTS.

``(a) Requirement of Reporting.--
``(1) In general.--The appropriate official of any
government or entity which is described in section 162(f)(4)
which is involved in a suit or agreement described in
paragraph (2) shall make a return in such form as determined
by the Secretary setting forth--
``(A) the amount required to be paid as a result of the
suit or agreement to which paragraph (1) of section 162(f)
applies,
``(B) any amount required to be paid as a result of the
suit or agreement which constitutes restitution or
remediation of property, and
``(C) any amount required to be paid as a result of the
suit or agreement for the purpose of coming into compliance
with any law which was violated or involved in the
investigation or inquiry.
``(2) Suit or agreement described.--
``(A) In general.--A suit or agreement is described in this
paragraph if--
``(i) it is--

``(I) a suit with respect to a violation of any law over
which the government or entity has authority and with respect
to which there has been a court order, or
``(II) an agreement which is entered into with respect to a
violation of any law over which the government or entity has
authority, or with respect to an investigation or inquiry by
the government or entity into the potential violation of any
law over which such government or entity has authority, and

``(ii) the aggregate amount involved in all court orders
and agreements with respect to the violation, investigation,
or inquiry is $600 or more.
``(B) Adjustment of reporting threshold.--The Secretary may
adjust the $600 amount in subparagraph (A)(ii) as necessary
in order to ensure the efficient administration of the
internal revenue laws.
``(3) Time of filing.--The return required under this
subsection shall be filed not later than--
``(A) 30 days after the date on which a court order is
issued with respect to the suit or the date the agreement is
entered into, as the case may be, or
``(B) the date specified Secretary.
``(b) Statements To Be Furnished to Individuals Involved in
the Settlement.--Every person required to make a return under
subsection (a) shall furnish to each person who is a party to
the suit or agreement a written statement showing--
``(1) the name of the government or entity, and
``(2) the information supplied to the Secretary under
subsection (a)(1).

The written statement required under the preceding sentence
shall be furnished to the person at the same time the
government or entity provides the Secretary with the
information required under subsection (a).
``(c) Appropriate Official Defined.--For purposes of this
section, the term `appropriate official' means the officer or
employee having control of the suit, investigation, or
inquiry or the person appropriately designated for purposes
of this section.''.
(2) Conforming amendment.--The table of sections for
subpart B of part III of subchapter A of chapter 61 is
amended by inserting after the item relating to section 6050V
the following new item:

``Sec. 6050W. Information with respect to certain fines, penalties, and
other amounts.''.

(c) Effective Date.--The amendments made by this section
shall apply to amounts paid or incurred on or after the date
of the enactment of this Act, except that such amendments
shall not apply to amounts paid or incurred under any binding
order or agreement entered into before such date. Such
exception shall not apply to an order or agreement requiring
court approval unless the approval was obtained before such
date.

SEC. 225. REVISION OF TAX RULES ON EXPATRIATION OF
INDIVIDUALS.

(a) In General.--Subpart A of part II of subchapter N of
chapter 1 is amended by inserting after section 877 the
following new section:

``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

``(a) General Rules.--For purposes of this subtitle--
``(1) Mark to market.--Except as provided in subsections
(d) and (f), all property of a covered expatriate to whom
this section applies shall be treated as sold on the day
before the expatriation date for its fair market value.
``(2) Recognition of gain or loss.--In the case of any sale
under paragraph (1)--
``(A) notwithstanding any other provision of this title,
any gain arising from such sale shall be taken into account
for the taxable year of the sale, and
``(B) any loss arising from such sale shall be taken into
account for the taxable year of the sale to the extent
otherwise provided by this title, except that section 1091
shall not apply to any such loss.

Proper adjustment shall be made in the amount of any gain or
loss subsequently realized for gain or loss taken into
account under the preceding sentence.
``(3) Exclusion for certain gain.--
``(A) In general.--The amount which, but for this
paragraph, would be includible in the gross income of any
individual by reason of this section shall be reduced (but
not below zero) by $600,000. For purposes of this paragraph,
allocable expatriation gain taken into account under
subsection (f)(2) shall be treated in the same manner as an
amount required to be includible in gross income.
``(B) Cost-of-living adjustment.--
``(i) In general.--In the case of an expatriation date
occurring in any calendar year after 2007, the $600,000
amount under subparagraph (A) shall be increased by an amount
equal to--

``(I) such dollar amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year, determined by
substituting `calendar year 2006' for `calendar year 1992' in
subparagraph (B) thereof.

``(ii) Rounding rules.--If any amount after adjustment
under clause (i) is not a multiple of $1,000, such amount
shall be rounded to the next lower multiple of $1,000.
``(4) Election to continue to be taxed as united states
citizen.--
``(A) In general.--If a covered expatriate elects the
application of this paragraph--
``(i) this section (other than this paragraph and
subsection (i)) shall not apply to the expatriate, but

[[Page S859]]

``(ii) in the case of property to which this section would
apply but for such election, the expatriate shall be subject
to tax under this title in the same manner as if the
individual were a United States citizen.
``(B) Requirements.--Subparagraph (A) shall not apply to an
individual unless the individual--
``(i) provides security for payment of tax in such form and
manner, and in such amount, as the Secretary may require,
``(ii) consents to the waiver of any right of the
individual under any treaty of the United States which would
preclude assessment or collection of any tax which may be
imposed by reason of this paragraph, and
``(iii) complies with such other requirements as the
Secretary may prescribe.
``(C) Election.--An election under subparagraph (A) shall
apply to all property to which this section would apply but
for the election and, once made, shall be irrevocable. Such
election shall also apply to property the basis of which is
determined in whole or in part by reference to the property
with respect to which the election was made.
``(b) Election To Defer Tax.--
``(1) In general.--If the taxpayer elects the application
of this subsection with respect to any property treated as
sold by reason of subsection (a), the payment of the
additional tax attributable to such property shall be
postponed until the due date of the return for the taxable
year in which such property is disposed of (or, in the case
of property disposed of in a transaction in which gain is not
recognized in whole or in part, until such other date as the
Secretary may prescribe).
``(2) Determination of tax with respect to property.--For
purposes of paragraph (1), the additional tax attributable to
any property is an amount which bears the same ratio to the
additional tax imposed by this chapter for the taxable year
solely by reason of subsection (a) as the gain taken into
account under subsection (a) with respect to such property
bears to the total gain taken into account under subsection
(a) with respect to all property to which subsection (a)
applies.
``(3) Termination of postponement.--No tax may be postponed
under this subsection later than the due date for the return
of tax imposed by this chapter for the taxable year which
includes the date of death of the expatriate (or, if earlier,
the time that the security provided with respect to the
property fails to meet the requirements of paragraph (4),
unless the taxpayer corrects such failure within the time
specified by the Secretary).
``(4) Security.--
``(A) In general.--No election may be made under paragraph
(1) with respect to any property unless adequate security is
provided to the Secretary with respect to such property.
``(B) Adequate security.--For purposes of subparagraph (A),
security with respect to any property shall be treated as
adequate security if--
``(i) it is a bond in an amount equal to the deferred tax
amount under paragraph (2) for the property, or
``(ii) the taxpayer otherwise establishes to the
satisfaction of the Secretary that the security is adequate.
``(5) Waiver of certain rights.--No election may be made
under paragraph (1) unless the taxpayer consents to the
waiver of any right under any treaty of the United States
which would preclude assessment or collection of any tax
imposed by reason of this section.
``(6) Elections.--An election under paragraph (1) shall
only apply to property described in the election and, once
made, is irrevocable. An election may be made under paragraph
(1) with respect to an interest in a trust with respect to
which gain is required to be recognized under subsection
(f)(1).
``(7) Interest.--For purposes of section 6601--
``(A) the last date for the payment of tax shall be
determined without regard to the election under this
subsection, and
``(B) section 6621(a)(2) shall be applied by substituting
`5 percentage points' for `3 percentage points' in
subparagraph (B) thereof.
``(c) Covered Expatriate.--For purposes of this section--
``(1) In general.--Except as provided in paragraph (2), the
term `covered expatriate' means an expatriate.
``(2) Exceptions.--An individual shall not be treated as a
covered expatriate if--
``(A) the individual--
``(i) became at birth a citizen of the United States and a
citizen of another country and, as of the expatriation date,
continues to be a citizen of, and is taxed as a resident of,
such other country, and
``(ii) has not been a resident of the United States (as
defined in section 7701(b)(1)(A)(ii)) during the 5 taxable
years ending with the taxable year during which the
expatriation date occurs, or
``(B)(i) the individual's relinquishment of United States
citizenship occurs before such individual attains age 18\1/
2\, and
``(ii) the individual has been a resident of the United
States (as so defined) for not more than 5 taxable years
before the date of relinquishment.
``(d) Exempt Property; Special Rules for Pension Plans.--
``(1) Exempt property.--This section shall not apply to the
following:
``(A) United states real property interests.--Any United
States real property interest (as defined in section
897(c)(1)), other than stock of a United States real property
holding corporation which does not, on the day before the
expatriation date, meet the requirements of section
897(c)(2).
``(B) Specified property.--Any property or interest in
property not described in subparagraph (A) which the
Secretary specifies in regulations.
``(2) Special rules for certain retirement plans.--
``(A) In general.--If a covered expatriate holds on the day
before the expatriation date any interest in a retirement
plan to which this paragraph applies--
``(i) such interest shall not be treated as sold for
purposes of subsection (a)(1), but
``(ii) an amount equal to the present value of the
expatriate's nonforfeitable accrued benefit shall be treated
as having been received by such individual on such date as a
distribution under the plan.
``(B) Treatment of subsequent distributions.--In the case
of any distribution on or after the expatriation date to or
on behalf of the covered expatriate from a plan from which
the expatriate was treated as receiving a distribution under
subparagraph (A), the amount otherwise includible in gross
income by reason of the subsequent distribution shall be
reduced by the excess of the amount includible in gross
income under subparagraph (A) over any portion of such amount
to which this subparagraph previously applied.
``(C) Treatment of subsequent distributions by plan.--For
purposes of this title, a retirement plan to which this
paragraph applies, and any person acting on the plan's
behalf, shall treat any subsequent distribution described in
subparagraph (B) in the same manner as such distribution
would be treated without regard to this paragraph.
``(D) Applicable plans.--This paragraph shall apply to--
``(i) any qualified retirement plan (as defined in section
4974(c)),
``(ii) an eligible deferred compensation plan (as defined
in section 457(b)) of an eligible employer described in
section 457(e)(1)(A), and
``(iii) to the extent provided in regulations, any foreign
pension plan or similar retirement arrangements or programs.
``(e) Definitions.--For purposes of this section--
``(1) Expatriate.--The term `expatriate' means--
``(A) any United States citizen who relinquishes
citizenship, and
``(B) any long-term resident of the United States who--
``(i) ceases to be a lawful permanent resident of the
United States (within the meaning of section 7701(b)(6)), or
``(ii) commences to be treated as a resident of a foreign
country under the provisions of a tax treaty between the
United States and the foreign country and who does not waive
the benefits of such treaty applicable to residents of the
foreign country.
``(2) Expatriation date.--The term `expatriation date'
means--
``(A) the date an individual relinquishes United States
citizenship, or
``(B) in the case of a long-term resident of the United
States, the date of the event described in clause (i) or (ii)
of paragraph (1)(B).
``(3) Relinquishment of citizenship.--A citizen shall be
treated as relinquishing United States citizenship on the
earliest of--
``(A) the date the individual renounces such individual's
United States nationality before a diplomatic or consular
officer of the United States pursuant to paragraph (5) of
section 349(a) of the Immigration and Nationality Act (8
U.S.C. 1481(a)(5)),
``(B) the date the individual furnishes to the United
States Department of State a signed statement of voluntary
relinquishment of United States nationality confirming the
performance of an act of expatriation specified in paragraph
(1), (2), (3), or (4) of section 349(a) of the Immigration
and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
``(C) the date the United States Department of State issues
to the individual a certificate of loss of nationality, or
``(D) the date a court of the United States cancels a
naturalized citizen's certificate of naturalization.

Subparagraph (A) or (B) shall not apply to any individual
unless the renunciation or voluntary relinquishment is
subsequently approved by the issuance to the individual of a
certificate of loss of nationality by the United States
Department of State.
``(4) Long-term resident.--The term `long-term resident'
has the meaning given to such term by section 877(e)(2).
``(f) Special Rules Applicable to Beneficiaries' Interests
in Trust.--
``(1) In general.--Except as provided in paragraph (2), if
an individual is determined under paragraph (3) to hold an
interest in a trust on the day before the expatriation date--
``(A) the individual shall not be treated as having sold
such interest,
``(B) such interest shall be treated as a separate share in
the trust, and
``(C)(i) such separate share shall be treated as a separate
trust consisting of the assets allocable to such share,
``(ii) the separate trust shall be treated as having sold
its assets on the day before the expatriation date for their
fair market value and as having distributed all of its assets
to the individual as of such time, and
``(iii) the individual shall be treated as having
recontributed the assets to the separate trust.

Subsection (a)(2) shall apply to any income, gain, or loss of
the individual arising from a

[[Page S860]]

distribution described in subparagraph (C)(ii). In
determining the amount of such distribution, proper
adjustments shall be made for liabilities of the trust
allocable to an individual's share in the trust.
``(2) Special rules for interests in qualified trusts.--
``(A) In general.--If the trust interest described in
paragraph (1) is an interest in a qualified trust--
``(i) paragraph (1) and subsection (a) shall not apply, and
``(ii) in addition to any other tax imposed by this title,
there is hereby imposed on each distribution with respect to
such interest a tax in the amount determined under
subparagraph (B).
``(B) Amount of tax.--The amount of tax under subparagraph
(A)(ii) shall be equal to the lesser of--
``(i) the highest rate of tax imposed by section 1(e) for
the taxable year which includes the day before the
expatriation date, multiplied by the amount of the
distribution, or
``(ii) the balance in the deferred tax account immediately
before the distribution determined without regard to any
increases under subparagraph (C)(ii) after the 30th day
preceding the distribution.
``(C) Deferred tax account.--For purposes of subparagraph
(B)(ii)--
``(i) Opening balance.--The opening balance in a deferred
tax account with respect to any trust interest is an amount
equal to the tax which would have been imposed on the
allocable expatriation gain with respect to the trust
interest if such gain had been included in gross income under
subsection (a).
``(ii) Increase for interest.--The balance in the deferred
tax account shall be increased by the amount of interest
determined (on the balance in the account at the time the
interest accrues), for periods after the 90th day after the
expatriation date, by using the rates and method applicable
under section 6621 for underpayments of tax for such periods,
except that section 6621(a)(2) shall be applied by
substituting `5 percentage points' for `3 percentage points'
in subparagraph (B) thereof.
``(iii) Decrease for taxes previously paid.--The balance in
the tax deferred account shall be reduced--

``(I) by the amount of taxes imposed by subparagraph (A) on
any distribution to the person holding the trust interest,
and
``(II) in the case of a person holding a nonvested
interest, to the extent provided in regulations, by the
amount of taxes imposed by subparagraph (A) on distributions
from the trust with respect to nonvested interests not held
by such person.

``(D) Allocable expatriation gain.--For purposes of this
paragraph, the allocable expatriation gain with respect to
any beneficiary's interest in a trust is the amount of gain
which would be allocable to such beneficiary's vested and
nonvested interests in the trust if the beneficiary held
directly all assets allocable to such interests.
``(E) Tax deducted and withheld.--
``(i) In general.--The tax imposed by subparagraph (A)(ii)
shall be deducted and withheld by the trustees from the
distribution to which it relates.
``(ii) Exception where failure to waive treaty rights.--If
an amount may not be deducted and withheld under clause (i)
by reason of the distributee failing to waive any treaty
right with respect to such distribution--

``(I) the tax imposed by subparagraph (A)(ii) shall be
imposed on the trust and each trustee shall be personally
liable for the amount of such tax, and
``(II) any other beneficiary of the trust shall be entitled
to recover from the distributee the amount of such tax
imposed on the other beneficiary.

``(F) Disposition.--If a trust ceases to be a qualified
trust at any time, a covered expatriate disposes of an
interest in a qualified trust, or a covered expatriate
holding an interest in a qualified trust dies, then, in lieu
of the tax imposed by subparagraph (A)(ii), there is hereby
imposed a tax equal to the lesser of--
``(i) the tax determined under paragraph (1) as if the day
before the expatriation date were the date of such cessation,
disposition, or death, whichever is applicable, or
``(ii) the balance in the tax deferred account immediately
before such date.

Such tax shall be imposed on the trust and each trustee shall
be personally liable for the amount of such tax and any other
beneficiary of the trust shall be entitled to recover from
the covered expatriate or the estate the amount of such tax
imposed on the other beneficiary.
``(G) Definitions and special rules.--For purposes of this
paragraph--
``(i) Qualified trust.--The term `qualified trust' means a
trust which is described in section 7701(a)(30)(E).
``(ii) Vested interest.--The term `vested interest' means
any interest which, as of the day before the expatriation
date, is vested in the beneficiary.
``(iii) Nonvested interest.--The term `nonvested interest'
means, with respect to any beneficiary, any interest in a
trust which is not a vested interest. Such interest shall be
determined by assuming the maximum exercise of discretion in
favor of the beneficiary and the occurrence of all
contingencies in favor of the beneficiary.
``(iv) Adjustments.--The Secretary may provide for such
adjustments to the bases of assets in a trust or a deferred
tax account, and the timing of such adjustments, in order to
ensure that gain is taxed only once.
``(v) Coordination with retirement plan rules.--This
subsection shall not apply to an interest in a trust which is
part of a retirement plan to which subsection (d)(2) applies.
``(3) Determination of beneficiaries' interest in trust.--
``(A) Determinations under paragraph (1).--For purposes of
paragraph (1), a beneficiary's interest in a trust shall be
based upon all relevant facts and circumstances, including
the terms of the trust instrument and any letter of wishes or
similar document, historical patterns of trust distributions,
and the existence of and functions performed by a trust
protector or any similar adviser.
``(B) Other determinations.--For purposes of this section--
``(i) Constructive ownership.--If a beneficiary of a trust
is a corporation, partnership, trust, or estate, the
shareholders, partners, or beneficiaries shall be deemed to
be the trust beneficiaries for purposes of this section.
``(ii) Taxpayer return position.--A taxpayer shall clearly
indicate on its income tax return--

``(I) the methodology used to determine that taxpayer's
trust interest under this section, and
``(II) if the taxpayer knows (or has reason to know) that
any other beneficiary of such trust is using a different
methodology to determine such beneficiary's trust interest
under this section.

``(g) Termination of Deferrals, Etc.--In the case of any
covered expatriate, notwithstanding any other provision of
this title--
``(1) any period during which recognition of income or gain
is deferred shall terminate on the day before the
expatriation date, and
``(2) any extension of time for payment of tax shall cease
to apply on the day before the expatriation date and the
unpaid portion of such tax shall be due and payable at the
time and in the manner prescribed by the Secretary.
``(h) Imposition of Tentative Tax.--
``(1) In general.--If an individual is required to include
any amount in gross income under subsection (a) for any
taxable year, there is hereby imposed, immediately before the
expatriation date, a tax in an amount equal to the amount of
tax which would be imposed if the taxable year were a short
taxable year ending on the expatriation date.
``(2) Due date.--The due date for any tax imposed by
paragraph (1) shall be the 90th day after the expatriation
date.
``(3) Treatment of tax.--Any tax paid under paragraph (1)
shall be treated as a payment of the tax imposed by this
chapter for the taxable year to which subsection (a) applies.
``(4) Deferral of tax.--The provisions of subsection (b)
shall apply to the tax imposed by this subsection to the
extent attributable to gain includible in gross income by
reason of this section.
``(i) Special Liens for Deferred Tax Amounts.--
``(1) Imposition of lien.--
``(A) In general.--If a covered expatriate makes an
election under subsection (a)(4) or (b) which results in the
deferral of any tax imposed by reason of subsection (a), the
deferred amount (including any interest, additional amount,
addition to tax, assessable penalty, and costs attributable
to the deferred amount) shall be a lien in favor of the
United States on all property of the expatriate located in
the United States (without regard to whether this section
applies to the property).
``(B) Deferred amount.--For purposes of this subsection,
the deferred amount is the amount of the increase in the
covered expatriate's income tax which, but for the election
under subsection (a)(4) or (b), would have occurred by reason
of this section for the taxable year including the
expatriation date.
``(2) Period of lien.--The lien imposed by this subsection
shall arise on the expatriation date and continue until--
``(A) the liability for tax by reason of this section is
satisfied or has become unenforceable by reason of lapse of
time, or
``(B) it is established to the satisfaction of the
Secretary that no further tax liability may arise by reason
of this section.
``(3) Certain rules apply.--The rules set forth in
paragraphs (1), (3), and (4) of section 6324A(d) shall apply
with respect to the lien imposed by this subsection as if it
were a lien imposed by section 6324A.
``(j) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this section.''.
(b) Inclusion in Income of Gifts and Bequests Received by
United States Citizens and Residents From Expatriates.--
Section 102 (relating to gifts, etc. not included in gross
income) is amended by adding at the end the following new
subsection:
``(d) Gifts and Inheritances From Covered Expatriates.--
``(1) Treatment of gifts and inheritances.--
``(A) In general.--Subsection (a) shall not exclude from
gross income the value of any property acquired by gift,
bequest, devise, or inheritance from a covered expatriate
after the expatriation date.
``(B) Determination of basis.--Notwithstanding sections
1015 or 1022, the basis of any property described in
subparagraph (A)

[[Page S861]]

in the hands of the donee or the person acquiring such
property from the decedent shall be equal to the fair market
value of the property at the time of the gift, bequest,
devise, or inheritance.
``(2) Exceptions for transfers otherwise subject to estate
or gift tax.--Paragraph (1) shall not apply to any property
if either--
``(A) the gift, bequest, devise, or inheritance is--
``(i) shown on a timely filed return of tax imposed by
chapter 12 as a taxable gift by the covered expatriate, or
``(ii) included in the gross estate of the covered
expatriate for purposes of chapter 11 and shown on a timely
filed return of tax imposed by chapter 11 of the estate of
the covered expatriate, or
``(B) no such return was timely filed but no such return
would have been required to be filed even if the covered
expatriate were a citizen or long-term resident of the United
States.
``(3) Definitions.--For purposes of this subsection, any
term used in this subsection which is also used in section
877A shall have the same meaning as when used in section
877A.''.
(c) Definition of Termination of United States
Citizenship.--Section 7701(a) is amended by adding at the end
the following new paragraph:
``(50) Termination of united states citizenship.--
``(A) In general.--An individual shall not cease to be
treated as a United States citizen before the date on which
the individual's citizenship is treated as relinquished under
section 877A(e)(3).
``(B) Dual citizens.--Under regulations prescribed by the
Secretary, subparagraph (A) shall not apply to an individual
who became at birth a citizen of the United States and a
citizen of another country.''.
(d) Ineligibility for Visa or Admission to United States.--
(1) In general.--Section 212(a)(10)(E) of the Immigration
and Nationality Act (8 U.S.C. 1182(a)(10)(E)) is amended to
read as follows:
``(E) Former citizens not in compliance with expatriation
revenue provisions.--Any alien who is a former citizen of the
United States who relinquishes United States citizenship
(within the meaning of section 877A(e)(3) of the Internal
Revenue Code of 1986) and who is not in compliance with
section 877A of such Code (relating to expatriation) is
inadmissible.''.
(2) Availability of information.--
(A) In general.--Section 6103(l) (relating to disclosure of
returns and return information for purposes other than tax
administration) is amended by adding at the end the following
new paragraph:
``(21) Disclosure to deny visa or admission to certain
expatriates.--Upon written request of the Attorney General or
the Attorney General's delegate, the Secretary shall disclose
whether an individual is in compliance with section 877A (and
if not in compliance, any items of noncompliance) to officers
and employees of the Federal agency responsible for
administering section 212(a)(10)(E) of the Immigration and
Nationality Act solely for the purpose of, and to the extent
necessary in, administering such section 212(a)(10)(E).''.
(B) Safeguards.--Section 6103(p)(4) (relating to
safeguards) is amended by striking ``or (20)'' each place it
appears and inserting ``(20), or (21)''.
(3) Effective dates.--The amendments made by this
subsection shall apply to individuals who relinquish United
States citizenship on or after the date of the enactment of
this Act.
(e) Conforming Amendments.--
(1) Section 877 is amended by adding at the end the
following new subsection:
``(h) Application.--This section shall not apply to an
expatriate (as defined in section 877A(e)) whose expatriation
date (as so defined) occurs on or after the date of the
enactment of this subsection.''.
(2) Section 2107 is amended by adding at the end the
following new subsection:
``(f) Application.--This section shall not apply to any
expatriate subject to section 877A.''.
(3) Section 2501(a)(3) is amended by adding at the end the
following new subparagraph:
``(C) Application.--This paragraph shall not apply to any
expatriate subject to section 877A.''.
(4) Section 6039G(a) is amended by inserting ``or 877A''
after ``section 877(b)''.
(5) The second sentence of section 6039G(d) is amended by
inserting ``or who relinquishes United States citizenship
(within the meaning of section 877A(e)(3))'' after ``section
877(a))''.
(f) Clerical Amendment.--The table of sections for subpart
A of part II of subchapter N of chapter 1 is amended by
inserting after the item relating to section 877 the
following new item:

``Sec. 877A. Tax responsibilities of expatriation.''.

(g) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendments made by this section shall apply to expatriates
(within the meaning of section 877A(e) of the Internal
Revenue Code of 1986, as added by this section) whose
expatriation date (as so defined) occurs on or after the date
of the enactment of this Act.
(2) Gifts and bequests.--Section 102(d) of the Internal
Revenue Code of 1986 (as added by subsection (b)) shall apply
to gifts and bequests received on or after the date of the
enactment of this Act, from an individual or the estate of an
individual whose expatriation date (as so defined) occurs
after such date.
(3) Due date for tentative tax.--The due date under section
877A(h)(2) of the Internal Revenue Code of 1986, as added by
this section, shall in no event occur before the 90th day
after the date of the enactment of this Act.

SEC. 226. LIMITATION ON ANNUAL AMOUNTS WHICH MAY BE DEFERRED
UNDER NONQUALIFIED DEFERRED COMPENSATION
ARRANGEMENTS.

(a) In General.--Section 409A(a) of the Internal Revenue
Code of 1986 (relating to inclusion of gross income under
nonqualified deferred compensation plans) is amended--
(1) by striking ``and (4)'' in subclause (I) of paragraph
(1)(A)(i) and inserting ``(4), and (5)'', and
(2) by adding at the end the following new paragraph:
``(5) Annual limitation on aggregate deferred amounts.--
``(A) Limitation.--The requirements of this paragraph are
met if the plan provides that the aggregate amount of
compensation which is deferred for any taxable year with
respect to a participant under the plan may not exceed the
applicable dollar amount for the taxable year.
``(B) Inclusion of future earnings.--If an amount is
includible under paragraph (1) in the gross income of a
participant for any taxable year by reason of any failure to
meet the requirements of this paragraph, any income (whether
actual or notional) for any subsequent taxable year shall be
included in gross income under paragraph (1)(A) in such
subsequent taxable year to the extent such income--
``(i) is attributable to compensation (or income
attributable to such compensation) required to be included in
gross income by reason of such failure (including by reason
of this subparagraph), and
``(ii) is not subject to a substantial risk of forfeiture
and has not been previously included in gross income.
``(C) Aggregation rule.--For purposes of this paragraph,
all nonqualified deferred compensation plans maintained by
all employers treated as a single employer under subsection
(d)(6) shall be treated as 1 plan.
``(D) Applicable dollar amount.--For purposes of this
paragraph--
``(i) In general.--The term `applicable dollar amount'
means, with respect to any participant, the lesser of--

``(I) the average annual compensation which was payable
during the base period to the participant by the employer
maintaining the nonqualified deferred compensation plan (or
any predecessor of the employer) and which was includible in
the participant's gross income for taxable years in the base
period, or
``(II) $1,000,000.

``(ii) Base period.--

``(I) In general.--The term `base period' means, with
respect to any computation year, the 5-taxable year period
ending with the taxable year preceding the computation year.
``(II) Elections made before computation year.--If, before
the beginning of the computation year, an election described
in paragraph (4)(B) is made by the participant to have
compensation for services performed in the computation year
deferred under a nonqualified deferred compensation plan, the
base period shall be the 5-taxable year period ending with
the taxable year preceding the taxable year in which the
election is made.
``(III) Computation year.--For purposes of this clause, the
term `computation year' means any taxable year of the
participant for which the limitation under subparagraph (A)
is being determined.
``(IV) Special rule for employees of less than 5 years.--If
a participant did not perform services for the employer
maintaining the nonqualified deferred compensation plan (or
any predecessor of the employer) during the entire 5-taxable
year period referred to in subparagraph (A) or (B), only the
portion of such period during which the participant performed
such services shall be taken into account.''.

(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2006,
except that--
(A) the amendments shall only apply to amounts deferred
after December 31, 2006 (and to earnings on such amounts),
and
(B) taxable years beginning on or before December 31, 2006,
shall be taken into account in determining the average annual
compensation of a participant during any base period for
purposes of section 409A(a)(5)(D) of the Internal Revenue
Code of 1986 (as added by such amendments).
(2) Guidance relating to certain existing arrangements.--
Not later than 60 days after the date of the enactment of
this Act, the Secretary of the Treasury shall issue guidance
providing a limited period during which a nonqualified
deferred compensation plan adopted before December 31, 2006,
may, without violating the requirements of section 409A(a) of
such Code, be amended--
(A) to provide that a participant may, no later than
December 31, 2007, cancel or modify an outstanding deferral
election with regard to all or a portion of amounts deferred
after December 31, 2006, to the extent necessary for the plan
to meet the requirements of section 409A(a)(5) of such Code
(as added by the amendments made by this section),

[[Page S862]]

but only if amounts subject to the cancellation or
modification are, to the extent not previously included in
gross income, includible in income of the participant when no
longer subject to substantial risk of forfeiture, and
(B) to conform to the requirements of section 409A(a)(5) of
such Code (as added by the amendments made by this section)
with regard to amounts deferred after December 31, 2006.

SEC. 227. INCREASE IN CRIMINAL MONETARY PENALTY LIMITATION
FOR THE UNDERPAYMENT OR OVERPAYMENT OF TAX DUE
TO FRAUD.

(a) In General.--Section 7206 (relating to fraud and false
statements) is amended--
(1) by striking ``Any person who--'' and inserting ``(a) In
General.--'', and
(2) by adding at the end the following new subsection:
``(b) Increase in Monetary Limitation for Underpayment or
Overpayment of Tax Due to Fraud.--If any portion of any
underpayment (as defined in section 6664(a)) or overpayment
(as defined in section 6401(a)) of tax required to be shown
on a return is attributable to fraudulent action described in
subsection (a), the applicable dollar amount under subsection
(a) shall in no event be less than an amount equal to such
portion. A rule similar to the rule under section 6663(b)
shall apply for purposes of determining the portion so
attributable.''.
(b) Increase in Penalties.--
(1) Attempt to evade or defeat tax.--Section 7201 is
amended--
(A) by striking ``$100,000'' and inserting ``$500,000'',
(B) by striking ``$500,000'' and inserting ``$1,000,000'',
and
(C) by striking ``5 years'' and inserting ``10 years''.
(2) Willful failure to file return, supply information, or
pay tax.--Section 7203 is amended--
(A) in the first sentence--
(i) by striking ``Any person'' and inserting the following:
``(a) In General.--Any person'', and
(ii) by striking ``$25,000'' and inserting ``$50,000'',
(B) in the third sentence, by striking ``section'' and
inserting ``subsection'', and
(C) by adding at the end the following new subsection:
``(b) Aggravated Failure To File.--
``(1) In general.--In the case of any failure described in
paragraph (2), the first sentence of subsection (a) shall be
applied by substituting--
``(A) `felony' for `misdemeanor',
``(B) `$500,000 ($1,000,000' for `$25,000 ($100,000', and
``(C) `10 years' for `1 year'.''.
``(2) Failure described.--A failure described in this
paragraph is a failure to make a return described in
subsection (a) for a period of 3 or more consecutive taxable
years if the aggregate tax liability for such period is not
less than $100,000.''.
(3) Fraud and false statements.--Section 7206(a) (as
redesignated by subsection (a)) is amended--
(A) by striking ``$100,000'' and inserting ``$500,000'',
(B) by striking ``$500,000'' and inserting ``$1,000,000'',
and
(C) by striking ``3 years'' and inserting ``5 years''.
(c) Effective Date.--The amendments made by this section
shall apply to actions, and failures to act, occurring after
the date of the enactment of this Act.

SEC. 228. DOUBLING OF CERTAIN PENALTIES, FINES, AND INTEREST
ON UNDERPAYMENTS RELATED TO CERTAIN OFFSHORE
FINANCIAL ARRANGEMENTS.

(a) Determination of Penalty.--
(1) In general.--Notwithstanding any other provision of
law, in the case of an applicable taxpayer--
(A) the determination as to whether any interest or
applicable penalty is to be imposed with respect to any
arrangement described in paragraph (2), or to any
underpayment of Federal income tax attributable to items
arising in connection with any such arrangement, shall be
made without regard to the rules of subsections (b), (c), and
(d) of section 6664 of the Internal Revenue Code of 1986, and
(B) if any such interest or applicable penalty is imposed,
the amount of such interest or penalty shall be equal to
twice that determined without regard to this section.
(2) Applicable taxpayer.--For purposes of this subsection--
(A) In general.--The term ``applicable taxpayer'' means a
taxpayer which--
(i) has underreported its United States income tax
liability with respect to any item which directly or
indirectly involves--

(I) any financial arrangement which in any manner relies on
the use of offshore payment mechanisms (including credit,
debit, or charge cards) issued by banks or other entities in
foreign jurisdictions, or
(II) any offshore financial arrangement (including any
arrangement with foreign banks, financial institutions,
corporations, partnerships, trusts, or other entities), and

(ii) has neither signed a closing agreement pursuant to the
Voluntary Offshore Compliance Initiative established by the
Department of the Treasury under Revenue Procedure 2003-11
nor voluntarily disclosed its participation in such
arrangement by notifying the Internal Revenue Service of such
arrangement prior to the issue being raised by the Internal
Revenue Service during an examination.
(B) Authority to waive.--The Secretary of the Treasury or
the Secretary's delegate may waive the application of
paragraph (1) to any taxpayer if the Secretary or the
Secretary's delegate determines that the use of such offshore
payment mechanisms is incidental to the transaction and, in
addition, in the case of a trade or business, such use is
conducted in the ordinary course of the type of trade or
business of the taxpayer.
(C) Issues raised.--For purposes of subparagraph (A)(ii),
an item shall be treated as an issue raised during an
examination if the individual examining the return--
(i) communicates to the taxpayer knowledge about the
specific item, or
(ii) has made a request to the taxpayer for information and
the taxpayer could not make a complete response to that
request without giving the examiner knowledge of the specific
item.
(b) Applicable Penalty.--For purposes of this section, the
term ``applicable penalty'' means any penalty, addition to
tax, or fine imposed under chapter 68 of the Internal Revenue
Code of 1986.
(c) Effective Date.--The provisions of this section shall
apply to interest, penalties, additions to tax, and fines
with respect to any taxable year if, as of the date of the
enactment of this Act, the assessment of any tax, penalty, or
interest with respect to such taxable year is not prevented
by the operation of any law or rule of law.

SEC. 229. INCREASE IN PENALTY FOR BAD CHECKS AND MONEY
ORDERS.

(a) In General.--Section 6657 (relating to bad checks) is
amended--
(1) by striking ``$750'' and inserting ``$1,250'', and
(2) by striking ``$15'' and inserting ``$25''.
(b) Effective Date.--The amendments made by this section
apply to checks or money orders received after the date of
the enactment of this Act.

SEC. 230. TREATMENT OF CONTINGENT PAYMENT CONVERTIBLE DEBT
INSTRUMENTS.

(a) In General.--Section 1275(d) (relating to regulation
authority) is amended--
(1) by striking ``The Secretary'' and inserting the
following:
``(1) In general.--The Secretary'', and
(2) by adding at the end the following new paragraph:
``(2) Treatment of contingent payment convertible debt.--
``(A) In general.--In the case of a debt instrument which--
``(i) is convertible into stock of the issuing corporation,
into stock or debt of a related party (within the meaning of
section 267(b) or 707(b)(1)), or into cash or other property
in an amount equal to the approximate value of such stock or
debt, and
``(ii) provides for contingent payments,

any regulations which require original issue discount to be
determined by reference to the comparable yield of a
noncontingent fixed-rate debt instrument shall be applied as
if the regulations require that such comparable yield be
determined by reference to a noncontingent fixed-rate debt
instrument which is convertible into stock.
``(B) Special rule.--For purposes of subparagraph (A), the
comparable yield shall be determined without taking into
account the yield resulting from the conversion of a debt
instrument into stock.''.
(b) Cross Reference.--Section 163(e)(6) (relating to cross
references) is amended by adding at the end the following:
``For the treatment of contingent payment convertible debt,
see section 1275(d)(2).''.
(c) Effective Date.--The amendments made by this section
shall apply to debt instruments issued on or after the date
of the enactment of this Act.

SEC. 231. EXTENSION OF IRS USER FEES.

Subsection (c) of section 7528 (relating to Internal
Revenue Service user fees) is amended by striking ``September
30, 2014'' and inserting ``September 30, 2016''.

SEC. 232. MODIFICATION OF COLLECTION DUE PROCESS PROCEDURES
FOR EMPLOYMENT TAX LIABILITIES.

(a) In General.--Section 6330(f) (relating to jeopardy and
State refund collection) is amended--
(1) by striking ``; or'' at the end of paragraph (1) and
inserting a comma,
(2) by adding ``or'' at the end of paragraph (2), and
(3) by inserting after paragraph (2) the following new
paragraph:
``(3) the Secretary has served a levy in connection with
the collection of taxes under chapter 21, 22, 23, or 24,''.
(b) Effective Date.--The amendments made by this section
shall apply to levies issued on or after the date that is 120
days after the date of the enactment of this Act.

SEC. 233. MODIFICATIONS TO WHISTLEBLOWER REFORMS.

(a) Modification of Tax Threshold for Awards.--Subparagraph
(B) of section 7623(b)(5), as added by the Tax Relief and
Health Care Act of 2006, is amended by striking
``$2,000,000'' and inserting ``$20,000''.
(b) Whistleblower Office.--
(1) In general.--Section 7623 is amended by adding at the
end the following new subsections:
``(c) Whistleblower Office.--
``(1) In general.--There is established in the Internal
Revenue Service an office to be known as the `Whistleblower
Office' which--
``(A) shall at all times operate at the direction of the
Commissioner and coordinate and

[[Page S863]]

consult with other divisions in the Internal Revenue Service
as directed by the Commissioner,
``(B) shall analyze information received from any
individual described in subsection (b) and either investigate
the matter itself or assign it to the appropriate Internal
Revenue Service office,
``(C) shall monitor any action taken with respect to such
matter,
``(D) shall inform such individual that it has accepted the
individual's information for further review,
``(E) may require such individual and any legal
representative of such individual to not disclose any
information so provided,
``(F) in its sole discretion, may ask for additional
assistance from such individual or any legal representative
of such individual, and
``(G) shall determine the amount to be awarded to such
individual under subsection (b).
``(2) Funding for office.--There is authorized to be
appropriated $10,000,000 for each fiscal year for the
Whistleblower Office. These funds shall be used to maintain
the Whistleblower Office and also to reimburse other Internal
Revenue Service offices for related costs, such as costs of
investigation and collection.
``(3) Request for assistance.--
``(A) In general.--Any assistance requested under paragraph
(1)(F) shall be under the direction and control of the
Whistleblower Office or the office assigned to investigate
the matter under subparagraph (A). No individual or legal
representative whose assistance is so requested may by reason
of such request represent himself or herself as an employee
of the Federal Government.
``(B) Funding of assistance.--From the amounts available
for expenditure under subsection (b), the Whistleblower
Office may, with the agreement of the individual described in
subsection (b), reimburse the costs incurred by any legal
representative of such individual in providing assistance
described in subparagraph (A).
``(d) Reports.--The Secretary shall each year conduct a
study and report to Congress on the use of this section,
including--
``(1) an analysis of the use of this section during the
preceding year and the results of such use, and
``(2) any legislative or administrative recommendations
regarding the provisions of this section and its
application.''.
(2) Conforming amendment.--Section 406 of division A of the
Tax Relief and Health Care Act of 2006 is amended by striking
subsections (b) and (c).
(3) Report on implementation.--Not later than 6 months
after the date of the enactment of this Act, the Secretary of
the Treasury shall submit to Congress a report on the
establishment and operation of the Whistleblower Office under
section 7623(c) of the Internal Revenue Code of 1986.
(c) Publicity of Award Appeals.--Paragraph (4) of section
7623(b), as added by the Tax Relief and Health Care Act of
2006, is amended to read as follows:
``(4) Appeal of award determination.--
``(A) In general.--Any determination regarding an award
under paragraph (1), (2), or (3) may, within 30 days of such
determination, be appealed to the Tax Court (and the Tax
Court shall have jurisdiction with respect to such matter).
``(B) Publicity of appeals.--Notwithstanding sections 7458
and 7461, the Tax Court may, in order to preserve the
anonymity, privacy, or confidentiality of any person under
this subsection, provide by rules adopted under section 7453
that portions of filings, hearings, testimony, evidence, and
reports in connection with proceedings under this subsection
may be closed to the public or to inspection by the
public.''.
(d) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to information
provided on or after the date of the enactment of this Act.
(2) Publicity of award appeals.--The amendment made by
subsection (c) shall take effect as if included in the
amendments made by section 406 of the Tax Relief and Health
Care Act of 2006.

SEC. 234. MODIFICATIONS OF DEFINITION OF EMPLOYEES COVERED BY
DENIAL OF DEDUCTION FOR EXCESSIVE EMPLOYEE
REMUNERATION.

(a) In General.--Paragraph (3) of section 162(m) is amended
to read as follows:
``(3) Covered employee.--For purposes of this subsection,
the term `covered employee' means, with respect to any
taxpayer for any taxable year, an individual who--
``(A) was the chief executive officer of the taxpayer, or
an individual acting in such a capacity, at any time during
the taxable year,
``(B) is 1 of the 4 highest compensated officers of the
taxpayer for the taxable year (other than the individual
described in subparagraph (A)), or
``(C) was a covered employee of the taxpayer (or any
predecessor) for any preceding taxable year beginning after
December 31, 2006.

In the case of an individual who was a covered employee for
any taxable year beginning after December 31, 2006, the term
`covered employee' shall include a beneficiary of such
employee with respect to any remuneration for services
performed by such employee as a covered employee (whether or
not such services are performed during the taxable year in
which the remuneration is paid).''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2006.
______

SA 101. Mr. McCONNELL (for Mr. Gregg (for himself, Mr. DeMint, Mr.
McConnell, Mr. Lott, Mr. Kyl, Mrs. Hutchison, Mr. Cornyn, Mr. Allard,
Mr. Crapo, Mr. Bunning, Mr. Vitter, Mr. Brownback, Mrs. Dole, Mr.
Alexander, Mr. Thomas, Mr. Craig, Mr. Burr, Mr. McCain, Mr. Sununu, Mr.
Enzi, Mr. Martinez, Mr. Chambliss, Mr. Sessions, Mr. Coleman, Mr.
Graham, Mr. Voinovich, Mr. Isakson, Mr. Coburn, Mr. Ensign, and Mr.
Thune)) proposed an amendment to amendment SA 100 proposed by Mr. Reid
(for Mr. Baucus) to the bill H.R. 2, to amend the Fair Labor Standards
Act of 1938 to provide for an increase in the Federal minimum wage; as
follows:

At the end, insert the following:

TITLE ___--SECOND LOOK AT WASTEFUL SPENDING ACT OF 2007

SEC. _01. SHORT TITLE.

This title may be cited as the ``Second Look at Wasteful
Spending Act of 2007''.

SEC. _02. ENHANCED RESCISSION AUTHORITY.

(a) In General.--Title X of the Congressional Budget and
Impoundment Control Act of 1974 (2 U.S.C. 621 et seq.) is
amended by striking part C and inserting the following:

``PART C--ENHANCED RESCISSION AUTHORITY

``SEC. 1021. EXPEDITED CONSIDERATION OF CERTAIN PROPOSED
RESCISSIONS.

``(a) Proposed Rescissions.--The President may send a
special message, at the time and in the manner provided in
subsection (b), that proposes to rescind dollar amounts of
discretionary budget authority, items of direct spending, and
targeted tax benefits.
``(b) Transmittal of Special Message.--
``(1) Special message.--
``(A) In general.--
``(i) Four messages.--The President may transmit to
Congress not to exceed 4 special messages per calendar year,
proposing to rescind dollar amounts of discretionary budget
authority, items of direct spending, and targeted tax
benefits.
``(ii) Timing.--Special messages may be transmitted under
clause (i)--

``(I) with the President's budget submitted pursuant to
section 1105 of title 31, United States Code; and
``(II) 3 other times as determined by the President.

``(iii) Limitations.--

``(I) In general.--Special messages shall be submitted
within 1 calendar year of the date of enactment of any dollar
amount of discretionary budget authority, item of direct
spending, or targeted tax benefit the President proposes to
rescind pursuant to this Act.
``(II) Resubmittal rejected.--If Congress rejects a bill
introduced under this part, the President may not resubmit
any of the dollar amounts of discretionary budget authority,
items of direct spending, or targeted tax benefits in that
bill under this part, or part B with respect to dollar
amounts of discretionary budget authority.
``(III) Resubmital after sine die.--If Congress does not
complete action on a bill introduced under this part because
Congress adjourns sine die, the President may resubmit some
or all of the dollar amounts of discretionary budget
authority, items of direct spending, and targeted tax
benefits in that bill in not more than 1 subsequent special
message under this part, or part B with respect to dollar
amounts of discretionary budget authority.

``(B) Contents of special message.--Each special message
shall specify, with respect to the dollar amount of
discretionary budget authority, item of direct spending, or
targeted tax benefit proposed to be rescinded--
``(i) the dollar amount of discretionary budget authority
available and proposed for rescission from accounts,
departments, or establishments of the government and the
dollar amount of the reduction in outlays that would result
from the enactment of such rescission of discretionary budget
authority for the time periods set forth in clause (iii);
``(ii) the specific items of direct spending and targeted
tax benefits proposed for rescission and the dollar amounts
of the reductions in budget authority and outlays or
increases in receipts that would result from enactment of
such rescission for the time periods set forth in clause
(iii);
``(iii) the budgetary effects of proposals for rescission,
estimated as of the date the President submits the special
message, relative to the most recent levels calculated
consistent with the methodology described in section 257 of
the Balanced Budget and Emergency Deficit Control Act of 1985
and included with a budget submission under section 1105(a)
of title 31, United States Code, for the time periods of--

``(I) the fiscal year in which the proposal is submitted;
and
``(II) each of the 10 following fiscal years beginning with
the fiscal year after the fiscal year in which the proposal
is submitted;

``(iv) any account, department, or establishment of the
Government to which such dollar amount of discretionary
budget authority or item of direct spending is available for
obligation, and the specific project or governmental
functions involved;

[[Page S864]]

``(v) the reasons why such dollar amount of discretionary
budget authority or item of direct spending or targeted tax
benefit should be rescinded;
``(vi) the estimated fiscal and economic impacts, of the
proposed rescission;
``(vii) to the maximum extent practicable, all facts,
circumstances, and considerations relating to or bearing upon
the proposed rescission and the decision to effect the
proposed rescission, and the estimated effect of the proposed
rescission upon the objects, purposes, and programs for which
the budget authority or items of direct spending or targeted
tax benefits are provided; and
``(viii) a draft bill that, if enacted, would rescind the
budget authority, items of direct spending and targeted tax
benefits proposed to be rescinded in that special message.
``(2) Analysis by congressional budget office and joint
committee on taxation.--
``(A) In general.--Upon the receipt of a special message
under this part proposing to rescind dollar amounts of
discretionary budget authority, items of direct spending, and
targeted tax benefits--
``(i) the Director of the Congressional Budget Office shall
prepare an estimate of the savings in budget authority or
outlays resulting from such proposed rescission and shall
include in its estimate, an analysis prepared by the Joint
Committee on Taxation related to targeted tax benefits; and
``(ii) the Director of the Joint Committee on Taxation
shall prepare an estimate and forward such estimate to the
Congressional Budget Office, of the savings from repeal of
targeted tax benefits.
``(B) Methodology.--The estimates required by subparagraph
(A) shall be made relative to the most recent levels
calculated consistent with the methodology used to calculate
a baseline under section 257 of the Balanced Budget and
Emergency Control Act of 1985 and included with a budget
submission under section 1105(a) of title 31, United States
Code, and transmitted to the chairmen of the Committees on
the Budget of the House of Representatives and Senate.
``(3) Enactment of rescission bill.--
``(A) Deficit reduction.--Amounts of budget authority or
items of direct spending or targeted tax benefit that are
rescinded pursuant to enactment of a bill as provided under
this part shall be dedicated only to deficit reduction and
shall not be used as an offset for other spending increases
or revenue reductions.
``(B) Adjustment of budget targets.--Not later than 5 days
after the date of enactment of a rescission bill as provided
under this part, the chairs of the Committees on the Budget
of the Senate and the House of Representatives shall revise
spending and revenue levels under section 311(a) of the
Congressional Budget Act of 1974 and adjust the committee
allocations under section 302(a) of the Congressional Budget
Act of 1974 or any other adjustments as may be appropriate to
reflect the rescission. The adjustments shall reflect the
budgetary effects of such rescissions as estimated by the
President pursuant to paragraph (1)(B)(iii). The appropriate
committees shall report revised allocations pursuant to
section 302(b) of the Congressional Budget Act of 1974.
Notwithstanding any other provision of law, the revised
allocations and aggregates shall be considered to have been
made under a concurrent resolution on the budget agreed to
under the Congressional Budget Act of 1974 and shall be
enforced under the procedures of that Act.
``(C) Adjustments to caps.--After enactment of a rescission
bill as provided under this part, the President shall revise
applicable limits under the Second Look at Wasteful Spending
Act of 2007, as appropriate.
``(c) Procedures for Expedited Consideration.--
``(1) In general.--
``(A) Introduction.--Before the close of the second day of
session of the Senate and the House of Representatives,
respectively, after the date of receipt of a special message
transmitted to Congress under subsection (b), the majority
leader of each House, for himself, or minority leader of each
House, for himself, or a Member of that House designated by
that majority leader or minority leader shall introduce (by
request) the President's draft bill to rescind the amounts of
budget authority or items of direct spending or targeted tax
benefits, as specified in the special message and the
President's draft bill. If the bill is not introduced as
provided in the preceding sentence in either House, then, on
the third day of session of that House after the date of
receipt of that special message, any Member of that House may
introduce the bill.
``(B) Referral and reporting.--
``(i) One committee.--The bill shall be referred by the
presiding officer to the appropriate committee. The committee
shall report the bill without any revision and with a
favorable, an unfavorable, or without recommendation, not
later than the fifth day of session of that House after the
date of introduction of the bill in that House. If the
committee fails to report the bill within that period, the
committee shall be automatically discharged from
consideration of the bill, and the bill shall be placed on
the appropriate calendar.
``(ii) Multiple committees.--

``(I) Referrals.--If a bill contains provisions in the
jurisdiction of more than 1 committee, the bill shall be
jointly referred to the committees of jurisdiction and the
Committee on the Budget.
``(II) Views of committee.--Any committee, other than the
Committee on the Budget, to which a bill is referred under
this clause may submit a favorable, an unfavorable
recommendation, without recommendation with respect to the
bill to the Committee on the Budget prior to the reporting or
discharge of the bill.
``(III) Reporting.--The Committee on the Budget shall
report the bill not later than the fifth day of session of
that House after the date of introduction of the bill in that
House, without any revision and with a favorable or
unfavorable recommendation, or with no recommendation,
together with the recommendations of any committee to which
the bill has been referred.
``(IV) Discharge.--If the Committee on the Budget fails to
report the bill within that period, the committee shall be
automatically discharged from consideration of the bill, and
the bill shall be placed on the appropriate calendar.

``(C) Final passage.--A vote on final passage of the bill
shall be taken in the Senate and the House of Representatives
on or before the close of the 10th day of session of that
House after the date of the introduction of the bill in that
House. If the bill is passed, the Clerk of the House of
Representatives shall cause the bill to be transmitted to the
Senate before the close of the next day of session of the
House.
``(2) Consideration in the house of representatives.--
``(A) Motion to proceed to consideration.--A motion in the
House of Representatives to proceed to the consideration of a
bill under this subsection shall be highly privileged and not
debatable. An amendment to the motion shall not be in order,
nor shall it be in order to move to reconsider the vote by
which the motion is agreed to or disagreed to.
``(B) Limits on debate.--Debate in the House of
Representatives on a bill under this subsection shall not
exceed 4 hours, which shall be divided equally between those
favoring and those opposing the bill. A motion further to
limit debate shall not be debatable. It shall not be in order
to move to recommit a bill under this subsection or to move
to reconsider the vote by which the bill is agreed to or
disagreed to.
``(C) Appeals.--Appeals from decisions of the chair
relating to the application of the Rules of the House of
Representatives to the procedure relating to a bill under
this part shall be decided without debate.
``(D) Application of house rules.--Except to the extent
specifically provided in this part, consideration of a bill
under this part shall be governed by the Rules of the House
of Representatives. It shall not be in order in the House of
Representatives to consider any bill introduced pursuant to
the provisions of this part under a suspension of the rules
or under a special rule.
``(3) Consideration in the senate.--
``(A) Motion to proceed to consideration.--A motion to
proceed to the consideration of a bill under this subsection
in the Senate shall not be debatable. A motion to proceed to
consideration of the bill may be made even though a previous
motion to the same effect has been disagreed to. It shall not
be in order to move to reconsider the vote by which the
motion to proceed is agreed to or disagreed to.
``(B) Limits on debate.--Debate in the Senate on a bill
under this subsection, and all debatable motions and appeals
in connection therewith, shall not exceed a total of 10
hours, equally divided and controlled in the usual form.
``(C) Debatable motions and appeals.--Debate in the Senate
on any debatable motion or appeal in connection with a bill
under this subsection shall be limited to not more than 1
hour from the time allotted for debate, to be equally divided
and controlled in the usual form.
``(D) Motion to limit debate.--A motion in the Senate to
further limit debate on a bill under this subsection is not
debatable.
``(E) Motion to recommit.--A motion to recommit a bill
under this subsection is not in order.
``(F) Consideration of the house bill.--
``(i) In general.--If the Senate has received the House
companion bill to the bill introduced in the Senate prior to
the vote required under paragraph (1)(C), then the Senate
shall consider, and the vote under paragraph (1)(C) shall
occur on, the House companion bill.
``(ii) Procedure after vote on senate bill.--If the Senate
votes, pursuant to paragraph (1)(C), on the bill introduced
in the Senate, the Senate bill shall be held pending receipt
of the House message on the bill. Upon receipt of the House
companion bill, the House bill shall be deemed to be
considered, read for the third time, and the vote on passage
of the Senate bill shall be considered to be the vote on the
bill received from the House.
``(4) Conference.--
``(A) Proceeding to conference.--If, after a bill is agreed
to in the Senate or House of Representatives, the bill has
been amended, the bill shall be deemed to be at a stage of
disagreement and motions to proceed to conference are deemed
to be agreed to. There shall be no motions to instruct. The
Senate and the House of Representatives shall appoint
conferees not later than 1 day of session after the vote of
the second House under paragraph (1)(C). Debate on any
debatable motion in relation to the conference report

[[Page S865]]

shall be limited to 1 hour to be equally divided between and
controlled by the mover and manager of a bill, or their
designees.
``(B) Period of consideration.--A conference report on a
bill considered under this section shall be reported out not
later than 3 days of session after the vote of the second
House under paragraph (1)(C). If the 2 Houses are unable to
agree in conference, the committee on conference shall report
out the text of the President's original bill.
``(C) Scope of conference.--The matter committed to
conference for purposes of scope of conference shall be
limited to the matter stricken from the text of the bills
passed by the Senate and the House of Representatives.
``(D) Procedure.--Debate on a conference report on any bill
considered under this section shall be limited to 2 hours
equally divided between the manager of the conference report
and the minority leader, or his designee.
``(E) Final passage.--A vote on final passage of the
conference report shall be taken in the Senate and the House
of Representatives on or before the close of the 2nd day of
session of that House after the date the conference report is
submitted in that House. If the conference report is passed,
the Secretary of the Senate or the Clerk of the House of
Representatives, as the case may be, shall cause the
conference report to be transmitted to the other House before
the close of the next day of session of that House.
``(F) Action of second house.--
``(i) In general.--If the Senate has received from the
House, the conference report in relation to the special
message from the President, prior to the vote required under
subparagraph (E), then the Senate shall consider, and the
vote under subparagraph (E) shall occur on the House
conference report.
``(ii) Procedure after vote on senate conference report.--
If the Senate votes, pursuant to subparagraph (E), on the
conference report in relation to the special message from the
President, then immediately following that vote, or upon
receipt of the House conference report, the House conference
report shall be deemed to be considered, read the third time,
and the vote on passage of the Senate conference report shall
be considered to be the vote on the conference report
received from the House.
``(d) Amendments and Divisions Prohibited.--
``(1) In general.--Except as provided in paragraph (2), no
amendment to a bill considered under this section shall be in
order in either the Senate or the House of Representatives.
``(2) Motion to strike.--
``(A) Senate.--During consideration of a bill in the
Senate, any Member of the Senate may move to strike any
proposed rescission of a dollar amount of discretionary
budget authority, an item of direct spending, or a targeted
tax benefit if supported by 11 other Members.
``(B) House.--During consideration of a bill in the House
of Representatives, any Member of the House of
Representatives may move to strike any proposed rescission of
a dollar amount of discretionary budget authority, an item of
direct spending, or a targeted tax benefit if supported by 49
other Members.
``(3) No division.--It shall not be in order to demand a
division of any motions to strike in the Senate, or the
division of the question in the House of Representatives (or
in a Committee of the Whole).
``(4) No suspension.--No motion to suspend the application
of this subsection shall be in order in the Senate or in the
House of Representatives, nor shall it be in order in the
House of Representatives to suspend the application of this
subsection by unanimous consent.
``(e) Temporary Presidential Authority To Withhold.--
``(1) Availability.--The President may not withhold any
dollar amount of discretionary budget authority until the
President transmits and Congress receives a special message
pursuant to subsection (b). Upon receipt by Congress of a
special message pursuant to subsection (b), the President may
direct that any dollar amount of discretionary budget
authority proposed to be rescinded in that special message
shall be withheld from obligation for a period not to exceed
45 calendar days from the date of receipt by Congress.
``(2) Early availability.--The President may make any
dollar amount of discretionary budget authority withheld from
obligation pursuant to paragraph (1) available at an earlier
time if the President determines that continued withholding
would not further the purposes of this Act.
``(f) Temporary Presidential Authority To Suspend.--
``(1) Suspend.--
``(A) In general.--The President may not suspend the
execution of any item of direct spending or targeted tax
benefit until the President transmits and Congress receives a
special message pursuant to subsection (b). Upon receipt by
Congress of a special message, the President may suspend the
execution of any item of direct spending or targeted tax
benefit proposed to be rescinded in that message for a period
not to exceed 45 calendar days from the date of receipt by
Congress.
``(B) Limitation on 45-day period.--The 45-day period
described in subparagraph (A) shall be reduced by the number
of days contained in the period beginning on the effective
date of the item of direct spending or targeted tax benefit;
and ending on the date that is the later of--
``(i) the effective date of the item of direct spending or
targeted benefit; or
``(ii) the date that Congress receives the special message.
``(C) Clarification.--Notwithstanding subparagraph (B), in
the case of an item of direct spending or targeted tax
benefit with an effective date within 45 days after the date
of enactment, the beginning date of the period calculated
under subparagraph (B) shall be the date that is 45 days
after the date of enactment and the ending date shall be the
date that is the later of--
``(i) the date that is 45 days after enactment; or
``(ii) the date that Congress receives the special message.
``(2) Early availability.--The President may terminate the
suspension of any item of direct spending or targeted tax
benefit suspended pursuant to paragraph (1) at an earlier
time if the President determines that continuation of the
suspension would not further the purposes of this Act.
``(g) Definitions.--In this part:
``(1) Appropriation law.--The term `appropriation law'
means any general or special appropriation Act, and any Act
or joint resolution making supplemental, deficiency, or
continuing appropriations.
``(2) Calendar day.--The term `calendar day' means a
standard 24-hour period beginning at midnight.
``(3) Days of session.--The term `days of session' means
only those days on which both Houses of Congress are in
session.
``(4) Dollar amount of discretionary budget authority.--The
term `dollar amount of discretionary budget authority' means
the dollar amount of budget authority and obligation
limitations--
``(A) specified in an appropriation law, or the dollar
amount of budget authority required to be allocated by a
specific proviso in an appropriation law for which a specific
dollar figure was not included;
``(B) represented separately in any table, chart, or
explanatory text included in the statement of managers or the
governing committee report accompanying such law;
``(C) required to be allocated for a specific program,
project, or activity in a law (other than an appropriation
law) that mandates obligations from or within accounts,
programs, projects, or activities for which budget authority
or an obligation limitation is provided in an appropriation
law;
``(D) represented by the product of the estimated
procurement cost and the total quantity of items specified in
an appropriation law or included in the statement of managers
or the governing committee report accompanying such law; or
``(E) represented by the product of the estimated
procurement cost and the total quantity of items required to
be provided in a law (other than an appropriation law) that
mandates obligations from accounts, programs, projects, or
activities for which dollar amount of discretionary budget
authority or an obligation limitation is provided in an
appropriation law.
``(5) Rescind or rescission.--The term `rescind' or
`rescission' means--
``(A) in the case of a dollar amount of discretionary
budget authority, to reduce or repeal a provision of law to
prevent that budget authority or obligation limitation from
having legal force or effect; and
``(B) in the case of direct spending or targeted tax
benefit, to repeal a provision of law in order to prevent the
specific legal obligation of the United States from having
legal force or effect.
``(6) Direct spending.--The term `direct spending' means
budget authority provided by law (other than an appropriation
law), mandatory spending provided in appropriation Acts, and
entitlement authority.
``(7) Item of direct spending.--The term `item of direct
spending' means any specific provision of law enacted after
the effective date of the Second Look at Wasteful Spending
Act of 2007 that is estimated to result in an increase in
budget authority or outlays for direct spending relative to
the most recent levels calculated consistent with the
methodology described in section 257 of the Balanced Budget
and Emergency Deficit Control Act of 1985 and included with a
budget submission under section 1105(a) of title 31, United
States Code, and, with respect to estimates made after that
budget submission that are not included with it, estimates
consistent with the economic and technical assumptions
underlying the most recently submitted President's budget.
``(8) Suspend the execution.--The term `suspend the
execution' means, with respect to an item of direct spending
or a targeted tax benefit, to stop the carrying into effect
of the specific provision of law that provides such benefit.
``(9) Targeted tax benefit.--The term `targeted tax
benefit' means--
``(A) any revenue provision that has the practical effect
of providing more favorable tax treatment to a particular
taxpayer or limited group of taxpayers when compared with
other similarly situated taxpayers; or
``(B) any Federal tax provision which provides one
beneficiary temporary or permanent transition relief from a
change to the Internal Revenue Code of 1986.''.
(b) Exercise of Rulemaking Powers.--Section 904 of the
Congressional Budget Act of 1974 (2 U.S.C. 621 note) is
amended--
(1) in subsection (a), by striking ``and 1017'' and
inserting ``1017, and 1021''; and
(2) in subsection (d), by striking ``section 1017'' and
inserting ``sections 1017 and 1021''.

[[Page S866]]

(c) Clerical Amendments.--
(1) Short title.--Section 1(a) of the Congressional Budget
and Impoundment Control Act of 1974 is amended by--
(A) striking ``Parts A and B'' before ``title X'' and
inserting ``Parts A, B, and C''; and
(B) striking the last sentence and inserting at the end the
following new sentence: ``Part C of title X also may be cited
as the `Second Look at Wasteful Spending Act of 2007'.''.
(2) Table of contents.--The table of contents set forth in
section 1(b) of the Congressional Budget and Impoundment
Control Act of 1974 is amended by deleting the contents for
part C of title X and inserting the following:

``Part C--Enhanced Rescission Authority

``Sec. 1021. Expedited consideration of certain proposed rescissions''.

(d) Severability.--If any provision of this title or the
amendments made by it is held to be unconstitutional, the
remainder of this title and the amendments made by it shall
not be affected by the holding.
(e) Effective Date and Expiration.--
(1) Effective date.--The amendments made by this title
shall--
(A) take effect on the date of enactment of this title; and
(B) apply to any dollar amount of discretionary budget
authority, item of direct spending, or targeted tax benefit
provided in an Act enacted on or after the date of enactment
of this title.
(2) Expiration.--The amendments made by this title shall
expire on December 31, 2010.
______

SA 102. Mr. ROBERTS submitted an amendment intended to be proposed by
him to the bill H.R. 2, to amend the Fair Labor Standards Act of 1938
to provide for an increase in the Federal minimum wage; as follows:

At the appropriate place, insert the following:

SEC. __. SMALL BUSINESS CHILD CARE GRANT PROGRAM.

(a) Establishment.--The Secretary of Health and Human
Services (referred to in this section as the ``Secretary'')
shall establish a program to award grants to States, on a
competitive basis, to assist States in providing funds to
encourage the establishment and operation of employer-
operated child care programs.
(b) Application.--To be eligible to receive a grant under
this section, a State shall prepare and submit to the
Secretary an application at such time, in such manner, and
containing such information as the Secretary may require,
including an assurance that the funds required under
subsection (e) will be provided.
(c) Amount and Period of Grant.--The Secretary shall
determine the amount of a grant to a State under this section
based on the population of the State as compared to the
population of all States receiving grants under this section.
The Secretary shall make the grant for a period of 3 years.
(d) Use of Funds.--
(1) In general.--A State shall use amounts provided under a
grant awarded under this section to provide assistance to
small businesses (or consortia formed in accordance with
paragraph (3)) located in the State to enable the small
businesses (or consortia) to establish and operate child care
programs. Such assistance may include--
(A) technical assistance in the establishment of a child
care program;
(B) assistance for the startup costs related to a child
care program;
(C) assistance for the training of child care providers;
(D) scholarships for low-income wage earners;
(E) the provision of services to care for sick children or
to provide care to school-aged children;
(F) the entering into of contracts with local resource and
referral organizations or local health departments;
(G) assistance for care for children with disabilities;
(H) payment of expenses for renovation or operation of a
child care facility; or
(I) assistance for any other activity determined
appropriate by the State.
(2) Application.--In order for a small business or
consortium to be eligible to receive assistance from a State
under this section, the small business involved shall prepare
and submit to the State an application at such time, in such
manner, and containing such information as the State may
require.
(3) Preference.--
(A) In general.--In providing assistance under this
section, a State shall give priority to an applicant that
desires to form a consortium to provide child care in a
geographic area within the State where such care is not
generally available or accessible.
(B) Consortium.--For purposes of subparagraph (A), a
consortium shall be made up of 2 or more entities that shall
include small businesses and that may include large
businesses, nonprofit agencies or organizations, local
governments, or other appropriate entities.
(4) Limitations.--With respect to grant funds received
under this section, a State may not provide in excess of
$500,000 in assistance from such funds to any single
applicant.
(e) Matching Requirement.--To be eligible to receive a
grant under this section, a State shall provide assurances to
the Secretary that, with respect to the costs to be incurred
by a covered entity receiving assistance in carrying out
activities under this section, the covered entity will make
available (directly or through donations from public or
private entities) non-Federal contributions to such costs in
an amount equal to--
(1) for the first fiscal year in which the covered entity
receives such assistance, not less than 50 percent of such
costs ($1 for each $1 of assistance provided to the covered
entity under the grant);
(2) for the second fiscal year in which the covered entity
receives such assistance, not less than 66\2/3\ percent of
such costs ($2 for each $1 of assistance provided to the
covered entity under the grant); and
(3) for the third fiscal year in which the covered entity
receives such assistance, not less than 75 percent of such
costs ($3 for each $1 of assistance provided to the covered
entity under the grant).
(f) Requirements of Providers.--To be eligible to receive
assistance under a grant awarded under this section, a child
care provider--
(1) who receives assistance from a State shall comply with
all applicable State and local licensing and regulatory
requirements and all applicable health and safety standards
in effect in the State; and
(2) who receives assistance from an Indian tribe or tribal
organization shall comply with all applicable regulatory
standards.
(g) State-Level Activities.--A State may not retain more
than 3 percent of the amount described in subsection (c) for
State administration and other State-level activities.
(h) Administration.--
(1) State responsibility.--A State shall have
responsibility for administering a grant awarded for the
State under this section and for monitoring covered entities
that receive assistance under such grant.
(2) Audits.--A State shall require each covered entity
receiving assistance under the grant awarded under this
section to conduct an annual audit with respect to the
activities of the covered entity. Such audits shall be
submitted to the State.
(3) Misuse of funds.--
(A) Repayment.--If the State determines, through an audit
or otherwise, that a covered entity receiving assistance
under a grant awarded under this section has misused the
assistance, the State shall notify the Secretary of the
misuse. The Secretary, upon such a notification, may seek
from such a covered entity the repayment of an amount equal
to the amount of any such misused assistance plus interest.
(B) Appeals process.--The Secretary shall by regulation
provide for an appeals process with respect to repayments
under this paragraph.
(i) Reporting Requirements.--
(1) 2-year study.--
(A) In general.--Not later than 2 years after the date on
which the Secretary first awards grants under this section,
the Secretary shall conduct a study to determine--
(i) the capacity of covered entities to meet the child care
needs of communities within States;
(ii) the kinds of consortia that are being formed with
respect to child care at the local level to carry out
programs funded under this section; and
(iii) who is using the programs funded under this section
and the income levels of such individuals.
(B) Report.--Not later than 28 months after the date on
which the Secretary first awards grants under this section,
the Secretary shall prepare and submit to the appropriate
committees of Congress a report on the results of the study
conducted in accordance with subparagraph (A).
(2) 4-year study.--
(A) In general.--Not later than 4 years after the date on
which the Secretary first awards grants under this section,
the Secretary shall conduct a study to determine the number
of child care facilities that are funded through covered
entities that received assistance through a grant awarded
under this section and that remain in operation, and the
extent to which such facilities are meeting the child care
needs of the individuals served by such facilities.
(B) Report.--Not later than 52 months after the date on
which the Secretary first awards grants under this section,
the Secretary shall prepare and submit to the appropriate
committees of Congress a report on the results of the study
conducted in accordance with subparagraph (A).
(j) Definitions.--In this section:
(1) Covered entity.--The term ``covered entity'' means a
small business or a consortium formed in accordance with
subsection (d)(3).
(2) Indian community.--The term ``Indian community'' means
a community served by an Indian tribe or tribal organization.
(3) Indian tribe; tribal organization.--The terms ``Indian
tribe'' and ``tribal organization'' have the meanings given
the terms in section 658P of the Child Care and Development
Block Grant Act of 1990 (42 U.S.C. 9858n).
(4) Small business.--The term ``small business'' means an
employer who employed an average of at least 2 but not more
than 50 employees on the business days during the preceding
calendar year.
(5) State.--The term ``State'' has the meaning given the
term in section 658P of the Child Care and Development Block
Grant Act of 1990 (42 U.S.C. 9858n).
(k) Application to Indian Tribes and Tribal
Organizations.--In this section:
(1) In general.--Except as provided in subsection (f)(1),
and in paragraphs (2) and (3),

[[Page S867]]

the term ``State'' includes an Indian tribe or tribal
organization.
(2) Geographic references.--The term ``State'' includes an
Indian community in subsections (c) (the second and third
place the term appears), (d)(1) (the second place the term
appears), (d)(3)(A) (the second place the term appears), and
(i)(1)(A)(i).
(3) State-level activities.--The term ``State-level
activities'' includes activities at the tribal level.
(l) Authorization of Appropriations.--
(1) In general.--There is authorized to be appropriated to
carry out this section, $50,000,000 for the period of fiscal
years 2008 through 2012.
(2) Studies and administration.--With respect to the total
amount appropriated for such period in accordance with this
subsection, not more than $2,500,000 of that amount may be
used for expenditures related to conducting studies required
under, and the administration of, this section.
(m) Termination of Program.--The program established under
subsection (a) shall terminate on September 30, 2012.
______

SA 103. Mr. ENZI (for Ms. Snowe (for herself, Mr. Enzi, and Ms.
Landrieu)) proposed an amendment to amendment SA 100 proposed by Mr.
Reid (for Mr. Baucus) to the bill H.R. 2, to amend the Fair Labor
Standards Act of 1938 to provide for an increase in the Federal minimum
wage; as follows:

At the appropriate place, insert the following:

SEC. __. ENHANCED COMPLIANCE ASSISTANCE FOR SMALL BUSINESSES.

(a) In General.--Section 212 of the Small Business
Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 601
note) is amended by striking subsection (a) and inserting the
following:
``(a) Compliance Guide.--
``(1) In general.--For each rule or group of related rules
for which an agency is required to prepare a final regulatory
flexibility analysis under section 605(b) of title 5, United
States Code, the agency shall publish 1 or more guides to
assist small entities in complying with the rule and shall
entitle such publications `small entity compliance guides'.
``(2) Publication of guides.--The publication of each guide
under this subsection shall include--
``(A) the posting of the guide in an easily identified
location on the website of the agency; and
``(B) distribution of the guide to known industry contacts,
such as small entities, associations, or industry leaders
affected by the rule.
``(3) Publication date.--An agency shall publish each guide
(including the posting and distribution of the guide as
described under paragraph (2))--
``(A) on the same date as the date of publication of the
final rule (or as soon as possible after that date); and
``(B) not later than the date on which the requirements of
that rule become effective.
``(4) Compliance actions.--
``(A) In general.--Each guide shall explain the actions a
small entity is required to take to comply with a rule.
``(B) Explanation.--The explanation under subparagraph
(A)--
``(i) shall include a description of actions needed to meet
the requirements of a rule, to enable a small entity to know
when such requirements are met; and
``(ii) if determined appropriate by the agency, may include
a description of possible procedures, such as conducting
tests, that may assist a small entity in meeting such
requirements.
``(C) Procedures.--Procedures described under subparagraph
(B)(ii)--
``(i) shall be suggestions to assist small entities; and
``(ii) shall not be additional requirements relating to the
rule.
``(5) Agency preparation of guides.--The agency shall, in
its sole discretion, taking into account the subject matter
of the rule and the language of relevant statutes, ensure
that the guide is written using sufficiently plain language
likely to be understood by affected small entities. Agencies
may prepare separate guides covering groups or classes of
similarly affected small entities and may cooperate with
associations of small entities to develop and distribute such
guides. An agency may prepare guides and apply this section
with respect to a rule or a group of related rules.
``(6) Reporting.--Not later than 1 year after the date of
enactment of the Small Business Compliance Assistance
Enhancement Act of 2007, and annually thereafter, the head of
each agency shall submit a report to the Committee on Small
Business and Entrepreneurship of the Senate and the Committee
on Small Business of the House of Representatives describing
the status of the agency's compliance with paragraphs (1)
through (5).''.
(b) Technical and Conforming Amendment.--Section 211(3) of
the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 601 note) is amended by inserting ``and
entitled'' after ``designated''.
______

SA 104. Mr. WYDEN (for himself, Mr. Smith, Mrs. Feinstein, and Mrs.
Boxer)) submitted an amendment intended to be proposed by him to the
bill H.R. 2, to amend the Fair Labor Standards Act of 1938 to provide
for an increase in the Federal minimum wage; which was ordered to lie
on the table; as follows:

At the appropriate place, insert the following:

SEC. ___. EXTENSION OF SECURE RURAL SCHOOLS AND COMMUNITY
SELF-DETERMINATION ACT.

(a) In General.--The Secure Rural Schools and Community
Self-Determination Act of 2000 (16 U.S.C. 500 note; Public
Law 106-393) is amended in sections 101(a), 102(b)(2),
103(b)(1), 203(a)(1), 207(a), 208, 303, and 401 by striking
``2006'' each place it appears and inserting ``2007''.
(b) Termination of Authority.--
(1) Special projects on federal lands.--Section 208 of the
Secure Rural Schools and Community Self-Determination Act of
2000 (16 U.S.C. 500 note; Public Law 106-393) is amended in
the second sentence by striking ``2007'' and inserting
``2008''.
(2) County projects.--Section 303 of the Secure Rural
Schools and Community Self-Determination Act of 2000 (16
U.S.C. 500 note; Public Law 106-393) is amended in the second
sentence by striking ``2007'' and inserting ``2008''.
______

SA 105. Mr. MARTINEZ submitted an amendment intended to be proposed
by him to the bill H.R. 2, to amend the Fair Labor Standards Act of
1938 to provide for an increase in the Federal minimum wage; which was
ordered to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. __. HOUSE PARENT EXCEPTION.

Section 13(b)(24) of the Fair Labor Standards Act of 1938
(29 U.S.C. 212(b)(24)) is amended--
(1) in the matter preceding subparagraph (A), by striking
``and his spouse''; and
(2) in the matter following subparagraph (B)--
(A) by striking ``and his spouse reside'' and inserting
``resides'';
(B) by striking ``receive'' and inserting ``receives''; and
(C) by striking ``are together'' and inserting ``is''.
______

SA 106. Mr. SESSIONS (for himself, Mr. Kohl, and Mrs. Hutchison)
proposed an amendment to amendment SA 100 proposed by Mr. Reid (for Mr.
Baucus) to the bill H.R. 2, to amend the Fair Labor Standards Act of
1938 to provide for an increase in the Federal minimum wage; as
follows:

At the appropriate place, insert the following:

SEC. __. SENSE OF THE SENATE CONCERNING PERSONAL SAVINGS.

(a) Findings.--The Senate finds that--
(1) the personal saving rate in the United States is at its
lowest point since the Great Depression, with the rate having
fallen into negative territory;
(2) the United States ranks at the bottom of the Group of
Twenty (G-20) nations in terms of net national saving rate;
(3) approximately half of all the working people of the
United States work for an employer that does not offer any
kind of retirement plan;
(4) existing savings policies enacted by Congress provide
limited incentives to save for low- and moderate-income
families; and
(5) the critically-important Social Security program was
never intended by Congress to be the sole source of
retirement income.
(b) Sense of the Senate.--It is the sense of the Senate
that--
(1) there is a need for simple, easily-accessible and
productive savings vehicles for all the people of the United
States;
(2) it is important to begin retirement saving as early as
possible to take full advantage of the power of compound
interest;
(3) regularly contributing money to a financially-sound
investment account is effective in achieving one's retirement
goals; and
(4) Congress should actively develop policies to enhance
personal savings for retirement.
______

SA 107. Mr. SESSIONS proposed an amendment to amendment SA 100
proposed by Mr. Reid (for Mr. Baucus) to the bill H.R. 2, to amend the
Fair Labor Standards Act of 1938 to provide for an increase in the
Federal minimum wage; as follows:

At the appropriate place insert the following:

SEC. __. ADDITIONAL REQUIREMENTS TO ENSURE GREATER USE OF
ADVANCE PAYMENT OF EARNED INCOME CREDIT.

Not later than January 1, 2010, the Secretary of the
Treasury by regulation shall require--
(1) each employer of an employee who the employer
determines receives wages in an amount which indicates that
such employee would be eligible for the earned income credit
under section 32 of the Internal Revenue Code of 1986 to
provide such employee with a simplified application for an
earned income eligibility certificate, and
(2) require each employee wishing to receive the earned
income tax credit to complete and return the application to
the employer within 30 days of receipt.

Such regulations shall require an employer to provide such an
application within 30 days

[[Page S868]]

of the hiring date of an employee and at least annually
thereafter. Such regulations shall further provide that, upon
receipt of a completed form, an employer shall provide for
the advance payment of the earned income credit as provided
under section 3507 of the Internal Revenue Code of 1986.

SEC. __. EXTENSION OF ADVANCE PAYMENT OF EARNED INCOME CREDIT
TO ALL ELIGIBLE TAXPAYERS.

(a) In General.--Section 3507(b) of the Internal Revenue
Code of 1986 (relating to earned income eligibility
certificate) is amended by striking paragraph (2) and by
redesignating paragraphs (3) and (4) as paragraphs (2) and
(3), respectively.
(b) Conforming Amendments.--
(1) Section 3507(c)(2)(B) of the Internal Revenue Code of
1986 is amended by inserting ``has 1 or more qualifying
children and'' before ``is not married,''.
(2) Section 3507(c)(2)(C) of such Code is amended by
striking ``the employee'' and inserting ``an employee with 1
or more qualifying children''.
(3) Section 3507(f) of such Code is amended by striking
``who have 1 or more qualifying children and''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2007.
______

SA 108. Mr. SESSIONS proposed an amendment to amendment SA 100
proposed by Mr. Reid (for Mr. Baucus) to the bill H.R. 2, to amend the
Fair Labor Standards Act of 1938 to provide for an increase in the
Federal minimum wage; as follows:

At the appropriate place insert the following:

SEC. __. STUDY OF UNIVERSAL USE OF ADVANCE PAYMENT OF EARNED
INCOME CREDIT.

Not later than 180 days after the date of the enactment of
this Act, the Secretary of the Treasury shall report to
Congress on a study of the costs and barriers to businesses
(with a special emphasis on small businesses) if the advance
earned income tax credit program (under section 3507 of the
Internal Revenue Code of 1986) included all recipients of the
earned income tax credit (under section 32 of such Code) and
what steps would be necessary to implement such inclusion.
______

SA 109. Mr. REID proposed an amendment to the concurrent resolution
H. Con. Res. 38, providing for a joint session of Congress to receive a
message from the President, as follows:

On page 1, line 3 strike ``Wednesday'' and insert Tuesday.
______

SA 110. Mr. VITTER (for himself and Mr. Voinovich) submitted an
amendment intended to be proposed by him to the bill H.R. 2, to amend
the Fair Labor Standards Act of 1938 to provide for an increase in the
Federal minimum wage; as follows:

At the appropriate place, insert the following:

SEC. __. SUSPENSION OF FINES FOR FIRST-TIME PAPERWORK
VIOLATIONS BY SMALL BUSINESS CONCERNS.

Section 3506 of title 44, United States Code (commonly
referred to as the ``Paperwork Reduction Act''), is amended
by adding at the end the following:
``(j) Small Businesses.--
``(1) Small business concern.--In this subsection, the term
`small business concern' means a business concern that meets
the requirements of section 3(a) of the Small Business Act
(15 U.S.C. 632(a)) and the regulations promulgated under that
section.
``(2) In general.--In the case of a first-time violation by
a small business concern of a requirement regarding the
collection of information by an agency, the head of that
agency shall not impose a civil fine on the small business
concern unless the head of the agency determines that--
``(A) the violation has the potential to cause serious harm
to the public interest;
``(B) failure to impose a civil fine would impede or
interfere with the detection of criminal activity;
``(C) the violation is a violation of an internal revenue
law or a law concerning the assessment or collection of any
tax, debt, revenue, or receipt;
``(D) the violation was not corrected on or before the date
that is 6 months after the date of receipt by the small
business concern of notification of the violation in writing
from the agency; or
``(E) except as provided in paragraph (3), the violation
presents a danger to the public health or safety.
``(3) Danger to public health or safety.--
``(A) In general.--In any case in which the head of an
agency determines under paragraph (2)(E) that a violation
presents a danger to the public health or safety, the head of
the agency may, notwithstanding paragraph (2)(E), determine
not to impose a civil fine on the small business concern if
the violation is corrected not later than 24 hours after
receipt by the small business owner of notification of the
violation in writing.
``(B) Considerations.--In determining whether to provide a
small business concern with 24 hours to correct a violation
under subparagraph (A), the head of an agency shall take into
account all of the facts and circumstances regarding the
violation, including--
``(i) the nature and seriousness of the violation,
including whether the violation is technical or inadvertent
or involves willful or criminal conduct;
``(ii) whether the small business concern has made a good
faith effort to comply with applicable laws and to remedy the
violation within the shortest practicable period of time; and
``(iii) whether the small business concern has obtained a
significant economic benefit from the violation.
``(C) Notice to congress.--In any case in which the head of
an agency imposes a civil fine on a small business concern
for a violation that presents a danger to the public health
or safety and does not provide the small business concern
with 24 hours to correct the violation under subparagraph
(A), the head of that agency shall notify Congress regarding
that determination not later than the date that is 60 days
after the date that the civil fine is imposed by that agency.
``(4) Limited to first-time violations.--
``(A) In general.--This subsection shall not apply to any
violation by a small business concern of a requirement
regarding collection of information by an agency if that
small business concern previously violated any requirement
regarding collection of information by that agency.
``(B) Other agencies.--For purposes of making a
determination under subparagraph (A), the head of an agency
shall not take into account any violation of a requirement
regarding collection of information by another agency.''.

____________________