To reauthorize the secure rural schools and community self-determination program and to provide funding for the payments in lieu of taxes program.

TEXT OF AMENDMENTS

SA 648. Mr. COBURN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
as follows:

[[Page S3850]]

At the appropriate place, add the following:
Notwithstanding any other provision of this Act, none of the
funds appropriated or otherwise made available in this Act
may be available for reimbursing State and local law
enforcement entities for security and related costs,
including overtime, associated with the 2008 Presidential
Candidate Nominating Conventions, and the total amount made
available in this Act in Title II, Chapter 2, under the
heading ``State and Local Law Enforcement Assistance'' is
reduced by $100,000,000.
______

SA 649. Mr. COBURN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
as follows:

At the appropriate place, add the following:
Notwithstanding any other provision of this Act, Sec. 3608(b)
of this Act shall not take effect.
______

SA 650. Mr. McCAIN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

Beginning on page 144, strike line 23 through line 4 on
page 145.
______

SA 651. Mr. McCAIN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

Beginning on page 139, strike line 3 through line 17.
______

SA 652. Mr. WARNER (for himself and Mr. Webb) submitted an amendment
intended to be proposed by him to the bill H.R. 1591, making emergency
supplemental appropriations for the fiscal year ending September 30,
2007, and for other purposes; which was ordered to lie on the table; as
follows:

At the appropriate place, insert the following:

SEC. ___. WAIVER FOR CERTAIN STATES, LOCAL EDUCATIONAL
AGENCIES, AND SCHOOLS.

A State, local educational agency, or school shall be held
harmless and not subject to the penalties provision under
section 1111(g) of the Elementary and Secondary Education Act
of 1965 (20 U.S.C. 6311(g)), the requirements of school or
local educational agency improvement, corrective action,
restructuring, or other sanctions or penalties under section
1116 of the Elementary and Secondary Education Act of 1965
(20 U.S.C. 6313), or any other sanctions or penalties
relating to academic assessments under the Elementary and
Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.) for
the 2006-2007 school year if the following criteria are met:
(1) The State (in the case of a local educational agency or
school, the State within which such local educational agency
or school exists) had 1 or more approved academic assessment
plans for the 2005-2006 school year.
(2) The State (in the case of a local educational agency or
school, the State within which such local educational agency
or school exists) had 1 or more of such plans subsequently
held invalid by the Department of Education for the 2006-2007
school year.
(3) The Governor of the State (in the case of a local
educational agency or school, the State within which such
local educational agency or school exists) certifies, in
writing, to the Secretary of Education that--
(A) the State cannot effectively train its educators on a
new or alternative assessment or assessments in place of the
assessment or assessments for which the plan or plans were
held invalid by the Department of Education, prior to the
date the assessment or assessments are to be administered;
and
(B) the administration of any new or alternative assessment
or assessments, in place of the assessment or assessments for
which the plan or plans were held invalid by the Department
of Education, in the 2006-2007 school year is not in the best
interest of the public school system and the children such
system serves.
(4) The Governor of the State (in the case of a local
educational agency or school, the State within which such
local educational agency or school exists) certifies, in
writing, to the Secretary of Education that the local
educational agency or school failed to make adequate yearly
progress (as described in section 1111(b)(2) of the
Elementary and Secondary Education Act of 1965 (20 U.S.C.
6311(b)(2))) based on academic assessments administered in
the 2006-2007 school year or the State would be subject to
the penalties provision under section 1111(g) of the
Elementary and Secondary Education Act of 1965 (20 U.S.C.
6311(g)) or any other sanctions or penalties relating to
academic assessments under the Elementary and Secondary
Education Act of 1965 (20 U.S.C. 6301 et seq.) for the 2006-
2007 school year solely because the State, local educational
agency, or school meets each of the criteria described in
paragraphs (1) through (3).
______

SA 653. Mr. GREGG submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 50, strike line 7 and all that follows through page
52, line 5.
On page 52, line 8 strike ``1711'' and insert in lieu
thereof ``1710''.
On page 56, line 6 strike ``1712'' and insert in lieu
thereof ``1711''.
______

SA 654. Mr. INHOFE submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 22, strike line 17 and all that follows through
``(B) the Secretary'' on line 21 and insert the following:
(A) the commander of such facility or quarters, as
applicable, shall--
(i) in the case of a facility or quarters recommended for
closure or realignment under the 2005 round of defense base
closure and realignment, comply with the requirements
applicable to such closure or realignment pursuant to the
Defense Base Closure and Realignment Act of 1990 (part A of
title XXIX of Public Law 101-510; 10 U.S.C. 2687 note) and
submit to the Secretary a report comparing the costs and
feasibility of--

(I) accelerating the schedule for closing or realigning the
facility or quarters; and
(II) transferring the operations and personnel from such
facility or quarters to an alternate temporary and adequate
facility or quarters until such closure or realignment is
completed; or

(ii) in the case of a facility or quarters not recommended
for closure or realignment under the 2005 round of defense
base closure and realignment, submit to the Secretary a
detailed plan to correct the deficiency; and
(B) the Secretary
______

SA 655. Mrs. HUTCHISON submitted an amendment intended to be proposed
by her to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

On page 28, between lines 18 and 19, insert the following:
Sec. 13__. (a)(1) Notwithstanding any other provision of
law, the Secretary of Veterans Affairs (referred to in this
section as the ``Secretary'') may convey to the State of
Texas, without consideration, all right, title, and interest
of the United States in and to the parcel of real property
comprising the location of the Marlin, Texas, Department of
Veterans Affairs Medical Center.
(2) The property conveyed under paragraph (1) shall be used
by the State of Texas for the purposes of a prison.
(b) In carrying out the conveyance under subsection (a),
the Secretary--
(1) shall not be required to comply with, and shall not be
held liable under, any Federal law (including a regulation)
relating to the environment or historic preservation; but
(2) may, at the discretion of the Secretary, conduct
environmental cleanup on the parcel to be conveyed, at a cost
not to exceed $500,000, using amounts made available for
environmental cleanup of sites under the jurisdiction of the
Secretary.
______

SA 656. Mr. COBURN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
as follows:

At the appropriate place, insert the following:
Sec. ___. (a) Posting of Certain Reports on Internet
Websites.--Each report described in subsection (b) shall be
posted on the Internet website of the department or agency
submitting that report for the public not later than 48 hours
after the submission of that report to Congress.
(b) Covered Reports.--The reports described in this
subsection are each report (including any review, evaluation,
assessment, or analysis) required by a provision of this Act
to be submitted by any department or agency to Congress or
any committee of the Senate or the House of Representatives.
(c) Redaction of Certain Information.--In posting a report
on the Internet website of the department or agency under
subsection (a), the head of that department or agency may
redact any information the release of which to the public
would compromise the national security of the United States.
______

SA 657. Mr. COBURN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

In title IV, strike sections 411 and all that follows
through the section heading for section 471 and insert the
following:

[[Page S3851]]

SEC. 411. CROP DISASTER ASSISTANCE.

(a) In General.--Subject to the availability of
appropriated funds under section 421, the Secretary shall
make emergency financial assistance authorized under this
section available to producers on a farm that have incurred
qualifying losses described in subsection (c).
(b) Administration.--
(1) In general.--Except as provided in paragraph (2), the
Secretary shall make assistance available under this section
in the same manner as provided under section 815 of the
Agriculture, Rural Development, Food and Drug Administration
and Related Agencies Appropriations Act, 2001 (Public Law
106-387; 114 Stat. 1549A-55), including using the same loss
thresholds for quantity and economic losses as were used in
administering that section, except that the payment rate
shall be 55 percent of the established price, instead of 65
percent.
(2) Noninsured producers.--For producers on a farm that
were eligible to acquire crop insurance for the applicable
production loss and failed to do so or failed to submit an
application for the noninsured assistance program for the
loss, the Secretary shall make assistance in accordance with
paragraph (1), except that the payment rate shall be 20
percent of the established price, instead of 50 percent.
(c) Qualifying Losses.--Assistance under this section shall
be made available to producers on farms, other than producers
of sugar beets, that incurred qualifying quantity or quality
losses for the applicable crop due to damaging weather or any
related condition (including losses due to crop diseases,
insects, and delayed harvest), as determined by the
Secretary.
(d) Quality Losses.--
(1) In general.--In addition to any payment received under
subsection (b), subject to the availability of appropriated
funds under section 421, the Secretary shall make payments to
producers on a farm described in subsection (a) that incurred
a quality loss for the applicable crop of a commodity in an
amount equal to the product obtained by multiplying--
(A) the payment quantity determined under paragraph (2);
(B)(i) in the case of an insurable commodity, the coverage
level elected by the insured under the policy or plan of
insurance under the Federal Crop Insurance Act (7 U.S.C. 1501
et seq.); or
(ii) in the case of a noninsurable commodity, the
applicable coverage level for the payment quantity determined
under paragraph (2); by
(C) 55 percent of the payment rate determined under
paragraph (3).
(2) Payment quantity.--For the purpose of paragraph (1)(A),
the payment quantity for quality losses for a crop of a
commodity on a farm shall equal the lesser of--
(A) the actual production of the crop affected by a quality
loss of the commodity on the farm; or
(B)(i) in the case of an insurable commodity, the actual
production history for the commodity by the producers on the
farm under the Federal Crop Insurance Act (7 U.S.C. 1501 et
seq.); or
(ii) in the case of a noninsurable commodity, the
established yield for the crop for the producers on the farm
under section 196 of the Federal Agriculture Improvement and
Reform Act of 1996 (7 U.S.C. 7333).
(3) Payment rate.--
(A) In general.--For the purpose of paragraph (1)(B), the
payment rate for quality losses for a crop of a commodity on
a farm shall be equal to the difference between (as
determined by the applicable State committee of the Farm
Service Agency)--
(i) the per unit market value that the units of the crop
affected by the quality loss would have had if the crop had
not suffered a quality loss; and
(ii) the per unit market value of the units of the crop
affected by the quality loss.
(B) Factors.--In determining the payment rate for quality
losses for a crop of a commodity on a farm, the applicable
State committee of the Farm Service Agency shall take into
account--
(i) the average local market quality discounts that
purchasers applied to the commodity during the first 2 months
following the normal harvest period for the commodity;
(ii) the loan rate and repayment rate established for the
commodity under the marketing loan program established for
the commodity under subtitle B of title I of the Farm
Security and Rural Investment Act of 2002 (7 U.S.C. 7931 et
seq.);
(iii) the market value of the commodity if sold into a
secondary market; and
(iv) other factors determined appropriate by the committee.
(4) Eligibility.--
(A) In general.--For producers on a farm to be eligible to
obtain a payment for a quality loss for a crop under this
subsection--
(i) the amount obtained by multiplying the per unit loss
determined under paragraph (1) by the number of units
affected by the quality loss shall be reduced by the amount
of any indemnification received by the producers on the farm
for quality loss adjustment for the commodity under a policy
or plan of insurance under the Federal Crop Insurance Act (7
U.S.C. 1501 et seq.); and
(ii) the remainder shall be at least 25 percent of the
value that all affected production of the crop would have had
if the crop had not suffered a quality loss.
(B) Ineligibility.--If the amount of a quality loss payment
for a commodity for the producers on a farm determined under
this paragraph is equal to or less than zero, the producers
on the farm shall be ineligible for assistance for the
commodity under this subsection.
(5) Eligible production.--The Secretary shall carry out
this subsection in a fair and equitable manner for all
eligible production, including the production of fruits and
vegetables, other specialty crops, and field crops.
(e) Election of Crop Year.--If a producer incurred
qualifying crop losses in more than 1 of the crop years
during the applicable period, the producers on a farm shall
elect to receive assistance under this section for losses
incurred in only 1 of the crop years.
(f) Payment Limitation.--
(1) Limitation.--Assistance provided under this section to
the producers on a farm for losses to a crop, together with
the amounts specified in paragraph (2) applicable to the same
crop, may not exceed 95 percent of what the value of the crop
would have been in the absence of the losses, as estimated by
the Secretary.
(2) Other payments.--In applying the limitation in
paragraph (1), the Secretary shall include the following:
(A) Any crop insurance payment made under the Federal Crop
Insurance Act (7 U.S.C. 1501 et seq.) or payment under
section 196 of the Federal Agricultural Improvement and
Reform Act of 1996 (7 U.S.C. 7333) that the producers on the
farm receive for losses to the same crop.
(B) The value of the crop that was not lost (if any), as
estimated by the Secretary.
(g) Timing.--
(1) In general.--Subject to paragraph (2), the Secretary
shall make payments to producers on a farm for a crop under
this section not later than 60 days after the date the
producers on the farm submit to the Secretary a completed
application for the payments.
(2) Interest.--If the Secretary does not make payments to
the producers on a farm by the date described in paragraph
(1), the Secretary shall pay to the producers on a farm
interest on the payments at a rate equal to the current (as
of the sign-up deadline established by the Secretary) market
yield on outstanding, marketable obligations of the United
States with maturities of 30 years.

SEC. 412. LIVESTOCK ASSISTANCE.

(a) Livestock Compensation Program.--
(1) Use of appropriated funds.--Effective beginning on the
date of enactment of this Act, subject to the availability of
appropriated funds under section 421, the Secretary shall
carry out the 2002 Livestock Compensation Program announced
by the Secretary on October 10, 2002 (67 Fed. Reg. 63070), to
provide compensation for livestock losses during the
applicable period for losses (including losses due to
blizzards that began in calendar year 2006 and continued in
January 2007) due to a disaster, as determined by the
Secretary, except that the payment rate shall be 80 percent
of the payment rate established for the 2002 Livestock
Compensation Program.
(2) Eligible applicants.--In carrying out the program
described in paragraph (1), the Secretary shall provide
assistance to any applicant for livestock losses during the
applicable period that--
(A)(i) conducts a livestock operation that is located in a
disaster county, including any applicant conducting a
livestock operation with eligible livestock (within the
meaning of the livestock assistance program under section
101(b) of division B of Public Law 108-324 (118 Stat. 1234));
or
(ii) produces an animal described in section 10806(a)(1) of
the Farm Security and Rural Investment Act of 2002 (21 U.S.C.
321d(a)(1));
(B) demonstrates to the Secretary that the applicant
suffered a material loss of pasture or hay production, or
experienced substantially increased feed costs, due to
damaging weather or a related condition during the calendar
year, as determined by the Secretary; and
(C) meets all other eligibility requirements established by
the Secretary for the program.
(3) Mitigation.--In determining the eligibility for or
amount of payments for which a producer is eligible under the
livestock compensation program, the Secretary shall not
penalize a producer that takes actions (recognizing disaster
conditions) that reduce the average number of livestock the
producer owned for grazing during the production year for
which assistance is being provided.
(4) Payments for reduction in grazing on federal land.--
(A) In general.--In carrying out this subsection, the
Secretary shall make payments to livestock producers that are
in proportion to any reduction during calendar year 2007 in
grazing on Federal land in a disaster county leased by the
producers a result of actions described in subparagraph (B).
(B) Federal actions.--Actions referred to in subparagraph
(A) are actions taken during calendar year 2007 by the Bureau
of Land Management or other Federal agency to restrict or
prohibit grazing otherwise allowed under the terms of the
lease of the producers in order to expedite the recovery of
the Federal land from drought, wildfire, or other natural
disaster declared by the Secretary during the applicable
period.
(5) Limitation.--The Secretary shall ensure, to the maximum
extent practicable, that producers on a farm do not receive
duplicative payments under this subsection and

[[Page S3852]]

another Federal program with respect to any loss.
(b) Livestock Indemnity Payments.--
(1) In general.--Subject to the availability of
appropriated funds under section 421, the Secretary shall
make livestock indemnity payments to producers on farms that
have incurred livestock losses during the applicable period
(including losses due to blizzards that began in calendar
year 2006 and continued in January 2007) due to a disaster,
as determined by the Secretary, including losses due to
hurricanes, floods, anthrax, wildfires, and extreme heat.
(2) Payment rates.--Indemnity payments to a producer on a
farm under paragraph (1) shall be made at a rate of not less
than 30 percent of the market value of the applicable
livestock on the day before the date of death of the
livestock, as determined by the Secretary.
(c) Ewe Lamb Replacement and Retention.--
(1) In general.--Subject to the availability of
appropriated funds under section 421, the Secretary shall use
$13,000,000 of the funds made available under that section to
make payments to producers located in disaster counties under
the Ewe Lamb Replacement and Retention Payment Program under
part 784 of title 7, Code of Federal Regulations (or a
successor regulation) for each qualifying ewe lamb retained
or purchased during the period beginning on January 1, 2006,
and ending on December 31, 2006, by the producers.
(2) Ineligibility for other assistance.--A producer that
receives assistance under this subsection shall not be
eligible to receive assistance under subsection (a).
(d) Election of Production Year.--If a producer incurred
qualifying production losses in more than one of the
production years, the producers on a farm shall elect to
receive assistance under this section in only one of the
production years.
(e) Exception.--Notwithstanding any other provision of this
section, livestock producers on a farm shall be eligible to
receive assistance under subsection (a) or livestock
indemnity payments under subsection (b) if the producers on a
farm--
(1) have livestock operations in a county included in the
geographic area covered by a major disaster or emergency
designated by the President under the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121
et seq.) due to blizzards, ice storms, or other winter-
related causes during the period of December 2006 through
January 2007; and
(2) meet all eligibility requirements for the assistance or
payments other than the requirements relating to disaster
declarations by the Secretary under subsections (a) and
(b)(1).

Subtitle B--Miscellaneous

SEC. 421. AUTHORIZATION OF APPROPRIATIONS.

(a) In General.--The Secretary shall use to carry out this
title funds derived from annual appropriations for the
Department of Agriculture, as determined by the Secretary.
(b) Limitation.--Notwithstanding any other provision of
this title, the authority provided by this title and the
amendments made by this title shall apply only to the extent
that funds are appropriated in advance in an annual
appropriations Act for the Department of Agriculture.

Subtitle C--Emergency Designation

SEC. 431. EMERGENCY DESIGNATION.

______

SA 658. Mr. GRASSLEY (for himself and Mr. Baucus) submitted an
amendment intended to be proposed by him to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

Strike all after the first word and insert the following:

V--FAIR MINIMUM WAGE AND TAX RELIEF

Subtitle A--Fair Minimum Wage

SEC. 500. SHORT TITLE.

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

SEC. 501. 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. 502. 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.

Subtitle B--Small Business Tax Incentives

SEC. 510. SHORT TITLE; AMENDMENT OF CODE.

(a) Short Title.--This subtitle 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 subtitle 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.

PART I--SMALL BUSINESS TAX RELIEF PROVISIONS

Subpart A--General Provisions

SEC. 511. 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. 512. 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 ``January 1,
2009''.
(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 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 January 1, 2009.''.
(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''.

[[Page S3853]]

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

SEC. 513. 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. 514. 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, renewal community, or
rural renewal county.
``(B) Individual must continue to reside in zone,
community, or county.--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, renewal community, or
rural renewal county.
``(C) Rural renewal county.--For purposes of this
paragraph, the term `rural renewal county' means any county
which--
``(i) is outside a metropolitan statistical area (defined
as such by the Office of Management and Budget), and
``(ii) during the 5-year periods 1990 through 1994 and 1995
through 1999 had a net population loss.''.
(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 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. 515. 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--

[[Page S3854]]

``(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 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)).

[[Page S3855]]

``(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.

SEC. 516. ACCELERATED DEPRECIATION FOR INVESTMENT IN HIGH
OUT-MIGRATION COUNTIES.

(a) In General.--Section 168 (relating to accelerated cost
recovery system) is amended by adding at the end the
following new subsection:
``(l) Rural Investment Property.--
``(1) In general.--For purposes of subsection (a), the
applicable recovery period for qualified rural investment
property shall be determined in accordance with the table
contained in paragraph (2) in lieu of the table contained in
subsection (c).
``(2) Applicable recovery period for rural investment
property.--For purposes of paragraph (1)--
The applicable
``  ``In the case of:                               recovery period is:
3-year property............................................2 years
5-year property............................................3 years
7-year property............................................4 years
10-year property...........................................6 years
15-year property...........................................9 years
20-year property..........................................12 years
Nonresidential real property................................22 years.

``(3) Qualified rural investment property defined.--For
purposes of this subsection--
``(A) In general.--The term `qualified rural investment
property' means property which is property described in the
table in paragraph (2) and which is--
``(i) used by the taxpayer predominantly in the active
conduct of a trade or business within a high out-migration
county,
``(ii) not used or located outside such county on a regular
basis,
``(iii) not acquired (directly or indirectly) by the
taxpayer from a person who is related to the taxpayer (within
the meaning of section 465(b)(3)(C)), and
``(iv) not property (or any portion thereof) placed in
service for purposes of operating any racetrack or other
facility used for gambling.
``(B) High out-migration county.--The term `high out-
migration county' means any county which--
``(i) is outside a metropolitan statistical area (defined
as such by the Office of Management and Budget), and
``(ii) during the 5-year periods 1990 through 1994 and 1995
through 1999 had a net population loss.
``(4) Termination.--This subsection shall not apply to
property placed in service after March 31, 2008.''.
(b) Effective Date.--The amendment made by this section
shall apply to 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.

Subpart B--Subchapter S Provisions

SEC. 521. 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 S3856]]

SEC. 522. 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. 523. 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. 524. 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. 525. 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. 526. 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.

PART II--REVENUE PROVISIONS

SEC. 531. 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. 532. 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. 533. 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).''.
(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:

[[Page S3857]]

``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. 534. 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--
``(A) the violation of any law, or
``(B) an investigation or inquiry into the potential
violation of any law which is initiated by such government or
entity.
``(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 (or 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) in the case of any binding, written settlement
agreement which requires the taxpayer to pay or incur an
amount in excess of $1,000,000, is identified as an amount
described in clause (i) or (ii) of subparagraph (A), as the
case may be, in the settlement agreement or in the court
order implementing the 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 unless such amount
is paid or incurred for a cost or fee regularly charged for
any routine audit or other customary review performed by the
government or entity.
``(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 by the 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. 535. 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 S3858]]

``(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 S3859]]

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 S3860]]

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. 536. 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 S3861]]

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. 537. 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. 538. 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. 539. 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. 540. 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 1 or more contingent payments,

any regulations which require original issue discount to be
determined by reference to the comparable yield of a fixed-
rate debt instrument shall be applied as if the regulations
require that such comparable yield be determined by reference
to a 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. 541. 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. 542. 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. 543. 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 S3862]]

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. 544. 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.

SEC. 545. INCREASE IN AGE OF MINOR CHILDREN WHOSE UNEARNED
INCOME IS TAXED AS IF PARENT'S INCOME.

(a) In General.--Subparagraph (A) of section 1(g)(2)
(relating to child to whom subsection applies) is amended to
read as follows:
``(A) such child--
``(i) has not attained age 19 before the close of the
taxable year, or
``(ii) is a student (as defined in section 152(f)(2))--

``(I) who has not attained age 24 before the close of such
taxable year, and
``(II) whose earned income (as defined in section
911(d)(2)) for such taxable year does not exceed one-half of
the amount of the individual's support (within the meaning of
section 152(c)(1)(D) after the application of section
152(f)(5)) for such taxable year, and''.

(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 546. INCREASE IN INFORMATION RETURN PENALTIES.

(a) Failure to File Correct Information Returns.--
(1) In general.--Section 6721(a)(1) is amended--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$250,000'' and inserting ``$3,000,000''.
(2) Reduction where correction in specified period.--
(A) Correction within 30 days.--Section 6721(b)(1) is
amended--
(i) by striking ``$15'' and inserting ``$50'',
(ii) by striking ``$50'' and inserting ``$250'', and
(iii) by striking ``$75,000'' and inserting ``$500,000''.
(B) Failures corrected on or before august 1.--Section
6721(b)(2) is amended--
(i) by striking ``$30'' and inserting ``$100'',
(ii) by striking ``$50'' and inserting ``$250'', and
(iii) by striking ``$150,000'' and inserting
``$1,500,000''.
(3) Lower limitation for persons with gross receipts of not
more than $5,000,000.--Section 6721(d)(1) is amended--
(A) in subparagraph (A)--
(i) by striking ``$100,000'' and inserting ``$1,000,000'',
and
(ii) by striking ``$250,000'' and inserting ``$3,000,000'',
(B) in subparagraph (B)--
(i) by striking ``$25,000'' and inserting ``$175,000'', and
(ii) by striking ``$75,000'' and inserting ``$500,000'',
and
(C) in subparagraph (C)--
(i) by striking ``$50,000'' and inserting ``$500,000'', and
(ii) by striking ``$150,000'' and inserting ``$1,500,000''.
(4) Penalty in case of intentional disregard.--Section
6721(e) is amended--
(A) by striking ``$100'' in paragraph (2) and inserting
``$500'',
(B) by striking ``$250,000'' in paragraph (3)(A) and
inserting ``$3,000,000''.
(b) Failure to Furnish Correct Payee Statements.--
(1) In general.--Section 6722(a) is amended--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$100,000'' and inserting ``$1,000,000''.
(2) Penalty in case of intentional disregard.--Section
6722(c) is amended--
(A) by striking ``$100'' in paragraph (1) and inserting
``$500'', and
(B) by striking ``$100,000'' in paragraph (2)(A) and
inserting ``$1,000,000''.
(c) Failure to Comply With Other Information Reporting
Requirements.--Section 6723 is amended--
(1) by striking ``$50'' and inserting ``$250'', and
(2) by striking ``$100,000'' and inserting ``$1,000,000''.
(d) Effective Date.--The amendments made by this section
shall apply with respect to information returns required to
be filed on or after January 1, 2008.

SEC. 547. E-FILING REQUIREMENT FOR CERTAIN LARGE
ORGANIZATIONS.

(a) In General.--The first sentence of section 6011(e)(2)
is amended to read as follows: ``In prescribing regulations
under paragraph (1), the Secretary shall take into account
(among other relevant factors) the ability of the taxpayer to
comply at reasonable cost with the requirements of such
regulations.''.
(b) Conforming Amendment.--Section 6724 is amended by
striking subsection (c).
(c) Effective Date.--The amendments made by this section
shall apply to taxable years ending on or after December 31,
2008.

SEC. 548. EXPANSION OF IRS ACCESS TO INFORMATION IN NATIONAL
DIRECTORY OF NEW HIRES FOR TAX ADMINISTRATION
PURPOSES.

(a) In General.--Paragraph (3) of section 453(j) of the
Social Security Act (42 U.S.C. 653(j)) is amended to read as
follows:
``(3) Administration of federal tax laws.--The Secretary of
the Treasury shall have access to the information in the
National Directory of New Hires for purposes of administering
the Internal Revenue Code of 1986.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.

[[Page S3863]]

SEC. 549. DISCLOSURE OF PRISONER RETURN INFORMATION TO
FEDERAL BUREAU OF PRISONS.

(a) Disclosure.--
(1) In general.--Subsection (l) of section 6103 (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 of return information of prisoners to
federal bureau of prisons.--
``(A) In general.--Under such procedures as the Secretary
may prescribe, the Secretary may disclose return information
with respect to persons incarcerated in Federal prisons whom
the Secretary believes filed or facilitated the filing of
false or fraudulent returns to the head of the Federal Bureau
of Prisons if the Secretary determines that such disclosure
is necessary to permit effective tax administration.
``(B) Disclosure by agency to employees.--The head of the
Federal Bureau of Prisons may redisclose information received
under subparagraph (A)--
``(i) only to those officers and employees of the Bureau
who are personally and directly engaged in taking
administrative actions to address violations of
administrative rules and regulations of the prison facility,
and
``(ii) solely for the purposes described in subparagraph
(C).
``(C) Restriction on use of disclosed information.--Return
information disclosed under this paragraph may be used only
for the purposes of--
``(i) preventing the filing of false or fraudulent returns;
and
``(ii) taking administrative actions against individuals
who have filed or attempted to file false or fraudulent
returns.''.
(2) Procedures and record keeping related to disclosure.--
Subsection (p)(4) of section 6103 is amended--
(A) by striking ``(14), or (17)'' in the matter before
subparagraph (A) and inserting ``(14), (17), or (21)'', and
(B) by striking ``(9), or (16)'' in subparagraph (F)(i) and
inserting ``(9), (16), or (21)''.
(3) Evaluation by treasury inspector general for tax
administration.--Paragraph (3) of section 7803(d) is amended
by striking ``and'' at the end of subparagraph (A), by
striking the period at the end of subparagraph (B) and
inserting ``; and'', and by adding at the end the following
new subparagraph:
``(C) not later than 3 years after the date of the
enactment of section 6103(l)(21), submit a written report to
Congress on the implementation of such section.''.
(b) Annual Reports.--
(1) In general.--The Secretary of the Treasury shall submit
to Congress and make publicly available an annual report on
the filing of false and fraudulent returns by individuals
incarcerated in Federal and State prisons.
(2) Contents of report.--The report submitted under
paragraph (1) shall contain statistics on the number of false
or fraudulent returns associated with each Federal and State
prison and such other information that the Secretary
determines is appropriate.
(3) Exchange of information.--For the purpose of gathering
information necessary for the reports required under
paragraph (1), the Secretary of the Treasury shall enter into
agreements with the head of the Federal Bureau of Prisons and
the heads of State agencies charged with responsibility for
administration of State prisons under which the head of the
Bureau or Agency provides to the Secretary not less
frequently than annually the names and other identifying
information of prisoners incarcerated at each facility
administered by the Bureau or Agency.
(c) Effective Date.--The amendments made by this section
shall apply to disclosures on or after January 1, 2008.

SEC. 550. MODIFICATION OF CRIMINAL PENALTIES FOR WILLFUL
FAILURES INVOLVING TAX PAYMENTS AND FILING
REQUIREMENTS.

(a) Increase in Penalty for Attempt to Evade or Defeat
Tax.--Section 7201 (relating to attempt to evade or defeat
tax) is amended--
(1) by striking ``$100,000'' and inserting ``$500,000'',
(2) by striking ``$500,000'' and inserting ``$1,000,000'',
and
(3) by striking ``5 years'' and inserting ``10 years''.
(b) Modification of Penalties for Willful Failure to File
Return, Supply Information, or Pay Tax.--
(1) In general.--Section 7203 (relating to willful failure
to file return, supply information, or pay tax) 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) `$250,000 ($500,000' for `$50,000 ($100,000', and
``(C) `5 years' for `1 year'.
``(2) Failure described.--A failure described in this
paragraph is--
``(A) a failure to make a return described in subsection
(a) for any 3 taxable years occurring during any period of 5
consecutive taxable years if the aggregate tax liability for
such period is not less than $50,000, or
``(B) a failure to make a return if the tax liability
giving rise to the requirement to make such return is
attributable to an activity which is a felony under any State
or Federal law.''.
(2) Penalty may be applied in addition to other
penalties.--Section 7204 (relating to fraudulent statement or
failure to make statement to employees) is amended by
striking ``the penalty provided in section 6674'' and
inserting ``the penalties provided in sections 6674 and
7203(b)''.
(c) Fraud and False Statements.--Section 7206 (relating to
fraud and false statements) is amended--
(1) by striking ``$100,000'' and inserting ``$500,000'',
(2) by striking ``$500,000'' and inserting ``$1,000,000'',
and
(3) by striking ``3 years'' and inserting ``5 years''.
(d) Increase in Monetary Limitation for Underpayment or
Overpayment of Tax Due to Fraud.--Section 7206 (relating to
fraud and false statements), as amended by subsection (a)(3),
is amended--
(1) by striking ``Any person who--'' and inserting ``(a) In
General.--Any person who--'', 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.''.
(e) 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. 551. UNDERSTATEMENT OF TAXPAYER LIABILITY BY RETURN
PREPARERS.

(a) Application of Return Preparer Penalties to All Tax
Returns.--
(1) Definition of tax return preparer.--Paragraph (36) of
section 7701(a) (relating to income tax preparer) is
amended--
(A) by striking ``income'' each place it appears in the
heading and the text, and
(B) in subparagraph (A), by striking ``subtitle A'' each
place it appears and inserting ``this title''.
(2) Conforming amendments.--
(A)(i) Section 6060 is amended by striking ``INCOME TAX
RETURN PREPARERS'' in the heading and inserting ``TAX RETURN
PREPARERS''.
(ii) Section 6060(a) is amended--
(I) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer'',
(II) by striking ``each income tax return preparer'' and
inserting ``each tax return preparer'', and
(III) by striking ``another income tax return preparer''
and inserting ``another tax return preparer''.
(iii) The item relating to section 6060 in the table of
sections for subpart F of part III of subchapter A of chapter
61 is amended by striking ``income tax return preparers'' and
inserting ``tax return preparers''.
(iv) Subpart F of part III of subchapter A of chapter 61 is
amended by striking ``Income Tax Return Preparers'' in the
heading and inserting ``Tax Return Preparers''.
(v) The item relating to subpart F in the table of subparts
for part III of subchapter A of chapter 61 is amended by
striking ``income tax return preparers'' and inserting ``tax
return preparers''.
(B) Section 6103(k)(5) is amended--
(i) by striking ``income tax return preparer'' each place
it appears and inserting ``tax return preparer'', and
(ii) by striking ``income tax return preparers'' each place
it appears and inserting ``tax return preparers''.
(C)(i) Section 6107 is amended--
(I) by striking ``INCOME TAX RETURN PREPARER'' in the
heading and inserting ``TAX RETURN PREPARER'',
(II) by striking ``an income tax return preparer'' each
place it appears in subsections (a) and (b) and inserting ``a
tax return preparer'',
(III) by striking ``Income Tax Return Preparer'' in the
heading for subsection (b) and inserting ``Tax Return
Preparer'', and
(IV) in subsection (c), by striking ``income tax return
preparers'' and inserting ``tax return preparers''.
(ii) The item relating to section 6107 in the table of
sections for subchapter B of chapter 61 is amended by
striking ``Income tax return preparer'' and inserting ``Tax
return preparer''.
(D) Section 6109(a)(4) is amended--
(i) by striking ``an income tax return preparer'' and
inserting ``a tax return preparer'', and
(ii) by striking ``income return preparer'' in the heading
and inserting ``tax return preparer''.
(E) Section 6503(k)(4) is amended by striking ``Income tax
return preparers'' and inserting ``Tax return preparers''.
(F)(i) Section 6694 is amended--

[[Page S3864]]

(I) by striking ``INCOME TAX RETURN PREPARER'' in the
heading and inserting ``TAX RETURN PREPARER'',
(II) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer'',
(III) in subsection (c)(2), by striking ``the income tax
return preparer'' and inserting ``the tax return preparer'',
(IV) in subsection (e), by striking ``subtitle A'' and
inserting ``this title'', and
(V) in subsection (f), by striking ``income tax return
preparer'' and inserting ``tax return preparer''.
(ii) The item relating to section 6694 in the table of
sections for part I of subchapter B of chapter 68 is amended
by striking ``income tax return preparer'' and inserting
``tax return preparer''.
(G)(i) Section 6695 is amended--
(I) by striking ``INCOME'' in the heading, and
(II) by striking ``an income tax return preparer'' each
place it appears and inserting ``A TAX RETURN PREPARER''.
(ii) Section 6695(f) is amended--
(I) by striking ``subtitle A'' and inserting ``this
title'', and
(II) by striking ``the income tax return preparer'' and
inserting ``the tax return preparer''.
(iii) The item relating to section 6695 in the table of
sections for part I of subchapter B of chapter 68 is amended
by striking ``income''.
(H) Section 6696(e) is amended by striking ``subtitle A''
each place it appears and inserting ``this title''.
(I)(i) Section 7407 is amended--
(I) by striking ``INCOME TAX RETURN PREPARERS'' in the
heading and inserting ``TAX RETURN PREPARERS'',
(II) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer'',
(III) by striking ``income tax preparer'' both places it
appears in subsection (a) and inserting ``tax return
preparer'', and
(IV) by striking ``income tax return'' in subsection (a)
and inserting ``tax return''.
(ii) The item relating to section 7407 in the table of
sections for subchapter A of chapter 76 is amended by
striking ``income tax return preparers'' and inserting ``tax
return preparers''.
(J)(i) Section 7427 is amended--
(I) by striking ``INCOME TAX RETURN PREPARERS'' in the
heading and inserting ``TAX RETURN PREPARERS'', and
(II) by striking ``an income tax return preparer'' and
inserting ``a tax return preparer''.
(ii) The item relating to section 7427 in the table of
sections for subchapter B of chapter 76 is amended to read as
follows:

``Sec. 7427. Tax return preparers.''.
(b) Modification of Penalty for Understatement of
Taxpayer's Liability by Tax Return Preparer.--Subsections (a)
and (b) of section 6694 are amended to read as follows:
``(a) Understatement Due to Unreasonable Positions.--
``(1) In general.--Any tax return preparer who prepares any
return or claim for refund with respect to which any part of
an understatement of liability is due to a position described
in paragraph (2) shall pay a penalty with respect to each
such return or claim in an amount equal to the greater of--
``(A) $1,000, or
``(B) 50 percent of the income derived (or to be derived)
by the tax return preparer with respect to the return or
claim.
``(2) Unreasonable position.--A position is described in
this paragraph if--
``(A) the tax return preparer knew (or reasonably should
have known) of the position,
``(B) there was not a reasonable belief that the position
would more likely than not be sustained on its merits, and
``(C)(i) the position was not disclosed as provided in
section 6662(d)(2)(B)(ii), or
``(ii) there was no reasonable basis for the position.
``(3) Reasonable cause exception.--No penalty shall be
imposed under this subsection if it is shown that there is
reasonable cause for the understatement and the tax return
preparer acted in good faith.
``(b) Understatement Due to Willful or Reckless Conduct.--
``(1) In general.--Any tax return preparer who prepares any
return or claim for refund with respect to which any part of
an understatement of liability is due to a conduct described
in paragraph (2) shall pay a penalty with respect to each
such return or claim in an amount equal to the greater of--
``(A) $5,000, or
``(B) 50 percent of the income derived (or to be derived)
by the tax return preparer with respect to the return or
claim.
``(2) Willful or reckless conduct.--Conduct described in
this paragraph is conduct by the tax return preparer which
is--
``(A) a willful attempt in any manner to understate the
liability for tax on the return or claim, or
``(B) a reckless or intentional disregard of rules or
regulations.
``(3) Reduction in penalty.--The amount of any penalty
payable by any person by reason of this subsection for any
return or claim for refund shall be reduced by the amount of
the penalty paid by such person by reason of subsection
(a).''.
(c) Effective Date.--The amendments made by this section
shall apply to returns prepared after the date of the
enactment of this Act.

SEC. 552. PENALTY FOR FILING ERRONEOUS REFUND CLAIMS.

(a) In General.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6675 the following new section:

``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

``(a) Civil Penalty.--If a claim for refund or credit with
respect to income tax (other than a claim for a refund or
credit relating to the earned income credit under section 32)
is made for an excessive amount, unless it is shown that the
claim for such excessive amount has a reasonable basis, the
person making such claim shall be liable for a penalty in an
amount equal to 20 percent of the excessive amount.
``(b) Excessive Amount.--For purposes of this section, the
term `excessive amount' means in the case of any person the
amount by which the amount of the claim for refund or credit
for any taxable year exceeds the amount of such claim
allowable under this title for such taxable year.
``(c) Coordination With Other Penalties.--This section
shall not apply to any portion of the excessive amount of a
claim for refund or credit on which a penalty is imposed
under part II of subchapter A of chapter 68.''.
(b) Conforming Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by inserting after
the item relating to section 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.
(c) Effective Date.--The amendments made by this section
shall apply to any claim--
(1) filed or submitted after the date of the enactment of
this Act, or
(2) filed or submitted prior to such date but not withdrawn
before the date which is 30 days after such date of
enactment.

SEC. 553. SUSPENSION OF CERTAIN PENALTIES AND INTEREST.

(a) In General.--Paragraphs (1)(A) and (3)(A) of section
6404(g) are each amended by striking ``18-month period'' and
inserting ``24-month period''.
(b) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to notices
provided by the Secretary of the Treasury, or his delegate
after the date which is 6 months after the date of the
enactment of this Act.
(2) Exception for certain taxpayers.--The amendments made
by this section shall not apply to any taxpayer with respect
to whom a suspension of any interest, penalty, addition to
tax, or other amount is in effect on the date which is 6
months after the date of the enactment of this Act.

SEC. 554. ADDITIONAL REASONS FOR SECRETARY TO TERMINATE
INSTALLMENT AGREEMENTS.

(a) In General.--Section 6159(b)(4) (relating to failure to
pay an installment or any other tax liability when due or to
provide requested financial information) is amended by
striking ``or'' at the end of subparagraph (B), by
redesignating subparagraph (C) as subparagraph (E), and by
inserting after subparagraph (B) the following new
subparagraphs:
``(C) to make a Federal tax deposit under section 6302 at
the time such deposit is required to be made,
``(D) to file a return of tax imposed under this title by
its due date (including extensions), or''.
(b) Conforming Amendment.--The heading for paragraph (4) of
section 6159(b) is amended by striking ``Failure to pay an
installment or any other tax liability when due or to provide
requested financial information'' and inserting ``Failure to
make payments or deposits or file returns when due or to
provide requested financial information''.
(c) Effective Date.--The amendments made by this section
shall apply to failures occurring on or after the date of the
enactment of this Act.

SEC. 555. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS-IN-
COMPROMISE.

(a) In General.--Section 7122(b) (relating to record) is
amended by striking ``Whenever a compromise'' and all that
follows through ``his delegate, with his reasons therefor''
and inserting ``If the Secretary determines that an opinion
of the General Counsel for the Department of the Treasury, or
the Counsel's delegate, is required with respect to a
compromise, there shall be placed on file in the office of
the Secretary such opinion, with the reasons therefor''.
(b) Conforming Amendments.--Section 7122(b) is amended by
striking the second and third sentences.
(c) Effective Date.--The amendments made by this section
shall apply to offers-in-compromise submitted or pending on
or after the date of the enactment of this Act.

SEC. 556. AUTHORIZATION FOR FINANCIAL MANAGEMENT SERVICE
RETENTION OF TRANSACTION FEES FROM LEVIED
AMOUNTS.

(a) In General.--Subsection (h) of section 6331 (relating
to continuing levy on certain payments) is amended by adding
at the end the following new paragraph:
``(4) Imposition of financial management services
transaction fees.--If the Secretary approves a levy under
this subsection, the Secretary may impose on the taxpayer a
transaction fee sufficient to cover the full cost of
implementing the levy under this subsection. Such fee--
``(A) shall be treated as an expense under section 6341,

[[Page S3865]]

``(B) may be collected through a levy under this
subsection, and
``(C) shall be in addition to the amount of tax liability
with respect to which such levy was approved.''.
(b) Retention of Fees by Financial Management Service.--The
Financial Management Service may retain the amount of any
transaction fee imposed under section 6331(h)(4) of the
Internal Revenue Code of 1986. Any amount retained by the
Financial Management Service under that section shall be
deposited into the account of the Department of the Treasury
under section 3711(g)(7) of title 31, United States Code.
(c) Effective Date.--The amendment made by this section
shall apply to amounts levied after the date of the enactment
of this Act.

SEC. 557. AUTHORITY FOR UNDERCOVER OPERATIONS.

Paragraph (6) of section 7608(c) (relating to application
of section) is amended by striking ``2007'' both places it
appears and inserting ``2008''.

SEC. 558. INCREASE IN PENALTY EXCISE TAXES ON THE POLITICAL
AND EXCESS LOBBYING ACTIVITIES OF SECTION
501(C)(3) ORGANIZATIONS.

(a) Taxes on Disqualifying Lobbying Expenditures of Certain
Organizations.--
(1) In general.--Section 4912(a) (relating to tax on
organization) is amended by striking ``5 percent'' and
inserting ``10 percent''.
(2) Tax on management.--Section 4912(b) is amended by
striking ``5 percent'' and inserting ``10 percent''.
(b) Taxes on Political Expenditures of Section 501(c)(3)
Organizations.--
(1) In general.--Section 4955(a) (relating to initial
taxes) is amended--
(A) in paragraph (1), by striking ``10 percent'' and
inserting ``20 percent'', and
(B) in paragraph (2), by striking ``2\1/2\ percent'' and
inserting ``5 percent''.
(2) Increased limitation for managers.--Section 4955(c)(2)
is amended--
(A) by striking ``$5,000'' and inserting ``$10,000'', and
(B) by striking ``$10,000'' and inserting ``$20,000''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 559. INCREASED PENALTY FOR FAILURE TO FILE FOR EXEMPT
ORGANIZATIONS.

(a) In General.--Subparagraph (A) of section 6652(c)(1)
(relating to annual returns under section 6033(a)(1) or
6012(a)(6)) is amended by adding at the end the following new
sentence: ``In the case of an organization having gross
receipts exceeding $25,000,000 for any year, with respect to
the return so required, the first sentence of this
subparagraph shall be applied by substituting `$250' for
`$20' and, in lieu of applying the second sentence of this
subparagraph, the maximum penalty under this subparagraph
shall not exceed $125,000.''.
(b) Conforming Amendment.--The third sentence of section
6652(c)(1)(A) is amended by inserting ``but not exceeding
$25,000,000'' after ``$1,000,000''.
(c) Effective Date.--The amendments made by this section
shall apply to returns required to be filed on or after
January 1, 2008.

SEC. 560. PENALTIES FOR FAILURE TO FILE CERTAIN RETURNS
ELECTRONICALLY.

(a) In General.--Part I of subchapter A of chapter 68
(relating to additions to the tax, additional amounts, and
assessable penalties) is amended by inserting after section
6652 the following new section:

``SEC. 6652A. FAILURE TO FILE CERTAIN RETURNS ELECTRONICALLY.

``(a) In General.--If a person fails to file a return
described in section 6651 or 6652(c)(1) in electronic form as
required under section 6011(e)--
``(1) such failure shall be treated as a failure to file
such return (even if filed in a form other than electronic
form), and
``(2) the penalty imposed under section 6651 or 6652(c),
whichever is appropriate, shall be equal to the greater of--
``(A) the amount of the penalty under such section,
determined without regard to this section, or
``(B) the amount determined under subsection (b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), the penalty determined under this subsection is equal to
$40 for each day during which a failure described under
subsection (a) continues. The maximum penalty under this
paragraph on failures with respect to any 1 return shall not
exceed the lesser of $20,000 or 10 percent of the gross
receipts of the taxpayer for the year.
``(2) Increased penalties for taxpayers with gross receipts
between $1,000,000 and $100,000,000.--
``(A) Taxpayers with gross receipts between $1,000,000 and
$25,000,000.--In the case of a taxpayer having gross receipts
exceeding $1,000,000 but not exceeding $25,000,000 for any
year--
``(i) the first sentence of paragraph (1) shall be applied
by substituting `$200' for `$40', and
``(ii) in lieu of applying the second sentence of paragraph
(1), the maximum penalty under paragraph (1) shall not exceed
$100,000.
``(B) Taxpayers with gross receipts over $25,000,000.--
Except as provided in paragraph (3), in the case of a
taxpayer having gross receipts exceeding $25,000,000 for any
year--
``(i) the first sentence of paragraph (1) shall be applied
by substituting `$500' for `$40', and
``(ii) in lieu of applying the second sentence of paragraph
(1), the maximum penalty under paragraph (1) shall not exceed
$250,000.
``(3) Increased penalties for certain taxpayers with gross
receipts exceeding $100,000,000.--In the case of a return
described in section 6651--
``(A) Taxpayers with gross receipts between $100,000,000
and $250,000,000.--In the case of a taxpayer having gross
receipts exceeding $100,000,000 but not exceeding
$250,000,000 for any year--
``(i) the amount of the penalty determined under this
subsection shall equal the sum of--

``(I) $50,000, plus
``(II) $1,000 for each day during which such failure
continues (twice such amount for each day such failure
continues after the first such 60 days), and

``(ii) the maximum amount under clause (i)(II) on failures
with respect to any 1 return shall not exceed $200,000.
``(B) Taxpayers with gross receipts over $250,000,000.--In
the case of a taxpayer having gross receipts exceeding
$250,000,000 for any year--
``(i) the amount of the penalty determined under this
subsection shall equal the sum of--

``(I) $250,000, plus
``(II) $2,500 for each day during which such failure
continues (twice such amount for each day such failure
continues after the first such 60 days), and

``(ii) the maximum amount under clause (i)(II) on failures
with respect to any 1 return shall not exceed $250,000.
``(C) Exception for certain returns.--Subparagraphs (A) and
(B) shall not apply to any return of tax imposed under
section 512.''.
(b) Clerical Amendment.--The table of sections for part I
of subchapter A of chapter 68 is amended by inserting after
the item relating to section 6652 the following new item:

``Sec. 6652A. Failure to file certain returns electronically.''.
(c) Effective Date.--The amendments made by this section
shall apply to returns required to be filed on or after
January 1, 2008.

PART III--GENERAL PROVISIONS

SEC. 561. 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, except that, compliance with any procedures
described pursuant to this section does not establish
compliance with the rule, or establish a presumption or
inference of such compliance.
``(C) Procedures.--Procedures described under subparagraph
(B)(ii)--
``(i) shall be suggestions to assist small entities; and
``(ii) shall not be additional requirements, or diminish
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.

[[Page S3866]]

``(6) Reporting.--Not later than 1 year after the date of
enactment of the Fair Minimum Wage 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, the Committee on Small Business of the House of
Representatives, and any other committee of relevant
jurisdiction 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''.

SEC. 562. 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), 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.

[[Page S3867]]

SEC. 563. 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 benefits, costs, risks, and
barriers to workers and 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.

SEC. 564. 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 Social Security program was enacted to serve as the
safest component of a retirement system that also includes
employer-sponsored retirement plans and personal savings.
(b) Sense of the Senate.--It is the sense of the Senate
that--
(1) Congress should enact policies that promote savings
vehicles for retirement that are simple, easily accessible
and provide adequate financial security 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; and
(3) regularly contributing money to a financially-sound
investment account is one important method for helping to
achieve one's retirement goals.

SEC. 565. RENEWAL GRANTS FOR WOMEN'S BUSINESS CENTERS.

(a) In General.--Section 29 of the Small Business Act (15
U.S.C. 656) is amended by adding at the end the following:
``(m) Continued Funding for Centers.--
``(1) In general.--A nonprofit organization described in
paragraph (2) shall be eligible to receive, subject to
paragraph (3), a 3-year grant under this subsection.
``(2) Applicability.--A nonprofit organization described in
this paragraph is a nonprofit organization that has received
funding under subsection (b) or (l).
``(3) Application and approval criteria.--
``(A) Criteria.--Subject to subparagraph (B), the
Administrator shall develop and publish criteria for the
consideration and approval of applications by nonprofit
organizations under this subsection.
``(B) Contents.--Except as otherwise provided in this
subsection, the conditions for participation in the grant
program under this subsection shall be the same as the
conditions for participation in the program under subsection
(l), as in effect on the date of enactment of this Act.
``(C) Notification.--Not later than 60 days after the date
of the deadline to submit applications for each fiscal year,
the Administrator shall approve or deny any application under
this subsection and notify the applicant for each such
application.
``(4) Award of grants.--
``(A) In general.--Subject to the availability of
appropriations, the Administrator shall make a grant for the
Federal share of the cost of activities described in the
application to each applicant approved under this subsection.
``(B) Amount.--A grant under this subsection shall be for
not more than $150,000, for each year of that grant.
``(C) Federal share.--The Federal share under this
subsection shall be not more than 50 percent.
``(D) Priority.--In allocating funds made available for
grants under this section, the Administrator shall give
applications under this subsection or subsection (l) priority
over first-time applications under subsection (b).
``(5) Renewal.--
``(A) In general.--The Administrator may renew a grant
under this subsection for additional 3-year periods, if the
nonprofit organization submits an application for such
renewal at such time, in such manner, and accompanied by such
information as the Administrator may establish.
``(B) Unlimited renewals.--There shall be no limitation on
the number of times a grant may be renewed under subparagraph
(A).
``(n) Privacy Requirements.--
``(1) In general.--A women's business center may not
disclose the name, address, or telephone number of any
individual or small business concern receiving assistance
under this section without the consent of such individual or
small business concern, unless--
``(A) the Administrator is ordered to make such a
disclosure by a court in any civil or criminal enforcement
action initiated by a Federal or State agency; or
``(B) the Administrator considers such a disclosure to be
necessary for the purpose of conducting a financial audit of
a women's business center, but a disclosure under this
subparagraph shall be limited to the information necessary
for such audit.
``(2) Administration use of information.--This subsection
shall not--
``(A) restrict Administration access to program activity
data; or
``(B) prevent the Administration from using client
information (other than the information described in
subparagraph (A)) to conduct client surveys.
``(3) Regulations.--The Administrator shall issue
regulations to establish standards for requiring disclosures
during a financial audit under paragraph (1)(B).''.
(b) Repeal.--Section 29(l) of the Small Business Act (15
U.S.C. 656(l)) is repealed effective October 1 of the first
full fiscal year after the date of enactment of this Act.
(c) Transitional Rule.--Notwithstanding any other provision
of law, a grant or cooperative agreement that was awarded
under subsection (l) of section 29 of the Small Business Act
(15 U.S.C. 656), on or before the day before the date
described in subsection (b) of this section, shall remain in
full force and effect under the terms, and for the duration,
of such grant or agreement.

SEC. 566. REPORTS ON ACQUISITIONS OF ARTICLES, MATERIALS, AND
SUPPLIES MANUFACTURED OUTSIDE THE UNITED
STATES.

Section 2 of the Buy American Act (41 U.S.C. 10a) is
amended--
(1) by striking ``Notwithstanding'' and inserting the
following:
``(a) In General.--Notwithstanding''; and
(2) by adding at the end the following:
``(b) Reports.--
``(1) In general.--Not later than 180 days after the end of
each of fiscal years 2007 through 2011, the head of each
Federal agency shall submit to the Committee on Homeland
Security and Governmental Affairs of the Senate and the
Committee on Oversight and Government Reform of the House of
Representatives a report on the amount of the acquisitions
made by the agency in that fiscal year of articles,
materials, or supplies purchased from entities that
manufacture the articles, materials, or supplies outside of
the United States.
``(2) Contents of report.--The report required by paragraph
(1) shall separately include, for the fiscal year covered by
such report--
``(A) the dollar value of any articles, materials, or
supplies that were manufactured outside the United States;
``(B) an itemized list of all waivers granted with respect
to such articles, materials, or supplies under this Act, and
a citation to the treaty, international agreement, or other
law under which each waiver was granted;
``(C) if any articles, materials, or supplies were acquired
from entities that manufacture articles, materials, or
supplies outside the United States, the specific exception
under this section that was used to purchase such articles,
materials, or supplies; and
``(D) a summary of--
``(i) the total procurement funds expended on articles,
materials, and supplies manufactured inside the United
States; and
``(ii) the total procurement funds expended on articles,
materials, and supplies manufactured outside the United
States.
``(3) Public availability.--The head of each Federal agency
submitting a report under paragraph (1) shall make the report
publicly available to the maximum extent practicable.
``(4) Exception for intelligence community.--This
subsection shall not apply to acquisitions made by an agency,
or component thereof, that is an element of the intelligence
community as specified in, or designated under, section 3(4)
of the National Security Act of 1947 (50 U.S.C. 401a(4)).''.

SEC. 567. SENSE OF THE SENATE REGARDING REPEAL OF 1993 INCOME
TAX INCREASE ON SOCIAL SECURITY BENEFITS.

It is the sense of the Senate that Congress should repeal
the 1993 tax increase on Social Security benefits and
eliminate wasteful spending, such as spending on unnecessary
tax loopholes, in order to fully offset the cost of such
repeal and avoid forcing taxpayers to pay substantially more
interest to foreign creditors.

SEC. 568. SENSE OF THE SENATE REGARDING PERMANENT TAX
INCENTIVES TO MAKE EDUCATION MORE AFFORDABLE
AND MORE ACCESSIBLE FOR AMERICAN FAMILIES.

It is the sense of the Senate that Congress should make
permanent the tax incentives to make education more
affordable and more accessible for American families and
eliminate wasteful spending, such as spending on unnecessary
tax loopholes, in order to fully offset the cost of such
incentives and avoid forcing taxpayers to pay substantially
more interest to foreign creditors.

SEC. 569. RESPONSIBLE GOVERNMENT CONTRACTOR REQUIREMENTS.

Section 274A(e) of the Immigration and Nationality Act (8
U.S.C. 1324a(e)) is amended by adding at the end the
following new paragraph:
``(10) Prohibition on award of government contracts,
grants, and agreements.--
``(A) Employers with no contracts, grants, or agreements.--
``(i) In general.--Subject to clause (iii) and subparagraph
(C), if an employer who does not hold a Federal contract,
grant, or cooperative agreement is determined to have
violated this section, the employer shall be debarred from
the receipt of a Federal contract, grant, or cooperative
agreement for a period of 7 years.
``(ii) Placement on excluded list.--The Secretary of
Homeland Security or the Attorney General shall advise the
Administrator of General Services of the debarment

[[Page S3868]]

of an employer under clause (i) and the Administrator of
General Services shall list the employer on the List of
Parties Excluded from Federal Procurement and Nonprocurement
Programs for a period of 7 years.
``(iii) Waiver.--

``(I) Authority.--The Administrator of General Services, in
consultation with the Secretary of Homeland Security and the
Attorney General, may waive operation of clause (i) or may
limit the duration or scope of a debarment under clause (i)
if such waiver or limitation is necessary to national defense
or in the interest of national security.
``(II) Notification to congress.--If the Administrator
grants a waiver or limitation described in subclause (I), the
Administrator shall submit to each member of the Committee on
the Judiciary of the Senate and of the Committee on the
Judiciary of the House of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial review.--The decision of
whether to debar or take alternative action under this clause
shall not be judicially reviewed.

``(B) Employers with contracts, grants, or agreements.--
``(i) In general.--Subject to clause (iii) and subclause
(C), an employer who holds a Federal contract, grant, or
cooperative agreement and is determined to have violated this
section shall be debarred from the receipt of new Federal
contracts, grants, or cooperative agreements for a period of
10 years.
``(ii) Notice to agencies.--Prior to debarring the employer
under clause (i), the Secretary of Homeland Security, in
cooperation with the Administrator of General Services, shall
advise any agency or department holding a contract, grant, or
cooperative agreement with the employer of the Government's
intention to debar the employer from the receipt of new
Federal contracts, grants, or cooperative agreements for a
period of 10 years.
``(iii) Waiver.--

``(I) Authority.--After consideration of the views of any
agency or department that holds a contract, grant, or
cooperative agreement with the employer, the Administrator of
General Services, in consultation with the Secretary of
Homeland Security and the Attorney General, may waive
operation of clause (i) or may limit the duration or scope of
the debarment under clause (i) if such waiver or limitation
is necessary to the national defense or in the interest of
national security.
``(II) Notification to congress.--If the Administrator
grants a waiver or limitation described in subclause (I), the
Administrator shall submit to each member of the Committee on
the Judiciary of the Senate and of the Committee on the
Judiciary of the House of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial review.--The decision of
whether to debar or take alternate action under this clause
shall not be judicially reviewed.

``(C) Exemption from penalty for employers participating in
the basic pilot program.--In the case of imposition on an
employer of a debarment from the receipt of a Federal
contract, grant, or cooperative agreement under subparagraph
(A) or (B), that penalty shall be waived if the employer
establishes that the employer was voluntarily participating
in the basic pilot program under section 403(a) of the
Illegal Immigration Reform and Immigrant Responsibility Act
of 1996 (8 U.S.C. 1324a note) at the time of the violations
of this section that resulted in the debarment.''.
______

SA 659. Mr. DORGAN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the end of subtitle F of title IV, add the following:

SEC. 4__. APPLICABILITY OF COUNTRY OF ORIGIN LABELING
REQUIREMENTS.

Section 285 of the Agricultural Marketing Act of 1946 (7
U.S.C. 1638d) is amended by striking ``September 30, 2008''
and inserting ``September 30, 2007''.
______

SA 660. Mrs. BOXER submitted an amendment intended to be proposed by
her to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. __. MAN-PORTABLE AIR DEFENSE SYSTEMS.

(a) In General.--Notwithstanding any other provision of
law, the Secretary of State may authorize the use of counter-
MANPADS equipment to protect the civil reserve air fleet if
the Secretary determines that--
(1) such use is in the national security or foreign policy
interests of the United States; and
(2) sufficient safeguards are in place to ensure that the
technology relating to such use is not diverted or
compromised.
(b) Definition of MANPADS.--In this section, the term
``MANPADS'' means--
(1) a surface-to-air missile system designed to be man-
portable and carried and fired by a single individual; and
(2) any other surface-to-air missile system designed to be
operated and fired by more than one individual acting as a
crew and portable by several individuals.
(c) Regulations.--The Secretary of State shall, in
consultation with the Secretary of Commerce, promulgate
regulations to carry out the section.
______

SA 661. Mr. KOHL (for himself, Ms. Snowe, Mr. Feingold, and Ms.
Landrieu) submitted an amendment intended to be proposed by him to the
bill H.R. 1591, making emergency supplemental appropriations for the
fiscal year ending September 30, 2007, and for other purposes; which
was ordered to lie on the table; as follows:

At the end of chapter 10 of title III, add the following:
Sec. 4004. With respect to any funds made available under
this or any other Act for the operation, capital improvement,
or management of public housing as authorized under sections
9(d) and 9(e) of the United States Housing Act of 1937 (42
U.S.C. 1437g(d) and (e)), the Secretary of Housing and Urban
Development shall not impose any requirement or guideline
relating to asset management that restricts or limits in any
way the use of capital funds for central office costs
pursuant to section 9(g)(1) or 9(g)(2) of such Act (42 U.S.C.
1437g(g)(1),(2)).
______

SA 662. Mr. DOMENICI submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

On page 37, between lines 10 and 11, insert the following:

International Commissions

international boundary and water commission, united states and mexico

For an additional amount for the ``International Boundary
and Water Commission, United States and Mexico'',
$21,700,000, to remain available until expended: Provided,
That of the funds appropriated under this heading, not less
than $11,700,000 shall be made available for sediment removal
and construction associated with the Rio Grande Canalization
project in Dona Ana County, New Mexico: Provided further,
That of the funds appropriated under this heading, not less
than $10,000,000 shall be made available for sediment removal
associated with the Rio Grande Flood Control System
Rehabilitation project in El Paso County, Texas.
______

SA 663. Ms. STABENOW (for herself and Mr. Levin) submitted an
amendment intended to be proposed by her to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

On page 60, strike lines 21 and 22 and insert the
following: ``the 2005 season, $18,590,000, to remain
available until expended, of which $15,590,000 shall be for
emergency repairs to breakwaters and dredging of commerical
and shallow draft harbors in the Detroit District.''
______

SA 664. Mr. OBAMA (for himself, Mrs. McCaskill, Ms. Mikulski, Mr.
Harkin, Mr. Kerry, Ms. Cantwell, Mr. Biden, Mr. Bingaman, Mr. Casey,
Mr. Durbin, Mr. Baucus, Ms. Landrieu, and Mr. Leahy) submitted an
amendment intended to be proposed by him to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; as follows:

At the end of chapter 3 of title I, add the following:

SEC. 1316. ADDITIONAL AMOUNT FOR DEFENSE HEALTH PROGRAM FOR
ADDITIONAL MENTAL HEALTH AND RELATED PERSONNEL.

The amount appropriated or otherwise made available by this
chapter under the heading ``Defense Health Program'' is
hereby increased by $58,000,000, with the amount of the
increase to be available for additional caseworkers at
military medical treatment facilities and other military
facilities housing patients to participate in, enhance, and
assist the Physical Disability Evaluation System (PDES)
process, and for additional mental health and mental crisis
counselors at military medical treatment facilities and other
military facilities housing patients for services for members
of the Armed Forces and their families.

SEC. 1317. ADDITIONAL AMOUNTS FOR OPERATION AND MAINTENANCE
FOR THE MILITARY DEPARTMENTS FOR IMPROVED
PHYSICAL DISABILITY EVALUATIONS OF MEMBERS OF
THE ARMED FORCES.

(a) Additional Amount for Operation and Maintenance,
Army.--The amount appropriated or otherwise made available by
this chapter under the heading ``Operation and Maintenance,
Army'' is hereby increased by $10,000,000, with the amount of
the increase to be available in accordance with subsection
(d).
(b) Additional Amounts for Operation and Maintenance for
Department of the

[[Page S3869]]

Navy.--The aggregate amount appropriated or otherwise made
available by this chapter under the headings ``Operation and
Maintenance, Navy'' and ``Operation and Maintenance, Marine
Corps'' is hereby increased by $10,000,000, with the amount
of the increase to be available in accordance with subsection
(d).
(c) Additional Amount for Operation and Maintenance, Air
Force.--The amount appropriated or otherwise made available
by this _chapter under the heading ``Operation and
Maintenance, Air Force'' is hereby increased by $10,000,000,
with the amount of the increase to be available in accordance
with subsection (d).
(d) Internet Access to Physical Disability Evaluations of
Members of the Armed Forces.--
(1) In general.--Each Secretary of a military department
shall, utilizing amounts appropriated by the applicable
subsection of this section, develop and implement an Internet
website to permit members of the Armed Forces who are subject
to the Physical Disability Evaluation system of such military
department to participate in such system through the
Internet.
(2) Elements.--Each Internet website under paragraph (1)
shall include the following:
(A) The availability of any forms required for the
utilization of the physical disability evaluation system
concerned by members of the Armed Forces who are subject to
such system.
(B) Secure mechanisms for the submission of forms described
in subparagraph (A) by members of the Armed Forces described
in that subparagraph, and for the tracking by such members of
the acceptance and review of any forms so submitted.
(C) Secure mechanisms for advising members of the Armed
Forces described in subparagraph (A) of any additional
information, forms, or other items that are required for the
acceptance and review of any forms so submitted.
(D) The continuous availability of assistance for members
of the Armed Forces described in subparagraph (A), including
assistance through the caseworkers assigned to such members,
in submitting and tracking forms, including assistance in
obtaining information, forms, or other items described by
subparagraph (C).

SEC. 1318. ADDITIONAL AMOUNT FOR DEFENSE HEALTH PROGRAM FOR
WOMEN'S MENTAL HEALTH SERVICES.

The amount appropriated or otherwise made available by this
chapter under the heading ``Defense Health Program'' is
hereby increased by $15,000,000, with the amount of the
increase to be available for the development and
implementation of a women's mental health treatment program
for women members of the Armed Forces to help screen and
treat women members of the Armed Forces, including services
and treatment for women who have experienced post-traumatic
stress disorder and services and treatment for women who have
experienced sexual assault or abuse, which services shall
include the hiring and training of sexual abuse crisis
counselors for members of the Armed Forces who have
experienced sexual abuse or assault.

SEC. 1319. STUDY ON MENTAL HEALTH AND READJUSTMENT NEEDS OF
MEMBERS AND FORMER MEMBERS OF THE ARMED FORCES
WHO DEPLOYED IN OPERATION IRAQI FREEDOM AND
OPERATION ENDURING FREEDOM AND THEIR FAMILIES.

(a) In General.--Using amounts appropriated or otherwise
made available by this chapter under the heading ``Defense
Health Program'', the Secretary of Defense shall, in
consultation with the Secretary of Veterans Affairs, enter
into an agreement with the National Academy of Sciences for a
study on the mental health and readjustment needs of members
and former members of the Armed Forces who deployed in
Operation Iraqi Freedom or Operation Enduring Freedom and
their families as a result of such deployment.
(b) Phases.--The study required under subsection (a) shall
consist of two phases:
(1) A preliminary phase, to be completed not later than 180
days after the date of the enactment of this Act, to
determine the parameters of the final phase of the study
under paragraph (2).
(2) A second phase, to be completed not later than two
years after the date of the enactment of this Act, to carry
out a comprehensive assessment, in accordance with the
parameters identified under paragraph (1), of the mental
health and readjustment needs of members and former members
of the Armed Forces who deployed in Operation Iraqi Freedom
or Operation Enduring Freedom and their families as a result
of such deployment.
(c) Reports.--The Secretary of Defense shall submit to
Congress, and make available to the public, a comprehensive
report on each phase of the study required under subsection
(a) not later than 30 days after the date of the completion
of such phase of the study.
______

SA 665. Mr. REED submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 62, line 18, insert before the period at the end
the following: ``: Provided further, That the Secretary of
the Army, acting through the Chief of Engineers, shall use
not more than $3,250,000 of the amounts made available under
this heading to rehabilitate the flood damage reduction
project, Woonsocket, Rhode Island to federal levee standards.
______

SA 666. Mrs. CLINTON submitted an amendment intended to be proposed
by her to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

At the end of chapter 5 of title I, add the following:

SEC. 1503. LINKING OF AWARD FEES UNDER DEPARTMENT OF HOMELAND
SECURITY CONTRACTS TO SUCCESSFUL ACQUISITION
OUTCOMES.

The Secretary of Homeland Security shall require that all
contracts of the Department of Homeland Security that provide
award fees link such fees to successful acquisition outcomes
(which outcomes shall be specified in terms of cost,
schedule, and performance).
______

SA 667. Mrs. CLINTON (for herself and Mr. Feingold) submitted an
amendment intended to be proposed by her to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the appropriate place, insert the following:

SEC. __. REPORT ON SUPPORTING THE RESTORATION OF DEMOCRATIC
RULE IN ZIMBABWE.

(a) In General.--Not later than 90 days after the date of
the enactment of this Act, the Secretary of State shall
submit to Congress a report detailing a comprehensive plan
for supporting and assisting the people of Zimbabwe in their
efforts to restore democratic rule.
(b) Consultation.--The Secretary of State shall develop the
plan described in subsection (a) in consultation with--
(1) the United Nations;
(2) the African Union;
(3) the Southern African Development Community;
(4) other multilateral organizations; and
(5) interested States.
______

SA 668. Mrs. CLINTON submitted an amendment intended to be proposed
by her to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

At the end of chapter 3 of title I, add the following:

SEC. 1316. LINKING OF AWARD FEES UNDER DEPARTMENT OF DEFENSE
CONTRACTS TO SUCCESSFUL ACQUISITION OUTCOMES.

The Secretary of Defense shall require that all contracts
of the Department of Defense that provide award fees link
such fees to successful acquisition outcomes (which outcomes
shall be specified in terms of cost, schedule, and
performance).
______

SA 669. Mr. LIEBERMAN (for himself, Mrs. Boxer, Mr. Kennedy, Mrs.
Clinton, Ms. Cantwell, Mr. Akaka, Mr. Biden, Ms. Landrieu, and Mr.
Menendez) submitted an amendment intended to be proposed by him to the
bill H.R. 1591, making emergency supplemental appropriations for the
fiscal year ending September 30, 2007, and for other purposes; which
was ordered to lie on the table; as follows:

At the end of chapter 3 of title I, add the following:

SEC. 1316. ADDITIONAL AMOUNT FOR DEFENSE HEALTH PROGRAM FOR
ENHANCED ACTIVITIES OF THE DEFENSE AND VETERANS
BRAIN INJURY CENTER.

The amount appropriated or otherwise made available by this
chapter under the heading ``Defense Health Program'' is
hereby increased by $17,000,000, with the amount of the
increase to be available for the Defense and Veterans Brain
Injury Center (DVBIC) for activities as follows:
(1) To provide care to members of the Armed Forces with
traumatic brain injury at sites of the Defense and Veterans
Brain Injury Center.
(2) To develop best practices on diagnosis and short-term
and long-term medical care for traumatic brain injury and
disseminate such practices to medical treatment facilities
and centers of the Department of Defense and the Department
of Veterans Affairs.
(3) To conduct outreach and education to families of
members of the Armed Forces and veterans who are affected by
traumatic brain injury.
(4) To investigate promising preventive interventions and
early interventions (including behavioral and pharmacological
treatments) to mitigate the impact of traumatic brain injury.
______

SA 670. Mr. LUGAR submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30,

[[Page S3870]]

2007, and for other purposes; which was ordered to lie on the table; as
follows:

On page 56, after line 18, insert the following:

CIVILIAN RESERVE CORPS

Sec. 1713. Of the funds appropriated by this chapter under
the heading ``Economic Support Fund'' and available for Iraq
and Afghanistan, up to $50,000,000 may be made available to
establish and maintain a civilian reserve corps. Funds made
available under this section shall be subject to the regular
notification procedures of the Committees on Appropriations.
______

SA 671. Mr. DOMENICI submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

Strike section 413.
______

SA 672. Mr. CRAIG submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

Beginning on page 89, line 8, strike ``available until
expended,'' and all that follows through ``that within 30
days'' on page 90, line 15, and insert ``available until
expended.

medical administration

For an additional amount for ``Medical Administration'',
$250,000,000, to remain available until expended.

medical facilities

For an additional amount for ``Medical Facilities'',
$595,000,000, to remain avialable until expended, of which
$45,000,000 shall be used for facility and equipment upgrades
at the Department of Veterans Affairs polytrauma
rehabilitation centers and the polytrauma network sites:
Provided, That within 30 days
______

SA 673. Mr. HAGEL (for himself, Mr. Harkin, Mr. Grassley, and Mr.
Durbin) submitted an amendment intended to be proposed by him to the
bill H.R. 1591, making emergency supplemental appropriations for the
fiscal year ending September 30, 2007, and for other purposes; which
was ordered to lie on the table; as follows:

At the end of chapter 9 of title II, add the following:

SEC. 2904. PAYMENT OF DEATH GRATUITY WITH RESPECT TO MEMBERS
OF THE ARMED FORCES WITHOUT A SURVIVING SPOUSE
WHO ARE SURVIVED BY A MINOR CHILD.

Section 1477 of title 10, United States Code, is amended--
(1) in subsection (a), by inserting ``, subject to
subsection (d),'' after ``shall be paid'';
(2) by redesignating subsection (d) as subsection (e); and
(3) by inserting after subsection (c) the following new
subsection (d):
``(d)(1) In the case of a person covered by section 1475 or
1476 of this title who has no surviving spouse, but who has
one or more surviving children (as prescribed by subsection
(b)) under the age of 18 years who, after the death of the
person, will be in the custody of a parent (as prescribed by
subsection (c)) or brother or sister (as prescribed by
subsection (a)) of the person, the death gratuity shall be
paid to such parent, brother, or sister as designated by the
person, whether in the full amount payable under section 1478
of this title or in such portion of such amount as the person
shall specify.
``(2) If the amount of the death gratuity specified for
payment under paragraph (1) is less than the full amount of
the death gratuity payable under section 1478 of this title,
the balance of the amount of the death gratuity shall be paid
to or for the living survivors of the person concerned in
accordance with paragraphs (2) through (5) of subsection (a).
``(3) An individual designated for the payment of death
gratuity under paragraph (1) shall be treated as an eligible
survivor for purposes of subsection (e).''.
______

SA 674. Mr. COCHRAN (for himself and Mr. Lott) submitted an amendment
intended to be proposed by him to the bill H.R. 1591, making emergency
supplemental appropriations for the fiscal year ending September 30,
2007, and for other purposes; which was ordered to lie on the table; as
follows:

On page 28, beginning on line 14, strike ``the Commander,
Multi-National Forces-Iraq shall submit'' and insert ``the
Commander, Multi-National Forces-Iraq and the United States
Ambassador to Iraq shall jointly submit''.
______

SA 675. Mr. THOMAS submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:
Sec. __. (a) Notwithstanding any other provision of this
Act, the following amounts provided in this Act are rescinded
and shall be null and void:
(1) $24,000,000 for funding sugar beets.
(2) $3,000,000 for funding for sugar cane.
(3) $20,000,000 for insect infestation damage
reimbursements in Nevada, Idaho, and Utah.
(4) $2,100,000,000 for crop production losses.
(5) $1,500,000,000 for livestock production losses.
(6) $100,000,000 for Dairy Production losses.
(7) $13,000,000 for Ewe Lamb Replacement and Retention
program.
(8) $32,000,000 for Livestock Indemnity program.
(9) $40,000,000 for the Tree Assistance program.
(10) $100,000,000 million for Small Agricultural Dependent
Businesses.
(11) $6,000,000 for North Dakota flooded crop land.
(12) $35,000,000 for emergency conservation program.
(13) $50,000,000 for the emergency watershed program.
(14) $115,000,000 for the conservation security program.
(15) $18,000,000 for drought assistance in upper Great
Plains/South West.
(16) Provisions that extend the availability by a year
$3,500,000 in funding for guided tours of the Capitol. Also a
provision allows transfer of funds from holiday ornament
sales in the Senate gift shop.
(17) $165,900,000 for fisheries disaster relief, funded
through NOAA.
(18) $12,000,000 for forest service money (requested by the
President in the non-emergency fiscal year 2008 budget).
(19) $425,000,000 for education grants for rural areas-
(Secure Rural Schools program).
(20) $640,000,000 for LIHEAP.
(21) $25,000,000 for asbestos abatement at the Capitol
Power Plant.
(22) $388,900,000 for funding for backlog of old Department
of Transportation projects.
(23) $22,800,000 for geothermal research and development.
(24) $500,000,000 for wildland fire management.
(25) $13,000,000 for mine safety technology research.
(26) $31,000,000 for 1 month extension of Milk Income Loss
Contract program (MILC).
(27) $50,000,000 for fisheries disaster mitigation fund.
(28) Subsections (a) and (b) of section 1315 (Iraq
withdraw).
(29) Any provision relating to Hurricane Katrina, Hurricane
Rita, Hurricane Wilma, or Hurricane Dennis emergency
assistance.
(30) $100,000,000 for the 2008 Presidential Candidate
Nominating Conventions.
(b) Notwithstanding any other provision of this Act, any
provision relating to the Federal minimum wage and any
related changes to the Internal Revenue Code of 1986, shall
be null and void.
______

SA 676. Mr. FEINGOLD (for himself, Mrs. Boxer, and Mr. Leahy)
submitted an amendment intended to be proposed by him to the bill H.R.
1591, making emergency supplemental appropriations for the fiscal year
ending September 30, 2007, and for other purposes; which was ordered to
lie on the table; as follows:

At the end of chapter 3 of title I, add the following:

SEC. 1316. PROHIBITION ON USE OF FUNDS TO MAINTAIN THE UNITED
STATES ARMED FORCES IN IRAQ.

(a) Prohibition.--Commencing 120 days after the date of the
enactment of this Act, no funds appropriated or otherwise
made available by this Act may be obligated or expended to
continue the deployment of members of the United States Armed
Forces to Iraq.
(b) Exceptions.--The prohibition under subsection (a) shall
not apply to the use of funds as follows:
(1) To conduct targeted counterterrorism operations in
Iraq.
(2) To provide security for United States infrastructure
and personnel.
(3) To train Iraqi security forces.
(4) To provide for the safe redeployment from Iraq of
members of the United States Armed Forces who are not needed
to perform any of the tasks described in paragraphs (1)
through (3).
______

SA 677. Mr. LEAHY submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 40, line 1, strike ``$5,000,000'' and insert in
lieu thereof ``$10,000,000''.
______

SA 678. Mr. LEAHY submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 44, line 16, strike ``$323,000,000'' and insert in
lieu thereof ``$328,000,000''.
On page 44, line 24, strike ``$45,000,000'' and insert in
lieu thereof ``$50,000,000''.
On page 42, line 20, strike ``$210,000,000'' and insert in
lieu thereof ``$205,000,000''.

[[Page S3871]]

______

SA 679. Ms. COLLINS (for herself and Mr. Lieberman) submitted an
amendment intended to be proposed by her to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the end of title III, add the following new section:

procurement of small arms

Sec. 4104. (a) None of the funds appropriated or otherwise
made available by this Act may be obligated or expended for
the procurement of small arms, including pistols, rifles, and
machine guns of .50 caliber or below, for assistance to the
military or security forces of Iraq or Afghanistan unless
such arms are procured through a contract awarded on or after
January 1, 2007, using competitive procedures that require
full and open competition and that are open to all qualified
manufacturers in the United States.
(b) The restriction under subsection (a) applies to
contracts to procure small arms and associated equipment,
including magazines and cleaning kits.
______

SA 680. Mr. KENNEDY (for himself, Mr. Enzi, Mr. Baucus, and Mr.
Grassley) submitted an amendment intended to be proposed by him to the
bill H.R. 1591, making emergency supplemental appropriations for the
fiscal year ending September 30, 2007, and for other purposes; as
follows:

At the end add the following:

TITLE V--FAIR MINIMUM WAGE AND TAX RELIEF

Subtitle A--Fair Minimum Wage

SEC. 500. SHORT TITLE.

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

SEC. 501. 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. 502. 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.

Subtitle B--Small Business Tax Incentives

SEC. 510. SHORT TITLE; AMENDMENT OF CODE.

(a) Short Title.--This subtitle 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 subtitle 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.

PART I--SMALL BUSINESS TAX RELIEF PROVISIONS

Subpart A--General Provisions

SEC. 511. 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. 512. 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 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 subsection
shall apply to property placed in service after the date of
the enactment of this Act.

SEC. 513. 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:

[[Page S3872]]

``(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. 514. 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 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. 515. 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

[[Page S3873]]

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 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:

[[Page S3874]]

``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.

Subpart B--Subchapter S Provisions

SEC. 521. 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.

SEC. 522. 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. 523. 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. 524. 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. 525. 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

[[Page S3875]]

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. 526. 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.

PART II--REVENUE PROVISIONS

SEC. 531. 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. 532. 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. 533. 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).''.
(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. 534. 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

[[Page S3876]]

``(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. 535. 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
``(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

[[Page S3877]]

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 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.

[[Page S3878]]

``(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) 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

[[Page S3879]]

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. 536. 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), 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. 537. 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. 538. 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

[[Page S3880]]

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. 539. 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. 540. 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 1 or more contingent payments,
any regulations which require original issue discount to be
determined by reference to the comparable yield of a fixed-
rate debt instrument shall be applied as if the regulations
require that such comparable yield be determined by reference
to a 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. 541. 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. 542. 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. 543. 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 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. 544. 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.

[[Page S3881]]

PART III--GENERAL PROVISIONS

SEC. 551. 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, except that, compliance with any procedures
described pursuant to this section does not establish
compliance with the rule, or establish a presumption or
inference of such compliance.
``(C) Procedures.--Procedures described under subparagraph
(B)(ii)--
``(i) shall be suggestions to assist small entities; and
``(ii) shall not be additional requirements, or diminish
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 Fair Minimum Wage 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, the Committee on Small Business of the House of
Representatives, and any other committee of relevant
jurisdiction 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''.

SEC. 552. 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

[[Page S3882]]

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), 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.

SEC. 553. 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 benefits, costs, risks, and
barriers to workers and 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.

SEC. 554. 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 Social Security program was enacted to serve as the
safest component of a retirement system that also includes
employer-sponsored retirement plans and personal savings.
(b) Sense of the Senate.--It is the sense of the Senate
that--
(1) Congress should enact policies that promote savings
vehicles for retirement that are simple, easily accessible
and provide adequate financial security 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; and
(3) regularly contributing money to a financially-sound
investment account is one important method for helping to
achieve one's retirement goals.

SEC. 555. RENEWAL GRANTS FOR WOMEN'S BUSINESS CENTERS.

(a) In General.--Section 29 of the Small Business Act (15
U.S.C. 656) is amended by adding at the end the following:
``(m) Continued Funding for Centers.--
``(1) In general.--A nonprofit organization described in
paragraph (2) shall be eligible to receive, subject to
paragraph (3), a 3-year grant under this subsection.
``(2) Applicability.--A nonprofit organization described in
this paragraph is a nonprofit organization that has received
funding under subsection (b) or (l).
``(3) Application and approval criteria.--
``(A) Criteria.--Subject to subparagraph (B), the
Administrator shall develop and publish criteria for the
consideration and approval of applications by nonprofit
organizations under this subsection.
``(B) Contents.--Except as otherwise provided in this
subsection, the conditions for participation in the grant
program under this subsection shall be the same as the
conditions for participation in the program under subsection
(l), as in effect on the date of enactment of this Act.
``(C) Notification.--Not later than 60 days after the date
of the deadline to submit applications for each fiscal year,
the Administrator shall approve or deny any application under
this subsection and notify the applicant for each such
application.
``(4) Award of grants.--
``(A) In general.--Subject to the availability of
appropriations, the Administrator shall make a grant for the
Federal share of the cost of activities described in the
application to each applicant approved under this subsection.
``(B) Amount.--A grant under this subsection shall be for
not more than $150,000, for each year of that grant.
``(C) Federal share.--The Federal share under this
subsection shall be not more than 50 percent.
``(D) Priority.--In allocating funds made available for
grants under this section, the Administrator shall give
applications under this subsection or subsection (l) priority
over first-time applications under subsection (b).
``(5) Renewal.--
``(A) In general.--The Administrator may renew a grant
under this subsection for additional 3-year periods, if the
nonprofit organization submits an application for such
renewal at such time, in such manner, and accompanied by such
information as the Administrator may establish.
``(B) Unlimited renewals.--There shall be no limitation on
the number of times a grant may be renewed under subparagraph
(A).
``(n) Privacy Requirements.--
``(1) In general.--A women's business center may not
disclose the name, address, or telephone number of any
individual or small business concern receiving assistance
under this section without the consent of such individual or
small business concern, unless--
``(A) the Administrator is ordered to make such a
disclosure by a court in any civil or criminal enforcement
action initiated by a Federal or State agency; or
``(B) the Administrator considers such a disclosure to be
necessary for the purpose of conducting a financial audit of
a women's business center, but a disclosure under this
subparagraph shall be limited to the information necessary
for such audit.
``(2) Administration use of information.--This subsection
shall not--
``(A) restrict Administration access to program activity
data; or
``(B) prevent the Administration from using client
information (other than the information described in
subparagraph (A)) to conduct client surveys.
``(3) Regulations.--The Administrator shall issue
regulations to establish standards for requiring disclosures
during a financial audit under paragraph (1)(B).''.
(b) Repeal.--Section 29(l) of the Small Business Act (15
U.S.C. 656(l)) is repealed effective October 1 of the first
full fiscal year after the date of enactment of this Act.
(c) Transitional Rule.--Notwithstanding any other provision
of law, a grant or cooperative agreement that was awarded
under subsection (l) of section 29 of the Small Business Act
(15 U.S.C. 656), on or before the day before the date
described in subsection (b) of this section, shall remain in
full force and effect under the terms, and for the duration,
of such grant or agreement.

SEC. 556. REPORTS ON ACQUISITIONS OF ARTICLES, MATERIALS, AND
SUPPLIES MANUFACTURED OUTSIDE THE UNITED
STATES.

Section 2 of the Buy American Act (41 U.S.C. 10a) is
amended--
(1) by striking ``Notwithstanding'' and inserting the
following:
``(a) In General.--Notwithstanding''; and
(2) by adding at the end the following:
``(b) Reports.--
``(1) In general.--Not later than 180 days after the end of
each of fiscal years 2007 through 2011, the head of each
Federal agency shall submit to the Committee on Homeland
Security and Governmental Affairs of the Senate and the
Committee on Oversight and Government Reform of the House of
Representatives a report on the amount of the acquisitions
made by the agency in that fiscal year of articles,
materials, or supplies purchased from entities that
manufacture the articles, materials, or supplies outside of
the United States.
``(2) Contents of report.--The report required by paragraph
(1) shall separately include, for the fiscal year covered by
such report--
``(A) the dollar value of any articles, materials, or
supplies that were manufactured outside the United States;
``(B) an itemized list of all waivers granted with respect
to such articles, materials, or supplies under this Act, and
a citation to the treaty, international agreement, or other
law under which each waiver was granted;

[[Page S3883]]

``(C) if any articles, materials, or supplies were acquired
from entities that manufacture articles, materials, or
supplies outside the United States, the specific exception
under this section that was used to purchase such articles,
materials, or supplies; and
``(D) a summary of--
``(i) the total procurement funds expended on articles,
materials, and supplies manufactured inside the United
States; and
``(ii) the total procurement funds expended on articles,
materials, and supplies manufactured outside the United
States.
``(3) Public availability.--The head of each Federal agency
submitting a report under paragraph (1) shall make the report
publicly available to the maximum extent practicable.
``(4) Exception for intelligence community.--This
subsection shall not apply to acquisitions made by an agency,
or component thereof, that is an element of the intelligence
community as specified in, or designated under, section 3(4)
of the National Security Act of 1947 (50 U.S.C. 401a(4)).''.

SEC. 557. SENSE OF THE SENATE REGARDING REPEAL OF 1993 INCOME
TAX INCREASE ON SOCIAL SECURITY BENEFITS.

It is the sense of the Senate that Congress should repeal
the 1993 tax increase on Social Security benefits and
eliminate wasteful spending, such as spending on unnecessary
tax loopholes, in order to fully offset the cost of such
repeal and avoid forcing taxpayers to pay substantially more
interest to foreign creditors.

SEC. 558. SENSE OF THE SENATE REGARDING PERMANENT TAX
INCENTIVES TO MAKE EDUCATION MORE AFFORDABLE
AND MORE ACCESSIBLE FOR AMERICAN FAMILIES.

It is the sense of the Senate that Congress should make
permanent the tax incentives to make education more
affordable and more accessible for American families and
eliminate wasteful spending, such as spending on unnecessary
tax loopholes, in order to fully offset the cost of such
incentives and avoid forcing taxpayers to pay substantially
more interest to foreign creditors.

SEC. 559. RESPONSIBLE GOVERNMENT CONTRACTOR REQUIREMENTS.

Section 274A(e) of the Immigration and Nationality Act (8
U.S.C. 1324a(e)) is amended by adding at the end the
following new paragraph:
``(10) Prohibition on award of government contracts,
grants, and agreements.--
``(A) Employers with no contracts, grants, or agreements.--
``(i) In general.--Subject to clause (iii) and subparagraph
(C), if an employer who does not hold a Federal contract,
grant, or cooperative agreement is determined to have
violated this section, the employer shall be debarred from
the receipt of a Federal contract, grant, or cooperative
agreement for a period of 7 years.
``(ii) Placement on excluded list.--The Secretary of
Homeland Security or the Attorney General shall advise the
Administrator of General Services of the debarment of an
employer under clause (i) and the Administrator of General
Services shall list the employer on the List of Parties
Excluded from Federal Procurement and Nonprocurement Programs
for a period of 7 years.
``(iii) Waiver.--

``(I) Authority.--The Administrator of General Services, in
consultation with the Secretary of Homeland Security and the
Attorney General, may waive operation of clause (i) or may
limit the duration or scope of a debarment under clause (i)
if such waiver or limitation is necessary to national defense
or in the interest of national security.
``(II) Notification to congress.--If the Administrator
grants a waiver or limitation described in subclause (I), the
Administrator shall submit to each member of the Committee on
the Judiciary of the Senate and of the Committee on the
Judiciary of the House of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial review.--The decision of
whether to debar or take alternative action under this clause
shall not be judicially reviewed.

``(B) Employers with contracts, grants, or agreements.--
``(i) In general.--Subject to clause (iii) and subclause
(C), an employer who holds a Federal contract, grant, or
cooperative agreement and is determined to have violated this
section shall be debarred from the receipt of new Federal
contracts, grants, or cooperative agreements for a period of
10 years.
``(ii) Notice to agencies.--Prior to debarring the employer
under clause (i), the Secretary of Homeland Security, in
cooperation with the Administrator of General Services, shall
advise any agency or department holding a contract, grant, or
cooperative agreement with the employer of the Government's
intention to debar the employer from the receipt of new
Federal contracts, grants, or cooperative agreements for a
period of 10 years.
``(iii) Waiver.--

``(I) Authority.--After consideration of the views of any
agency or department that holds a contract, grant, or
cooperative agreement with the employer, the Administrator of
General Services, in consultation with the Secretary of
Homeland Security and the Attorney General, may waive
operation of clause (i) or may limit the duration or scope of
the debarment under clause (i) if such waiver or limitation
is necessary to the national defense or in the interest of
national security.
``(II) Notification to congress.--If the Administrator
grants a waiver or limitation described in subclause (I), the
Administrator shall submit to each member of the Committee on
the Judiciary of the Senate and of the Committee on the
Judiciary of the House of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial review.--The decision of
whether to debar or take alternate action under this clause
shall not be judicially reviewed.

``(C) Exemption from penalty for employers participating in
the basic pilot program.--In the case of imposition on an
employer of a debarment from the receipt of a Federal
contract, grant, or cooperative agreement under subparagraph
(A) or (B), that penalty shall be waived if the employer
establishes that the employer was voluntarily participating
in the basic pilot program under section 403(a) of the
Illegal Immigration Reform and Immigrant Responsibility Act
of 1996 (8 U.S.C. 1324a note) at the time of the violations
of this section that resulted in the debarment.''.
______

SA 681. Mr. LEAHY submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the end of chapter 3 of title I, add the following:

SEC. 1316. AMOUNTS FOR PROCUREMENT OF DEPLOYABLE, TWO-WAY,
SPEECH-TO-SPEECH LANGUAGE TRANSLATION DEVICES
FOR USE IN IRAQ AND AFGHANISTAN.

Of the amount appropriated or otherwise made available by
this chapter under the heading ``Other Procurement, Army'',
the amount ($12,800,000) otherwise available for the Sequoyah
Foreign Language Translation System shall be available
instead for the procurement of deployable, two-way, speech-
to-speech language translation devices for use in Iraq and
Afghanistan.
______

SA 682. Mr. LEAHY (for himself, Mr. Bond, Ms. Landrieu, Mr. Dodd, Mr.
Bingaman, Ms. Mikulski, Ms. Cantwell, Mr. Baucus, Mr. Brown, Mr. Kerry,
Mr. Durbin, Mr. Rockefeller, Mr. Domenici, and Mr. Biden) submitted an
amendment intended to be proposed by him to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the end of chapter 3 of title I, add the following:

SEC. 1316. ADDITIONAL AMOUNT FOR NATIONAL GUARD AND RESERVE
EQUIPMENT FOR EQUIPMENT FOR THE ARMY NATIONAL
GUARD.

The amount appropriated by this chapter under the heading
``National Guard and Reserve Equipment'' is hereby increased
by $1,000,000,000, with the amount of the increase to be
available for equipment for the Army National Guard:
Provided, That the amount provided under this heading is
designated as an emergency requirement pursuant to section
402 of H. Con. Res. 376 (109th Congress) as made applicable
to the House of Representatives pursuant to H. Res. 818
(109th Congress), and as an emergency requirement pursuant to
section 402 of S. Con. Res. 83 (109th Congress) as made
applicable to the Senate by section 7035 of Public Law 109-
234.
______

SA 683. Mr. DORGAN (for himself, Mr. Conrad, Mr. Johnson, and Mr.
Thune) submitted an amendment intended to be proposed by him to the
bill H.R. 1591, making emergency supplemental appropriations for the
fiscal year ending September 30, 2007, and for other purposes; which
was ordered to lie on the table; as follows:

At the end of chapter 8 of title III, add the following:

SEC. 38__. AWARD OF MEDAL OF HONOR TO WOODROW W. KEEBLE FOR
VALOR DURING KOREAN WAR.

(a) Waiver of Time Limitations.--Notwithstanding any
applicable time limitation under section 3744 of title 10,
United States Code, or any other time limitation with respect
to the award of certain medals to individuals who served in
the Armed Forces, the President may award to Woodrow W.
Keeble the Medal of Honor under section 3741 of that title
for the acts of valor described in subsection (b).
(b) Acts of Valor.--The acts of valor referred to in
subsection (a) are the acts of Woodrow W. Keeble, then-acting
platoon leader, carried out on October 20, 1951, during the
Korean War.
______

SA 684. Mr. OBAMA (for himself, Mrs. McCaskill, Ms. Mikulski, Mr.
Harkin, Mr. Kerry, Ms. Cantwell, Mr. Biden, and Mr. Bingaman) submitted
an amendment intended to be proposed by him to the bill H.R. 1591,
making emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

[[Page S3884]]

At the end of chapter 3 of title I, add the following:

SEC. 1316. ADDITIONAL AMOUNT FOR DEFENSE HEALTH PROGRAM FOR
ADDITIONAL MENTAL HEALTH AND RELATED PERSONNEL.

The amount appropriated or otherwise made available by this
chapter under the heading ``Defense Health Program'' is
hereby increased by $58,000,000, with the amount of the
increase to be available for additional caseworkers at
military medical treatment facilities and other military
facilities housing patients to participate in, enhance, and
assist the Physical Disability Evaluation System (PDES)
process, and for additional mental health and mental crisis
counselors at military medical treatment facilities and other
military facilities housing patients for services for members
of the Armed Forces and their families.

SEC. 1317. ADDITIONAL AMOUNTS FOR OPERATION AND MAINTENANCE
FOR THE MILITARY DEPARTMENTS FOR IMPROVED
PHYSICAL DISABILITY EVALUATIONS OF MEMBERS OF
THE ARMED FORCES.

(a) Additional Amount for Operation and Maintenance,
Army.--The amount appropriated or otherwise made available by
this chapter under the heading ``Operation and Maintenance,
Army'' is hereby increased by $10,000,000, with the amount of
the increase to be available in accordance with subsection
(d).
(b) Additional Amounts for Operation and Maintenance for
Department of the Navy.--The aggregate amount appropriated or
otherwise made available by this chapter under the headings
``Operation and Maintenance, Navy'' and ``Operation and
Maintenance, Marine Corps'' is hereby increased by
$10,000,000, with the amount of the increase to be available
in accordance with subsection (d).
(c) Additional Amount for Operation and Maintenance, Air
Force.--The amount appropriated or otherwise made available
by this _chapter under the heading ``Operation and
Maintenance, Air Force'' is hereby increased by $10,000,000,
with the amount of the increase to be available in accordance
with subsection (d).
(d) Internet Access to Physical Disability Evaluations of
Members of the Armed Forces.--
(1) In general.--Each Secretary of a military department
shall, utilizing amounts appropriated by the applicable
subsection of this section, develop and implement an Internet
website to permit members of the Armed Forces who are subject
to the Physical Disability Evaluation system of such military
department to participate in such system through the
Internet.
(2) Elements.--Each Internet website under paragraph (1)
shall include the following:
(A) The availability of any forms required for the
utilization of the physical disability evaluation system
concerned by members of the Armed Forces who are subject to
such system.
(B) Secure mechanisms for the submission of forms described
in subparagraph (A) by members of the Armed Forces described
in that subparagraph, and for the tracking by such members of
the acceptance and review of any forms so submitted.
(C) Secure mechanisms for advising members of the Armed
Forces described in subparagraph (A) of any additional
information, forms, or other items that are required for the
acceptance and review of any forms so submitted.
(D) The continuous availability of assistance for members
of the Armed Forces described in subparagraph (A), including
assistance through the caseworkers assigned to such members,
in submitting and tracking forms, including assistance in
obtaining information, forms, or other items described by
subparagraph (C).

SEC. 1318. ADDITIONAL AMOUNT FOR DEFENSE HEALTH PROGRAM FOR
WOMEN'S MENTAL HEALTH SERVICES.

The amount appropriated or otherwise made available by this
chapter under the heading ``Defense Health Program'' is
hereby increased by $15,000,000, with the amount of the
increase to be available for the development and
implementation of a women's mental health treatment program
for women members of the Armed Forces to help screen and
treat women members of the Armed Forces, including services
and treatment for women who have experienced post-traumatic
stress disorder and services and treatment for women who have
experienced sexual assault or abuse, which services shall
include the hiring and training of sexual abuse crisis
counselors for members of the Armed Forces who have
experienced sexual abuse or assault.

SEC. 1319. OFFSET.

The amount appropriated or otherwise made available by this
chapter under the heading ``Iraq Freedom Fund'' is hereby
reduced by $103,000,000.

SEC. 1320. STUDY ON MENTAL HEALTH AND READJUSTMENT NEEDS OF
MEMBERS AND FORMER MEMBERS OF THE ARMED FORCES
WHO DEPLOYED IN OPERATION IRAQI FREEDOM AND
OPERATION ENDURING FREEDOM AND THEIR FAMILIES.

(a) In General.--Using amounts appropriated or otherwise
made available by this chapter under the heading ``Defense
Health Program'', the Secretary of Defense shall, in
consultation with the Secretary of Veterans Affairs, enter
into an agreement with the National Academy of Sciences for a
study on the mental health and readjustment needs of members
and former members of the Armed Forces who deployed in
Operation Iraqi Freedom or Operation Enduring Freedom and
their families as a result of such deployment.
(b) Phases.--The study required under subsection (a) shall
consist of two phases:
(1) A preliminary phase, to be completed not later than 180
days after the date of the enactment of this Act, to
determine the parameters of the final phase of the study
under paragraph (2).
(2) A second phase, to be completed not later than two
years after the date of the enactment of this Act, to carry
out a comprehensive assessment, in accordance with the
parameters identified under paragraph (1), of the mental
health and readjustment needs of members and former members
of the Armed Forces who deployed in Operation Iraqi Freedom
or Operation Enduring Freedom and their families as a result
of such deployment.
(c) Reports.--The Secretary of Defense shall submit to
Congress, and make available to the public, a comprehensive
report on each phase of the study required under subsection
(a) not later than 30 days after the date of the completion
of such phase of the study.
______

SA 685. Mr. KENNEDY submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. __. PROHIBITION ON MODIFICATIONS TO CONSULTING AND
EDUCATIONAL SERVICES OF THE ARMED FORCES
INSTITUTE OF PATHOLOGY.

No funds appropriated or otherwise made available by this
Act or any other Act may be obligated or expended to plan
for, prepare for, or implement any action to reduce,
eliminate, or substantially modify the consulting services or
educational services provided by the Armed Forces Institute
of Pathology.
______

SA 686. Mr. KENNEDY submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. __. PROHIBITION ON MODIFICATIONS TO CONSULTING AND
EDUCATIONAL SERVICES OF THE ARMED FORCES
INSTITUTE OF PATHOLOGY.

No funds appropriated or otherwise made available by this
Act or any other Act may be obligated or expended to plan
for, prepare for, or implement any action to reduce,
eliminate, or substantially modify the consulting services or
educational services provided by the Armed Forces Institute
of Pathology.
______

SA 687. Mr. KERRY submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 70, between lines 5 and 6, insert the following:

SEC. 2403. RESERVIST PROGRAMS.

(a) Definitions.--In this section--
(1) the term ``activated'' means receiving an order placing
a Reservist on active duty;
(2) the term ``active duty'' has the meaning given that
term in section 101 of title 10, United States Code;
(3) the terms ``Administration'' and ``Administrator'' mean
the Small Business Administration and the Administrator
thereof, respectively;
(4) the term ``Reservist'' means a member of a reserve
component of the Armed Forces, as described in section 10101
of title 10, United States Code;
(5) the term ``Service Corps of Retired Executives'' means
the Service Corps of Retired Executives authorized by section
8(b)(1) of the Small Business Act (15 U.S.C. 637(b)(1));
(6) the term ``small business concern'' has the meaning
given that term in section 3 of the Small Business Act (15
U.S.C. 632);
(7) the term ``small business development center'' means a
small business development center described in section 21 of
the Small Business Act (15 U.S.C. 648); and
(8) the term ``women's business center'' means a women's
business center described in section 29 of the Small Business
Act (15 U.S.C. 656).
(b) Application Period.--Section 7(b)(3)(C) of the Small
Business Act (15 U.S.C. 636(b)(3)(C)) is amended by striking
``90 days'' and inserting ``1 year''.
(c) Preapproval Process.--
(1) Definition.--In this subsection, the term ``eligible
Reservist'' means a Reservist who--
(A) has not been ordered to active duty;
(B) expects to be ordered to active duty during a period of
military conflict; and

[[Page S3885]]

(C) can reasonably demonstrate that the small business
concern for which that Reservist is a key employee will
suffer economic injury in the absence of that Reservist.
(2) Establishment.--Not later than 6 months after the date
of enactment of this Act, the Administrator shall establish a
preapproval process, under which the Administrator--
(A) may approve a loan to a small business concern under
section 7(b)(3) of the Small Business Act (15 U.S.C.
636(b)(3)) before an eligible Reservist employed by that
small business concern is activated; and
(B) shall distribute funds for any loan approved under
subparagraph (A) if that eligible Reservist is activated.
(d) Outreach and Technical Assistance Program.--
(1) In general.--Not later than 6 months after the date of
enactment of this Act, the Administrator, in consultation
with the Secretary of Veterans Affairs and the Secretary of
Defense, shall develop a comprehensive outreach and technical
assistance program (in this subsection referred to as the
``program'') to--
(A) market the loans available under section 7(b)(3) of the
Small Business Act (15 U.S.C. 636(b)(3)) to Reservists, and
family members of Reservists, that are on active duty and
that are not on active duty; and
(B) provide technical assistance to a small business
concern applying for a loan under that section.
(2) Components.--The program shall--
(A) incorporate appropriate websites maintained by the
Administration, the Department of Veterans Affairs, and the
Department of Defense; and
(B) require that information on the program is made
available to small business concerns directly through--
(i) the district offices and resource partners of the
Administration, including small business development centers,
women's business centers, and the Service Corps of Retired
Executives; and
(ii) other Federal agencies, including the Department of
Veterans Affairs and the Department of Defense.
(3) Report.--
(A) In general.--Not later than 6 months after the date of
enactment of this Act, and every 6 months thereafter until
the date that is 30 months after such date of enactment, the
Administrator shall submit to Congress a report on the status
of the program.
(B) Contents.--Each report submitted under subparagraph (A)
shall include--
(i) for the 6-month period ending on the date of that
report--

(I) the number of loans approved under section 7(b)(3) of
the Small Business Act (15 U.S.C. 636(b)(3));
(II) the number of loans disbursed under that section; and
(III) the total amount disbursed under that section; and

(ii) recommendations, if any, to make the program more
effective in serving small business concerns that employ
Reservists.
______

SA 688. Mr. LEVIN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 96, after line 19, add the following:
Sec. 3___. Section 20501 of the Continuing Appropriations
Resolution, 2007 (division B of Public Law 109-289, as
amended by Public Law 110-5; 121 Stat. 26) is amended by
striking ``Superfund', $1,251,574,000.'' and inserting
``Superfund', $1,251,574,000: Provided, That $19,000,000 of
the amount provided for Environmental Protection Agency,
Science and Technology shall be for the Climate Protection
Program.''.
______

SA 689. Mr. LUGAR submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 56, after line 18, insert the following:

CIVILIAN RESERVE CORPS

Sec. 1713. Of the funds appropriated by this Act under the
headings ``diplomatic and consular programs'' and ``Economic
Support Fund'' (except for the Community Action Program), up
to $50,000,000 may be made available to support and maintain
a civilian reserve corps. Funds made available under this
section shall be subject to the regular notification
procedures of the Committees on Appropriations.
______

SA 690. Mr. COCHRAN (for Mr. Lugar) proposed an amendment to the bill
H.R. 1591, making emergency supplemental appropriations for the fiscal
year ending September 30, 2007, and for other purposes; as follows:

On page 56, after line 18, insert the following:

CIVILIAN RESERVE CORPS

Sec. 1713. Of the funds appropriated by this Act under the
headings ``diplomatic and consular programs'' and ``Economic
Support Fund'' (except for the Community Action Program), up
to $50,000,000 may be made available to support and maintain
a civilian reserve corps. Funds made available under this
section shall be subject to the regular notification
procedures of the Committees on Appropriations.
______

SA 691. Mr. WEBB (for himself and Mr. Byrd) submitted an amendment
intended to be proposed by him to the bill H.R. 1591, making emergency
supplemental appropriations for the fiscal year ending September 30,
2007, and for other purposes; which was ordered to lie on the table; as
follows:

At the appropriate place, insert the following:

SEC. __. PROHIBITION ON USE OF FUNDS FOR MILITARY OPERATIONS
IN IRAN.

(a) Prohibition.--No funds appropriated or otherwise made
available by this Act may be obligated or expended for
military operations or activities within or above the
territory of Iran, or within the territorial waters of Iran,
except pursuant to a specific authorization of Congress
enacted in a statute enacted after the date of the enactment
of this Act.
(b) Exceptions.--The prohibition in subsection (a) shall
not apply with respect to military operations or activities
as follows:
(1) Military operations or activities to directly repel or
thwart an attack or imminent attack on United States forces
or interests from within the territory of Iran.
(2) Military operations or activities in hot pursuit of
forces engaged outside the territory of Iran who thereafter
enter into Iran.
(3) Intelligence collection activities of which Congress
has been appropriately notified under applicable law.
(c) Report.--Not later than 24 hours after determining to
utilize funds referred to in subsection (a) for purposes of a
military operation described in subsection (b), the President
shall submit to the appropriate committees of Congress a
report on the determination, including a justification for
the determination.
______

SA 692. Mr. WEBB proposed an amendment to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; as follows:

At the appropriate place, insert the following:

SEC. __. PROHIBITION ON USE OF FUNDS FOR MILITARY OPERATIONS
IN IRAN.

(a) Prohibition.--Notwithstanding any other provision of
law, no funds appropriated or otherwise made available by
this Act may be obligated or expended for military operations
or activities within or above the territory of Iran, or
within the territorial waters of Iran, except pursuant to a
specific authorization of Congress enacted in a statute
enacted after the date of the enactment of this Act.
(b) Exceptions.--The prohibition in subsection (a) shall
not apply with respect to military operations or activities
as follows:
(1) Military operations or activities to directly repel an
attack launched from within the territory of Iran.
(2) Military operations or activities to directly thwart an
imminent attack to be launched from within the territory of
Iran.
(3) Military operations or activities in hot pursuit of
forces engaged outside the territory of Iran who thereafter
enter into Iran.
(4) Intelligence collection activities of which Congress
has been appropriately notified under applicable law.
(c) Report.--Not later than 24 hours after determining to
utilize funds referred to in subsection (a) for purposes of a
military operation described in subsection (b), the President
shall submit to the appropriate committees of Congress a
report on the determination, including a justification for
the determination.
______

SA 693. Mr. DODD submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the end of chapter 10 of title III, add the following:
Sec. 4004. For an additional amount to carry out housing
counseling, $25,000,000, to remain available until expended,
shall be made available to the Secretary of Housing and Urban
Development, Provided, That the amount provided under this
section is designated as an emergency requirement pursuant to
section 402 of H. Con. Res. 95 (109th Congress).
______

SA 694. Mr. WARNER submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 94, between lines 10 and 11, insert the following:
Sec. 2904. (a) It is the sense of Congress that the
realignment of functions from Walter Reed Army Medical
Center, as prescribed under the 2005 round of defense base
closure and realignment, should be accelerated to minimize
the uncertainty faced by the dedicated professionals serving
at the Center,

[[Page S3886]]

and to ensure the quickest possible completion of facilities
and the immediate transfer of functions from the Center.
(b) Of the funds appropriated by this chapter for military
construction under the heading ``Department of Defense Base
Closure Account, 2005'', $123,000,000 shall be deposited into
the Department of Defense Base Closure Account 2005
established under section 2906A(a)(1) of the Defense Base
Closure and Realignment Act of 1990 (part A of title XXIX of
Public Law 101-510; 10 U.S.C. 2687 note) and made available
for the acceleration of construction activities related to
the closure of Walter Reed Army Medical Center.
______

SA 695. Mr. WARNER submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 94, between lines 10 and 11, insert the following:
Sec. 2904. (a) Congress makes the following findings:
(1) Congress authorized the 2005 Defense Base Closure and
Realignment (BRAC) process in the National Defense
Authorization Act for Fiscal Year 2002 (Public Law 107-107)
as the only fair and objective way for the Department of
Defense to reduce excess military base infrastructure and to
obtain savings from these reductions.
(2) In order to ensure a fair and objective process, the
President was required to present to Congress a list of bases
to be closed or realigned, as determined by the BRAC
Commission, in a totality without any changes or alterations.
(3) The President submitted to Congress the decisions of
the BRAC Commission under the 2005 round of defense base
closure and realignment on September 15, 2005, two and a half
years after the commencement of Operation Iraqi Freedom.
(4) As part of the BRAC process, the Secretary of Defense
was required by law to assess the probable threats to
national security and, as part of such assessment, determine
the potential, prudent, surge requirements to meet those
threats.
(5) The Department of Defense and the BRAC Commission were
required by law to determine whether each decision accounted
for the ability to accommodate contingency, mobilization,
surge, and future total force requirements at both existing
and potential receiving locations to support operations and
training.
(6) Congress took no action to disapprove the decisions of
the Commission, thus allowing the totality of the 2005 round
of defense base closure and realignment to become law on
November 20, 2005.
(7) Contained within the totality of the 2005 BRAC
decisions was the realignment of the Walter Reed Army Medical
Center in Washington, D.C., which would result in the closure
of the main post and the relocation of--
(A) all tertiary (sub-specialty and complex care) medical
services, Legal Medicine, and a Pathology Program Management
Office to National Naval Medical Center, Bethesda, Maryland;
(B) all non-tertiary (primary and specialty) patient care
functions to a new community hospital at Fort Belvoir,
Virginia;
(C) the Armed Forces Medical Examiner, DNA Registry, and
Accident Investigation to Dover Air Force Base, Delaware; and
(D) the Combat Casualty Care Research sub-function and the
enlisted histology technician training to Fort Sam Houston,
Texas.
(8) The decision to close Walter Reed Army Medical Center
is estimated to save the Department of Defense over
$170,000,000 annually after 2011.
(9) The cost to maintain and renovate current facilities at
Walter Reed Army Medical Center and in the national capitol
region was estimated by the Department of the Army to exceed
$13,000,000,000 over the next 13 years.
(10) A delay in the closure or realignment of a military
installation would cause further disruption and uncertainty
for the workforce supporting the installation and the local
community surrounding the installation until the action is
complete.
(11) The Defense Base Closure and Realignment Act of 1990
(part A of title XXIX of Public Law 101-510; 10 U.S.C. 2687
note) requires the Secretary of Defense to complete all such
closures and realignments no later than September 15, 2011,
in order minimize to the negative impact on military
operations and local communities by establishing clear,
specific goals for the realignment and closure activities.
(12) The inadequate conditions and processes recently
identified at Walter Reed Army Medical Center are, in part,
due to antiquated facilities spread over a 113-acre campus,
which was not initially designed for processes necessitated
by current military operations.
(13) The BRAC decision will allow the Department of Defense
to transform legacy medical facilities into a premier,
modern, state-of-the-art joint operational medical facility
that will combine the best military practitioners, medical
practices, and medical research efforts from both the
Department of the Army and the Department of the Navy under
one roof working side-by-side for wounded servicemembers.
(14) The acceleration of the construction at the receiving
locations from the closure of Walter Reed Army Medical Center
will allow for a quicker transition of functions and patient
services to newer, more modern facilities, significantly
improving the capability to care for our Nation's wounded
service members.
(15) Any action by Congress to delay or reverse the BRAC
decision to close Walter Reed Army Medical Center will result
in an unprecedented disruption to the BRAC process and
introduce a level of uncertainty in every other BRAC
decision, which could paralyze the efforts of the military
and local communities to faithfully carry out the decisions
made under the 2005 round of defense base closure and
realignment.
(b) It is the sense of Congress that the realignment of
functions from Walter Reed Army Medical Center, as prescribed
under the 2005 round of defense base closure and realignment,
should be accelerated to minimize the uncertainty faced by
the dedicated professionals serving at the Center, and to
ensure the quickest possible completion of facilities and the
immediate transfer of functions from the Center.
(c) There are authorized to be appropriated $123,000,000
for an additional amount to be deposited into the Department
of Defense Base Closure Account 2005 established under
section 2906A(a)(1) of the Defense Base Closure and
Realignment Act of 1990 (part A of title XXIX of Public Law
101-510; 10 U.S.C. 2687 note) for the purpose of accelerating
construction activities related to the closure of Walter Reed
Army Medical Center. Any funds so appropriated shall remain
available until expended.
______

SA 696. Mr. WARNER submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 94, between lines 10 and 11, insert the following:
Sec. 2904. (a) Congress makes the following findings:
(1) Congress authorized the 2005 Defense Base Closure and
Realignment (BRAC) process in the National Defense
Authorization Act for Fiscal Year 2002 (Public Law 107-107)
as the only fair and objective way for the Department of
Defense to reduce excess military base infrastructure and to
obtain savings from these reductions.
(2) In order to ensure a fair and objective process, the
President was required to present to Congress a list of bases
to be closed or realigned, as determined by the BRAC
Commission, in a totality without any changes or alterations.
(3) The President submitted to Congress the decisions of
the BRAC Commission under the 2005 round of defense base
closure and realignment on September 15, 2005, two and a half
years after the commencement of Operation Iraqi Freedom.
(4) As part of the BRAC process, the Secretary of Defense
was required by law to assess the probable threats to
national security and, as part of such assessment, determine
the potential, prudent, surge requirements to meet those
threats.
(5) The Department of Defense and the BRAC Commission were
required by law to determine whether each decision accounted
for the ability to accommodate contingency, mobilization,
surge, and future total force requirements at both existing
and potential receiving locations to support operations and
training.
(6) Congress took no action to disapprove the decisions of
the Commission, thus allowing the totality of the 2005 round
of defense base closure and realignment to become law on
November 20, 2005.
(7) Contained within the totality of the 2005 BRAC
decisions was the realignment of the Walter Reed Army Medical
Center in Washington, D.C., which would result in the closure
of the main post and the relocation of--
(A) all tertiary (sub-specialty and complex care) medical
services, Legal Medicine, and a Pathology Program Management
Office to National Naval Medical Center, Bethesda, Maryland;
(B) all non-tertiary (primary and specialty) patient care
functions to a new community hospital at Fort Belvoir,
Virginia;
(C) the Armed Forces Medical Examiner, DNA Registry, and
Accident Investigation to Dover Air Force Base, Delaware; and
(D) the Combat Casualty Care Research sub-function and the
enlisted histology technician training to Fort Sam Houston,
Texas.
(8) The decision to close Walter Reed Army Medical Center
is estimated to save the Department of Defense over
$170,000,000 annually after 2011.
(9) The cost to maintain and renovate current facilities at
Walter Reed Army Medical Center and in the national capitol
region was estimated by the Department of the Army to exceed
$13,000,000,000 over the next 13 years.
(10) A delay in the closure or realignment of a military
installation would cause further disruption and uncertainty
for the workforce supporting the installation and the local
community surrounding the installation until the action is
complete.
(11) The Defense Base Closure and Realignment Act of 1990
(part A of title XXIX of Public Law 101-510; 10 U.S.C. 2687
note) requires the Secretary of Defense to complete all such
closures and realignments no later

[[Page S3887]]

than September 15, 2011, in order minimize to the negative
impact on military operations and local communities by
establishing clear, specific goals for the realignment and
closure activities.
(12) The inadequate conditions and processes recently
identified at Walter Reed Army Medical Center are, in part,
due to antiquated facilities spread over a 113-acre campus,
which was not initially designed for processes necessitated
by current military operations.
(13) The BRAC decision will allow the Department of Defense
to transform legacy medical facilities into a premier,
modern, state-of-the-art joint operational medical facility
that will combine the best military practitioners, medical
practices, and medical research efforts from both the
Department of the Army and the Department of the Navy under
one roof working side-by-side for wounded servicemembers.
(14) The acceleration of the construction at the receiving
locations from the closure of Walter Reed Army Medical Center
will allow for a quicker transition of functions and patient
services to newer, more modern facilities, significantly
improving the capability to care for our Nation's wounded
service members.
(15) Any action by Congress to delay or reverse the BRAC
decision to close Walter Reed Army Medical Center will result
in an unprecedented disruption to the BRAC process and
introduce a level of uncertainty in every other BRAC
decision, which could paralyze the efforts of the military
and local communities to faithfully carry out the decisions
made under the 2005 round of defense base closure and
realignment.
(b) It is the sense of Congress that the realignment of
functions from Walter Reed Army Medical Center, as prescribed
under the 2005 round of defense base closure and realignment,
should be accelerated to minimize the uncertainty faced by
the dedicated professionals serving at the Center, and to
ensure the quickest possible completion of facilities and the
immediate transfer of functions from the Center.
(c) Of the funds appropriated by this chapter for military
construction under the heading ``Department of Defense Base
Closure Account, 2005'', $123,000,000 shall be deposited into
the Department of Defense Base Closure Account 2005
established under section 2906A(a)(1) of the Defense Base
Closure and Realignment Act of 1990 (part A of title XXIX of
Public Law 101-510; 10 U.S.C. 2687 note) and made available
for the acceleration of construction activities related to
the closure of Walter Reed Army Medical Center.
______

SA 697. Mr. WARNER (for himself, Mr. Byrd, Ms. Collins, Mr. Nelson of
Nebraska, Ms. Snowe, Mr. Salazar, Ms. Murkowski, and Mr. Smith)
submitted an amendment intended to be proposed by him to the bill H.R.
1591, making emergency supplemental appropriations for the fiscal year
ending September 30, 2007, and for other purposes; which was ordered to
lie on the table; as follows:

At the appropriate place, insert the following:

SEC. __. INDEPENDENT ASSESSMENT OF CAPABILITIES OF THE IRAQI
SECURITY FORCES.

(a) Findings.--Congress makes the following findings:
(1) The responsibility for Iraq's internal security and
halting sectarian violence must rest primarily with the
Government of Iraq, relying on the Iraqi Security Forces
(ISF).
(2) In quarterly reports to Congress, and in testimony
before a number of congressional committees, the Department
of Defense reported progress towards training and equipping
Iraqi Security Forces; however, the subsequent performance of
the Iraqi Security Forces has been uneven and occasionally
appeared inconsistent with those reports.
(3) On November 15, 2005, President Bush said, ``The plan
[is] that we will train Iraqi troops to be able to take the
fight to the enemy. And as I have consistently said, as the
Iraqis stand up, we will stand down''.
(4) In testimony to Congress, on November 15, 2006, U.S.
Central Command Commander General John Abizaid said, ``I
believe that more American forces prevent the Iraqis from
doing more, from taking more responsibility for their own
future''.
(5) On January 10, 2007, the President announced a new
strategy, which consists of three basic elements: diplomatic,
economic, and military; the central component of the military
element being an augmentation of the present level of the
U.S. military forces with more than 20,000 additional U.S.
military troops to Iraq to ``work alongside Iraqi units and
be embedded in their formations. Our troops will have a well-
defined mission: to help Iraqis clear and secure
neighborhoods, to help them protect the local population, and
to help ensure that the Iraqi forces left behind are capable
of providing the security that Baghdad needs''.
(6) The President said on January 10, 2007, that ``I've
made it clear to the Prime Minister and Iraq's other leaders
that America's commitment is not open-ended'' so as to dispel
the contrary impression that exists.
(7) The latest National Intelligence Estimate (NIE) on
Iraq, entitled ``Prospects for Iraq's Stability: A
Challenging Road Ahead,'' released in January 2007, found:
``If strengthened Iraqi Security Forces (ISF), more loyal to
the government and supported by Coalition forces, are able to
reduce levels of violence and establish more effective
security for Iraq's population, Iraqi leaders could have an
opportunity to begin the process of political compromise
necessary for longer term stability, political progress, and
economic recovery''.
(8) The NIE also stated that ``[d]espite real improvements,
the Iraqi Security Forces (ISF)--particularly the Iraqi
police--will be hard pressed in the next 12-18 months to
execute significantly increased security responsibilities''.
(9) The current and prospective readiness of the ISF is
critical to (A) the long term stability of Iraq, (B) the
force protection of U.S. forces conducting combined
operations with the ISF; and (C) the scale of U.S. forces
deployed to Iraq.
(b) Independent Assessment of Capabilities of Iraqi
Security Forces.--
(1) In general.--There is hereby authorized to be
appropriated for the Department of Defense, $750,000, that
the Department, in turn, will commission an independent,
private-sector entity, which operates as a 501(c)(3) with
recognized credentials and expertise in military affairs, to
prepare an independent report assessing the following:
(A) The readiness of the Iraqi Security Forces (ISF) to
assume responsibility for maintaining the territorial
integrity of Iraq, denying international terrorists a safe
haven, and bringing greater security to Iraq's 18 provinces
in the next 12-18 months, and bringing an end to sectarian
violence to achieve national reconciliation.
(B) The training; equipping; command, control and
intelligence capabilities; and logistics capacity of the ISF.
(C) The likelihood that, given the ISF's record of
preparedness to date, following years of training and
equipping by US forces, the continued support of US troops
will contribute to the readiness of the ISF to fulfill the
missions outlined in subparagraph (A).
(2) Report.--Not later than 120 days after passage of this
Act, the designated private sector entity shall provide an
unclassified report, with a classified annex, containing its
findings, to the House and Senate Committees on Armed
Services, Appropriations, Foreign Relations, and
Intelligence.
______

SA 698. Mr. WARNER submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

SEC. 1. SENSE OF THE SENATE CONCERNING IRAQ.

Whereas on the fourth anniversary of Operation Iraqi
Freedom, the regime of a brutal dictator has been replaced by
a democratically elected government in the Arab world;
Whereas, the United Nations Security Council Resolution
1723, approved November 28, 2006, ``determin[ed] that the
situation in Iraq continues to constitute a threat to
international peace and security;''
Whereas, over 137,000 American military personnel are
currently serving in Iraq, like thousands of others since
March 2003, with the bravery and professionalism consistent
with the finest traditions of the United States armed forces,
and are deserving of the support of all Americans, which they
have strongly;
Whereas many American service personnel have lost their
lives, and many more have been wounded, in Iraq, and the
American people will always honor their sacrifices and honor
their families;
Whereas the U.S. Army and Marine Corps, including their
Reserve and National Guard organizations, together with
components of the other branches of the military, are under
enormous strain from multiple, extended deployments to Iraq
and Afghanistan, and these deployments, and those that will
follow, will have lasting impacts on the future recruiting,
retention and readiness of our nation's all volunteer force;
Whereas Iraq is experiencing a deteriorating problem of
sectarian and intra-sectarian violence based upon political
distrust and cultural differences between some Sunni and Shia
Muslims, concentrated primarily in Baghdad;
Whereas Iraqis must reach political settlements in order to
achieve reconciliation, and the failure of the Iraqis to
reach such settlements to support a truly unified government
greatly contributes to the increasing violence in Iraq;
Whereas the responsibility for Iraq's internal security and
halting sectarian violence must rest primarily with the
Government of Iraq, relying on the Iraqi Security Forces
(ISF);
Whereas the President said on January 10, 2007, that ``I've
made it clear to the Prime Minister and Iraq's other leaders
that America's commitment is not open-ended'' so as to dispel
the contrary impression that exists;
Whereas it is essential that the Government of Iraq set out
measurable and achievable benchmarks and President Bush said,
on January 10, 2007, that ``America will change our approach
to help the Iraqi government as it works to meet these
benchmarks;''
Whereas according to Secretary of State Rice, Iraq's Policy
Committee on National Security agreed upon a set of
political, security, and economic benchmarks and an
associated timeline in September 2006 that were (a)
reaffirmed by Iraq's Presidency Council on October 6, 2007;
(b) referenced by the Iraq Study Group; and (c) posted on the
President of Iraq's website;
Whereas the Secretary of State indicated on January 30,
2007 that ``we expect the Prime Minister will follow through
on his pledges to the President that he would take difficult
decisions.''
Whereas the Secretary of State, the Secretary of Defense,
and the Chairman of the Joint Chiefs of Staff have testified
about, and, or, provided unclassified material to members of
Congress on Iraqi commitments and goals.
Whereas Congress acknowledges that the Baghdad Security
Plan is in it's initial months and while there are signs of
progress, there are also signs of difficulty and uncertainty.
Now therefore be it
Resolved that

[[Page S3888]]

(1) The United States strategy in Iraq, hereafter, should
be conditioned on the Iraqi government meeting benchmarks, as
told to members of Congress by the President, the Secretary
of State, the Secretary of Defense, and the Chairman of the
Joint Chiefs of Staff, and reflected in the Iraqi
Government's commitments to the United States, and to the
international community, including:
(a) forming a Constitutional Review Committee and
completing the Constitutional review;
(b) enacting and implementing legislation on de-
Bathification;
(c) enacting and implementing legislation to ensure the
equitable distribution of hydrocarbon resources to the people
of Iraq without regard to the sect or ethnicity of
recipients, and ensuring that the energy resources of Iraq
benefit Sunni Arabs, Shia Arabs, Kurds, and other Iraqi
citizens in an equitable manner;
(d) enacting and implementing legislation on procedures to
form semi-autonomous regions;
(e) enacting and implementing legislation establishing an
Independent High Electoral Commission; provincial elections
law; provincial council authorities; and a date for
provincial elections;
(f) enacting and implementing legislation addressing
amnesty;
(g) enacting and implementing legislation establishing a
strong militia disbarment program to ensure that such
security forces are accountable only to the central
government and loyal to the constitution of Iraq;
(h) establishing supporting political media, economic, and
services committees in support of the Baghdad Security Plan;
(i) providing three trained and ready Iraqi brigades to
support Baghdad operations;
(j) providing Iraqi commanders with all authorities to
execute this plan and to make tactical and operational
decisions, in consultation with U.S. commanders, without
political intervention;
(k) ensuring that the Iraqi Security Forces are providing
even handed enforcement of the law against all who break it;
(l) ensuring that, the Baghdad security plan is not
providing a safe haven for any outlaws, regardless of their
sectarian or political affiliation; as Prime Minister Maliki
stated to President Bush.
(m) establishing all of the planned joint security stations
in neighborhoods across Baghdad;
(n) increasing the number of Iraqi security forces units
capable of operating independently;
(o) allocating and spending $10 billion in Iraqi revenues
for reconstruction projects, including delivery of essential
services, on an equitable basis;
(2) The Iraqi government achieving, or demonstrating
satisfactory progress towards achieving these benchmarks
should be viewed as the condition for continued United States
military and economic involvement in Iraq;
Sec. 2. Reporting Requirements.
A. Report Required on Benchmarks
(1) The Commander, Multi-National Forces-Iraq, in
coordination with the United States Ambassador to Iraq, shall
submit a report (hereafter known as ``the report''), to the
Commander of U.S. Central Command not later than July 15,
2007, and every 60 days thereafter. The report shall detail
the status of each of the specific benchmarks established in
Section 1, and conclude whether satisfactory progress has
been made toward meeting the overall benchmarks as defined in
Section 1, in a timely manner.
(2) Upon receipt of the report, the Commander of U.S.
Central Command shall prepare an assessment of the report.
The report and the assessment shall be submitted to the
Secretary of Defense not later than July 20, 2007, and every
60 days thereafter.
(3) Upon receipt of the report and assessment, the
Secretary of Defense shall, in consultation with the
Secretary of State, prepare their independent assessment of
and submit the report and all assessments to the Committees
on Armed Services; Appropriations; Foreign Relations or
International Relations; and Intelligence of the Senate and
House of Representatives, not later than August 1, 2007, and
every 60 days thereafter.
(4) If the report or any of the assessments fail to
indicate satisfactory progress in any benchmark, the
President shall submit, within 30 days thereafter, a report
to Congress on those benchmarks that failed to achieve
satisfactory progress. The Presidents' report shall provide
an explanation of why satisfactory progress was not achieved
and describe revisions to the January 10, 2007 strategy, that
reflect how satisfactory progress will be attained.
(5) The reporting requirement detailed in Section 1227 of
the National Defense Authorization Act for Fiscal Year 2007
is terminated after a reporting period ending May 31, 2007.
B. Reports on Readiness of the Armed Forces.
(1) Commencing 60 days after the enactment of this Act, the
Secretaries of the military services, in coordination with
the Chiefs of the Services, shall report to the Committees on
Armed Services and Appropriations of the Senate and the House
of Representatives, not later than 30 days before the date of
embarkation, the deployment of any unit of the Armed Forces
of the United States, to include the Reserve Forces and
National Guard (hereafter known as ``the unit''), outside the
United States and its territories, that is not deemed fully
mission capable of performing reasonably assigned mission-
essential tasks to prescribed standards, under anticipated
conditions in the theater of operations, of the supported
combatant commander.
(2) Subsequently, the supported combatant commander, in
coordination with the Commander of Joint Forces Command,
shall assess the risk of the deployment of the unit as
significant, high, medium, or low, and specify corrective
actions to reduce that level of risk from significant, high,
or medium to low to the Secretary of Defense, not later than
20 days before the embarkation of the unit.
(3) Thereafter, the Secretary of Defense, in coordination
with Chairman of the Joint Chiefs of Staff, shall forward the
aforementioned risk assessment to the Committees on Armed
Services and Appropriations of the Senate and the House of
Representatives, not later than 10 days before the date of
embarkation of the unit, with a statement that the risk
associated with the deployment of ``the unit'' has been
mitigated to satisfaction, or that the deployment of ``the
unit'' has been canceled, delayed, or determined to be of
such significant importance that deployment of ``the unit''
is essential and the level of risk of that deployment is
vital to national security.

______

SA 699. Mr. GRASSLEY submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

Strike section 2704 and insert the following:
Sec. 2704. (a) Elimination of Remainder of SCHIP Funding
Shortfalls for Fiscal Year 2007.--
(1) In general.--Section 2104(h) of the Social Security Act
(42 U.S.C. 1397dd(h)), as added by section 201(a) of the
National Institutes of Health Reform Act of 2006, is
amended--
(A) by redesignating paragraphs (4) through (7) as
paragraphs (5) through (8), respectively;
(B) by inserting after paragraph (3), the following:
``(4) Additional amounts to eliminate remainder of fiscal
year 2007 funding shortfalls.--
``(A) Allotment authority.--From the amounts made available
under subparagraph (D) for additional allotments under this
paragraph, subject to subparagraph (C), the Secretary shall
allot to each remaining shortfall State described in
subparagraph (B) such amount as the Secretary determines will
eliminate the estimated shortfall described in such
subparagraph for the State for fiscal year 2007.
``(B) Remaining shortfall state described.--For purposes of
subparagraph (A), a remaining shortfall State is a State with
a State child health plan approved under this title for which
the Secretary estimates, on the basis of the most recent data
available to the Secretary as of March 31, 2007, that the
projected Federal expenditures under such plan for the State
for fiscal year 2007 will exceed the sum of--
``(i) the amount of the State's allotments for each of
fiscal years 2005 and 2006 that will not be expended by the
end of fiscal year 2006;
``(ii) the amount of the State's allotment for fiscal year
2007; and
``(iii) the amounts, if any, that are to be redistributed
to the State during fiscal year 2007 in accordance with
paragraphs (1) and (2).
``(C) Proration rule.--If the amount available under
subparagraph (D) is less than the total amount of the
estimated shortfalls determined by the Secretary under
subparagraph (A), the amount of the allotment for each
remaining shortfall State determined under such subparagraph
shall be reduced proportionally.
``(D) Appropriation; allotment authority.--For the purpose
of providing additional allotments to remaining shortfall
States under this paragraph there is appropriated, out of any
funds in the Treasury not otherwise appropriated, such sums
as are necessary for fiscal year 2007, not to exceed
$750,000,000. Amounts appropriated pursuant to the preceding
sentence are designated as an emergency requirement pursuant
to section 402 of H. Con. Res. 95 (109th Congress).''.
(2) Conforming amendments.--Such section is further
amended--
(A) in paragraph (1)(B), by striking ``paragraph (4)(B)''
and inserting ``paragraph (5)(B)'';
(B) in paragraph (2)--
(i) in the paragraph heading, by striking ``remainder of
reduction'' and inserting ``part'';
(ii) in subparagraph (A), by striking ``paragraph (5)(B)''
and inserting ``paragraph (6)(B)''; and
(iii) in subparagraph (B), by striking ``paragraph (4)(B)''
and inserting ``paragraph (5)(B)'';
(C) in paragraph (5) (as redesignated by paragraph
(1)(A))--
(i) in subparagraph (A), by inserting ``or allotted'' after
``redistributed''; and
(ii) in subparagraph (B)--

(I) by inserting ``or allotted'' after ``redistributed'';
(II) by striking ``To the'' and inserting the following:

``(i) In general.--Subject to clause (ii), to the''; and

[[Page S3889]]

(III) by adding at the end the following new clause:

``(ii) Exception for remaining shortfall states with lowest
third ranking of uninsured children.--Only with respect to
the amounts allotted under paragraph(4) to a remaining
shortfall State described in subparagraph (B) of such
paragraph, clause (i) shall not apply to any such State that,
on the basis of the most recent American Community Survey of
the Bureau of the Census (or, until such data is available,
on the basis of the 3 most recent Annual Social and Economic
Supplements of the Current Population Survey of the Bureau of
the Census), ranks in the lowest \1/3\ of States in terms of
the State's percentage of low-income children without health
insurance.'';
(D) in subparagraph (6)(A) (as so redesignated), by
striking ``and (3)'' and inserting ``(3), and (4)''; and
(E) in paragraph (7) (as so redesignated)--
(i) in the first sentence_

(I) by inserting ``or allotted'' after ``redistributed'';
and
(II) by inserting ``or allotments'' after
``redistributions''; and

(ii) in the second sentence, by striking ``and (3), in
accordance with paragraph (5)'' and inserting ``(3), and (4)
in accordance with paragraph (6)''.
(b) Improving Access to Dental Services and Mental Health
Services for Children.--Title V of the Social Security Act
(42 U.S.C. 701 et seq.) is amended by adding at the end the
following:

``SEC. 511. SEPARATE PROGRAM TO IMPROVE ACCESS TO DENTAL
SERVICES AND MENTAL HEALTH SERVICES.

``(a) Authority To Award Allotments.--For the purpose
described in subsection (b)(1), the Secretary shall allot to
each State which has transmitted an application under
subsection (c) that has been approved by the Secretary an
amount equal to the product of--
``(1) the amount appropriated in subsection (h) for the
period of fiscal years 2007 through 2012; and
``(2) the proportion that the number of low-income children
for that State bears to the total of such numbers of children
for all the States with approved applications under this
section for such period.
``(b) Purpose; Priority for Use of Funds.--
``(1) Purpose.--The purpose of an allotment under
subsection (a) to a State is to enable the State to carry out
activities that are designed to improve access to dental
services and mental health services for targeted low-income
children and other children with low income or limited
availability of health services.
``(2) Priority for use of funds.--In carrying out
activities with funds from an allotment made under this
section, a State shall give priority to activities that are
designed to improve access to dental services and mental
health services for targeted low-income children.
``(c) Application.--A State that desires to receive an
allotment under this section shall submit, not later than
June 1, 2007, an application to the Secretary in such form
and manner, and containing such information, as the Secretary
may require. Such application shall include--
``(1) a detailed description of the activities proposed to
be conducted with funds from the allotment;
``(2) quality and outcomes performance measures to evaluate
the effectiveness of such activities; and
``(3) an assurance that the State shall--
``(A) conduct an assessment of the effectiveness of such
activities against such performance measures; and
``(B) cooperate with the collection and reporting of data
and other information determined as a result of conducting
such assessments to the Secretary, in such form and manner as
the Secretary shall require.
``(d) Report.--Not later than March 31, 2008, the Secretary
shall submit a report to Congress on the activities conducted
with funds allotted under this section.
``(e) Supplement, Not Supplant.--Funds awarded under this
section shall be used to supplement, not supplant, non-
Federal funds that are otherwise available for activities
conducted with funds from an allotment made under this
section.
``(f) Application of Other Provisions.--
``(1) In general.--Sections 503, 507, and 508 shall apply
to allotments under subsection (a) to the same extent and in
the same manner as such sections apply to allotments under
section 502(c).
``(2) Reports.--Section 506 shall apply to allotments under
subsection (a) to the extent determined by the Secretary to
be appropriate.
``(g) Definitions.--In this section:
``(1) Targeted low-income children.--The term `targeted
low-income children' means, with respect to a State, children
enrolled in the State child health plan under title XXI.
``(2) Low-income children.--The term `low-income children'
has the meaning given the term `low-income child' under
section 2110(c)(4).
``(h) Appropriation.--There is appropriated, out of any
money in the Treasury not otherwise appropriated,
$250,000,000 for the period of fiscal years 2007 through 2012
for the purpose of making allotments under this section.''.
(c) Funding Provisions.--
(1) Repeal of the limited continuous enrollment provision
for certain beneficiaries under the medicare advantage
program.--
(A) In general.--Subparagraph (E) of section 1851(e)(2) of
the Social Security Act (42 U.S.C. 1395w-21(e)(2)), as added
by section 206(a) of division B of the Tax Relief and Health
Care Act of 2006 (Public Law 109-432), is repealed.
(B) Conforming amendment.--Section 1860D-1(b)(1)(B)(iii) of
the Social Security Act (42 U.S.C. 1395w-101(b)(1)(B)(iii)),
as amended by 206(b) of division B of the Tax Relief and
Health Care Act of 2006 (Public Law 109-432), is amended by
striking ``subparagraphs (B), (C), and (E)'' and inserting
``subparagraphs (B) and (C)''.
(C) Effective date.--The amendments made by this paragraph
shall take effect on the day after the date of enactment of
this Act.
(2) Requirement for use of tamper-resistant prescription
pads under the medicaid program.--
(A) In general.--Section 1903(i) of the Social Security Act
(42 U.S.C. 1396b(i)) is amended--
(i) by striking ``or'' at the end of paragraph (21);
(ii) by striking the period at the end of paragraph (22)
and inserting ``; or''; and
(iii) by inserting after paragraph (22) the following new
paragraph:
``(23) with respect to amounts expended for medical
assistance for covered outpatient drugs (as defined in
section 1927(k)(2)) for which the prescription was executed
in written (and non-electronic) form unless the prescription
was executed on a tamper-resistant pad.''.
(B) Effective date.--The amendments made by subparagraph
(A) shall apply to prescriptions executed after September 30,
2007.
(3) Extension of ssi asset verification demonstration to
medicaid.--
(A) In general.--Subject to subparagraph (B), the Secretary
of Health and Human Services shall collaborate with the
Commissioner of Social Security to provide for the use, for
purposes of verifying financial eligibility for medical
assistance under State plans under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.), of the system
administered by the Commissioner (under section
1631(e)(1)(B)(ii) of such Act (42 U.S.C. 1383(e)(1)(B)(ii))
under which the Commissioner may obtain information held by
financial institutions in order to verify eligibility for
benefits under title XVI of such Act (42 U.S.C. 1381 et
seq.).
(B) Limitation.--For purposes of this paragraph, use of the
system described in subparagraph (A), and the information
obtained through such system, shall be limited to
determinations of eligibility for medical assistance in
States in which such system is being used by the Commissioner
to verify eligibility for benefits under such title XVI.
(C) Sharing by commissioner of information obtained from
financial institutions.--Notwithstanding the Right to
Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.) or any
other provision of law, information obtained by the
Commissioner from financial institutions under the system
described in subparagraph (A) may, for purposes of carrying
out this paragraph, be shared with the agencies of States
specified in subparagraph (B) which are administering the
plans of such States under title XIX of the Social Security
Act.
(d) General Effective Date; Applicability.--Except as
otherwise provided, the amendments made by this section take
effect on the date of enactment of this Act and apply without
fiscal year limitation.

______

SA 700. Mr. GRASSLEY submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

Beginning on page 85, between lines 7 and 8, insert the
following:

Nothing in the preceding sentence shall be construed as
prohibiting the Secretary of Health and Human Services during
the period described in such sentence from promulgating or
implementing a rule designed to prevent fraud and protect the
integrity of the Medicaid program or the State Children's
Health Insurance Program, reduce inappropriate spending under
such programs, or protect hospitals and other providers of
items and services under such programs by permitting such
hospitals and providers to retain all allowable Federal,
State, and local payments for items or services provided to
recipients of medical assistance under the Medicaid program
or child health assistance under the State Children's Health
Insurance Program.
______

SA 701. Mr. GRASSLEY submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

Beginning on page 85, between lines 7 and 8, insert the
following:

Nothing in the preceding sentence shall be construed as
prohibiting the Secretary of Health and Human Services during
the period described in such sentence from promulgating or
implementing a rule designed to prevent fraud and protect the
integrity of the Medicaid program or the State Children's
Health Insurance Program or reduce inappropriate spending
under such programs.

[[Page S3890]]

______

SA 702. Mr. DeMINT submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

Strike subtitle C of title IV.
______

SA 703. Mr. DeMINT submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 135, strike lines 5 through 14.
______

SA 704. Mr. DeMINT submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the end of chapter 1 of title III, insert the following:

SEC. 3104. SPINACH.

No funds made available under this Act shall be used to
make payments to growers and first handlers, as defined by
the Secretary of Health and Human Services, of fresh spinach
that were unable to market spinach crops as a result of the
Food and Drug Administration Public Health Advisory issued on
September 14, 2006.
______

SA 705. Mr. HAGEL (for himself, Mr. Webb, and Mr. Salazar) submitted
an amendment intended to be proposed by him to the bill H.R. 1591,
making emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

CHAPTER 8--ADDITIONAL POLICY AND REQUIREMENTS ON IRAQ

SEC. 1803. LIMITATION ON AVAILABILITY OF FUNDS FOR DEPLOYMENT
OF UNITS UNLESS FULLY MISSION CAPABLE.

(a) Limitation.--Commencing 120 days after the date of the
enactment of this Act, no funds appropriated or otherwise
made available by this Act or any other Act may be obligated
or expended for the deployment of a unit or member of the
Armed Forces unless the Chief of Staff of the Armed Force
concerned certifies to the congressional defense committees,
not later than 15 days before the date of such deployment,
that the unit or member, as the case may be, is fully mission
capable.
(b) Fully Mission Capable.--For purposes of this section, a
unit or member of the Armed Forces shall be rated as being
fully mission capable only if--
(1) the unit or member is capable of performing assigned
mission-essential tasks to prescribed standards under
anticipated conditions in the theater of operations of
deployment in accordance with guidelines set forth in the
Department of Defense readiness reporting system; and
(2) the unit or member is capable of performing such other
assigned mission tasks, including mission tasks outside the
theater of operations of deployment, that could reasonably be
expected to arise during the period of deployment.
(c) Applicability to Voluntary Deployments.--The limitation
in subsection (a) shall apply with respect to the deployment
of any member of the Armed Forces who voluntarily consents to
deployment.
(d) Waiver Authority.--
(1) In general.--The President may waive the applicability
of the limitation in subsection (a) to the deployment of a
unit or member of the Armed Forces if the President certifies
to the congressional defense committees, not later than 15
days before the date of such deployment, that--
(A) any equipment required for the unit or member to be
deployed as fully mission capable that is not available at
the time of deployment will be supplied upon arrival in the
theater of operations to which the unit or member is
deployed; and
(B) the unit or member has met, prior to deployment, all
other requirements to be rated as fully mission capable.
(2) Case-by-case basis.--Any waiver under paragraph (1)
shall be made on a case-by-case basis.
(e) Additional Waiver Authority.--The President may waive
the applicability of the limitation in subsection (a) in the
event of a requirement for the use of military force in time
of national emergency.

SEC. 1804. LIMITATION ON EXTENDING LENGTH OF DEPLOYMENTS FOR
OPERATION IRAQI FREEDOM.

(a) Limitation.--Commencing 120 days after the date of the
enactment of this Act, no funds appropriated or otherwise
made available by this Act or any other Act may be obligated
or expended to deploy, continue the deployment, or execute
any order that has the effect of extending the deployment of
a unit or member of the Armed Forces for Operation Iraqi
Freedom as follows:
(1) In the case of a unit or member of the Army (including
a unit or member of the Army National Guard or the Army
Reserve), if the deployment or continuation or extension of
deployment would result in the deployment of the unit or
member for more than 365 consecutive days.
(2) In the case of a unit or member of the Marine Corps
(including a unit or member of the Marine Corps Reserve), if
the deployment or continuation or extension of deployment
would result in the deployment of the unit or member for more
than 210 consecutive days.
(b) Exception.--The limitation in subsection (a) shall not
apply to designated key command headquarters personnel or
other members of the Armed Forces who are required to
maintain continuity of mission and situational awareness
between rotating forces.
(c) Deployment Defined.--For purposes of this section, the
term ``deployment'' has the meaning given that term in
section 991(b) of title 10, United States Code.

SEC. 1805. MINIMUM PERIOD BETWEEN DEPLOYMENTS FOR OPERATION
IRAQI FREEDOM.

(a) Minimum Period for Certain Members of the Army and
Marine Corps.--
(1) In general.--Commencing 120 days after the date of the
enactment of this Act, no funds appropriated or otherwise
made available by this Act or any other Act may be obligated
or expended to deploy for Operation Iraqi Freedom a unit or
member of the Armed Forces specified in paragraph (2) unless
the period between the deployment of the unit or member for
Operation Iraqi Freedom covered by this subsection and the
previous deployment of the unit or member is equal to or
longer than the period of such previous deployment of the
unit or member.
(2) Covered units and members.--The units and members of
the Armed Forces specified in this paragraph are as follows:
(A) Units and members of the regular Army.
(B) Units and members of the regular Marine Corps.
(b) Minimum Period for Members of Army Reserve, Marine
Corps Reserve, and Army National Guard.--Commencing 120 days
after the date of the enactment of this Act, no funds
appropriated or otherwise made available by this Act or any
other Act may be obligated or expended to deploy for
Operation Iraqi Freedom a unit or member of the Army Reserve,
Marine Corps Reserve, or Army National Guard if the unit or
member has been deployed at any time within the five years
preceding the date of the deployment covered by this
subsection.
(c) Deployment Defined.--For purposes of this section, the
term ``deployment'' has the meaning given that term in
section 991(b) of title 10, United States Code.

SEC. 1806. ADDITIONAL AMOUNT FOR NATIONAL GUARD PERSONNEL,
ARMY.

The amount appropriated by chapter 3 of this title under
the heading ``National Guard Personnel, Army'' is hereby
increased by $597,100,000.

SEC. 1807. ADDITIONAL AMOUNT FOR OPERATION AND MAINTENANCE,
ARMY NATIONAL GUARD.

The amount appropriated by chapter 3 of this title under
the heading ``Operation and Maintenance, Army National
Guard'' is hereby increased by $460,700,000.

SEC. 1808. ADDITIONAL AMOUNT FOR NATIONAL GUARD AND RESERVE
EQUIPMENT.

The amount appropriated by chapter 3 of this title under
the heading ``National Guard and Reserve Equipment'' is
hereby increased by $364,900,000, with the amount of such
increase to be available for National Guard equipment needs.

SEC. 1809. ADDITIONAL AMOUNT FOR PROCUREMENT, MARINE CORPS.

The amount appropriated by chapter 3 of this title under
the heading ``Procurement, Marine Corps'' is hereby increased
by $1,700,000,000, with the amount of such increase to be
available for additional Mine Resistant Ambush Protection
vehicles.

SEC. 1810. REPORTS ON UNITED STATES EFFORTS FOR IRAQ.

(a) Reports Required.--Not later than 60 days after the
date of the enactment of this Act, and every 60 days
thereafter, the President shall submit to the appropriate
committees of Congress a report that sets forth a
comprehensive description and assessment of current United
States diplomatic, political, and economic efforts with
respect to Iraq.
(b) Elements.--
(1) In general.--Each report under subsection (a) shall set
forth, current as of the date of such report, a comprehensive
description and assessment of United States diplomatic,
political, and economic efforts with respect to Iraq,
including efforts as follows:
(A) To achieve broad-based national political
reconciliation in Iraq that includes all of Iraq's
communities.
(B) To engage all nations in the Middle East, including
Iraq's immediate neighbors, the international community, and
international institutions in developing a regional,
internationally-sponsored reconciliation and reconstruction
process for Iraq.
(C) To utilize United States political, economic, and
military assistance to facilitate the reconstruction of Iraq.
(D) To secure the delivery of pledged economic and other
assistance for Iraq from the international community, and to
secure additional pledges of assistance for Iraq, including
specific information regarding the status of assistance
pledges for Iraq from the international community.
(E) To ensure that the Government of Iraq is increasing and
improving the delivery of basic services to the people of
Iraq.
(2) Information on status of pledged assistance.--The
description of pledged economic and other assistance for Iraq
under

[[Page S3891]]

paragraph (1)(D) shall include information on the current
status of delivery of assistance for Iraq under pledges of
assistance from the international community.
(c) Form of Report.--Each report under this section shall
be submitted in unclassified form, but may include a
classified annex.
(d) Appropriate Committees of Congress Defined.--In this
section, the term ``appropriate committees of Congress''
means--
(1) the Committees on Armed Services, Foreign Relations,
and Appropriations of the Senate; and
(2) the Committees on Armed Services, Foreign Affairs, and
Appropriations of the House of Representatives.

SEC. 1811. EMERGENCY DESIGNATION.

Amounts provided in this chapter are designated as
emergency requirements pursuant to section 403 of H.Con.Res.
95 (109th Congress), the concurrent resolution on the budget
for fiscal year 2006.
______

SA 706. Mr. BURR submitted an amendment intended to be proposed to
amendment SA 641 proposed by Mr. Byrd to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

On page 112, line 14, insert before the period the
following: ``; in addition to the amounts transferred, an
additional $111,000,000 is appropriated to the Public Health
and Social Services Emergency Fund to carry out section 319L
of the Public Health Service Act (the Biomedical Advanced
Research and Development Authority), which shall be
designated as an emergency requirement pursuant to section
402 of S. Con. Res. 83 (109th Congress), the concurrent
resolution on the budget for fiscal year 2007, as made
applicable in the Senate by section 7035 of Public Law 109-
234, to remain available until expended, and to be offset
through striking the amount appropriated in chapter I of
title III (Department of Agriculture) for the Farm Service
Agency, reducing the amount appropriated under section 412 by
$12,000,000, and striking the amount appropriated under
section 416''.
______

SA 707. Mr. HAGEL (for himself, Mr. Webb, and Mr. Salazar) submitted
an amendment intended to be proposed by him to the bill H.R. 1591,
making emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the end of title I, add the following:

CHAPTER 8--ADDITIONAL POLICY AND REQUIREMENTS ON IRAQ

SEC. 1801. SENSE OF CONGRESS.

It is the sense of Congress that--
(1) the primary objective of United States strategy in Iraq
should be to achieve a political solution and national
reconciliation in Iraq through increased, concerted regional
and international diplomacy;
(2) the United States should engage all nations in the
Middle East, including Iraq's immediate neighbors, in
developing a regional, internationally sponsored peace and
reconciliation process for Iraq;
(3) the regional security conferences on Iraq that are
being organized by Prime Minister of Iraq Nuri al-Maliki
represent important first steps to achieve a more robust
diplomatic initiative that should be given the full and
direct support by the President; and
(4) the President and the Government of Iraq should build
on the momentum of the Baghdad conference and the upcoming
ministerial meeting by convening a diplomatic conference with
the purpose of bringing stability to the region, reinforcing
national reconciliation efforts, achieving the withdrawal of
the United States Armed Forces from Iraq, and promoting a
comprehensive regional diplomatic solution.

SEC. 1802. FINDINGS REGARDING THE UNITED STATES ARMED FORCES.

Congress makes the following findings:
(1) The United States Armed Forces, and the members of the
Armed Forces and their families, are under enormous strain
from multiple, extended deployments to Iraq and Afghanistan.
(2) The readiness of nondeployed Army and Marine Corps
units has declined significantly due to a lack of equipment
and insufficient time to train, thereby jeopardizing their
capability to respond quickly and effectively to other crises
or contingencies in the world.
(3) The Navy and Air Force are sustaining high operating
tempos in support of military operations in Iraq and
Afghanistan, as well as conducting other global missions.
(4) Each of the Armed Forces has important requirements to
modernize and recapitalize aging legacy platforms and systems
if our Nation is to possess the military capability needed to
defend against a growing array of dynamic and challenging
threats to our national security.
(5) The current deployment tempo of the United States Armed
Forces will have lasting impacts on the future recruitment,
retention, and readiness of the All-Volunteer Force.

SEC. 1803. LIMITATION ON AVAILABILITY OF FUNDS FOR DEPLOYMENT
OF UNITS UNLESS FULLY MISSION CAPABLE.

(a) Limitation.--Commencing 120 days after the date of the
enactment of this Act, no funds appropriated or otherwise
made available by this Act or any other Act may be obligated
or expended for the deployment of a unit or member of the
Armed Forces unless the Chief of Staff of the Armed Force
concerned certifies to the congressional defense committees,
not later than 15 days before the date of such deployment,
that the unit or member, as the case may be, is fully mission
capable.
(b) Fully Mission Capable.--For purposes of this section, a
unit or member of the Armed Forces shall be rated as being
fully mission capable only if--
(1) the unit or member is capable of performing assigned
mission-essential tasks to prescribed standards under
anticipated conditions in the theater of operations of
deployment in accordance with guidelines set forth in the
Department of Defense readiness reporting system; and
(2) the unit or member is capable of performing such other
assigned mission tasks, including mission tasks outside the
theater of operations of deployment, that could reasonably be
expected to arise during the period of deployment.
(c) Applicability to Voluntary Deployments.--The limitation
in subsection (a) shall apply with respect to the deployment
of any member of the Armed Forces who voluntarily consents to
deployment.
(d) Waiver Authority.--
(1) In general.--The President may waive the applicability
of the limitation in subsection (a) to the deployment of a
unit or member of the Armed Forces if the President certifies
to the congressional defense committees, not later than 15
days before the date of such deployment, that--
(A) any equipment required for the unit or member to be
deployed as fully mission capable that is not available at
the time of deployment will be supplied upon arrival in the
theater of operations to which the unit or member is
deployed; and
(B) the unit or member has met, prior to deployment, all
other requirements to be rated as fully mission capable.
(2) Case-by-case basis.--Any waiver under paragraph (1)
shall be made on a case-by-case basis.
(e) Additional Waiver Authority.--The President may waive
the applicability of the limitation in subsection (a) in the
event of a requirement for the use of military force in time
of national emergency.

SEC. 1804. LIMITATION ON EXTENDING LENGTH OF DEPLOYMENTS FOR
OPERATION IRAQI FREEDOM.

(a) Limitation.--Commencing 120 days after the date of the
enactment of this Act, no funds appropriated or otherwise
made available by this Act or any other Act may be obligated
or expended to deploy, continue the deployment, or execute
any order that has the effect of extending the deployment of
a unit or member of the Armed Forces for Operation Iraqi
Freedom as follows:
(1) In the case of a unit or member of the Army (including
a unit or member of the Army National Guard or the Army
Reserve), if the deployment or continuation or extension of
deployment would result in the deployment of the unit or
member for more than 365 consecutive days.
(2) In the case of a unit or member of the Marine Corps
(including a unit or member of the Marine Corps Reserve), if
the deployment or continuation or extension of deployment
would result in the deployment of the unit or member for more
than 210 consecutive days.
(b) Exception.--The limitation in subsection (a) shall not
apply to designated key command headquarters personnel or
other members of the Armed Forces who are required to
maintain continuity of mission and situational awareness
between rotating forces.
(c) Deployment Defined.--For purposes of this section, the
term ``deployment'' has the meaning given that term in
section 991(b) of title 10, United States Code.

SEC. 1805. MINIMUM PERIOD BETWEEN DEPLOYMENTS FOR OPERATION
IRAQI FREEDOM.

(a) Minimum Period for Certain Members of the Army and
Marine Corps.--
(1) In general.--Commencing 120 days after the date of the
enactment of this Act, no funds appropriated or otherwise
made available by this Act or any other Act may be obligated
or expended to deploy for Operation Iraqi Freedom a unit or
member of the Armed Forces specified in paragraph (2) unless
the period between the deployment of the unit or member for
Operation Iraqi Freedom covered by this subsection and the
previous deployment of the unit or member is equal to or
longer than the period of such previous deployment of the
unit or member.
(2) Covered units and members.--The units and members of
the Armed Forces specified in this paragraph are as follows:
(A) Units and members of the regular Army.
(B) Units and members of the regular Marine Corps.
(b) Minimum Period for Members of Army Reserve, Marine
Corps Reserve, and Army National Guard.--Commencing 120 days
after the date of the enactment of this Act, no funds
appropriated or otherwise made available by this Act or any
other Act may be obligated or expended to deploy for
Operation Iraqi Freedom a unit or member of the Army Reserve,
Marine Corps Reserve, or Army National Guard if the unit or
member has been deployed at any time within the five years
preceding the date of the deployment covered by this
subsection.

[[Page S3892]]

(c) Deployment Defined.--For purposes of this section, the
term ``deployment'' has the meaning given that term in
section 991(b) of title 10, United States Code.

SEC. 1806. ADDITIONAL AMOUNT FOR NATIONAL GUARD PERSONNEL,
ARMY.

The amount appropriated by chapter 3 of this title under
the heading ``National Guard Personnel, Army'' is hereby
increased by $597,100,000.

SEC. 1807. ADDITIONAL AMOUNT FOR OPERATION AND MAINTENANCE,
ARMY NATIONAL GUARD.

The amount appropriated by chapter 3 of this title under
the heading ``Operation and Maintenance, Army National
Guard'' is hereby increased by $460,700,000.

SEC. 1808. ADDITIONAL AMOUNT FOR NATIONAL GUARD AND RESERVE
EQUIPMENT.

The amount appropriated by chapter 3 of this title under
the heading ``National Guard and Reserve Equipment'' is
hereby increased by $364,900,000, with the amount of such
increase to be available for National Guard equipment needs.

SEC. 1809. ADDITIONAL AMOUNT FOR PROCUREMENT, MARINE CORPS.

The amount appropriated by chapter 3 of this title under
the heading ``Procurement, Marine Corps'' is hereby increased
by $1,700,000,000, with the amount of such increase to be
available for additional Mine Resistant Ambush Protection
vehicles.

SEC. 1810. REPORTS ON UNITED STATES EFFORTS FOR IRAQ.

(a) Reports Required.--Not later than 60 days after the
date of the enactment of this Act, and every 60 days
thereafter, the President shall submit to the appropriate
committees of Congress a report that sets forth a
comprehensive description and assessment of current United
States diplomatic, political, and economic efforts with
respect to Iraq.
(b) Elements.--
(1) In general.--Each report under subsection (a) shall set
forth, current as of the date of such report, a comprehensive
description and assessment of United States diplomatic,
political, and economic efforts with respect to Iraq,
including efforts as follows:
(A) To achieve broad-based national political
reconciliation in Iraq that includes all of Iraq's
communities.
(B) To engage all nations in the Middle East, including
Iraq's immediate neighbors, the international community, and
international institutions in developing a regional,
internationally-sponsored reconciliation and reconstruction
process for Iraq.
(C) To utilize United States political, economic, and
military assistance to facilitate the reconstruction of Iraq.
(D) To secure the delivery of pledged economic and other
assistance for Iraq from the international community, and to
secure additional pledges of assistance for Iraq, including
specific information regarding the status of assistance
pledges for Iraq from the international community.
(E) To ensure that the Government of Iraq is increasing and
improving the delivery of basic services to the people of
Iraq.
(2) Information on status of pledged assistance.--The
description of pledged economic and other assistance for Iraq
under paragraph (1)(D) shall include information on the
current status of delivery of assistance for Iraq under
pledges of assistance from the international community.
(c) Form of Report.--Each report under this section shall
be submitted in unclassified form, but may include a
classified annex.
(d) Appropriate Committees of Congress Defined.--In this
section, the term ``appropriate committees of Congress''
means--
(1) the Committees on Armed Services, Foreign Relations,
and Appropriations of the Senate; and
(2) the Committees on Armed Services, Foreign Affairs, and
Appropriations of the House of Representatives.

SEC. 1811. EMERGENCY DESIGNATION.

Amounts provided in this chapter are designated as
emergency requirements pursuant to section 403 of H. Con.
Res. 95 (109th Congress), the concurrent resolution on the
budget for fiscal year 2006.
______

SA 708. Mr. KYL submitted an amendment intended to be proposed by him
to the bill H.R. 1591, making emergency supplemental appropriations for
the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At page 53, strike line 12 and all that follows through
page 56, line 4 and insert the following:
``(b) Automatic Relief for the Hmong and Other Groups That
Do Not Pose a Threat to the United States.--For purposes of
section 212(a)(3)(B) of the Immigration and Nationality Act
(INA) (8 U.S.C. Sec. 1181(a)(3)(B)), the Hmong, the
Montagnards, the Karen National Union/Karen National
Liberation Army (KNU/KNLA), the Chin National Front/Chin
National Army (CNF/CNA), the Chin National League for
Democracy (CNLD), the Kayan New Land Party (KNLP), the Arakan
Liberation Party (ALP), the Mustangs, the Alzados, and the
Karenni National Progressive Party shall not be considered to
be a terrorist organization on the basis of any act or event
occurring before the date of the enactment of this section.
Nothing in this subsection may be construed to alter or limit
the authority of the Secretary of State and Secretary of
Homeland Security to exercise their discretionary authority
pursuant to section 212(d)(3)(B)(i) of the INA (8 U.S.C.
1182(d)(3)(B)(i).''.
(c) Technical Correction.--Section 212(a)(3)(B)(ii) of the
INA (8 U.S.C. 1182(a)(3)(B)(vi)) is amended by striking
``Subclause (VII)'' and replacing it with ``Subclause (IX)''.
(d) Effective Date.--The amendments made by this section
shall take effect on the date of enactment of this section,
and these amendments and section 212(a)(3)(B)(ii) of the INA
(8 U.S.C. 1182(a)(3)(B)(ii), as amended by this section,
shall apply to--
(1) removal proceedings instituted before, on, or after the
date of the enactment of this section; and
(2) acts and conditions constituting a ground for
inadmissibility, excludability, deportation, or removal
occurring or existing before, on, or after such date.
______

SA 709. Mr. WYDEN (for himself, Mr. Reid, Mr. Baucus, Mr. Bingaman,
Mr. Smith, Ms. Cantwell, Mr. Domenici, Mrs. Boxer, Mr. Craig, Mrs.
Murray, Mr. Crapo, Mr. Tester, and Mr. Stevens, Mr. Bennett Ms.
Murkowski, Mr. Salazar, and Mrs. Feinstein) proposed an amendment to
the bill H.R. 1591, making emergency supplemental appropriations for
the fiscal year ending September 30, 2007, and for other purposes; as
follows:

Beginning on page 75, strike line 25 and all that follows
through page 76, line 15, and insert the following:

SEC. 2601. SECURE RURAL SCHOOLS AND COMMUNITY SELF-
DETERMINATION PROGRAM.

(a) Reauthorization of the Secure Rural Schools and
Community Self-Determination Act of 2000.--The Secure Rural
Schools and Community Self-Determination Act of 2000 (16
U.S.C. 500 note; Public Law 106-393) is amended by striking
sections 1 through 403 and inserting the following:

``SECTION 1. SHORT TITLE.

``This Act may be cited as the `Secure Rural Schools and
Community Self-Determination Act of 2000'.

``SEC. 2. PURPOSES.

``The purposes of this Act are--
``(1) to stabilize and transition payments to counties to
provide funding for schools and roads that supplements other
available funds;
``(2) to make additional investments in, and create
additional employment opportunities through, projects that--
``(A)(i) improve the maintenance of existing
infrastructure;
``(ii) implement stewardship objectives that enhance forest
ecosystems; and
``(iii) restore and improve land health and water quality;
``(B) enjoy broad-based support; and
``(C) have objectives that may include--
``(i) road, trail, and infrastructure maintenance or
obliteration;
``(ii) soil productivity improvement;
``(iii) improvements in forest ecosystem health;
``(iv) watershed restoration and maintenance;
``(v) the restoration, maintenance, and improvement of
wildlife and fish habitat;
``(vi) the control of noxious and exotic weeds; and
``(vii) the reestablishment of native species; and
``(3) to improve cooperative relationships among--
``(A) the people that use and care for Federal land; and
``(B) the agencies that manage the Federal land.

``SEC. 3. DEFINITIONS.

``In this Act:
``(1) Adjusted share.--The term `adjusted share' means the
number equal to the quotient obtained by dividing--
``(A) the number equal to the quotient obtained by
dividing--
``(i) the base share for the eligible county; by
``(ii) the income adjustment for the eligible county; by
``(B) the number equal to the sum of the quotients obtained
under subparagraph (A) and paragraph (8)(A) for all eligible
counties.
``(2) Base share.--The term `base share' means the number
equal to the average of--
``(A) the quotient obtained by dividing--
``(i) the number of acres of Federal land described in
paragraph (7)(A) in each eligible county; by
``(ii) the total number acres of Federal land in all
eligible counties in all eligible States; and
``(B) the quotient obtained by dividing--
``(i) the amount equal to the average of the 3 highest 25-
percent payments and safety net payments made to each
eligible State for each eligible county during the
eligibility period; by
``(ii) the amount equal to the sum of the averages
calculated under clause (i) and paragraph (9)(B)(i) for all
eligible counties in all eligible States during the
eligibility period.
``(3) County payment.--The term `county payment' means the
payment for an eligible county calculated under section
101(b).
``(4) Eligible county.--The term `eligible county' means
any county that--
``(A) contains Federal land (as defined in paragraph (7));
and

[[Page S3893]]

``(B) elects to receive a share of the State payment or the
county payment under section 102(b).
``(5) Eligibility period.--The term `eligibility period'
means fiscal year 1986 through fiscal year 1999.
``(6) Eligible state.--The term `eligible State' means a
State or territory of the United States that received a 25-
percent payment for 1 or more fiscal years of the eligibility
period.
``(7) Federal land.--The term `Federal land' means--
``(A) land within the National Forest System, as defined in
section 11(a) of the Forest and Rangeland Renewable Resources
Planning Act of 1974 (16 U.S.C. 1609(a)) exclusive of the
National Grasslands and land utilization projects designated
as National Grasslands administered pursuant to the Act of
July 22, 1937 (7 U.S.C. 1010-1012); and
``(B) such portions of the revested Oregon and California
Railroad and reconveyed Coos Bay Wagon Road grant land as are
or may hereafter come under the jurisdiction of the
Department of the Interior, which have heretofore or may
hereafter be classified as timberlands, and power-site land
valuable for timber, that shall be managed, except as
provided in the former section 3 of the Act of August 28,
1937 (50 Stat. 875; 43 U.S.C. 1181c), for permanent forest
production.
``(8) 50-Percent adjusted share.--The term `50-percent
adjusted share' means the number equal to the quotient
obtained by dividing--
``(A) the number equal to the quotient obtained by
dividing--
``(i) the 50-percent base share for the eligible county; by
``(ii) the income adjustment for the eligible county; by
``(B) the number equal to the sum of the quotients obtained
under subparagraph (A) and paragraph (1)(A) for all eligible
counties.
``(9) 50-Percent base share.--The term `50-percent base
share' means the number equal to the average of--
``(A) the quotient obtained by dividing--
``(i) the number of acres of Federal land described in
paragraph (7)(B) in each eligible county; by
``(ii) the total number acres of Federal land in all
eligible counties in all eligible States; and
``(B) the quotient obtained by dividing--
``(i) the amount equal to the average of the 3 highest 50-
percent payments made to each eligible county during the
eligibility period; by
``(ii) the amount equal to the sum of the averages
calculated under clause (i) and paragraph (2)(B)(i) for all
eligible counties in all eligible States during the
eligibility period.
``(10) 50-percent payment.--The term `50-percent payment'
means the payment that is the sum of the 50-percent share
otherwise paid to a county pursuant to title II of the Act of
August 28, 1937 (chapter 876; 50 Stat. 875; 43 U.S.C. 1181f),
and the payment made to a county pursuant to the Act of May
24, 1939 (chapter 144; 53 Stat. 753; 43 U.S.C. 1181f-1 et
seq.).
``(11) Full funding amount.--The term `full funding amount'
means--
``(A) $526,079,656 for fiscal year 2007;
``(B) $520,000,000 for fiscal year 2008; and
``(C) for fiscal year 2009 and each fiscal year thereafter,
the amount that is equal to 90 percent of the full funding
amount for the preceding fiscal year.
``(12) Income adjustment.--The term `income adjustment'
means the square of the quotient obtained by dividing--
``(A) the per capita personal income for each eligible
county; by
``(B) the median per capita personal income of all eligible
counties.
``(13) Per capita personal income.--The term `per capita
personal income' means the most recent per capita personal
income data, as determined by the Bureau of Economic
Analysis.
``(14) Safety net payments.--The term `safety net payments'
means the special payment amounts paid to States and counties
required by section 13982 or 13983 of the Omnibus Budget
Reconciliation Act of 1993 (Public Law 103-66; 16 U.S.C. 500
note; 43 U.S.C. 1181f note).
``(15) Secretary concerned.--The term `Secretary concerned'
means--
``(A) the Secretary of Agriculture or the designee of the
Secretary of Agriculture with respect to the Federal land
described in paragraph (7)(A); and
``(B) the Secretary of the Interior or the designee of the
Secretary of the Interior with respect to the Federal land
described in paragraph (7)(B).
``(16) State payment.--The term `State payment' means the
payment for an eligible State calculated under section
101(a).
``(17) 25-Percent payment.--The term `25-percent payment'
means the payment to States required by the sixth paragraph
under the heading of `forest service' in the Act of May 23,
1908 (35 Stat. 260; 16 U.S.C. 500), and section 13 of the Act
of March 1, 1911 (36 Stat. 963; 16 U.S.C. 500).

``TITLE I--SECURE PAYMENTS FOR STATES AND COUNTIES CONTAINING FEDERAL
LAND

``SEC. 101. SECURE PAYMENTS FOR STATES CONTAINING FEDERAL
LAND.

``(a) State Payment.--For each of fiscal years 2007 through
2011, the Secretary of Agriculture shall calculate for each
eligible State an amount equal to the sum of the products
obtained by multiplying--
``(1) the adjusted share for each eligible county within
the eligible State; by
``(2) the full funding amount for the fiscal year.
``(b) County Payment.--For each of fiscal years 2007
through 2011, the Secretary of the Interior shall calculate
for each eligible county that received a 50-percent payment
during the eligibility period an amount equal to the product
obtained by multiplying--
``(1) the 50-percent adjusted share for the eligible
county; by
``(2) the full funding amount for the fiscal year.

``SEC. 102. PAYMENTS TO STATES AND COUNTIES.

``(a) Payment Amounts.--Except as provided in section 103,
the Secretary of the Treasury shall pay to--
``(1) a State an amount equal to the sum of the amounts
elected under subsection (b) by each county within the State
for--
``(A) if the county is eligible for the 25-percent payment,
the share of the 25-percent payment; or
``(B) the share of the State payment of the eligible
county; and
``(2) a county an amount equal to the amount elected under
subsection (b) by each county for--
``(A) if the county is eligible for the 50-percent payment,
the 50-percent payment; or
``(B) the county payment for the eligible county.
``(b) Election to Receive Payment Amount.--
``(1) Election; submission of results.--
``(A) In general.--The election to receive a share of the
State payment, the county payment, a share of the State
payment and the county payment, a share of the 25-percent
payment, the 50-percent payment, or a share of the 25-percent
payment and the 50-percent payment, as applicable, shall be
made at the discretion of each affected county by August 1,
2007, and August 1 of each second fiscal year thereafter, in
accordance with paragraph (2), and transmitted to the
Secretary concerned by the Governor of each eligible State.
``(B) Failure to transmit.--If an election for an affected
county is not transmitted to the Secretary concerned by the
date specified under subparagraph (A), the affected county
shall be considered to have elected to receive a share of the
State payment, the county payment, or a share of the State
payment and the county payment, as applicable.
``(2) Duration of election.--
``(A) In general.--A county election to receive a share of
the 25-percent payment or 50-percent payment, as applicable
shall be effective for 2 fiscal years.
``(B) Full funding amount.--If a county elects to receive a
share of the State payment or the county payment, the
election shall be effective for all subsequent fiscal years
through fiscal year 2011.
``(3) Source of payment amounts.--The payment to an
eligible State or eligible county under this section for a
fiscal year shall be derived from--
``(A) any revenues, fees, penalties, or miscellaneous
receipts, exclusive of deposits to any relevant trust fund,
special account, or permanent operating funds, received by
the Federal Government from activities by the Bureau of Land
Management or the Forest Service on the applicable Federal
land; and
``(B) to the extent of any shortfall, out of any amounts in
the Treasury of the United States not otherwise appropriated.
``(c) Distribution and Expenditure of Payments.--
``(1) Distribution method.--A State that receives a payment
under subsection (a) for Federal land described in section
3(7)(A) shall distribute the appropriate payment amount among
the appropriate counties in the State in accordance with--
``(A) the Act of May 23, 1908 (16 U.S.C. 500); and
``(B) section 13 of the Act of March 1, 1911 (36 Stat. 963;
16 U.S.C. 500).
``(2) Expenditure purposes.--Subject to subsection (d),
payments received by a State under subsection (a) and
distributed to counties in accordance with paragraph (1)
shall be expended as required by the laws referred to in
paragraph (1).
``(d) Expenditure Rules for Eligible Counties.--
``(1) Allocations.--
``(A) Use of portion in same manner as 25-percent payment
or 50-percent payment, as applicable.--Except as provided in
paragraph (3)(B), if an eligible county elects to receive its
share of the State payment or the county payment, not less
than 80 percent, but not more than 85 percent, of the funds
shall be expended in the same manner in which the 25-percent
payments or 50-percent payment, as applicable, are required
to be expended.
``(B) Election as to use of balance.--Except as provided in
subparagraph (C), an eligible county shall elect to do 1 or
more of the following with the balance of any funds not
expended pursuant to subparagraph (A):
``(i) Reserve any portion of the balance for projects in
accordance with title II.
``(ii) Reserve not more than 7 percent of the total share
for the eligible county of the State payment or the county
payment for projects in accordance with title III.
``(iii) Return the portion of the balance not reserved
under clauses (i) and (ii) to the Treasury of the United
States.
``(C) Counties with modest distributions.--In the case of
each eligible county to which more than $100,000, but less
than

[[Page S3894]]

$350,000, is distributed for any fiscal year pursuant to
either or both of paragraphs (1)(B) and (2)(B) of subsection
(a), the eligible county, with respect to the balance of any
funds not expended pursuant to subparagraph (A) for that
fiscal year, shall--
``(i) reserve any portion of the balance for--

``(I) carrying out projects under title II;
``(II) carrying out projects under title III; or
``(III) a combination of the purposes described in
subclauses (I) and (II); or

``(ii) return the portion of the balance not reserved under
clause (i) to the Treasury of the United States.
``(2) Distribution of funds.--
``(A) In general.--Funds reserved by an eligible county
under subparagraph (B)(i) or (C)(i)(I) of paragraph (1) shall
be deposited in a special account in the Treasury of the
United States.
``(B) Availability.--Amounts deposited under subparagraph
(A) shall--
``(i) be available for expenditure by the Secretary
concerned, without further appropriation; and
``(ii) remain available until expended in accordance with
title II.
``(3) Election.--
``(A) Notification.--
``(i) In general.--An eligible county shall notify the
Secretary concerned of an election by the eligible county
under this subsection not later than September 30 of each
fiscal year.
``(ii) Failure to elect.--Except as provided in
subparagraph (B), if the eligible county fails to make an
election by the date specified in clause (i), the eligible
county shall--

``(I) be considered to have elected to expend 85 percent of
the funds in accordance with paragraph (1)(A); and
``(II) return the balance to the Treasury of the United
States.

``(B) Counties with minor distributions.--In the case of
each eligible county to which less than $100,000 is
distributed for any fiscal year pursuant to either or both of
paragraphs (1)(B) and (2)(B) of subsection (a), the eligible
county may elect to expend all the funds in the same manner
in which the 25-percent payments or 50-percent payments, as
applicable, are required to be expended.
``(e) Time for Payment.--The payments required under this
section for a fiscal year shall be made as soon as
practicable after the end of that fiscal year.

``SEC. 103. TRANSITION PAYMENTS TO THE STATES OF CALIFORNIA,
OREGON, AND WASHINGTON.

``(a) Definitions.--In this section:
``(1) Adjusted amount.--The term `adjusted amount' means,
with respect to a covered State--
``(A) for fiscal year 2007--
``(i) the sum of the amounts paid in fiscal year 2006 under
section 102(a)(2) (as in effect on September 29, 2006) for
the eligible counties in the covered State that have elected
under section 102(b) to receive a share of the State payment
for fiscal year 2007; and
``(ii) the sum of the amounts paid in fiscal year 2006
under section 103(a)(2) (as in effect on September 29, 2006)
for the eligible counties in the State of Oregon that have
elected under section 102(b) to receive the county payment
for fiscal year 2007;
``(B) for fiscal year 2008, 90 percent of--
``(i) the sum of the amounts paid in fiscal year 2006 under
section 102(a)(2) (as in effect on September 29, 2006) for
the eligible counties in the covered State that have elected
under section 102(b) to receive a share of the State payment
for fiscal year 2008; and
``(ii) the sum of the amounts paid in fiscal year 2006
under section 103(a)(2) (as in effect on September 29, 2006)
for the eligible counties in the State of Oregon that have
elected under section 102(b) to receive the county payment
for fiscal year 2008;
``(C) for fiscal year 2009, 81 percent of--
``(i) the sum of the amounts paid in fiscal year 2006 under
section 102(a)(2) (as in effect on September 29, 2006) for
the eligible counties in the covered State that have elected
under section 102(b) to receive a share of the State payment
for fiscal year 2009; and
``(ii) the sum of the amounts paid in fiscal year 2006
under section 103(a)(2) (as in effect on September 29, 2006)
for the eligible counties in the State of Oregon that have
elected under section 102(b) to receive the county payment
for fiscal year 2009; and
``(D) for fiscal year 2010, 73 percent of--
``(i) the sum of the amounts paid in fiscal year 2006 under
section 102(a)(2) (as in effect on September 29, 2006) for
the eligible counties in the covered State that have elected
under section 102(b) to receive a share of the State payment
for fiscal year 2010; and
``(ii) the sum of the amounts paid in fiscal year 2006
under section 103(a)(2) (as in effect on September 29, 2006)
for the eligible counties in the State of Oregon that have
elected under section 102(b) to receive the county payment
for fiscal year 2010.
``(2) Covered state.--The term `covered State' means each
of the States of California, Oregon, and Washington.
``(b) Transition Payments.--For each of fiscal years 2007
through 2010, in lieu of the payment amounts that otherwise
would have been made under paragraphs (1)(B) and (2)(B) of
section 102(a), the Secretary of the Treasury shall pay the
adjusted amount to each covered State and the eligible
counties within the covered State, as applicable, from funds
in the Treasury of the United States not otherwise
appropriated.
``(c) Distribution of Adjusted Amount in Oregon and
Washington.--It is the intent of Congress that the method of
distributing the payments under subsection (b) among the
counties in the States of Oregon and Washington for each of
fiscal years 2007 through 2010 be in the same proportion that
the payments were distributed to the eligible counties in
fiscal year 2006.
``(d) Distribution of Payments in California.--The
following payments shall be distributed among the eligible
counties in the State of California in the same proportion
that payments under section 102(a)(2) (as in effect on
September 29, 2006) were distributed to the eligible counties
in fiscal year 2006:
``(1) Payments to the State of California under subsection
(b).
``(2) The shares of the eligible counties of the State
payment for California under section 102 for fiscal year
2011.
``(e) Treatment of Payments.--For purposes of this Act, any
payment made under subsection (b) shall be considered to be a
payment made under section 102(a).

``TITLE II--SPECIAL PROJECTS ON FEDERAL LAND

``SEC. 201. DEFINITIONS.

``In this title:
``(1) Participating county.--The term `participating
county' means an eligible county that elects under section
102(d) to expend a portion of the Federal funds received
under section 102 in accordance with this title.
``(2) Project funds.--The term `project funds' means all
funds an eligible county elects under section 102(d) to
reserve for expenditure in accordance with this title.
``(3) Resource advisory committee.--The term `resource
advisory committee' means--
``(A) an advisory committee established by the Secretary
concerned under section 205; or
``(B) an advisory committee determined by the Secretary
concerned to meet the requirements of section 205.
``(4) Resource management plan.--The term `resource
management plan' means--
``(A) a land use plan prepared by the Bureau of Land
Management for units of the Federal land described in section
3(7)(B) pursuant to section 202 of the Federal Land Policy
and Management Act of 1976 (43 U.S.C. 1712); or
``(B) a land and resource management plan prepared by the
Forest Service for units of the National Forest System
pursuant to section 6 of the Forest and Rangeland Renewable
Resources Planning Act of 1974l (16 U.S.C. 1604).

``SEC. 202. GENERAL LIMITATION ON USE OF PROJECT FUNDS.

``(a) Limitation.--Project funds shall be expended solely
on projects that meet the requirements of this title.
``(b) Authorized Uses.--Project funds may be used by the
Secretary concerned for the purpose of entering into and
implementing cooperative agreements with willing Federal
agencies, State and local governments, private and nonprofit
entities, and landowners for protection, restoration, and
enhancement of fish and wildlife habitat, and other resource
objectives consistent with the purposes of this Act on
Federal land and on non-Federal land where projects would
benefit the resources on Federal land.

``SEC. 203. SUBMISSION OF PROJECT PROPOSALS.

``(a) Submission of Project Proposals to Secretary
Concerned.--
``(1) Projects funded using project funds.--Not later than
September 30 for fiscal year 2007, and each September 30
thereafter for each succeeding fiscal year through fiscal
year 2011, each resource advisory committee shall submit to
the Secretary concerned a description of any projects that
the resource advisory committee proposes the Secretary
undertake using any project funds reserved by eligible
counties in the area in which the resource advisory committee
has geographic jurisdiction.
``(2) Projects funded using other funds.--A resource
advisory committee may submit to the Secretary concerned a
description of any projects that the committee proposes the
Secretary undertake using funds from State or local
governments, or from the private sector, other than project
funds and funds appropriated and otherwise available to do
similar work.
``(3) Joint projects.--Participating counties or other
persons may propose to pool project funds or other funds,
described in paragraph (2), and jointly propose a project or
group of projects to a resource advisory committee
established under section 205.
``(b) Required Description of Projects.--In submitting
proposed projects to the Secretary concerned under subsection
(a), a resource advisory committee shall include in the
description of each proposed project the following
information:
``(1) The purpose of the project and a description of how
the project will meet the purposes of this title.
``(2) The anticipated duration of the project.
``(3) The anticipated cost of the project.
``(4) The proposed source of funding for the project,
whether project funds or other funds.
``(5)(A) Expected outcomes, including how the project will
meet or exceed desired ecological conditions, maintenance
objectives, or stewardship objectives.
``(B) An estimate of the amount of any timber, forage, and
other commodities and other economic activity, including jobs
generated, if any, anticipated as part of the project.

[[Page S3895]]

``(6) A detailed monitoring plan, including funding needs
and sources, that--
``(A) tracks and identifies the positive or negative
impacts of the project, implementation, and provides for
validation monitoring; and
``(B) includes an assessment of the following:
``(i) Whether or not the project met or exceeded desired
ecological conditions; created local employment or training
opportunities, including summer youth jobs programs such as
the Youth Conservation Corps where appropriate.
``(ii) Whether the project improved the use of, or added
value to, any products removed from land consistent with the
purposes of this title.
``(7) An assessment that the project is to be in the public
interest.
``(c) Authorized Projects.--Projects proposed under
subsection (a) shall be consistent with section 2.

``SEC. 204. EVALUATION AND APPROVAL OF PROJECTS BY SECRETARY
CONCERNED.

``(a) Conditions for Approval of Proposed Project.--The
Secretary concerned may make a decision to approve a project
submitted by a resource advisory committee under section 203
only if the proposed project satisfies each of the following
conditions:
``(1) The project complies with all applicable Federal laws
(including regulations).
``(2) The project is consistent with the applicable
resource management plan and with any watershed or subsequent
plan developed pursuant to the resource management plan and
approved by the Secretary concerned.
``(3) The project has been approved by the resource
advisory committee in accordance with section 205, including
the procedures issued under subsection (e) of that section.
``(4) A project description has been submitted by the
resource advisory committee to the Secretary concerned in
accordance with section 203.
``(5) The project will improve the maintenance of existing
infrastructure, implement stewardship objectives that enhance
forest ecosystems, and restore and improve land health and
water quality.
``(b) Environmental Reviews.--
``(1) Request for payment by county.--The Secretary
concerned may request the resource advisory committee
submitting a proposed project to agree to the use of project
funds to pay for any environmental review, consultation, or
compliance with applicable environmental laws required in
connection with the project.
``(2) Conduct of environmental review.--If a payment is
requested under paragraph (1) and the resource advisory
committee agrees to the expenditure of funds for this
purpose, the Secretary concerned shall conduct environmental
review, consultation, or other compliance responsibilities in
accordance with Federal laws (including regulations).
``(3) Effect of refusal to pay.--
``(A) In general.--If a resource advisory committee does
not agree to the expenditure of funds under paragraph (1),
the project shall be deemed withdrawn from further
consideration by the Secretary concerned pursuant to this
title.
``(B) Effect of withdrawal.--A withdrawal under
subparagraph (A) shall be deemed to be a rejection of the
project for purposes of section 207(c).
``(c) Decisions of Secretary Concerned.--
``(1) Rejection of projects.--
``(A) In general.--A decision by the Secretary concerned to
reject a proposed project shall be at the sole discretion of
the Secretary concerned.
``(B) No administrative appeal or judicial review.--
Notwithstanding any other provision of law, a decision by the
Secretary concerned to reject a proposed project shall not be
subject to administrative appeal or judicial review.
``(C) Notice of rejection.--Not later than 30 days after
the date on which the Secretary concerned makes the rejection
decision, the Secretary concerned shall notify in writing the
resource advisory committee that submitted the proposed
project of the rejection and the reasons for rejection.
``(2) Notice of project approval.--The Secretary concerned
shall publish in the Federal Register notice of each project
approved under subsection (a) if the notice would be required
had the project originated with the Secretary.
``(d) Source and Conduct of Project.--Once the Secretary
concerned accepts a project for review under section 203, the
acceptance shall be deemed a Federal action for all purposes.
``(e) Implementation of Approved Projects.--
``(1) Cooperation.--Notwithstanding chapter 63 of title 31,
United States Code, using project funds the Secretary
concerned may enter into contracts, grants, and cooperative
agreements with States and local governments, private and
nonprofit entities, and landowners and other persons to
assist the Secretary in carrying out an approved project.
``(2) Best value contracting.--
``(A) In general.--For any project involving a contract
authorized by paragraph (1) the Secretary concerned may elect
a source for performance of the contract on a best value
basis.
``(B) Factors.--The Secretary concerned shall determine
best value based on such factors as--
``(i) the technical demands and complexity of the work to
be done;
``(ii)(I) the ecological objectives of the project; and
``(II) the sensitivity of the resources being treated;
``(iii) the past experience by the contractor with the type
of work being done, using the type of equipment proposed for
the project, and meeting or exceeding desired ecological
conditions; and
``(iv) the commitment of the contractor to hiring highly
qualified workers and local residents.
``(3) Merchantable timber contracting pilot program.--
``(A) Establishment.--The Secretary concerned shall
establish a pilot program to implement a certain percentage
of approved projects involving the sale of merchantable
timber using separate contracts for--
``(i) the harvesting or collection of merchantable timber;
and
``(ii) the sale of the timber.
``(B) Annual percentages.--Under the pilot program, the
Secretary concerned shall ensure that, on a nationwide basis,
not less than the following percentage of all approved
projects involving the sale of merchantable timber are
implemented using separate contracts:
``(i) For fiscal year 2007, 25 percent.
``(ii) For fiscal year 2008, 35 percent.
``(iii) For fiscal year 2009, 45 percent.
``(iv) For each of fiscal years 2010 and 2011, 50 percent.
``(C) Inclusion in pilot program.--The decision whether to
use separate contracts to implement a project involving the
sale of merchantable timber shall be made by the Secretary
concerned after the approval of the project under this title.
``(D) Assistance.--
``(i) In general.--The Secretary concerned may use funds
from any appropriated account available to the Secretary for
the Federal land to assist in the administration of projects
conducted under the pilot program.
``(ii) Maximum amount of assistance.--The total amount
obligated under this subparagraph may not exceed $1,000,000
for any fiscal year during which the pilot program is in
effect.
``(E) Review and report.--
``(i) Initial report.--Not later than September 30, 2009,
the Comptroller General shall submit to the Committees on
Agriculture, Nutrition, and Forestry and Energy and Natural
Resources of the Senate and the Committees on Agriculture and
Natural Resources of the House of Representatives a report
assessing the pilot program.
``(ii) Annual report.--The Secretary concerned shall submit
to the Committees on Agriculture, Nutrition, and Forestry and
Energy and Natural Resources of the Senate and the Committees
on Agriculture and Natural Resources of the House of
Representatives an annual report describing the results of
the pilot program.
``(f) Requirements for Project Funds.--The Secretary shall
ensure that at least 50 percent of all project funds be used
for projects that are primarily dedicated--
``(1) to road maintenance, decommissioning, or
obliteration; or
``(2) to restoration of streams and watersheds.

``SEC. 205. RESOURCE ADVISORY COMMITTEES.

``(a) Establishment and Purpose of Resource Advisory
Committees.--
``(1) Establishment.--The Secretary concerned shall
establish and maintain resource advisory committees to
perform the duties in subsection (b), except as provided in
paragraph (4).
``(2) Purpose.--The purpose of a resource advisory
committee shall be--
``(A) to improve collaborative relationships; and
``(B) to provide advice and recommendations to the land
management agencies consistent with the purposes of this
title.
``(3) Access to resource advisory committees.--To ensure
that each unit of Federal land has access to a resource
advisory committee, and that there is sufficient interest in
participation on a committee to ensure that membership can be
balanced in terms of the points of view represented and the
functions to be performed, the Secretary concerned may,
establish resource advisory committees for part of, or 1 or
more, units of Federal land.
``(4) Existing advisory committees.--
``(A) In general.--An advisory committee that meets the
requirements of this section, an advisory committee
established before the date of enactment of this Act, or an
advisory committee determined by the Secretary concerned to
meet the requirements of this section before the date of
enactment of this Act may be deemed by the Secretary
concerned to be a resource advisory committee for the
purposes of this title.
``(B) Charter.--A charter for a committee described in
subparagraph (A) that was filed on or before September 29,
2006, shall be considered to be filed for purposes of this
Act.
``(C) Bureau of land management advisory committees.--The
Secretary of the Interior may deem a resource advisory
committee meeting the requirements of subpart 1784 of part
1780 of title 43, Code of Federal Regulations, as a resource
advisory committee for the purposes of this title.
``(b) Duties.--A resource advisory committee shall--
``(1) review projects proposed under this title by
participating counties and other persons;

[[Page S3896]]

``(2) propose projects and funding to the Secretary
concerned under section 203;
``(3) provide early and continuous coordination with
appropriate land management agency officials in recommending
projects consistent with purposes of this Act under this
title;
``(4) provide frequent opportunities for citizens,
organizations, tribes, land management agencies, and other
interested parties to participate openly and meaningfully,
beginning at the early stages of the project development
process under this title;
``(5)(A) monitor projects that have been approved under
section 204; and
``(B) advise the designated Federal official on the
progress of the monitoring efforts under subparagraph (A);
and
``(6) make recommendations to the Secretary concerned for
any appropriate changes or adjustments to the projects being
monitored by the resource advisory committee.
``(c) Appointment by the Secretary.--
``(1) Appointment and term.--
``(A) In general.--The Secretary concerned, shall appoint
the members of resource advisory committees for a term of 4
years beginning on the date of appointment.
``(B) Reappointment.--The Secretary concerned may reappoint
members to subsequent 4-year terms.
``(2) Basic requirements.--The Secretary concerned shall
ensure that each resource advisory committee established
meets the requirements of subsection (d).
``(3) Initial appointment.--Not later than 180 days after
the date of the enactment of this Act, the Secretary
concerned shall make initial appointments to the resource
advisory committees.
``(4) Vacancies.--The Secretary concerned shall make
appointments to fill vacancies on any resource advisory
committee as soon as practicable after the vacancy has
occurred.
``(5) Compensation.--Members of the resource advisory
committees shall not receive any compensation.
``(d) Composition of Advisory Committee.--
``(1) Number.--Each resource advisory committee shall be
comprised of 15 members.
``(2) Community interests represented.--Committee members
shall be representative of the interests of the following 3
categories:
``(A) 5 persons that--
``(i) represent organized labor or non-timber forest
product harvester groups;
``(ii) represent developed outdoor recreation, off highway
vehicle users, or commercial recreation activities;
``(iii) represent--

``(I) energy and mineral development interests; or
``(II) commercial or recreational fishing interests;

``(iv) represent the commercial timber industry; or
``(v) hold Federal grazing or other land use permits, or
represent nonindustrial private forest land owners, within
the area for which the committee is organized.
``(B) 5 persons that represent--
``(i) nationally recognized environmental organizations;
``(ii) regionally or locally recognized environmental
organizations;
``(iii) dispersed recreational activities;
``(iv) archaeological and historical interests; or
``(v) nationally or regionally recognized wild horse and
burro interest groups, wildlife or hunting organizations, or
watershed associations.
``(C) 5 persons that--
``(i) hold State elected office (or a designee);
``(ii) hold county or local elected office;
``(iii) represent American Indian tribes within or adjacent
to the area for which the committee is organized;
``(iv) are school officials or teachers; or
``(v) represent the affected public at large.
``(3) Balanced representation.--In appointing committee
members from the 3 categories in paragraph (2), the Secretary
concerned shall provide for balanced and broad representation
from within each category.
``(4) Geographic distribution.--The members of a resource
advisory committee shall reside within the State in which the
committee has jurisdiction and, to extent practicable, the
Secretary concerned shall ensure local representation in each
category in paragraph (2).
``(5) Chairperson.--A majority on each resource advisory
committee shall select the chairperson of the committee.
``(e) Approval Procedures.--
``(1) In general.--Subject to paragraph (3), each resource
advisory committee shall establish procedures for proposing
projects to the Secretary concerned under this title.
``(2) Quorum.--A quorum must be present to constitute an
official meeting of the committee.
``(3) Approval by majority of members.--A project may be
proposed by a resource advisory committee to the Secretary
concerned under section 203(a), if the project has been
approved by a majority of members of the committee from each
of the 3 categories in subsection (d)(2).
``(f) Other Committee Authorities and Requirements.--
``(1) Staff assistance.--A resource advisory committee may
submit to the Secretary concerned a request for periodic
staff assistance from Federal employees under the
jurisdiction of the Secretary.
``(2) Meetings.--All meetings of a resource advisory
committee shall be announced at least 1 week in advance in a
local newspaper of record and shall be open to the public.
``(3) Records.--A resource advisory committee shall
maintain records of the meetings of the committee and make
the records available for public inspection.

``SEC. 206. USE OF PROJECT FUNDS.

``(a) Agreement Regarding Schedule and Cost of Project.--
``(1) Agreement between parties.--The Secretary concerned
may carry out a project submitted by a resource advisory
committee under section 203(a) using project funds or other
funds described in section 203(a)(2), if, as soon as
practicable after the issuance of a decision document for the
project and the exhaustion of all administrative appeals and
judicial review of the project decision, the Secretary
concerned and the resource advisory committee enter into an
agreement addressing, at a minimum, the following:
``(A) The schedule for completing the project.
``(B) The total cost of the project, including the level of
agency overhead to be assessed against the project.
``(C) For a multiyear project, the estimated cost of the
project for each of the fiscal years in which it will be
carried out.
``(D) The remedies for failure of the Secretary concerned
to comply with the terms of the agreement consistent with
current Federal law.
``(2) Limited use of federal funds.--The Secretary
concerned may decide, at the sole discretion of the Secretary
concerned, to cover the costs of a portion of an approved
project using Federal funds appropriated or otherwise
available to the Secretary for the same purposes as the
project.
``(b) Transfer of Project Funds.--
``(1) Initial transfer required.--As soon as practicable
after the agreement is reached under subsection (a) with
regard to a project to be funded in whole or in part using
project funds, or other funds described in section 203(a)(2),
the Secretary concerned shall transfer to the applicable unit
of National Forest System land or Bureau of Land Management
District an amount of project funds equal to--
``(A) in the case of a project to be completed in a single
fiscal year, the total amount specified in the agreement to
be paid using project funds, or other funds described in
section 203(a)(2); or
``(B) in the case of a multiyear project, the amount
specified in the agreement to be paid using project funds, or
other funds described in section 203(a)(2) for the first
fiscal year.
``(2) Condition on project commencement.--The unit of
National Forest System land or Bureau of Land Management
District concerned, shall not commence a project until the
project funds, or other funds described in section 203(a)(2)
required to be transferred under paragraph (1) for the
project, have been made available by the Secretary concerned.
``(3) Subsequent transfers for multiyear projects.--
``(A) In general.--For the second and subsequent fiscal
years of a multiyear project to be funded in whole or in part
using project funds, the unit of National Forest System land
or Bureau of Land Management District concerned shall use the
amount of project funds required to continue the project in
that fiscal year according to the agreement entered into
under subsection (a).
``(B) Suspension of work.--The Secretary concerned shall
suspend work on the project if the project funds required by
the agreement in the second and subsequent fiscal years are
not available.

``SEC. 207. AVAILABILITY OF PROJECT FUNDS.

``(a) Submission of Proposed Projects to Obligate Funds.--
By September 30 of each fiscal year through fiscal year 2011,
a resource advisory committee shall submit to the Secretary
concerned pursuant to section 203(a)(1) a sufficient number
of project proposals that, if approved, would result in the
obligation of at least the full amount of the project funds
reserved by the participating county in the preceding fiscal
year.
``(b) Use or Transfer of Unobligated Funds.--Subject to
section 208, if a resource advisory committee fails to comply
with subsection (a) for a fiscal year, any project funds
reserved by the participating county in the preceding fiscal
year and remaining unobligated shall be available for use as
part of the project submissions in the next fiscal year.
``(c) Effect of Rejection of Projects.--Subject to section
208, any project funds reserved by a participating county in
the preceding fiscal year that are unobligated at the end of
a fiscal year because the Secretary concerned has rejected
one or more proposed projects shall be available for use as
part of the project submissions in the next fiscal year.
``(d) Effect of Court Orders.--
``(1) In general.--If an approved project under this Act is
enjoined or prohibited by a Federal court, the Secretary
concerned shall return the unobligated project funds related
to the project to the participating county or counties that
reserved the funds.
``(2) Expenditure of funds.--The returned funds shall be
available for the county to expend in the same manner as the
funds reserved by the county under subparagraph (B) or (C)(i)
of section 102(d)(1).

``SEC. 208. TERMINATION OF AUTHORITY.

``(a) In General.--The authority to initiate projects under
this title shall terminate on September 30, 2011.

[[Page S3897]]

``(b) Deposits in Treasury.--Any project funds not
obligated by September 30, 2012, shall be deposited in the
Treasury of the United States.

``TITLE III--COUNTY FUNDS

``SEC. 301. DEFINITIONS.

``In this title:
``(1) County funds.--The term `county funds' means all
funds an eligible county elects under section 102(d) to
reserve for expenditure in accordance with this title.
``(2) Participating county.--The term `participating
county' means an eligible county that elects under section
102(d) to expend a portion of the Federal funds received
under section 102 in accordance with this title.

``SEC. 302. USE.

``(a) Authorized Uses.--A participating county, including
any applicable agencies of the participating county, shall
use county funds, in accordance with this title, only--
``(1) to carry out activities under the Firewise
Communities program to provide to homeowners in fire-
sensitive ecosystems education on, and assistance with
implementing, techniques in home siting, home construction,
and home landscaping that can increase the protection of
people and property from wildfires;
``(2) to reimburse the participating county for search and
rescue and other emergency services, including firefighting,
that are--
``(A) performed on Federal land after the date on which the
use was approved under subsection (b);
``(B) paid for by the participating county; and
``(3) to develop community wildfire protection plans in
coordination with the appropriate Secretary concerned.
``(b) Proposals.--A participating county shall use county
funds for a use described in subsection (a) only after a 45-
day public comment period, at the beginning of which the
participating county shall--
``(1) publish in any publications of local record a
proposal that describes the proposed use of the county funds;
and
``(2) submit the proposal to any resource advisory
committee established under section 205 for the participating
county.

``SEC. 303. CERTIFICATION.

``(a) In General.--Not later than February 1 of the year
after the year in which any county funds were expended by a
participating county, the appropriate official of the
participating county shall submit to the Secretary concerned
a certification that the county funds expended in the
applicable year have been used for the uses authorized under
section 302(a), including a description of the amounts
expended and the uses for which the amounts were expended.
``(b) Review.--The Secretary concerned shall review the
certifications submitted under subsection (a) as the
Secretary concerned determines to be appropriate.

``SEC. 304. TERMINATION OF AUTHORITY.

``(a) In General.--The authority to initiate projects under
this title terminates on September 30, 2011.
``(b) Availability.--Any county funds not obligated by
September 30, 2012, shall be deposited in the Treasury of the
United States.

``TITLE IV--MISCELLANEOUS PROVISIONS

``SEC. 401. REGULATIONS.

``The Secretary of Agriculture and the Secretary of the
Interior shall jointly issue regulations to carry out the
purposes of this Act.

``SEC. 402. AUTHORIZATION OF APPROPRIATIONS.

``(a) In General.--There are authorized to be appropriated
such sums as are necessary to carry out this Act for each of
fiscal years 2007 through 2011.
``(b) Emergency Designation.--Of the amounts authorized to
be appropriated under subsection (a) for fiscal year 2007,
$425,000,000 is designated as an emergency requirement
pursuant to section 402 of H. Con. Res. 95 (109th Congress).

``SEC. 403. TREATMENT OF FUNDS AND REVENUES.

``(a) Relation to Other Appropriations.--Funds made
available under section 402 and funds made available to a
Secretary concerned under section 206 shall be in addition to
any other annual appropriations for the Forest Service and
the Bureau of Land Management.
``(b) Deposit of Revenues and Other Funds.--All revenues
generated from projects pursuant to title II, including any
interest accrued from the revenues, shall be deposited in the
Treasury of the United States.''.
(b) Forest Receipt Payments to Eligible States and
Counties.--
(1) Act of may 23, 1908.--The sixth paragraph under the
heading ``forest service'' in the Act of May 23, 1908 (16
U.S.C. 500) is amended in the first sentence by striking
``twenty-five percentum'' and all that follows through
``shall be paid'' and inserting the following: ``an amount
equal to the annual average of 25 percent of all amounts
received for the applicable fiscal year and each of the
preceding 6 fiscal years from each national forest shall be
paid''.
(2) Weeks law.--Section 13 of the Act of March 1, 1911
(commonly known as the ``Weeks Law'') (16 U.S.C. 500) is
amended in the first sentence by striking ``twenty-five
percentum'' and all that follows through ``shall be paid''
and inserting the following: ``an amount equal to the annual
average of 25 percent of all amounts received for the
applicable fiscal year and each of the preceding 6 fiscal
years from each national forest shall be paid''.
(c) Payments in Lieu of Taxes.--
(1) In general.--Section 6906 of title 31, United States
Code, is amended to read as follows:

``Sec. 6906. Funding

``For each of fiscal years 2008 through 2012, such sums as
are authorized under this chapter shall be made available to
the Secretary of the Interior, out of any amounts in the
Treasury not otherwise appropriated, for obligation or
expenditure in accordance with this chapter.''.
(2) Conforming amendment.--The table of sections for
chapter 69 of title 31, United States Code, is amended by
striking the item relating to section 6906 and inserting the
following:

``6906. Funding.''.
(d) Increase in Information Return Penalties.--
(1) Failure to file correct information returns.--
(A) In general.--Section 6721(a)(1) of the Internal Revenue
Code of 1986 is amended--
(i) by striking ``$50'' and inserting ``$250'', and
(ii) by striking ``$250,000'' and inserting ``$3,000,000''.
(B) Reduction where correction in specified period.--
(i) Correction within 30 days.--Section 6721(b)(1) of such
Code is amended--

(I) by striking ``$15'' and inserting ``$50'',
(II) by striking ``$50'' and inserting ``$250'', and
(III) by striking ``$75,000'' and inserting ``$500,000''.

(ii) Failures corrected on or before august 1.--Section
6721(b)(2) of such Code is amended--

(I) by striking ``$30'' and inserting ``$100'',
(II) by striking ``$50'' and inserting ``$250'', and
(III) by striking ``$150,000'' and inserting
``$1,500,000''.

(C) Lower limitation for persons with gross receipts of not
more than $5,000,000.--Section 6721(d)(1) of such Code is
amended--
(i) in subparagraph (A)--

(I) by striking ``$100,000'' and inserting ``$1,000,000'',
and
(II) by striking ``$250,000'' and inserting ``$3,000,000'',

(ii) in subparagraph (B)--

(I) by striking ``$25,000'' and inserting ``$175,000'', and
(II) by striking ``$75,000'' and inserting ``$500,000'',
and

(iii) in subparagraph (C)--

(I) by striking ``$50,000'' and inserting ``$500,000'', and
(II) by striking ``$150,000'' and inserting ``$1,500,000''.

(D) Penalty in case of intentional disregard.--Section
6721(e) of such Code is amended--
(i) by striking ``$100'' in paragraph (2) and inserting
``$500'',
(ii) by striking ``$250,000'' in paragraph (3)(A) and
inserting ``$3,000,000''.
(2) Failure to furnish correct payee statements.--
(A) In general.--Section 6722(a) of the Internal Revenue
Code of 1986 is amended--
(i) by striking ``$50'' and inserting ``$250'', and
(ii) by striking ``$100,000'' and inserting ``$1,000,000''.
(B) Penalty in case of intentional disregard.--Section
6722(c) of such Code is amended--
(i) by striking ``$100'' in paragraph (1) and inserting
``$500'', and
(ii) by striking ``$100,000'' in paragraph (2)(A) and
inserting ``$1,000,000''.
(3) Failure to comply with other information reporting
requirements.--Section 6723 of the Internal Revenue Code of
1986 is amended--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$100,000'' and inserting ``$1,000,000''.
(4) Effective date.--The amendments made by this section
shall apply with respect to information returns required to
be filed on or after January 1, 2008.
(e) Repeal of Suspension of Certain Penalties and
Interest.--
(1) In general.--Section 6404 of the Internal Revenue Code
of 1986 is amended by striking subsection (g).
(2) Effective date.--
(A) In general.--Except as provided in paragraph (2), the
amendment made by this section shall apply to notices
provided by the Secretary of the Treasury, or his delegate
after the date which is 6 months after the date of the
enactment of this Act.
(B) Exception for certain taxpayers.--The amendment made by
this section shall not apply to any taxpayer with respect to
whom a suspension of any interest, penalty, addition to tax,
or other amount is in effect on the date which is 6 months
after the date of the enactment of this Act.
(f) Participants in Government Section 457 Plans Allowed to
Treat Elective Deferrals as Roth Contributions.--
(1) In general.--Section 402A(e)(1) of the Internal Revenue
Code of 1986 (defining applicable retirement plan) is amended
by striking ``and'' at the end of subparagraph (A), by
striking the period at the end of subparagraph (B) and
inserting ``, and'', and by adding at the end the following:
``(C) an eligible deferred compensation plan (as defined in
section 457(b)) of an eligible employer described in section
457(e)(1)(A).''.

[[Page S3898]]

(2) Elective deferrals.--Section 402A(e)(2) of the Internal
Revenue Code of 1986 (defining elective deferral) is amended
to read as follows:
``(2) Elective deferral.--The term `elective deferral'
means--
``(A) any elective deferral described in subparagraph (A)
or (C) of section 402(g)(3), and
``(B) any elective deferral of compensation by an
individual under an eligible deferred compensation plan (as
defined in section 457(b)) of an eligible employer described
in section 457(e)(1)(A).''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31,
2007.
______

SA 710. Mr. KYL submitted an amendment intended to be proposed by him
to the bill H.R. 1591, making emergency supplemental appropriations for
the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At page 52, line 16, strike ``may determine'' and all that
follows through page 53, line 11 and insert the following:
``may determine in such Secretary's sole unreviewable
discretion that--
(1) subsection (a)(3)(B)(i)(IV)(bb) of this section shall
not apply to an alien;
(II) subsection (a)(3)(B)(i)(VII) of this section shall not
apply to an alien who endorsed or espoused terrorist activity
or persuaded others to endorse or espouse terrorist activity
or support a terrorist organization described in clause
(vi)(III);
(III) subsection (a)(3)(B)(iv)(VI) of this section shall
not apply with respect to any material support that an alien
afforded under duress (as that term is defined in common law)
to an organization or individual that has engaged in a
terrorist activity; or
(IV) subsection (a)(3)(B)(vi)(III) of this section shall
not apply to a group that--
(aa) does not pose a threat to the United States or other
democratic countries; and
(bb) has not engaged in terrorist activity targeted at
civilians; or
(V) subsection (a)(3)(B)(vi)(III) of this section shall not
apply to a group solely by virtue of its having a subgroup
within the scope of that subsection.
``Such a determination shall neither prejudice the ability
of the United States Government to commence criminal or civil
proceedings involving a beneficiary of such a determination
or any other person, nor create any substantive or procedural
right or benefit for a beneficiary of such a determination or
any other person. Not withstanding any other provision of law
(statutory or non-statutory), including but not limited to
section 2241 of title 28, or any other habeas corpus
provision, and sections 1361 and 1651 of such title, no court
shall have jurisdiction to review such a determination or
revocation except in a proceeding for review of a final order
of removal pursuant to section 242 and only to the extent
provided in section 242(a)(2)(D). The Secretary of State may
not exercise the discretion provided in this clause with
respect to an alien at any time during which the alien is the
subject of pending removal proceedings under section 1229a of
title 8.''.
______

SA 711. Mr. GREGG submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 50, strike line 7 and all that follows through page
52, line 5.
______

SA 712. Mr. DOMENICI submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

On page 62, line 18, insert the following before the
period:
Provided further, That the Secretary of the Army, acting
through the Chief of Engineers, is provided an additional
$10,000,000 under this heading to rehabilitate the flood
damage projects for the Albuquerque Middle Rio Grande levee,
New Mexico; the Abeytas to Bernardo levee in Socorro County,
New Mexico; and the Glenwood/Whitewater Creek levee in Catron
County, New Mexico, to Federal levee standards: Provided
further, That the amount provided under this heading is
designated as an emergency requirement pursuant to section
402 of H. Con. Res. 95 (109th Congress).
______

SA 713. Mr. COLEMAN (for himself and Ms. Klobuchar) submitted an
amendment intended to be proposed by him to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the end of chapter 9 of title II, add the following:

CONVEYANCE OF A-12 BLACKBIRD AIRCRAFT TO THE MINNESOTA AIR NATIONAL
GUARD HISTORICAL FOUNDATION

Sec. 2904. (a) Conveyance Required.--The Secretary of the
Air Force shall convey, without consideration, to the
Minnesota Air National Guard Historical Foundation, Inc. (in
this section referred to as the ``Foundation''), a non-profit
entity located in the State of Minnesota, A-12 Blackbird
aircraft with tail number 60-6931 that is under the
jurisdiction of the National Museum of the United States Air
Force and, as of January 1, 2007, was on loan to the
Foundation and display with the 133rd Airlift Wing at
Minneapolis-St. Paul International Airport, Minnesota.
(b) Condition.--The conveyance required by subsection (a)
shall be subject to the requirement that Foundation utilize
and display the aircraft described in that subsection for
educational and other appropriate public purposes as jointly
agreed upon by the Secretary and the Foundation before the
conveyance.
(c) Relocation of Aircraft.--As part of the conveyance
required by subsection (a), the Secretary shall relocate the
aircraft described in that subsection to Minneapolis-St. Paul
International Airport and undertake any reassembly of the
aircraft required as part of the conveyance and relocation.
Any costs of the Secretary under this subsection shall be
borne by the Secretary.
(d) Maintenance Support.--The Secretary may authorize the
133rd Airlift Wing to provide support to the Foundation for
the maintenance of the aircraft relocated under subsection
(a) after its relocation under that subsection.
(e) Reversion of Aircraft.--
(1) Reversion.--In the event the Foundation ceases to
exist, all right, title, and interest in and to the aircraft
conveyed under subsection (a) shall revert to the United
States, and the United States shall have immediate right of
possession of the aircraft.
(2) Assumption of possession.--Possession under paragraph
(1) of the aircraft conveyed under subsection (a) shall be
assumed by the 133rd Airlift Wing.
(f) Additional Terms and Conditions.--The Secretary may
require such additional terms and conditions in connection
with the conveyance required by subsection (a) as the
Secretary considers appropriate to protect the interests of
the United States.
______

SA 714. Mr. VOINOVICH submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. __. SENSE OF CONGRESS REGARDING BUDGETING FOR OPERATION
IRAQI FREEDOM AND THE GLOBAL WAR ON TERRORISM.

(a) Findings.--Congress makes the following findings:
(1) The global war on terrorism began in September 2001 and
military operations in Iraq began in March 2003, and United
States military involvement in Iraq and Afghanistan no longer
represents unforeseen, unpredictable, or unanticipated
events.
(2) Since the beginning of the global war on terrorism and
the military operations in Iraq, Congress has provided
$503,000,000,000 in budget authority to carry out Operation
Iraqi Freedom and the global war on terrorism, including
funding for military operations and other defense activities,
indigenous security forces, diplomatic operations, and
foreign aid.
(3) The President has requested $98,000,000,000 in
additional fiscal year 2007 supplemental appropriations to
carry out Operation Iraqi Freedom and the global war on
terrorism, bringing the total appropriated upon the date of
the enactment of this Act for that purpose to
$601,000,000,000.
(4) The President has requested $145,000,000,000 in fiscal
year 2008 supplemental appropriations to carry out Operation
Iraqi Freedom and the global war on terrorism.
(5) During the past few years, both the President and
Congress have consistently underestimated the future costs of
carrying out Operation Iraqi Freedom and the global war on
terrorism in budget requests and in congressional budget
resolutions.
(6) The President and Congress have provided funds to carry
out Operation Iraqi Freedom and the global war on terrorism
largely through the use of supplemental appropriations bills
that escape the budget limitations imposed on regular
appropriations.
(7) As a result of insufficient budget projections and
exemption of supplemental appropriations from budget rules,
Congress and the President have provided the public with
erroneous information regarding the true impact of Operation
Iraqi Freedom and the global war on terrorism on future
budget deficits and the growth of the national debt.
(b) Sense of Congress.--It is the sense of Congress that--
(1) fiscal year 2008 should be the last fiscal year for
which Congress provides funding to carry out Operation Iraqi
Freedom and the global war on terrorism through the use of
supplemental appropriations that generally are not subject to
budget limitations; and
(2) beginning in fiscal year 2009, Congress should include
funding to carry out Operation Iraqi Freedom and the global
war on terrorism in the regular budget and appropriations
processes so that the public is able to recognize and
understand the costs of carrying out such activities and
Congress may consider whether additional spending and revenue
policies should be enacted to offset such costs.

[[Page S3899]]

______

SA 715. Mr. COBURN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:
Sec. __. In accordance with paragraphs (4) and (5) of
section 203(d) of the Legislative Reorganization Act of 1946
(2 U.S.C. 166(d)), the Congressional Research Service may not
refuse a request from a Member of the Senate or House of
Representatives for compilation and analysis of earmarks
contained in appropriations bills and amendments.
______

SA 716. Mr. BURR proposed an amendment to amendment SA 709 proposed
by Mr. Wyden (for himself, Mr. Reid, Mr. Baucus, Mr. Bingaman, Mr.
Smith, Ms. Cantwell, Mr. Domenici, Mrs. Boxer, Mr. Craig, Mrs. Murray,
Mr. Crapo, Mr. Tester, Mr. Stevens, Mr. Bennett, Ms. Murkowski, Mr.
Salazar, and Mrs. Feinstein) to the bill H.R. 1591, making emergency
supplemental appropriations for the fiscal year ending September 30,
2007, and for other purposes; as follows:

Beginning on page 13, strike line 22 and all that follows
through page 17, line 18, and insert the following:
``(2) Expenditure purposes.--Subject to subsection (d),
payments received by a State under subsection (a) and
distributed to eligible counties shall be expended only for
public schools of the eligible county.
``(d) Expenditure Rules for Eligible Counties.--
``(1) Allocations.--
``(A) In general.--Except as provided in paragraph (3)(B),
if an eligible county elects to receive its share of the
State payment or the county payment, not less than 80
percent, but not more than 85 percent, of the funds shall be
expended only for public schools of the eligible county.
``(B) Election as to use of balance.--Except as provided in
subparagraph (C), an eligible county shall elect to do 1 or
more of the following with the balance of any funds not
expended pursuant to subparagraph (A):
``(i) Reserve any portion of the balance for projects in
accordance with title II.
``(ii) Reserve not more than 7 percent of the total share
for the eligible county of the State payment or the county
payment for projects in accordance with title III.
``(iii) Return the portion of the balance not reserved
under clauses (i) and (ii) to the Treasury of the United
States.
``(C) Counties with modest distributions.--In the case of
each eligible county to which more than $100,000, but less
than $350,000, is distributed for any fiscal year pursuant to
either or both of paragraphs (1)(B) and (2)(B) of subsection
(a), the eligible county, with respect to the balance of any
funds not expended pursuant to subparagraph (A) for that
fiscal year, shall--
``(i) reserve any portion of the balance for--

``(I) carrying out projects under title II;
``(II) carrying out projects under title III; or
``(III) a combination of the purposes described in
subclauses (I) and (II); or

``(ii) return the portion of the balance not reserved under
clause (i) to the Treasury of the United States.
``(2) Distribution of funds.--
``(A) In general.--Funds reserved by an eligible county
under subparagraph (B)(i) or (C)(i)(I) of paragraph (1) shall
be deposited in a special account in the Treasury of the
United States.
``(B) Availability.--Amounts deposited under subparagraph
(A) shall--
``(i) be available for expenditure by the Secretary
concerned, without further appropriation; and
``(ii) remain available until expended in accordance with
title II.
``(3) Election.--
``(A) Notification.--
``(i) In general.--An eligible county shall notify the
Secretary concerned of an election by the eligible county
under this subsection not later than September 30 of each
fiscal year.
``(ii) Failure to elect.--Except as provided in
subparagraph (B), if the eligible county fails to make an
election by the date specified in clause (i), the eligible
county shall--

``(I) be considered to have elected to expend 85 percent of
the funds in accordance with paragraph (1)(A); and
``(II) return the balance to the Treasury of the United
States.

``(B) Counties with minor distributions.--In the case of
each eligible county to which less than $100,000 is
distributed for any fiscal year pursuant to either or both of
paragraphs (1)(B) and (2)(B) of subsection (a), the eligible
county may elect to expend all the funds for public schools
in the eligible county.
______

SA 717. Mr. COBURN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
as follows:

At the appropriate place, insert the following:

SEC. __. INAPPLICABILITY OF CERTAIN PROVISIONS.

Notwithstanding any other provision of this Act, titles II,
III, and IV of this Act shall not take effect.
______

SA 718. Mr. COBURN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
as follows:

SEC. __. INAPPLICABILITY OF CERTAIN PROVISIONS.

Notwithstanding any provision of this Act, titles II
(except for chapter 8 and 9 of title II), III, and IV of this
Act shall not take effect.
______

SA 719. Mr. ALEXANDER submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

Beginning on page 95, strike line 22 and all that follows
through page 96, line 8.
______

SA 720. Mr. ALEXANDER submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

On page 96, lines 5 and 6, strike ``a State found within
Federal Emergency Management Agency Region IV or VI'' and
insert ``the State of Alabama, Florida, Louisiana,
Mississippi, or Texas''.
______

SA 721. Mr. ALEXANDER submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

On page 96, lines 6 through 8, strike ``The provisions of
this section shall cease to be in effect twenty-four months
following the date of enactment of this Act.'' and insert
``This section shall cease to be in effect as of the date
that is 180 days after the date of enactment of this Act, and
the authority provided by this section is contingent on
authorization by the appropriate committees of Congress prior
to implementation.''.
______

SA 722. Mr. DOMENICI (for himself and Mrs. Hutchison) submitted an
amendment intended to be proposed by him to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

On page 37, between lines 10 and 11, insert the following:

International Commissions

international boundary and water commission, united states and mexico

(including rescission of funds)

For an additional amount for the ``International Boundary
and Water Commission, United States and Mexico'',
$21,700,000, to remain available until expended: Provided,
That of the funds appropriated under this heading, not less
than $11,700,000 shall be made available for sediment removal
and construction associated with the Rio Grande Canalization
project in Dona Ana County, New Mexico: Provided further,
That of the funds appropriated under this heading, not less
than $10,000,000 shall be made available for sediment removal
associated with the Rio Grande Flood Control System
Rehabilitation project in El Paso County, Texas.
Of the funds appropriated for the ``Millennium Challenge
Corporation'' under the Foreign Operations, Export Financing,
and Related Programs Appropriations Act, 2006 (Public Law
109-102), $21,700,000 are rescinded.
______

SA 723. Mr. DOMENICI submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

On page 62, line 18, insert the following before the
period:
Provided further, That the Secretary of the Army, acting
through the Chief of Engineers, is provided an additional
$10,000,000 under this heading to rehabilitate the flood
damage projects for the Albuquerque Middle Rio Grande levee,
New Mexico; the Abeytas to Bernardo levee in Socorro County,
New Mexico; and the Glenwood/Whitewater Creek levee in Catron
County, New Mexico, to Federal levee standards.
______

SA 724. Mrs. BOXER submitted an amendment intended to be proposed by
her to the bill H.R. 1591, making emergency supplemental appropriations
for

[[Page S3900]]

the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 28, between lines 18 and 19, insert the following:
Sec. 1316. It is the sense of the Senate that a portion of
the funds appropriated or otherwise made available by this
Act should be used to begin the phased redeployment of United
States military forces from Iraq.
______

SA 725. Mrs. BOXER submitted an amendment intended to be proposed by
her to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the end of chapter 3 of title I, add the following:

SEC. 1316. RESEARCH ON MENTAL HEALTH NEEDS OF FEMALE MEMBERS
OF THE ARMED FORCES.

Of the amount appropriated or otherwise made available by
this chapter under the heading ``Defense Health Program'',
$10,000,000 shall be available for research on the mental
health needs of female members of the Armed Forces, with a
specific emphasis on post traumatic stress disorder and
sexual trauma and the development of new treatment models.
______

SA 726. Mr. KERRY submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 40, line 3, insert after ``Public Law 109-13:'' the
following: ``Provided further, That of the funds appropriated
under this heading that are available for assistance for
Iraq, not less than $1,000,000 shall be made available for a
Youth Center/Work Study Program in Iraq to be administered by
the Iraqi Ministry of Youth and Sport:''.
______

SA 727. Mr. STEVENS submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the end of chapter 3 of title I, add the following:

SEC. 1316. REDEVELOPMENT OF INDUSTRIAL SECTOR IN IRAQ.

Of the amount appropriated or otherwise made available by
this chapter under the heading ``Iraq Freedom Fund'', up to
$100,000,000 may be obligated and expended for purposes of
the Task Force to Improve Business and Stability Operations
in Iraq.
______

SA 728. Mr. BOND submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table, as follows:

At the end of chapter 10 of title II, insert the following:
Sec. 4004. In section 21307 of Public Law 110-5, in the
first proviso, strike out ``for such account''.
______

SA 729. Mr. VITTER submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 64, between lines 15 and 16, insert the following:
Sec. 23__. Not later than 90 days after the date of
enactment of this Act, the Chief of Engineers shall, at full
Federal expense, investigate and submit to Congress an
analysis of--
(1) the overall technical advantages, disadvantages, and
operational effectiveness of operating the new pumping
stations at the mouths of the 17th Street, Orleans Avenue,
and London Avenue canals in the New Orleans area directed for
construction in the matter under the heading ``flood control
and coastal emergencies'' of chapter 3 of title II of the
Emergency Supplemental Appropriations Act for Defense, the
Global War on Terror, and Hurricane Recovery, 2006 (Public
Law 109-234; 120 Stat. 454) concurrently or in series with
existing pumping stations serving those canals;
(2) the advantages, disadvantages, and technical
operational effectiveness of removing the existing pumping
stations and configuring the new pumping stations and
associated canals to handle all needed discharges; and
(3) the advantages, disadvantages, and technical
operational effectiveness of replacing or improving the
floodwalls and levees adjacent to the 3 canals specified in
paragraph (1).

______

SA 730. Mr. VITTER submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

Beginning on page 60, strike line 23 and all that follows
through page 70, line 13, and insert the following:
Flood Control and Coastal Emergencies.--For an additional
amount for ``Flood Control and Coastal Emergencies'', as
authorized by section 5 of the Act of August 18, 1941 (33
U.S.C. 701n), for necessary expenses relating to the
consequences of Hurricanes Katrina and Rita and for other
purposes, $2,257,700,000, to remain available until expended:
Provided, That $2,000,000,000 of the amount provided may be
used by the Secretary of the Army to carry out projects and
measures to provide the level of protection necessary to
achieve the certification required for the 100-year level of
flood protection in accordance with the national flood
insurance program under the base flood elevations in
existence at the time of construction of the enhancements for
the West Bank and Vicinity and Lake Ponchartrain and
Vicinity, Louisiana, projects, as described under the heading
``Flood Control and Coastal Emergencies'', in chapter 3 of
Public Law 109-148: Provided further, That $150,000,000 of
the amount provided may be used to support emergency
operations, repairs and other activities in response to
flood, drought and earthquake emergencies as authorized by
law: Provided further, That $107,700,000 of the amount
provided may be used to implement the projects for hurricane
storm damage reduction, flood damage reduction, and ecosystem
restoration within Hancock, Harrison, and Jackson Counties,
Mississippi substantially in accordance with the Report of
the Chief of Engineers dated December 31, 2006, and entitled
``Mississippi, Coastal Improvements Program Interim Report,
Hancock, Harrison, and Jackson Counties, Mississippi'':
Provided further, That projects authorized for implementation
under this Chief's report shall be carried out at full
Federal expense, except that the non-Federal interests shall
be responsible for providing any lands, easements, rights-of-
way, disposal areas, and relocations required for
construction of the project and for all costs associated with
operation and maintenance of the project: Provided further,
That any project using funds appropriated under this heading
shall be initiated only after non-Federal interests have
entered into binding agreements with the Secretary requiring
the non-Federal interests to pay 100 percent of the
operation, maintenance, repair, replacement, and
rehabilitation costs of the project and to hold and save the
United States free from damages due to the construction or
operation and maintenance of the project, except for damages
due to the fault or negligence of the United States or its
contractors.

DEPARTMENT OF INTERIOR.

BUREAU OF RECLAMATION.

WATER AND RELATED RESOURCES.--For an additional amount for
``Water and Related Resources'', $18,000,000, to remain
available until expended for drought assistance: Provided,
That drought assistance may be provided under the Reclamation
States Drought Emergency Act or other applicable Reclamation
authorities to assist drought plagued areas of the West.

SEC. 2301. GENERAL PROVISIONS--THIS CHAPTER.

The Secretary is authorized and directed to reimburse local
governments for expenses they have incurred in storm-proofing
pumping stations, constructing safe houses for operators, and
other interim flood control measures in and around the New
Orleans metropolitan area, provided the Secretary determines
those elements of work and related expenses to be integral to
the overall plan to ensure operability of the stations during
hurricanes, storms and high water events and the flood
control plan for the area.
Sec. 2302. The limitation concerning total project costs in
section 902 of the Water Resources Development Act of 1986,
as amended (33 U.S.C. 2280), shall not apply during fiscal
year 2008 to any water resources project for which funds were
made available during fiscal year 2007.
Sec. 2303.(a) The Secretary of the Army is authorized and
directed to utilize funds remaining available for obligation
from the amounts appropriated in chapter 3 of Public Law 109-
234 under the heading ``Flood Control and Coastal
Emergencies'' for projects in the greater New Orleans
metropolitan area to prosecute these projects in a manner
which promotes the goal of continuing work at an optimal
pace, while maximizing, to the greatest extent practicable,
levels of protection to reduce the risk of storm damage to
people and property.
(b) The expenditure of funds as provided in subsection (a)
may be made without regard to individual amounts or purposes
specified in chapter 3 of Public Law 109-234.
(c) Any reallocation of funds that are necessary to
accomplish the goal established in subsection (a) are
authorized. Reallocation of funds in excess of $250,000,000
or 50 percent, whichever is less, of the individual amounts
specified in chapter 3 of Public Law 109-234 require
notifications of the House and Senate Committees on
Appropriation.

CHAPTER 4--SMALL BUSINESS ADMINISTRATION--DISASTER LOANS PROGRAM
ACCOUNT

(INCLUDING TRANSFER OF FUNDS)

For an additional amount for ``Disaster Loans Program
Account'' for administrative expenses to carry out the
disaster loan program, $25,069,000, to remain available until

[[Page S3901]]

expended, which may be transferred to and merged with ``Small
Business Administration, Salaries and Expenses''.

SEC. 2401. GENERAL PROVISIONS--THIS CHAPTER.

In this section--
(1) the term ``Administrator'' means the Administrator of
the Small Business Administration;
(2) the term ``covered small business concern'' means a
small business concern--
(A) that is located in any area in Louisiana or Mississippi
for which the President declared a major disaster because of
Hurricane Katrina of 2005 or Hurricane Rita of 2005;
(B) that has not more than 50 full-time employees; and
(C) that--
(i)(I) suffered a substantial economic injury as a result
of Hurricane Katrina of 2005 or Hurricane Rita of 2005,
because of a reduction in travel or tourism to the area
described in subparagraph (A); and
(II) demonstrates that, during the 1-year period ending on
August 28, 2005, not less than 45 percent of the revenue of
that small business concern resulted from tourism or travel
related sales; or
(ii)(I) suffered a substantial economic injury as a result
of Hurricane Katrina of 2005 or Hurricane Rita of 2005; and
(II) operates in a parish or county for which the
population on the date of enactment of this Act, as
determined by the Administrator, is not greater than 75
percent of the population of that parish or county before
August 28, 2005, based on the most recent United States
population estimate available before August 28, 2005;
(3) the term ``major disaster'' has the meaning given that
term in section 102 of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C. 5122); and
(4) the term ``small business concern'' has the meaning
given that term in section 3 of the Small Business Act (15
U.S.C. 632).
(b) Appropriation.--
(1) In General.--There are appropriated, out of any money
in the Treasury not otherwise appropriated, $25,000,000 to
the Administrator, which, except as provided in paragraph (2)
or (3), shall be used for loans under section 7(b)(2) of the
Small Business Act (15 U.S.C. 636(b)(2)) to covered small
business concerns.
(2) Administrative Expenses.--Of the amounts made available
under paragraph (1), not more than $8,750,000 may be
transferred to and merged with ``Salaries and Expenses'' to
carry out the disaster loan program of the Small Business
Administration.
(3) Other Uses of Funds.--The Administrator may use amounts
made available under paragraph (1) for other purposes
authorized for amounts in the ``Disaster Loans Program
Account'' or transfer such amounts to and merge such amounts
with ``Salaries and Expenses'', if--
(A) such amounts are--
(i) not obligated on the later of 5 months after the date
of enactment of this Act and August 29, 2007; or
(ii) necessary to provide assistance in the event of a
major disaster; and
(B) not later than 5 days before any such use or transfer
of amounts, the Administrator provides written notification
of such use or transfer to the Committee on Appropriations of
the Senate and the Committee on Appropriations of the House
of Representatives.

SEC. 2402. OTHER PROGRAMS.

(a) HUBZONES.--Section 3(p) of the Small Business Act (15
U.S.C. 632(p)) is amended--
(1) in paragraph (1)--
(A) in subparagraph (D), by striking ``or'';
(B) in subparagraph (E), by striking the period at the end
and inserting ``; or''; and
(C) by adding at the end the following:
``(F) an area in which the President has declared a major
disaster (as that term is defined in section 102 of the
Robert T. Stafford Disaster Relief and Emergency Assistance
Act (42 U.S.C. 5122)) as a result of Hurricane Katrina of
August 2005 or Hurricane Rita of September 2005, during the
time period described in paragraph (8).''; and
(2) by adding at the end the following:
``(8) Time period.--The time period for the purposes of
paragraph (1)(F)--
``(A) shall be the 2-year period beginning on the later of
the date of enactment of this paragraph and August 29, 2007;
and
``(B) may, at the discretion of the Administrator, be
extended to be the 3-year period beginning on the later of
the date of enactment of this paragraph and August 29,
2007.''.
(b) Relief From Test Program.--Section 711(d) of the Small
Business Competitive Demonstration Program Act of 1988 (15
U.S.C. 644 note) is amended--
(1) by striking ``The Program'' and inserting the
following:
``(1) In general.--Except as provided in paragraph (2), the
Program''; and
(2) by adding at the end the following:
``(2) Exception.--
``(A) In general.--The Program shall not apply to any
contract related to relief or reconstruction from Hurricane
Katrina of 2005 or Hurricane Rita of 2005 during the time
period described in subparagraph (B).
``(B) Time period.--The time period for the purposes of
subparagraph (A)--
``(i) shall be the 2-year period beginning on the later of
the date of enactment of this paragraph and August 29, 2007;
and
``(ii) may, at the discretion of the Administrator, be
extended to be the 3-year period beginning on the later of
the date of enactment of this paragraph and August 29,
2007.''.

CHAPTER 5--DEPARTMENT OF HOMELAND SECURITY--FEDERAL EMERGENCY
MANAGEMENT AGENCY

DISASTER RELIEF.

For an additional amount for ``Disaster Relief'' for
necessary expenses under the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.),
$3,610,000,000, to remain available until expended.
______

SA 731. Mr. VITTER submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 64, between lines 15 and 16, insert the following:
Section 23_. (a) Using funds made available in Chapter 3
under Title II of Public Law 109-234 (120 Stat. 453), under
the heading ``Investigations'', within three months after the
date of enactment of this Act, the Secretary of the Army, in
consultation with other agencies and the State of Louisiana
shall submit to Congress a final report of the Chief of
Engineers recommending a comprehensive plan to install a
permanent storm surge and intrusion barrier on the lower
Mississippi River Gulf-outlet and to restore associated
structural and non-structural hurricane and storm surge
reduction in this region to ensure the level of protection
necessary to achieve the certification required for the 100-
year level of flood protection in accordance with the
national flood insurance program under the base flood
elevations in existence at the time of construction of the
enhancements as part of the Lake Pontchartrain and Vicinity
Louisiana project as described under the heading ``Flood
Control and Coastal Emergencies'', in chapter 3 of Public Law
109-148: Provided, That the plan shall incorporate and build
upon the Interim Mississippi River Gulf Outlet Deep-Draft De-
Authorization Report submitted to Congress in December 2006
pursuant to Public Law 109-234.
______

SA 732. Ms. LANDRIEU submitted an amendment intended to be proposed
by her to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

At the appropriate place in title II Chapter 3 General
Provisions, insert the following:
Section _. The Chief of Engineers shall investigate the
overall technical advantages, disadvantages and operational
effectiveness of operating the new pumping stations at the
mouths of the 17th Street, Orleans Avenue and London Avenue
canals in the New Orleans area directed for construction in
Public Law 109-234 concurrently or in series with existing
pumping stations serving these canals and the advantages,
disadvantages and technical operational effectiveness of
removing the existing pumping stations and configuring the
new pumping stations and associated canals to handle all
needed discharges: Provided, That the analysis should be
conducted at Federal expense: Provided further, that the
analysis shall be completed and furnished to the Congress not
later than three months after enactment of this Act.
______

SA 733. Ms. LANDRIEU submitted an amendment intended to be proposed
by her to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows;

On page 59, between lines 23 and 24, insert the following:

ECONOMIC DEVELOPMENT ADMINISTRATION

For an additional amount for the Economic Development
Administration, $175,000,000, to remain available until
expended, for use in providing grants to the Port of New
Orleans to relocate public facilities located along the
Mississippi River Gulf Outlet that are adversely affected by
the closing of the Mississippi River Gulf Outlet: Provided,
That the amount provided under this heading is designated as
an emergency requirement pursuant to section 402 of H. Con.
Res. 95 (109th Congress).
______

SA 734. Mr. SANDERS submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows;

At the end of title III, add the following:

NO AUTHORITY TO INITIATE MILITARY ACTION AGAINST IRAN

Sec. 4104. No provision of this Act, the Authorization for
Use of Military Force (Public Law 107-40; 50 U.S.C. 1541
note), or the Authorization for Use of Military Force Against
Iraq Resolution of 2002 (Public Law 107-243; 50 U.S.C. 1541
note), may be construed as granting authority to the
President to initiate military action against Iran.
______

SA 735. Mr. SANDERS submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for

[[Page S3902]]

the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows;

At the end of title III, add the following:

PROHIBITION ON USE OF FUNDS TO INITIATE OFFENSIVE MILITARY ACTION

Sec. 4104. None of the funds appropriated or otherwise made
available by this Act may be obligated or expended to
initiate offensive military action against any country,
including Iran, that is not authorized by law.
______

SA 736. Mr. SANDERS submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows;

At the end of title III, add the following:

SENSE OF CONGRESS REGARDING INITIATING MILITARY ACTION AGAINST IRAN

Sec. 4104. It is the sense of Congress that--
(1) initiating military action against Iran without
congressional approval does not fall within the President's
``Commander in Chief'' powers under article II, section 2, of
the Constitution of the United States;
(2) the Authorization for Use of Military Force (Public Law
107-40; 50 U.S.C. 1541 note), approved in response to the
terrorist attacks of September 11, 2001, does not explicitly
or implicitly extend to authorizing military action against
Iran, including over its nuclear program;
(3) the Authorization for Use of Military Force Against
Iraq Resolution of 2002 (Public Law 107-243; 50 U.S.C. 1541
note) does not explicitly or implicitly extend to authorizing
military action against Iran, including over its nuclear
program; and
(4) seeking congressional authority prior to taking
military action against Iran is not discretionary, but is a
legal and constitutional requirement.
______

SA 737. Mr. SANDERS (for himself, Mr. Reed, Mr. Bingaman, Mr.
Menendez, Mr. Kerry, Mr. Harkin, Mr. Wyden, Mrs. Clinton, and Mr.
Sununu) submitted an amendment intended to be proposed by him to the
bill H.R. 1591, making emergency supplemental appropriations for the
fiscal year ending September 30, 2007, and for other purposes; which
was ordered to lie on the table; as follows;

=========================== NOTE ===========================

On page S3902, March 27, 2007, the following appears: SA 737.
Mr. SANDERS submitted an amendment

The online version has been corrected to read: SA 737. Mr.
SANDERS (for himself, Mr. Reed, Mr. Bingaman, Mr. Menendez, Mr.
Kerry, Mr. Harkin, Mr. Wyden, Mrs. Clinton, and Mr. Sununu)
submitted an amendment

========================= END NOTE =========================

On page 99, line 4, strike ``ties'' and insert ``ties:
Provided further, That $242,200,000 of the amount provided
shall be used for the weatherization assistance program of
the Department of Energy''.
______

SA 738. Mr. BIDEN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows;

At the appropriate place, insert the following:

TITLE VI--FUNDING FOR GLOBAL WAR ON TERROR

SEC. 601. FINDINGS.

The Congress finds the following:
(1) It is estimated that the top 1 percent of income
earners in the United States will receive at total of $715
billion in tax cuts between 2001 and 2010 under current law.
(2) It is estimated that in the single year 2009, tax cuts
for the top 1 percent of income earners will total over $94
billion.
(3) To date all of the funds for military operations in
Iraq and Afghanistan have been designated as emergency
spending.
(4) Operations in Iraq alone have now lasted longer than
World War II and are not ``unanticipated uncontrollable
expenditures'' as defined by the Congressional Budget Act.

SEC. 602. SENSE OF THE SENATE.

It is the sense of the Senate that in order to fund the
operations of the Government under chapter 3 of title I of
this Act, including $1,500,000,000 for mine resistant ambush
protected vehicles, the Committee on Finance of the Senate
should report to the Senate not later than 30 days after the
date of the enactment of this Act legislation which increases
revenues to the Treasury in the amount of $93,500,000,000
during taxable years 2007 through 2011 by reducing scheduled
and existing income tax reductions enacted since taxable year
2001 with respect to the top 1 percent of income earners.
______

SA 739. Mr. BIDEN (for himself, Mr. Kennedy, Mr. Kerry, Mr. Durbin,
and Mr. Pryor) submitted an amendment intended to be proposed by him to
the bill H.R. 1591, making emergency supplemental appropriations for
the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the end of chapter 3 of title I, add the following:

SEC. 1316. ADDITIONAL AMOUNT FOR PROCUREMENT, MARINE CORPS,
FOR ACCELERATION OF PROCUREMENT OF ADDITIONAL
2,500 MINE RESISTANT AMBUSH PROTECTED VEHICLES
FOR THE ARMED FORCES.

(a) Additional Amount.--The amount appropriated by this
chapter under the heading ``Procurement, Marine Corps'' is
hereby increased by $1,500,000,000, with the amount of the
increase to be available to the Marine Corps for the
procurement of an additional 2,500 Mine Resistant Ambush
Protected (MRAP) vehicles for the regular and reserve
components of the Armed Forces by not later than December 31,
2007.
(b) Supplement Not Supplant.--The amount available under
subsection (a) for the procurement of vehicles described in
that subsection is in addition to any other amounts available
under this chapter for that purpose.
______

SA 740. Mr. CASEY submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the end of subtitle A of title IV, add the following:

SEC. 4__. DAIRY LOSSES.

The Secretary shall use such funds of the Commodity Credit
Corporation as are necessary to make payments to producers on
a dairy farm in the State of Pennsylvania in the amount of
$2.50 per hundredweight of milk produced by the dairy
producers during the period beginning on August 1, 2006, and
ending on February 28, 2007.
______

SA 741. Mr. KENNEDY submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

TITLE V--FAIR MINIMUM WAGE

SEC. 500. SHORT TITLE.

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

SEC. 501. 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. 502. 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.
______

SA 742. Mr. BAUCUS submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows;

On page 35, line 3, insert after ``law'' the following: ``:
Provided, That of the funds appropriated under this heading,
up to $1,900,000 may be available for the construction of a
Deployment Processing Facility for the Montana Air National
Guard''.
______

SA 743. Mr. LAUTENBERG submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. . FAA PERSONNEL MANAGEMENT SYSTEM ARBITRATION.

Section 40122(a) of title 49, United States Code, is
amended--
(1) by striking the second and third sentences of paragraph
(2);
(2) by redesignating paragraphs (3) and (4) as paragraphs
(4) and (5), respectively; and
(3) by inserting after paragraph (2) the following:
``(3) Arbitration.--
``(A) In general.--If the services of the Federal Mediation
and Conciliation Service under paragraph (2) do not lead to
an agreement, the Federal Service Impasses Panel shall assert
jurisdiction over the issues in controversy in accordance
with subsection (g)(2)(C) and order binding arbitration.
``(B) Arbitration board.--The Panel shall appoint an
arbitration board composed of 3

[[Page S3903]]

professional private arbitrators with Federal sector
experience. The Executive Director of the Panel shall request
a list of not fewer than 15 arbitrators from the Director of
the Federal Mediation and Conciliation Service. Each party
shall select one arbitrator and the Executive Director of the
Panel shall select the third and final member of the
arbitration board.
``(C) Ratification and approval.--In accordance with
subsection (g)(2)(C), upon reaching agreement or at the
conclusion of the binding arbitration, the final agreement
shall be subject to ratification by the exclusive
representative, upon request, and approval by the head of the
agency.
``(D) Enforcement actions.--Each United States district
court and each United States court of a place subject to the
jurisdiction of the United States shall have jurisdiction of
any action brought to enforce this paragraph. Upon the
application of any exclusive bargaining representative, any
changes implemented in the personnel management system by the
Administrator after July 9, 2005, without the agreement of
the exclusive bargaining representative and before the
agreement ratified and approved under subparagraph (C) takes
effect shall be reversed and the status quo ante shall be
restored until the date certified by the exclusive bargaining
representative and the Administrator as the date on which the
ratified and approved agreement takes effect.''
______

SA 744. Ms. STABENOW submitted an amendment intended to be proposed
by her to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

In section 402, strike paragraph (2) and insert the
following:
(2) Applicable crop.--The term ``applicable crop'' means--
(A) 1 or more crops planted, or prevented from being
planted, during, as elected by the producers on a farm, 1
of--
(i) the 2005 crop year;
(ii) the 2006 crop year; or
(iii) that part of the 2007 crop year that takes place
before the end of the applicable period; and
(B) that part of the 2004 crop of sugar beets that was
damaged during calendar year 2005.

______

SA 745. Mr. PRYOR submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the end of chapter 5 of title I, add the following:

SEC. 1503. DOMESTIC PREPAREDNESS EQUIPMENT TECHNICAL
ASSISTANCE PROGRAM.

Of the amount appropriated or otherwise made available by
this chapter under the heading ``state and local program''
and available under that heading for regional grants and
technical assistance, $5,000,000 shall be available for the
Domestic Preparedness Equipment Technical Assistance Program
(DPETAP).
______

SA 746. Mr. TESTER submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 94, between lines 10 and 11, insert the following:
Sec. 2904. (a) Additional Amount for Medical Services.--The
amount appropriated or otherwise made available by this
chapter under the heading ``medical services'' is increased
by $127,000,000.
(b) Availability.--Of the amount appropriated or otherwise
made available by this chapter under the heading ``medical
services'', as increased by subsection (a), $127,000,000
shall be available for increasing the reimbursement rate for
beneficiary travel described in section 111 of title 38,
United States Code.

______

SA 747. Mr. PRYOR submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 25, strike line 11 and all that follows through
page 26, line 24 and insert:
(b) Classified Campaign Plan.--The President shall create a
classified campaign plan for Iraq, including strategic and
operational benchmarks and projected redeployment dates of US
forces ITom Iraq as those benchmarks are met.
(c) Commencement of Phased Redeployment of United States
Forces From Iraq.--
(1) Transition of mission.--The President shall promptly
transition the mission of United States forces in Iraq to the
limited purposes set forth in paragraph (2)
(2) Commencement of phased redeployment from iraq.--The
President shall commence the phased redeployment of United
States forces from Iraq pursuant to the plan required in
subsection
(b) except for the limited number that are essential for
the following Purposes:
(A) Protecting United States and coalition personnel and
infrastructure.
(B) Training and equipping Iraqi forces.
(C) Conducting targeted counter-terrorism operations.
(3) Comprehensive strategy.--Paragraph (2) shall be
implemented as part of a comprehensive diplomatic, political,
and economic strategy that includes sustained engagement with
Iraq's neighbors and the international community for the
purpose of working collectively to bring stability to Iraq.
(4) Reports required.--Not later than 60 days after the
date of enactment of this Act, the President shall submit the
plan required in subsection (b), and every 90 days
thereafter, provide classified reports to Congress on the
progress made in transitioning the mission of United States
forces in Iraq and implementing the phased redeployment of
United States forces from Iraq as required by subsection (b).
(d) Benchmarks for the Government of Iraq.--
______

SA 748. Mr. CHAMBLISS submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. ____. AUTHORITY TO WAIVE ANNUAL LIMITATIONS ON TOTAL
COMPENSATION PAID TO CERTAIN FEDERAL CIVILIAN
EMPLOYEES.

(a) Waiver Authority.--For pay earned during calendar years
2006 and 2007 and notwithstanding section 5547 of title 5,
United States Code, the head of an executive agency or the
head of a military department may waive, subject to
subsection (c), the limitation established in that section
for total compensation (including limitations on the
aggregate of basic pay and premium pay payable in a calendar
year) of an employee who performs work while engaged in
repair, recovery, restoration, and other authorized actions
associated with the destruction caused by natural disasters
in Louisiana, Mississippi, and Alabama.
(b) Pay Earned in 2006 but Paid in 2007.--With regard to
subsection (c), to the extent that a waiver granted under
subsection (a) results in additional pay for calendar year
2006 that is paid in calendar year 2007, such additional pay
paid in calendar year 2007 shall not be used to compute the
total maximum compensation for calendar year 2007.
(c) Maximum Total Compensation.--The total compensation of
an employee whose pay is covered by a waiver under subsection
(a) may not exceed $200,000 in calendar year 2006 and
$212,000 in calendar year 2007.
(d) Additional Pay Not Considered Basic Pay.--To the extent
that a waiver under subsection (a) results in payment of
additional premium pay of a type that is normally creditable
as basic pay for retirement or any other purpose, such
additional pay--
(1) shall not be considered to be basic pay for any
purpose; and
(2) shall not be used in computing a lump sum payment for
accumulated and accrued annual leave under section 5551 of
title 5, United States Code.
______

SA 749. Mr. ENSIGN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 63, strike lines 14 through 19.
______

SA 750. Mr. ENSIGN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the end of title III, insert the following:

RESCISSION

Sec. __. Five percent of each amount appropriated under the
Continuing Appropriations Resolution, 2007 (as amended by the
Revised Continuing Appropriations Resolution, 2007 (Public
Law 110-5)) is rescinded, except that none of the amount
appropriated under the following provisions of the Continuing
Appropriations Resolution, 2007 shall be rescinded:
(1) Section 101(a)(7).
(2) Chapter 2 or 8 of title II.
______

SA 751. Mr. ENSIGN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

In the second sentence of the matter under the heading
``low-income home energy assistance'' in the matter under the
heading ``Administration for Children and Families'' in the
matter under the heading ``DEPARTMENT OF HEALTH AND HUMAN
SERVICES'', in chapter 7 of title II (relating to amounts for
section 2604(e) of the Low-Income Home Energy Assistance Act
of 1981),

[[Page S3904]]

strike ``$320,000,000'' and insert the following
``$320,000,000: Provided,  That $80,000,000 of that
$320,000,000 shall be transferred to the Secretary of the
Interior, for the account entitled `payments in lieu of
taxes', to implement sections 6901 through 6907 of title 31,
United States Code''.
______

SA 752. Mr. ENSIGN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 3, strike lines 13 through 22 and insert the
following:

salaries and expenses, united states attorneys

For an additional amount for ``Salaries and Expenses,
United States Attorneys'', $17,500,000, to remain available
until September 30, 2008.

United States Marshals Service

salaries and expenses, united states marshals service

For an additional amount for ``Salaries and Expenses,
United States Marshals Service'', $37,500,000, to remain
available until September 30, 2008: Provided, That of the
amounts made available in this Act for ``Educational and
Cultural Exchange Programs'', $25,000,000 is rescinded.
______

SA 753. Mr. ENSIGN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 3, strike lines 13 through 22 and insert the
following:

salaries and expenses, united states attorneys

For an additional amount for ``Salaries and Expenses,
United States Attorneys'', $17,500,000, to remain available
until September 30, 2008: Provided, That $12,500,000 of such
amount shall be used by the United States Attorneys' Offices
to prosecute child pornographers and individuals who exploit
children.

United States Marshals Service

salaries and expenses, united states marshals service

For an additional amount for ``Salaries and Expenses,
United States Marshals Service'', $37,500,000, to remain
available until September 30, 2008: Provided, That
$12,500,000 of such amount shall be used by the United States
Marshals Service to carry out the Adam Walsh Child Protection
and Safety Act of 2006 (Public Law 109-248; 120 Stat. 587),
and the amendments made by that Act, and to track down
unregistered convicted sex offenders: Provided Further, That
of the amounts made available in this Act for ``Educational
and Cultural Exchange Programs'', $25,000,000 is rescinded.
______

SA 754. Mr. SHELBY (for himself and Ms. Mikulski) submitted an
amendment intended to be proposed by him to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

On page 60, line 4, strike the period and insert the
following ``: Provided, that of the amount made available
under this heading, $20,000,000 shall be for the Lunar
Precursor and Robotic Program.''
______

SA 755. Mr. LEAHY (for himself and Mr. Specter) submitted an
amendment intended to be proposed by him to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the appropriate place, insert the following:

CHAPTER __--THE JUDICIARY

Supreme Court of the United States

salaries and expenses

For an additional amount for ``salaries and expenses'' for
the salaries of Justices of the Supreme Court, $27,000,
Provided, That the amount provided under this heading is
designated as an emergency requirement pursuant to section
402 of H. Con. Res. 95 (109th Congress).

United States Court of Appeals for the Federal Circuit

salaries and expenses

For an additional amount for ``salaries and expenses'' for
the salaries of the judges of the United States Court of
Appeals for the Federal Circuit, $29,000, Provided, That the
amount provided under this heading is designated as an
emergency requirement pursuant to section 402 of H. Con. Res.
95 (109th Congress).

United States Court of International Trade

salaries and expenses

For an additional amount for ``salaries and expenses'' for
the salaries of the judges of the United States Court of
International Trade, $18,000, Provided, That the amount
provided under this heading is designated as an emergency
requirement pursuant to section 402 of H. Con. Res. 95 (109th
Congress).

Courts of Appeals, District Courts, and Other Judicial Services

salaries and expenses

For an additional amount for ``salaries and expenses'' for
the salaries of the judges of the Courts of Appeals and
District Courts, $5,279,000, Provided, That the amount
provided under this heading is designated as an emergency
requirement pursuant to section 402 of H. Con. Res. 95 (109th
Congress).

General Provisions--The Judiciary

Sec. ____. (a) Pursuant to section 140 of Public Law 97-92,
justices and judges of the United States are authorized
during fiscal year 2007 to receive a salary adjustment in
accordance with section 461 of title 28, United States Code.
(b) This section shall be effective as of January 1, 2007,
and shall apply only with respect to the salaries of justices
and judges for whom appropriations are made available under
this chapter, notwithstanding section 603 of title 28, United
States Code, or similar provision of law.
______

SA 756. Mrs. LANDRIEU submitted an amendment intended to be proposed
by her to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

At the end of chapter 3 of title I, add the following:

SEC. __. ADDITIONAL AMOUNT FOR DEFENSE HEALTH PROGRAM.

The amount appropriated or otherwise made available by this
chapter under the heading ``DEFENSE HEALTH PROGRAM'' is
hereby increased by $20,000,000, with the amount of the
increase to be available to provide for:
(1) The development of a field-deployable system which
would mitigate the impact of traumatic brain injury, such as
deployable ice water immersion cooling system.
(2) The development of an ice water immersion cooling
system to treat traumatic brain injuries, suitable for use in
a stationary medical treatment center.
______

SA 757. Mr. BYRD (for himself and Mr. Inouye) submitted an amendment
intended to be proposed by him to the bill H.R. 1591, making emergency
supplemental appropriations for the fiscal year ending September 30,
2007, and for other purposes; which was ordered to lie on the table; as
follows:

On page 11, between lines 4 and 5, insert the following:

(rescission)

Of the amount appropriated by title III of division A of
Public Law 109-148 under the heading ``Other Procurement
Army'', $6,250,000 is hereby rescinded.
On page 34, line 5, strike ``$1,261,390,000'' and insert
``$1,267,640,000''.
______

SA 758. Mr. INOUYE submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the end of chapter 3 of title I, add the following:

SEC. 1316. STUDY ON REFORM OF NATIONAL SECURITY SYSTEM.

Of the amount appropriated or otherwise made available by
this chapter under the heading ``Operation and Maintenance,
Defense-Wide'', up to $4,000,000 may be available for a
detailed, objective study of the current national security
system in order to identify the reforms to the system that
will be required to assure that the system possesses the
capabilities required to meet the future national security
interests of the United States.
______

SA 759. Mrs. CLINTON (for herself and Mr. Schumer) submitted an
amendment intended to be proposed by her to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the appropriate place in chapter 7 of title II, insert
the following:
Sec. __. For an additional amount to enable the Centers for
Disease Control and Prevention to carry out activities under
section 5011(b) of the Department of Defense, Emergency
Supplemental Appropriations to Address Hurricanes in the Gulf
of Mexico, and Pandemic Influenza Act, 2006 (Public law 109-
148), and in addition to giving first priority to the
entities described in such section, also including first
priority for the World Trade Center Environmental Health
Center at Bellevue Hospital, $296,700,000 to remain available
until September 30, 2008.
______

SA 760. Mr. ENSIGN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30,

[[Page S3905]]

2007, and for other purposes; which was ordered to lie on the table; as
follows:

On page 83, strike lines 14 through 20, and insert the
following:
``(C) Limitation on use of funds.--A State shall not use
amounts allotted under this paragraph for expenditures for
providing child health assistance or other health benefits
coverage for any nonpregnant adult.
``(D) Appropriation; allotment authority.--For the purpose
of providing additional allotments to remaining shortfall
States under this paragraph there is appropriated, out of any
funds in the Treasury not otherwise appropriated, such sums
as are necessary for fiscal year 2007.''.
______

SA 761. Mr. ENSIGN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 83, strike lines 14 through 20, and insert the
following:
``(C) Limitation on use of funds.--A State shall not use
amounts allotted under this paragraph for expenditures for
providing child health assistance or other health benefits
coverage for any nonpregnant childless adult.
``(D) Appropriation; allotment authority.--For the purpose
of providing additional allotments to remaining shortfall
States under this paragraph there is appropriated, out of any
funds in the Treasury not otherwise appropriated, such sums
as are necessary for fiscal year 2007.''.
______

SA 762. Mr. VOINOVICH (for himself, Mr. Inhofe, Mr. Warner, Mrs.
Hutchison, Mr. Craig, Mr. Coburn, and Mr. Enzi) submitted an amendment
intended to be proposed by him to the bill H.R. 1591, making emergency
supplemental appropriations for the fiscal year ending September 30,
2007, and for other purposes; which was ordered to lie on the table; as
follows:

On page 33, strike lines 11 through 23.
______

SA 763. Mr. BROWNBACK (for himself and Mr. Roberts) submitted an
amendment intended to be proposed by him to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the appropriate place, insert the following:

IMPORTANCE OF OMITTING PROVISIONS THAT THREATEN PASSAGE OF LEGISLATION
FUNDING THE IMPLEMENTATION OF BRAC RECOMMENDATIONS

Sec. __. (a) The Senate makes the following findings:
(1) Congress and President George W. Bush approved the
final recommendations of the Defense Base Closure and
Realignment Commission under the 2005 round of defense base
closure and realignment.
(2) These recommendations propose major changes in the
positioning of United States military personnel.
(3) The Department of Defense is moving rapidly to
implement these recommendations.
(4) The communities near military installations that are
slated to receive major troop increases have already invested
time and capital in making preparations for upcoming
increases in population.
(5) Funding these recommendations on an annual basis is
absolutely necessary for their implementation and the
economic confidence of the communities that are expecting
increases in population.
(b) It is the sense of the Senate that Congress should not
include provisions that provoke veto threats from the
President in bills that appropriate funds for the
implementation of recommendations of the Base Closure and
Realignment Commission.
______

SA 764. Mr. BINGAMAN submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

On page 37, between lines 10 and 11, insert the following:

International Commissions

international boundary and water commission, united states and mexico

construction

For an additional amount for ``Construction'' for the
``International Boundary and Water Commission, United States
and Mexico'', $4,300,000, to remain available until expended.
______

SA 765. Mr. SMITH (for himself and Mr. Coleman) submitted an
amendment intended to be proposed to amendment SA 680 submitted by Mr.
Kennedy (for himself, Mr. Enzi, Mr. Baucus, and Mr. Grassley) by him to
the bill H.R. 1591, making emergency supplemental appropriations for
the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

Beginning on page 32, line 13, strike all through page 39,
line 10, and insert the following:

Subtitle B--Subchapter S Provisions

SEC. 521. 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 December 31,
2006.

SEC. 522. 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

[[Page S3906]]

an S corporation has more than 1 class of stock.

SEC. 523. 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. 524. 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. 525. 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 December
31, 2006) 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. 526. 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 apply to taxable years beginning after December 31,
2006.
______

SA 766. Mr. BIDEN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. __. PROHIBITION ON COMPETITIVE SOURCING OF CERTAIN
ACTIVITIES AT MEDICAL FACILITIES OF THE
DEPARTMENT OF DEFENSE.

(a) Prohibition on Competitive Sourcing of Certain
Activities at Medical Facilities of the Department of
Defense.--
(1) Prohibition on initiation of competitive sourcing
activities at medical facilities of department of defense
during period of major military conflict.--
(A) In general.--Except as provided in paragraph (2),
during a period in which the Armed Forces are involved in a
major military conflict, the Secretary of Defense shall not
take any action under the Office of Management and Budget
Circular A-76 or any other similar administrative regulation,
directive, or policy--
(i) to subject work performed by an employee of a medical
facility of the Department of Defense or employee of a
private contractor of such a medical facility to public-
private competition; or
(ii) to convert such employee or the work performed by such
employee to private contractor performance.
(B) Exception to prevent negative impact on provision of
services.--Paragraph (1) shall not apply to any action at a
medical facility of the Department of Defense if the
Secretary of Defense certifies to Congress that not
initiating such action during such period would have a
negative impact on the provision of services at such military
medical facility.
(2) Study on competitive sourcing activities at medical
facilities of department of defense.--The Comptroller General
of the United States shall assess the efficiency and
advisability of subjecting work performed by an employee of a
medical facility of the Department of Defense or a private
contractor of such a medical facility to public-private
competition, or converting such employee or the work
performed by such employee to private contractor performance,
under the Office of Management and Budget Circular A-76 or
any other similar administrative regulation, directive, or
policy.
(b) Minimum Budget for Medical Services of the Armed Forces
During Period of Major Military Conflict.--
(1) In general.--Except as provided in paragraph (2), if
the Armed Forces are involved in a major military conflict at
the time the President submits the budget for a fiscal year
to Congress, the President shall not include in that budget a
total aggregate amount allocated for medical services for the
Department of Defense and the Department of Veterans Affairs
that is less than the total aggregate amount allocated for
such purposes in the budget submitted by the President to
Congress for the previous fiscal year.
(2) Exception.--Paragraph (1) shall not apply if the
President--
(A) certifies to Congress that submitting a total aggregate
amount allocated for medical services for the Department of
Defense and the Department of Veterans Affairs that is less
than that required under paragraph (1) is in the national
interest; and
(B) submits to Congress a report on the reasons for the
reduction described by subparagraph (A).
(c) Limitation on Implementation of Recommendation To Close
Walter Reed Army Medical Center.--
(1) Limitation on implementation of recommendations.--The
Secretary of Defense shall not take any action to implement
the recommendations of the Defense Base Closure and
Realignment Commission under the 2005 round of defense base
closure and realignment relating to the transfer of medical
services from Walter Reed Army Medical Center to the National
Naval Medical Center at Bethesda and at Fort Belvoir during
the period beginning on the date of the enactment of this Act
and ending on the date that is 60 days after the date on
which Congress receives the plan required under paragraph
(2).
(2) Plan required.--Not later than one year after the date
of the enactment of this Act, the Secretary of Defense shall
submit to Congress a plan that includes an assessment of the
following:
(A) The feasibility and advisability of providing current
or prospective employees at Walter Reed Army Medical Center a
guarantee that their employment will continue for more than
two years after the date on which Walter Reed Army Medical
Center is closed.
(B) Detailed construction plans for new medical facilities
and family housing at the National Naval Medical Center at
Bethesda and at Fort Belvoir to accommodate the transfer of
medical services from Walter Reed Army Medical Center to the
National Naval Medical Center at Bethesda and at Fort
Belvoir.
(C) The costs, feasibility, and advisability of completing
all of the construction planned for the transfer of medical
services from Walter Reed Army Medical Center to the National
Naval Medical Center at Bethesda and at Fort Belvoir before
any patients are transferred to such new facilities from
Walter Reed Army Medical Center as a result of the
recommendations of the Defense Base Closure and Realignment
Commission under the 2005 round of defense base closure and
realignment.
(d) Improving Case Management Services for Members of the
Armed Forces.--
(1) Case managers.--
(A) In general.--The Secretary of Defense shall assign at
least one case manager for every 20 recovering servicemembers
to assist in the recovery of such recovering servicemember.
(B) Minimum contact.--The Secretary of Defense shall ensure
that case managers meet with each of their assigned
recovering servicemembers not less than once per week.
(C) Training.--The Secretary of Defense shall ensure that
case managers of the Department of Defense are familiar with
the disability and discharge system of the Department of
Defense and that such case managers are able to assist
recovering servicemembers complete necessary and related
forms.
(2) Recovering servicemember.--In this subsection, the term
``recovering servicemember'' means a member of the Armed
Forces, including a member of the National Guard or a
Reserve, who is undergoing medical treatment, recuperation,
or therapy, or is otherwise in medical hold or holdover
status, for an injury, illness, or disease incurred or
aggravated while on active duty in the Armed Forces.
(e) Screening for Traumatic Brain Injury.--
(1) Screening required.--The Secretary of Defense shall
screen every member of the Armed Forces returning from
deployment in Operation Iraqi Freedom or Operation Enduring
Freedom for traumatic brain injury upon the return of each
such member.
(2) Studies on treating traumatic brain injury as
presumptive condition for disability compensation.--

[[Page S3907]]

(A) Study by secretary of defense.--
(i) In general.--The Secretary of Defense shall conduct a
study on the feasability and advisability of treating
traumatic brain injury as a presumptive condition for members
of the Armed Forces who served in Operation Iraqi Freedom or
Operation Enduring Freedom for the qualification for
disability compensation under laws administered by the
Secretary of Defense.
(ii) Report.--Not later than 180 days after the date of the
enactment of this Act, the Secretary of Defense shall submit
to Congress a report on the results of the study required by
clause (i).
(B) Study by secretary of veterans affairs.--
(i) In general.--The Secretary of Veterans Affairs shall
conduct a study on the feasability and advisability of
treating traumatic brain injury as a presumptive condition
for the qualification for veterans who served as members of
the Armed Forces in Operation Iraqi Freedom or Operation
Enduring Freedom for disability compensation under laws
administered by the Secretary of Veterans Affairs.
(ii) Report.--Not later than 180 days after the date of the
enactment of this Act, the Secretary of Veterans Affairs
shall submit to Congress a report on the results of the study
required by clause (i).
(C) Study by director of national institutes of health.--
(i) In general.--The Director of the National Institutes of
Health shall conduct a study on traumatic brain injury,
including the detection of traumatic brain injury and the
measurement and classification of the severity of traumatic
brain injury.
(ii) Report.--Not later than 180 days after the date of the
enactment of this Act, the Director of the National
Institutes of Health shall submit to Congress a report on the
results of the study required by clause (i).
(f) Requiring Medical Records Management Systems of
Department of Defense To Communicate With Medical Records
Management Systems of Department of Veterans Affairs.--
(1) In general.--Not later than two years after the date of
the enactment of this Act, the Secretary of Defense shall
ensure that the medical records management systems of the
Department of Defense are capable of transmitting medical
records to and receiving medical records from the medical
records management systems of the Department of Veterans
Affairs electronically.
(2) Initiation of activities.--Not later than one year
after the date of the enactment of this Act, the Secretary of
Defense shall begin any activities required to meet the
requirements of paragraph (1).
(g) Department of Veterans Affairs Assessment of Long-Term
Care Needs of Veterans.--
(1) Assessment of long-term care needs.--The Secretary of
Veterans Affairs shall assess the current ability of the
Department of Veterans Affairs to meet long-term care needs
of veterans during the 50-year period that begins on the date
of the enactment of this Act.
(2) Determination of actions required to meet long-term
care needs.--The Secretary of Veterans Affairs shall
determine what actions are required to ensure that the needs
described in paragraph (1) are satisfied.
(3) Report required.--Not later than one year after the
date of the enactment of this Act, the Secretary of Veterans
Affairs shall submit to Congress a report on the assessment
required in paragraph (1) and the determination required in
paragraph (2).
______

SA 767. Mr. KENNEDY (for himself, Mr. Lieberman, Mr. Leahy, Mr.
Smith, and Mr. Levin) submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. __. TEMPORARY INCREASE IN NUMBER OF IRAQI AND AFGHAN
TRANSLATORS IN THE UNITED STATES ARMED FORCES
ELIGIBLE FOR SPECIAL IMMIGRANT STATUS.

Section 1059(c) of the National Defense Authorization Act
for Fiscal Year 2006 (8 U.S.C. 1101 note) is amended--
(1) in paragraph (1), by striking ``The total'' and
inserting ``Except as provided under paragraph (3), the
total'';
(2) in paragraph (2), by inserting ``and shall not be
counted against the numerical limitations under sections
202(a) and 203(b)(4) of the Immigration and Nationality Act
(8 U.S.C. 1152(a) and 1153(b)(4))'' before the period at the
end; and
(3) by adding at the end the following:
``(3) Additional visas available for fiscal year 2007.--
Notwithstanding paragraph (1), up to 500 principal aliens may
be provided special immigrant status under this section
during fiscal year 2007.''.
______

SA 768. Mrs. CLINTON (for herself and Mr. Schumer) submitted an
amendment intended to be proposed by her to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the appropriate place in chapter 7 of title II, insert
the following:
Sec. __. For an additional amount to enable the Centers for
Disease Control and Prevention to carry out activities under
section 5011(b) of the Department of Defense, Emergency
Supplemental Appropriations to Address Hurricanes in the Gulf
of Mexico, and Pandemic Influenza Act, 2006 (Public Law 109-
148), $296,700,000 to remain available until expended.
______

SA 769. Ms. SNOWE submitted an amendment intended to be proposed by
her to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 70, between lines 5 and 6, insert the following:
(c) Catastrophic Disaster Areas.--Section 3(p) of the Small
Business Act (15 U.S.C. 632(p)) is amended--
(1) in paragraph (1)--
(A) in subparagraph (F), as added by subsection (a) of this
section, by striking the period at the end and inserting ``;
or''; and
(B) by adding at the end the following:
``(G) catastrophic disaster areas, for a period of not
longer than 3 years, as determined by the Administrator.'';
and
(2) in paragraph (4), by adding at the end the following:
``(E) Catastrophic disaster area.--The term `catastrophic
disaster area' means an area--
``(i) affected by--

``(I) a disaster determined to be an incident of national
significance under Homeland Security Presidential Directive-
5, or any successor to that directive; or
``(II) a catastrophic incident, as that term is defined in
section 501 of the Homeland Security Act of 2002 (6 U.S.C.
311); and

``(ii) for which the Administrator determines that
designation as a HUBZone would substantially contribute to
the reconstruction and recovery effort in that area.''.
______

SA 770. Ms. SNOWE (for herself and Mr. Kohl) submitted an amendment
intended to be proposed by her to the bill H.R. 1591, making emergency
supplemental appropriations for the fiscal year ending September 30,
2007, and for other purposes; which was ordered to lie on the table; as
follows:

At the appropriate place, insert the following:

SEC. ___. CLARIFICATION OF ELIGIBLE CONTRIBUTIONS IN
CONNECTION WITH REGIONAL CENTERS RESPONSIBLE
FOR IMPLEMENTING THE OBJECTIVES OF THE HOLLINGS
MANUFACTURING PARTNERSHIP PROGRAM.

Paragraph (3) of section 25(c) of the National Institute of
Standards and Technology Act (15 U.S.C. 278k(c)(3)) is
amended to read as follows:
``(3) Financial Support.--
``(A) In general.--Any nonprofit institution, or group
thereof, or consortia of nonprofit institutions, including
entities existing on August 23, 1988, may submit to the
Secretary an application for financial support under this
subsection, in accordance with the procedures established by
the Secretary and published in the Federal Register under
paragraph (2).
``(B) Center contributions.--In order to receive assistance
under this section, an applicant for financial assistance
under subparagraph (A) shall provide adequate assurances that
non-Federal assets obtained from the applicant and the
applicant's partnering organizations will be used as a
funding source to meet not less than 50 percent of the costs
incurred in connection with the activities undertaken to
improve the management, productivity, and technological
performance of small- and medium-sized manufacturing
companies.
``(C) Agreements with other entities.--In meeting the 50
percent requirement, it is anticipated that a Center will
enter into agreements with other entities such as private
industry, universities, other Federal agencies, and State
governments to accomplish programmatic objectives and access
new and existing resources that will further the impact of
the Federal investment made on behalf of small- and medium-
sized manufacturing companies. All non-Federal costs,
contributed by such entities and determined by a Center as
programmatically reasonable and allocable are includable as a
portion of the Center's contribution.
``(D) Allocation of legal rights.--Each applicant under
subparagraph (A) shall also submit a proposal for the
allocation of any legal right associated with any invention
that may result from an activity of a Center for which such
applicant receives financial assistance under this
section.''.
______

SA 771. Ms. SNOWE submitted an amendment intended to be proposed by
her to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 70, between lines 5 and 6, insert the following:
(c) Subcontracts.--Section 15 of the Small Business Act (15
U.S.C. 640) is amended by adding at the end the following:
``(q) Disaster Subcontracting Policy.--As soon as is
practicable, the Administrator may issue a policy reflecting
the recommendations of the Comptroller General in

[[Page S3908]]

the report titled `Hurricane Katrina: Agency Contracting
Should Be More Complete Regarding Subcontracting
Opportunities for Small Businesses' (relating to small
business disaster subcontracting compliance and reporting),
GAO-07-205, dated March 2007.''.
______

SA 772. Ms. SNOWE submitted an amendment intended to be proposed by
her to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 69, strike line 5 and all that follows through page
70, line 5, and insert the following:
(b) Termination of Program.--Section 711(c) of the Small
Business Competitive Demonstration Program Act of 1988 (15
U.S.C. 644 note) is amended by inserting after ``January 1,
1989'' the following: ``, and shall terminate on the date of
enactment of the U.S. Troop Readiness, Veterans' Care,
Katrina Recovery, and Iraq Accountability Appropriations Act,
2007''.
______

SA 773. Mr. LEAHY submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. __. INCREASING NUMBER OF H-2B NONIMMIGRANT VISAS FOR
FISCAL YEAR 2007.

Section 214(g)(1)(B) of the Immigration and Nationality Act
(8 U.S.C. 1184(g)(1)(B)) is amended to read as follows:
``(B) under section 101(a)(15)(H)(ii)(b), may not exceed--
``(i) 106,000 in fiscal year 2007; and
``(ii) 66,000 in any fiscal year other than fiscal year
2007.''.
______

SA 774. Mr. BAUCUS submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 85, line 21, strike ``20'' and insert ``17.4''.
______

SA 775. Mr. BAUCUS submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 85, strike lines 8 through 21.
______

SA 776. Ms. LANDRIEU (for herself and Mr. Cochran) submitted an
amendment intended to be proposed by her to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the appropriate place, insert the following:

Hurricane Education Recovery

For carrying out activities authorized by subpart 1 of
part D of title V of the Elementary and Secondary Education
Act of 1965, $30,000,000, to remain available until expended,
for use by the States of Louisiana, Mississippi, and Alabama
primarily for recruiting, retaining, and compensating new and
current teachers, principals, school leaders, and other
educators for positions in public elementary and secondary
schools located in an area with respect to which a major
disaster was declared under section 401 of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (42
U.S.C. 5170) by reason of Hurricane Katrina or Hurricane
Rita, including through such mechanisms as paying salary
premiums, performance bonuses, housing subsidies, and
relocation costs, with priority given to teachers and school
leaders who were displaced from, or lost employment in,
Louisiana, Mississippi, or Alabama by reason of Hurricane
Katrina or Hurricane Rita and who return to and are rehired
by such State or local educational agency; Provided,  That
funds available under this heading to such States may also be
used for 1 or more of the following activities: (1) to build
the capacity of such public elementary and secondary schools
to provide an effective education, including the design,
adaptation, and implementation of high-quality formative
assessments; (2) the establishment of partnerships with
nonprofit entities with a demonstrated track record in
recruiting and retaining outstanding teachers and other
school leaders; and (3) paid release time for teachers and
principals to identify and replicate successful practices
from the fastest-improving and highest-performing schools:
Provided further, That the Secretary of Education shall
allocate amounts available under this heading among such
States that submit applications; that such allocation shall
be based on the number of public elementary and secondary
schools in each State that were closed for 19 days or more
during the period beginning on August 29, 2005, and ending on
December 31, 2005, due to Hurricane Katrina or Hurricane
Rita; and that such States shall in turn allocate funds, on a
competitive basis, to local educational agencies, with
priority given first to such agencies with the highest
percentages of public elementary and secondary schools that
are closed as a result of such hurricanes as of the date of
enactment of this Act and then to such agencies with the
highest percentages of public elementary and secondary
schools with a student-teacher ratio of at least 25 to 1, and
with any remaining amounts to be distributed to such agencies
with demonstrated need, as determined by the State
educational agency: Provided further, That, in the case of a
State that chooses to use amounts available under this
heading for performance bonuses, not later than 60 days after
the date of enactment of this Act and after consultation
with, as applicable, local educational agencies, teachers'
unions, local principals' organizations, local parents'
organizations, local business organizations, and local
charter schools organizations, such State shall establish and
implement a rating system for such performance bonuses based
on strong learning gains for students and growth in student
achievement, based on classroom observation and feedback at
least 4 times annually, conducted by multiple sources
(including principals and master teachers), and evaluated
against research-validated rubrics that use planning,
instructional, and learning environment standards to measure
teaching performance: Provided further, That the amount
provided under this heading is designated as an emergency
requirement pursuant to section 402 of H. Con. Res. 95 (109th
Congress).

Hurricane Education Recovery

programs to restart school operations

Funds made available under section 102 of the Hurricane
Education Recovery Act (title IV of division B of Public Law
109-148) may be used by the States of Louisiana, Mississippi,
Alabama, and Texas, in addition to the uses of funds
described in section 102(e) for the following costs: (1)
recruiting, retaining and compensating new and current
teachers, principals, school leaders, other school
administrators, and other educators for positions in
reopening public elementary and secondary schools impacted by
Hurricane Katrina or Hurricane Rita, including through such
mechanisms as paying salary premiums, performance bonuses,
housing subsidies and relocation costs; and (2) activities to
build the capacity of reopening such public elementary and
secondary schools to provide an effective education,
including the design, adaptation, and implementation of high-
quality formative assessments; the establishment of
partnerships with nonprofit entities with a demonstrated
track record in recruiting and retaining outstanding teachers
and other school leaders; and paid release time for teachers
and principals to identify and replicate successful practices
from the fastest-improving and highest-performing schools:
Provided, further, That in the case of a State that chooses
to use amounts available under this heading for performance
bonuses, not later than 60 days after the date of enactment
of this Act, and after consultation with, as applicable,
local educational agencies, teachers' unions, local
principals' organizations, local parents' organizations,
local business organizations, and local charter schools
organizations, such State shall establish and implement a
rating system that shall be based on strong learning gains
for students and growth in student achievement, based on
classroom observation and feedback at least 4 times annually,
conducted by multiple sources (including principals and
master teachers), and evaluated against research-validated
rubrics that use planning, instructional, and learning
environment standards to measure teaching performance:
Provided further, That the amount provided under this heading
is designated as an emergency requirement pursuant to section
402 of H. Con. Res. 95 (109th Congress).
______

SA 777. Mr. THUNE submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At end of chapter 3 of title I, add the following:

SEC. 1316. ADDITIONAL AMOUNT FOR OPERATION AND MAINTENANCE,
AIR FORCE.

(a) Additional Amount.--The amount appropriated or
otherwise made available by this chapter under the heading
``Operation and Maintenance, Air Force'' is hereby increased
by $100,000,000.
(b) Offset.--The amount appropriated or otherwise made
available by chapter 2 of title II under the heading ``State
and Local Law Enforcement Assistance'' is hereby decreased by
$100,000,000, with the amount of the decrease to be allocated
to amounts otherwise available under that heading for
reimbursement of State and local law enforcement entities for
security and related costs associated with the 2008
Presidential Candidate Nominating Conventions.
______

SA 778. Ms. COLLINS submitted an amendment intended to be proposed by
her to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

[[Page S3909]]

On page 33, strike lines 11 through 23 and insert the
following:
Sec. 1502. (a) Any provision of the interim final
regulations issued under section 550 of the Department of
Homeland Security Appropriations Act, 2007 (6 U.S.C. 121
note) relating to the preemption of State law, or the law of
a political subdivision thereof, shall have no force or
effect.
(b) Nothing in subsection (a) shall be construed to effect
the interpretation by any court of Federal preemption of
State law, or the law of a political subdivision thereof,
under section 550 of the Department of Homeland Security
Appropriations Act, 2007 (6 U.S.C. 121 note).
______

SA 779. Ms. SNOWE submitted an amendment intended to be proposed by
her to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:
Not later than 120 days after enactment of this provision,
the Commander, Multi-National Forces-Iraq, having consulted
with the relevant U.S. and Iraqi officials, shall provide a
report detailing the status of the specific 5 benchmarks
described below and declaring, in his judgment, whether each
has been met:
(a) Iraqi assumption of control of its military;
(b) enactment of a Militia Law to disarm and demobilize
militias and to ensure that such security forces are
accountable only to the central government and loyal to the
constitution of Iraq;
(c) completion of the constitutional review and a
referendum held on special amendments to the Iraq
Constitution that ensure equitable participation in
the Government of Iraq without regard to religious sect or
ethnicity;
(d) completion of provincial election law and preparation
for the conduct of provincial elections that ensures
equitable constitution of provincial representative bodies
without regard to religious sect or ethnicity;
(e) enactment and implementation of legislation to ensure
that the energy resources of Iraq benefit Sunni Arabs, Shia
Arabs, Kurds, and other Iraqi citizens in an equitable
manner; and
(f) enactment and implementation of legislation that
equitably reforms the de-Ba'athification process in Iraq.
Not later than 14 days after submission of that report to
Congress, the Commander, Multi-National Forces-Iraq shall
appear to testify before the relevant committees of
jurisdiction in both the House of Representatives and the
Senate to provide his personal and professional opinion
regarding:
(a) the Iraqi government's success or failure to meet the
benchmarks listed
(b) the ability of the Iraqi government to meet these
benchmarks Should the Commander, Multi-National Forces, Iraq
report and testify that the Iraqi government has failed to
meet the benchmarks listed, then the Commander, Multi-
National Forces, Iraq shall be required to present:
(a) plans for the phased redeployment of U.S. Armed Forces
deployed to Iraq in support of the Baghdad Security Plan as
outlined by the President
(b) plans for changing the mission of US forces to: (i)
Train and equip Iraqi forces. (ii) Assist Iraqi deployed
brigades with intelligence, transportation, air support, and
logistics support. (iii) Protect United States and coalition
personnel and infrastructure. (iv) Maintain rapid-reaction
teams and special operations teams to undertake strike
missions against al Qaeda in Iraq, and for other missions
considered vital by the U.S. commander in Iraq.''
______

SA 780. Mr. GRASSLEY (for himself and Mr. Baucus) submitted an
amendment intended to be proposed by him to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

Strike all after the first word and insert the following:

V--FAIR MINIMUM WAGE AND TAX RELIEF

Subtitle A--Fair Minimum Wage

SEC. 500. SHORT TITLE.

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

SEC. 501. 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. 502. 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.

Subtitle B--Small Business Tax Incentives

SEC. 510. SHORT TITLE; AMENDMENT OF CODE.

(a) Short Title.--This subtitle 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 subtitle 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.

PART I--SMALL BUSINESS TAX RELIEF PROVISIONS

Subpart A--General Provisions

SEC. 511. 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. 512. 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 ``January 1,
2009''.
(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 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 January 1, 2009.''.
(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

[[Page S3910]]

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 subsection
shall apply to property placed in service after the date of
the enactment of this Act.

SEC. 513. 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.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 514. 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, renewal community, or
rural renewal county.
``(B) Individual must continue to reside in zone,
community, or county.--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, renewal community, or
rural renewal county.
``(C) Rural renewal county.--For purposes of this
paragraph, the term `rural renewal county' means any county
which--
``(i) is outside a metropolitan statistical area (defined
as such by the Office of Management and Budget), and
``(ii) during the 5-year periods 1990 through 1994 and 1995
through 1999 had a net population loss.''.
(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 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. 515. 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

[[Page S3911]]

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 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.

[[Page S3912]]

``(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.

SEC. 516. ACCELERATED DEPRECIATION FOR INVESTMENT IN HIGH
OUT-MIGRATION COUNTIES.

(a) In General.--Section 168 (relating to accelerated cost
recovery system) is amended by adding at the end the
following new subsection:
``(m) Rural Investment Property.--
``(1) In general.--For purposes of subsection (a), the
applicable recovery period for qualified rural investment
property shall be determined in accordance with the table
contained in paragraph (2) in lieu of the table contained in
subsection (c).
``(2) Applicable recovery period for rural investment
property.--For purposes of paragraph (1)--
The applicable
``  ``In the case of:                               recovery period is:
3-year property...........................................2 years
5-year property...........................................3 years
7-year property...........................................4 years
10-year property..........................................6 years
15-year property..........................................9 years
20-year property.........................................12 years
Nonresidential real property............................22 years.
``(3) Qualified rural investment property defined.--For
purposes of this subsection--
``(A) In general.--The term `qualified rural investment
property' means property which is property described in the
table in paragraph (2) and which is--
``(i) used by the taxpayer predominantly in the active
conduct of a trade or business within a high out-migration
county,
``(ii) not used or located outside such county on a regular
basis,
``(iii) not acquired (directly or indirectly) by the
taxpayer from a person who is related to the taxpayer (within
the meaning of section 465(b)(3)(C)), and
``(iv) not property (or any portion thereof) placed in
service for purposes of operating any racetrack or other
facility used for gambling.
``(B) High out-migration county.--The term `high out-
migration county' means any county which--
``(i) is outside a metropolitan statistical area (defined
as such by the Office of Management and Budget), and
``(ii) during the 5-year periods 1990 through 1994 and 1995
through 1999 had a net population loss.
``(4) Termination.--This subsection shall not apply to
property placed in service after March 31, 2008.''.
(b) Effective Date.--The amendment made by this section
shall apply to 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.

Subpart B--Subchapter S Provisions

SEC. 521. 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.

SEC. 522. 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.--

[[Page S3913]]

``(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. 523. 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. 524. 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. 525. 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. 526. 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.

SEC. 527. DEDUCTIBILITY OF INTEREST EXPENSE ON INDEBTEDNESS
INCURRED BY AN ELECTING SMALL BUSINESS TRUST TO
ACQUIRE S CORPORATION STOCK.

(a) In General.--Subparagraph (C) of section 641(c)(2)
(relating to modifications) is amended by inserting after
clause (iii) the following new clause:
``(iv) Any interest expense paid or accrued on indebtedness
incurred to acquire stock in an S corporation.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2006.

PART II--REVENUE PROVISIONS

SEC. 531. 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. 532. 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. 533. 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

[[Page S3914]]

shall not apply to punitive damages described in section
104(c).''.
(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. 534. 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--
``(A) the violation of any law, or
``(B) an investigation or inquiry into the potential
violation of any law which is initiated by such government or
entity.
``(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 (or 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 an amount described in clause (i) or
(ii) of subparagraph (A), as the case may be, in the court
order or settlement agreement, except that the requirement of
this subparagraph shall not apply in the case of any
settlement agreement which requires the taxpayer to pay or
incur an amount not greater than $1,000,000.

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 unless such amount
is paid or incurred for a cost or fee regularly charged for
any routine audit or other customary review performed by the
government or entity.
``(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 by the 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. 535. 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

[[Page S3915]]

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
``(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,

[[Page S3916]]

``(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 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

[[Page S3917]]

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) 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. 536. 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

[[Page S3918]]

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), 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. 537. MODIFICATION OF CRIMINAL PENALTIES FOR WILLFUL
FAILURES INVOLVING TAX PAYMENTS AND FILING
REQUIREMENTS.

(a) Increase in Penalty for Attempt to Evade or Defeat
Tax.--Section 7201 (relating to attempt to evade or defeat
tax) is amended--
(1) by striking ``$100,000'' and inserting ``$500,000'',
(2) by striking ``$500,000'' and inserting ``$1,000,000'',
and
(3) by striking ``5 years'' and inserting ``10 years''.
(b) Modification of Penalties for Willful Failure to File
Return, Supply Information, or Pay Tax.--
(1) In general.--Section 7203 (relating to willful failure
to file return, supply information, or pay tax) 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) `$250,000 ($500,000' for `$50,000 ($100,000', and
``(C) `5 years' for `1 year'.
``(2) Failure described.--A failure described in this
paragraph is--
``(A) a failure to make a return described in subsection
(a) for any 3 taxable years occurring during any period of 5
consecutive taxable years if the aggregate tax liability for
such period is not less than $50,000, or
``(B) a failure to make a return if the tax liability
giving rise to the requirement to make such return is
attributable to an activity which is a felony under any State
or Federal law.''.
(2) Penalty may be applied in addition to other
penalties.--Section 7204 (relating to fraudulent statement or
failure to make statement to employees) is amended by
striking ``the penalty provided in section 6674'' and
inserting ``the penalties provided in sections 6674 and
7203(b)''.
(c) Fraud and False Statements.--Section 7206 (relating to
fraud and false statements) is amended--
(1) by striking ``$100,000'' and inserting ``$500,000'',
(2) by striking ``$500,000'' and inserting ``$1,000,000'',
and
(3) by striking ``3 years'' and inserting ``5 years''.
(d) Increase in Monetary Limitation for Underpayment or
Overpayment of Tax Due to Fraud.--Section 7206 (relating to
fraud and false statements), as amended by subsection (a)(3),
is amended--
(1) by striking ``Any person who--''and inserting ``(a) In
General.--Any person who--'', 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.''.
(e) 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. 538. 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. 539. 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. 540. 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 1 or more contingent payments,

any regulations which require original issue discount to be
determined by reference to the comparable yield of a fixed-
rate debt instrument shall be applied as if the regulations
require that such comparable yield be determined by reference
to a 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. 541. 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''.

[[Page S3919]]

SEC. 542. 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. 543. 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 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. 544. 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.

SEC. 545. INCREASE IN AGE OF MINOR CHILDREN WHOSE UNEARNED
INCOME IS TAXED AS IF PARENT'S INCOME.

(a) In General.--Subparagraph (A) of section 1(g)(2)
(relating to child to whom subsection applies) is amended to
read as follows:
``(A) such child--
``(i) has not attained age 18 before the close of the
taxable year, or
``(ii)(I) has attained age 18 before the close of the
taxable year and meets the age requirements of section
152(c)(3) (determined without regard to subparagraph (B)
thereof), and
``(II) whose earned income (as defined in section
911(d)(2)) for such taxable year does not exceed one-half of
the amount of the individual's support (within the meaning of
section 152(c)(1)(D) after the application of section
152(f)(5)) for such taxable year,''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 546. INCREASE IN INFORMATION RETURN PENALTIES.

(a) Failure to File Correct Information Returns.--
(1) In general.--Section 6721(a)(1) is amended--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$250,000'' and inserting ``$3,000,000''.
(2) Reduction where correction in specified period.--
(A) Correction within 30 days.--Section 6721(b)(1) is
amended--
(i) by striking ``$15'' and inserting ``$50'',
(ii) by striking ``$50'' and inserting ``$250'', and
(iii) by striking ``$75,000'' and inserting ``$500,000''.
(B) Failures corrected on or before august 1.--Section
6721(b)(2) is amended--
(i) by striking ``$30'' and inserting ``$100'',
(ii) by striking ``$50'' and inserting ``$250'', and
(iii) by striking ``$150,000'' and inserting
``$1,500,000''.
(3) Lower limitation for persons with gross receipts of not
more than $5,000,000.--Section 6721(d)(1) is amended--
(A) in subparagraph (A)--
(i) by striking ``$100,000'' and inserting ``$1,000,000'',
and
(ii) by striking ``$250,000'' and inserting ``$3,000,000'',
(B) in subparagraph (B)--
(i) by striking ``$25,000'' and inserting ``$175,000'', and
(ii) by striking ``$75,000'' and inserting ``$500,000'',
and
(C) in subparagraph (C)--
(i) by striking ``$50,000'' and inserting ``$500,000'', and
(ii) by striking ``$150,000'' and inserting ``$1,500,000''.
(4) Penalty in case of intentional disregard.--Section
6721(e) is amended--
(A) by striking ``$100'' in paragraph (2) and inserting
``$500'',
(B) by striking ``$250,000'' in paragraph (3)(A) and
inserting ``$3,000,000''.
(b) Failure to Furnish Correct Payee Statements.--
(1) In general.--Section 6722(a) is amended--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$100,000'' and inserting ``$1,000,000''.
(2) Penalty in case of intentional disregard.--Section
6722(c) is amended--
(A) by striking ``$100'' in paragraph (1) and inserting
``$500'', and
(B) by striking ``$100,000'' in paragraph (2)(A) and
inserting ``$1,000,000''.
(c) Failure to Comply With Other Information Reporting
Requirements.--Section 6723 is amended--

[[Page S3920]]

(1) by striking ``$50'' and inserting ``$250'', and
(2) by striking ``$100,000'' and inserting ``$1,000,000''.
(d) Effective Date.--The amendments made by this section
shall apply with respect to information returns required to
be filed on or after January 1, 2008.

SEC. 547. E-FILING REQUIREMENT FOR CERTAIN LARGE
ORGANIZATIONS.

(a) In General.--The first sentence of section 6011(e)(2)
is amended to read as follows: ``In prescribing regulations
under paragraph (1), the Secretary shall take into account
(among other relevant factors) the ability of the taxpayer to
comply at reasonable cost with the requirements of such
regulations.''.
(b) Conforming Amendment.--Section 6724 is amended by
striking subsection (c).
(c) Effective Date.--The amendments made by this section
shall apply to taxable years ending on or after December 31,
2008.

SEC. 548. EXPANSION OF IRS ACCESS TO INFORMATION IN NATIONAL
DIRECTORY OF NEW HIRES FOR TAX ADMINISTRATION
PURPOSES.

(a) In General.--Paragraph (3) of section 453(j) of the
Social Security Act (42 U.S.C. 653(j)) is amended to read as
follows:
``(3) Administration of federal tax laws.--The Secretary of
the Treasury shall have access to the information in the
National Directory of New Hires for purposes of administering
the Internal Revenue Code of 1986.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.

SEC. 549. DISCLOSURE OF PRISONER RETURN INFORMATION TO
FEDERAL BUREAU OF PRISONS.

(a) Disclosure.--
(1) In general.--Subsection (l) of section 6103 (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 of return information of prisoners to
federal bureau of prisons.--
``(A) In general.--Under such procedures as the Secretary
may prescribe, the Secretary may disclose return information
with respect to persons incarcerated in Federal prisons whom
the Secretary believes filed or facilitated the filing of
false or fraudulent returns to the head of the Federal Bureau
of Prisons if the Secretary determines that such disclosure
is necessary to permit effective tax administration.
``(B) Disclosure by agency to employees.--The head of the
Federal Bureau of Prisons may redisclose information received
under subparagraph (A)--
``(i) only to those officers and employees of the Bureau
who are personally and directly engaged in taking
administrative actions to address violations of
administrative rules and regulations of the prison facility,
and
``(ii) solely for the purposes described in subparagraph
(C).
``(C) Restriction on use of disclosed information.--Return
information disclosed under this paragraph may be used only
for the purposes of--
``(i) preventing the filing of false or fraudulent returns;
and
``(ii) taking administrative actions against individuals
who have filed or attempted to file false or fraudulent
returns.''.
(2) Procedures and record keeping related to disclosure.--
Subsection (p)(4) of section 6103 is amended--
(A) by striking ``(14), or (17)'' in the matter before
subparagraph (A) and inserting ``(14), (17), or (21)'', and
(B) by striking ``(9), or (16)'' in subparagraph (F)(i) and
inserting ``(9), (16), or (21)''.
(3) Evaluation by treasury inspector general for tax
administration.--Paragraph (3) of section 7803(d) is amended
by striking ``and'' at the end of subparagraph (A), by
striking the period at the end of subparagraph (B) and
inserting ``; and'', and by adding at the end the following
new subparagraph:
``(C) not later than 3 years after the date of the
enactment of section 6103(l)(21), submit a written report to
Congress on the implementation of such section.''.
(b) Annual Reports.--
(1) In general.--The Secretary of the Treasury shall submit
to Congress and make publicly available an annual report on
the filing of false and fraudulent returns by individuals
incarcerated in Federal and State prisons.
(2) Contents of report.--The report submitted under
paragraph (1) shall contain statistics on the number of false
or fraudulent returns associated with each Federal and State
prison and such other information that the Secretary
determines is appropriate.
(3) Exchange of information.--For the purpose of gathering
information necessary for the reports required under
paragraph (1), the Secretary of the Treasury shall enter into
agreements with the head of the Federal Bureau of Prisons and
the heads of State agencies charged with responsibility for
administration of State prisons under which the head of the
Bureau or Agency provides to the Secretary not less
frequently than annually the names and other identifying
information of prisoners incarcerated at each facility
administered by the Bureau or Agency.
(c) Effective Date.--The amendments made by this section
shall apply to disclosures on or after January 1, 2008.

SEC. 550. UNDERSTATEMENT OF TAXPAYER LIABILITY BY RETURN
PREPARERS.

(a) Application of Return Preparer Penalties to All Tax
Returns.--
(1) Definition of tax return preparer.--Paragraph (36) of
section 7701(a) (relating to income tax preparer) is
amended--
(A) by striking ``income'' each place it appears in the
heading and the text, and
(B) in subparagraph (A), by striking ``subtitle A'' each
place it appears and inserting ``this title''.
(2) Conforming amendments.--
(A)(i) Section 6060 is amended by striking ``INCOME TAX
RETURN PREPARERS'' in the heading and inserting ``TAX RETURN
PREPARERS''.
(ii) Section 6060(a) is amended--
(I) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer'',
(II) by striking ``each income tax return preparer'' and
inserting ``each tax return preparer'', and
(III) by striking ``another income tax return preparer''
and inserting ``another tax return preparer''.
(iii) The item relating to section 6060 in the table of
sections for subpart F of part III of subchapter A of chapter
61 is amended by striking ``income tax return preparers'' and
inserting ``tax return preparers''.
(iv) Subpart F of part III of subchapter A of chapter 61 is
amended by striking ``INCOME TAX RETURN PREPARERS'' in the
heading and inserting ``TAX RETURN PREPARERS''.
(v) The item relating to subpart F in the table of subparts
for part III of subchapter A of chapter 61 is amended by
striking ``income tax return preparers'' and inserting ``tax
return preparers''.
(B) Section 6103(k)(5) is amended--
(i) by striking ``income tax return preparer'' each place
it appears and inserting ``tax return preparer'', and
(ii) by striking ``income tax return preparers'' each place
it appears and inserting ``tax return preparers''.
(C)(i) Section 6107 is amended--
(I) by striking ``INCOME TAX RETRUN PREPARER'' in the
heading and inserting ``TAX RETRUN PREPARER'',
(II) by striking ``an income tax return preparer'' each
place it appears in subsections (a) and (b) and inserting ``a
tax return preparer'',
(III) by striking ``Income Tax Return Preparer'' in the
heading for subsection (b) and inserting ``Tax Return
Preparer'', and
(IV) in subsection (c), by striking ``income tax return
preparers'' and inserting ``tax return preparers''.
(ii) The item relating to section 6107 in the table of
sections for subchapter B of chapter 61 is amended by
striking ``Income tax return preparer'' and inserting ``Tax
return preparer''.
(D) Section 6109(a)(4) is amended--
(i) by striking ``an income tax return preparer'' and
inserting ``a tax return preparer'', and
(ii) by striking ``income return preparer'' in the heading
and inserting ``tax return preparer''.
(E) Section 6503(k)(4) is amended by striking ``Income tax
return preparers'' and inserting ``Tax return preparers''.
(F)(i) Section 6694 is amended--
(I) by striking ``INCOME TAX RETRUN PREPARER'' in the
heading and inserting ``TAX RETRUN PREPARER'',
(II) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer'',
(III) in subsection (c)(2), by striking ``the income tax
return preparer'' and inserting ``the tax return preparer'',
(IV) in subsection (e), by striking ``subtitle A'' and
inserting ``this title'', and
(V) in subsection (f), by striking ``income tax return
preparer'' and inserting ``tax return preparer''.
(ii) The item relating to section 6694 in the table of
sections for part I of subchapter B of chapter 68 is amended
by striking ``income tax return preparer'' and inserting
``tax return preparer''.
(G)(i) Section 6695 is amended--
(I) by striking ``INCOME'' in the heading, and
(II) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer''.
(ii) Section 6695(f) is amended--
(I) by striking ``subtitle A'' and inserting ``this
title'', and
(II) by striking ``the income tax return preparer'' and
inserting ``the tax return preparer''.
(iii) The item relating to section 6695 in the table of
sections for part I of subchapter B of chapter 68 is amended
by striking ``income''.
(H) Section 6696(e) is amended by striking ``subtitle A''
each place it appears and inserting ``this title''.
(I)(i) Section 7407 is amended--
(I) by striking ``INCOME TAX RETRUN PREPARERS'' in the
heading and inserting ``TAX RETRUN PREPARERS'',
(II) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer'',
(III) by striking ``income tax preparer'' both places it
appears in subsection (a) and inserting ``tax return
preparer'', and
(IV) by striking ``income tax return'' in subsection (a)
and inserting ``tax return''.
(ii) The item relating to section 7407 in the table of
sections for subchapter A of chapter 76 is amended by
striking ``income tax return preparers'' and inserting ``tax
return preparers''.

[[Page S3921]]

(J)(i) Section 7427 is amended--
(I) by striking ``INCOME TAX RETRUN PREPARERS'' in the
heading and inserting ``TAX RETRUN PREPARERS'', and
(II) by striking ``an income tax return preparer'' and
inserting ``a tax return preparer''.
(ii) The item relating to section 7427 in the table of
sections for subchapter B of chapter 76 is amended to read as
follows:

``Sec. 7427. Tax return preparers.''.
(b) Modification of Penalty for Understatement of
Taxpayer's Liability by Tax Return Preparer.--Subsections (a)
and (b) of section 6694 are amended to read as follows:
``(a) Understatement Due to Unreasonable Positions.--
``(1) In general.--Any tax return preparer who prepares any
return or claim for refund with respect to which any part of
an understatement of liability is due to a position described
in paragraph (2) shall pay a penalty with respect to each
such return or claim in an amount equal to the greater of--
``(A) $1,000, or
``(B) 50 percent of the income derived (or to be derived)
by the tax return preparer with respect to the return or
claim.
``(2) Unreasonable position.--A position is described in
this paragraph if--
``(A) the tax return preparer knew (or reasonably should
have known) of the position,
``(B) there was not a reasonable belief that the position
would more likely than not be sustained on its merits, and
``(C)(i) the position was not disclosed as provided in
section 6662(d)(2)(B)(ii), or
``(ii) there was no reasonable basis for the position.
``(3) Reasonable cause exception.--No penalty shall be
imposed under this subsection if it is shown that there is
reasonable cause for the understatement and the tax return
preparer acted in good faith.
``(b) Understatement Due to Willful or Reckless Conduct.--
``(1) In general.--Any tax return preparer who prepares any
return or claim for refund with respect to which any part of
an understatement of liability is due to a conduct described
in paragraph (2) shall pay a penalty with respect to each
such return or claim in an amount equal to the greater of--
``(A) $5,000, or
``(B) 50 percent of the income derived (or to be derived)
by the tax return preparer with respect to the return or
claim.
``(2) Willful or reckless conduct.--Conduct described in
this paragraph is conduct by the tax return preparer which
is--
``(A) a willful attempt in any manner to understate the
liability for tax on the return or claim, or
``(B) a reckless or intentional disregard of rules or
regulations.
``(3) Reduction in penalty.--The amount of any penalty
payable by any person by reason of this subsection for any
return or claim for refund shall be reduced by the amount of
the penalty paid by such person by reason of subsection
(a).''.
(c) Effective Date.--The amendments made by this section
shall apply to returns prepared after the date of the
enactment of this Act.

SEC. 551. PENALTY FOR FILING ERRONEOUS REFUND CLAIMS.

(a) In General.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6675 the following new section:

``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

``(a) Civil Penalty.--If a claim for refund or credit with
respect to income tax (other than a claim for a refund or
credit relating to the earned income credit under section 32)
is made for an excessive amount, unless it is shown that the
claim for such excessive amount has a reasonable basis, the
person making such claim shall be liable for a penalty in an
amount equal to 20 percent of the excessive amount.
``(b) Excessive Amount.--For purposes of this section, the
term `excessive amount' means in the case of any person the
amount by which the amount of the claim for refund or credit
for any taxable year exceeds the amount of such claim
allowable under this title for such taxable year.
``(c) Coordination With Other Penalties.--This section
shall not apply to any portion of the excessive amount of a
claim for refund or credit on which a penalty is imposed
under part II of subchapter A of chapter 68.''.
(b) Conforming Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by inserting after
the item relating to section 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.
(c) Effective Date.--The amendments made by this section
shall apply to any claim--
(1) filed or submitted after the date of the enactment of
this Act, or
(2) filed or submitted prior to such date but not withdrawn
before the date which is 30 days after such date of
enactment.

SEC. 552. SUSPENSION OF CERTAIN PENALTIES AND INTEREST.

(a) In General.--Paragraphs (1)(A) and (3)(A) of section
6404(g) are each amended by striking ``18-month period'' and
inserting ``36-month period''.
(b) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to notices
provided by the Secretary of the Treasury, or his delegate
after the date which is 6 months after the date of the
enactment of this Act.
(2) Exception for certain taxpayers.--The amendments made
by this section shall not apply to any taxpayer with respect
to whom a suspension of any interest, penalty, addition to
tax, or other amount is in effect on the date which is 6
months after the date of the enactment of this Act.

SEC. 553. ADDITIONAL REASONS FOR SECRETARY TO TERMINATE
INSTALLMENT AGREEMENTS.

(a) In General.--Section 6159(b)(4) (relating to failure to
pay an installment or any other tax liability when due or to
provide requested financial information) is amended by
striking ``or'' at the end of subparagraph (B), by
redesignating subparagraph (C) as subparagraph (E), and by
inserting after subparagraph (B) the following new
subparagraphs:
``(C) to make a Federal tax deposit under section 6302 at
the time such deposit is required to be made,
``(D) to file a return of tax imposed under this title by
its due date (including extensions), or''.
(b) Conforming Amendment.--The heading for paragraph (4) of
section 6159(b) is amended by striking ``Failure to pay an
installment or any other tax liability when due or to provide
requested financial information'' and inserting ``Failure to
make payments or deposits or file returns when due or to
provide requested financial information''.
(c) Effective Date.--The amendments made by this section
shall apply to failures occurring on or after the date of the
enactment of this Act.

SEC. 554. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS-IN-
COMPROMISE.

(a) In General.--Section 7122(b) (relating to record) is
amended by striking ``Whenever a compromise'' and all that
follows through ``his delegate, with his reasons therefor''
and inserting ``If the Secretary determines that an opinion
of the General Counsel for the Department of the Treasury, or
the Counsel's delegate, is required with respect to a
compromise, there shall be placed on file in the office of
the Secretary such opinion, with the reasons therefor''.
(b) Conforming Amendments.--Section 7122(b) is amended by
striking the second and third sentences.
(c) Effective Date.--The amendments made by this section
shall apply to offers-in-compromise submitted or pending on
or after the date of the enactment of this Act.

SEC. 555. AUTHORIZATION FOR FINANCIAL MANAGEMENT SERVICE
RETENTION OF TRANSACTION FEES FROM LEVIED
AMOUNTS.

(a) In General.--Subsection (h) of section 6331 (relating
to continuing levy on certain payments) is amended by adding
at the end the following new paragraph:
``(4) Imposition of financial management services
transaction fees.--If the Secretary approves a levy under
this subsection, the Secretary may impose on the taxpayer a
transaction fee sufficient to cover the full cost of
implementing the levy under this subsection. Such fee--
``(A) shall be treated as an expense under section 6341,
``(B) may be collected through a levy under this
subsection, and
``(C) shall be in addition to the amount of tax liability
with respect to which such levy was approved.''.
(b) Retention of Fees by Financial Management Service.--The
Financial Management Service may retain the amount of any
transaction fee imposed under section 6331(h)(4) of the
Internal Revenue Code of 1986. Any amount retained by the
Financial Management Service under that section shall be
deposited into the account of the Department of the Treasury
under section 3711(g)(7) of title 31, United States Code.
(c) Effective Date.--The amendment made by this section
shall apply to amounts levied after the date of the enactment
of this Act.

SEC. 556. AUTHORITY FOR UNDERCOVER OPERATIONS.

Paragraph (6) of section 7608(c) (relating to application
of section) is amended by striking ``2007'' both places it
appears and inserting ``2008''.

SEC. 557. INCREASE IN PENALTY EXCISE TAXES ON THE POLITICAL
AND EXCESS LOBBYING ACTIVITIES OF SECTION
501(C)(3) ORGANIZATIONS.

(a) Taxes on Disqualifying Lobbying Expenditures of Certain
Organizations.--
(1) In general.--Section 4912(a) (relating to tax on
organization) is amended by striking ``5 percent'' and
inserting ``10 percent''.
(2) Tax on management.--Section 4912(b) is amended by
striking ``5 percent'' and inserting ``10 percent''.
(b) Taxes on Political Expenditures of Section 501(c)(3)
Organizations.--
(1) In general.--Section 4955(a) (relating to initial
taxes) is amended--
(A) in paragraph (1), by striking ``10 percent'' and
inserting ``20 percent'', and
(B) in paragraph (2), by striking ``2\1/2\ percent'' and
inserting ``5 percent''.
(2) Increased limitation for managers.--Section 4955(c)(2)
is amended--
(A) by striking ``$5,000'' and inserting ``$10,000'', and
(B) by striking ``$10,000'' and inserting ``$20,000''.
(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 S3922]]

SEC. 558. INCREASED PENALTY FOR FAILURE TO FILE FOR EXEMPT
ORGANIZATIONS.

(a) In General.--Subparagraph (A) of section 6652(c)(1)
(relating to annual returns under section 6033(a)(1) or
6012(a)(6)) is amended by adding at the end the following new
sentence: ``In the case of an organization having gross
receipts exceeding $25,000,000 for any year, with respect to
the return so required, the first sentence of this
subparagraph shall be applied by substituting `$250' for
`$20' and, in lieu of applying the second sentence of this
subparagraph, the maximum penalty under this subparagraph
shall not exceed $125,000.''.
(b) Conforming Amendment.--The third sentence of section
6652(c)(1)(A) is amended by inserting ``but not exceeding
$25,000,000'' after ``$1,000,000''.
(c) Effective Date.--The amendments made by this section
shall apply to returns required to be filed on or after
January 1, 2008.

SEC. 559. PENALTIES FOR FAILURE TO FILE CERTAIN RETURNS
ELECTRONICALLY.

(a) In General.--Part I of subchapter A of chapter 68
(relating to additions to the tax, additional amounts, and
assessable penalties) is amended by inserting after section
6652 the following new section:

``SEC. 6652A. FAILURE TO FILE CERTAIN RETURNS ELECTRONICALLY.

``(a) In General.--If a person fails to file a return
described in section 6651 or 6652(c)(1) in electronic form as
required under section 6011(e)--
``(1) such failure shall be treated as a failure to file
such return (even if filed in a form other than electronic
form), and
``(2) the penalty imposed under section 6651 or 6652(c),
whichever is appropriate, shall be equal to the greater of--
``(A) the amount of the penalty under such section,
determined without regard to this section, or
``(B) the amount determined under subsection (b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), the penalty determined under this subsection is equal to
$40 for each day during which a failure described under
subsection (a) continues. The maximum penalty under this
paragraph on failures with respect to any 1 return shall not
exceed the lesser of $20,000 or 10 percent of the gross
receipts of the taxpayer for the year.
``(2) Increased penalties for taxpayers with gross receipts
between $1,000,000 and $100,000,000.--
``(A) Taxpayers with gross receipts between $1,000,000 and
$25,000,000.--In the case of a taxpayer having gross receipts
exceeding $1,000,000 but not exceeding $25,000,000 for any
year--
``(i) the first sentence of paragraph (1) shall be applied
by substituting `$200' for `$40', and
``(ii) in lieu of applying the second sentence of paragraph
(1), the maximum penalty under paragraph (1) shall not exceed
$100,000.
``(B) Taxpayers with gross receipts over $25,000,000.--
Except as provided in paragraph (3), in the case of a
taxpayer having gross receipts exceeding $25,000,000 for any
year--
``(i) the first sentence of paragraph (1) shall be applied
by substituting `$500' for `$40', and
``(ii) in lieu of applying the second sentence of paragraph
(1), the maximum penalty under paragraph (1) shall not exceed
$250,000.
``(3) Increased penalties for certain taxpayers with gross
receipts exceeding $100,000,000.--In the case of a return
described in section 6651--
``(A) Taxpayers with gross receipts between $100,000,000
and $250,000,000.--In the case of a taxpayer having gross
receipts exceeding $100,000,000 but not exceeding
$250,000,000 for any year--
``(i) the amount of the penalty determined under this
subsection shall equal the sum of--

``(I) $50,000, plus
``(II) $1,000 for each day during which such failure
continues (twice such amount for each day such failure
continues after the first such 60 days), and

``(ii) the maximum amount under clause (i)(II) on failures
with respect to any 1 return shall not exceed $200,000.
``(B) Taxpayers with gross receipts over $250,000,000.--In
the case of a taxpayer having gross receipts exceeding
$250,000,000 for any year--
``(i) the amount of the penalty determined under this
subsection shall equal the sum of--

``(I) $250,000, plus
``(II) $2,500 for each day during which such failure
continues (twice such amount for each day such failure
continues after the first such 60 days), and

``(ii) the maximum amount under clause (i)(II) on failures
with respect to any 1 return shall not exceed $250,000.
``(C) Exception for certain returns.--Subparagraphs (A) and
(B) shall not apply to any return of tax imposed under
section 511.''.
(b) Clerical Amendment.--The table of sections for part I
of subchapter A of chapter 68 is amended by inserting after
the item relating to section 6652 the following new item:

``Sec. 6652A. Failure to file certain returns electronically.''.
(c) Effective Date.--The amendments made by this section
shall apply to returns required to be filed on or after
January 1, 2008.

PART III--GENERAL PROVISIONS

SEC. 561. 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, except that, compliance with any procedures
described pursuant to this section does not establish
compliance with the rule, or establish a presumption or
inference of such compliance.
``(C) Procedures.--Procedures described under subparagraph
(B)(ii)--
``(i) shall be suggestions to assist small entities; and
``(ii) shall not be additional requirements, or diminish
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 Fair Minimum Wage 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, the Committee on Small Business of the House of
Representatives, and any other committee of relevant
jurisdiction 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''.

SEC. 562. 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;

[[Page S3923]]

(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), 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.

SEC. 563. 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 benefits, costs, risks, and
barriers to workers and 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.

SEC. 564. 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 Social Security program was enacted to serve as the
safest component of a retirement system that also includes
employer-sponsored retirement plans and personal savings.
(b) Sense of the Senate.--It is the sense of the Senate
that--
(1) Congress should enact policies that promote savings
vehicles for retirement that are simple, easily accessible
and provide adequate financial security 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; and
(3) regularly contributing money to a financially-sound
investment account is one important method for helping to
achieve one's retirement goals.

SEC. 565. RENEWAL GRANTS FOR WOMEN'S BUSINESS CENTERS.

(a) In General.--Section 29 of the Small Business Act (15
U.S.C. 656) is amended by adding at the end the following:
``(m) Continued Funding for Centers.--
``(1) In general.--A nonprofit organization described in
paragraph (2) shall be eligible to receive, subject to
paragraph (3), a 3-year grant under this subsection.

[[Page S3924]]

``(2) Applicability.--A nonprofit organization described in
this paragraph is a nonprofit organization that has received
funding under subsection (b) or (l).
``(3) Application and approval criteria.--
``(A) Criteria.--Subject to subparagraph (B), the
Administrator shall develop and publish criteria for the
consideration and approval of applications by nonprofit
organizations under this subsection.
``(B) Contents.--Except as otherwise provided in this
subsection, the conditions for participation in the grant
program under this subsection shall be the same as the
conditions for participation in the program under subsection
(l), as in effect on the date of enactment of this Act.
``(C) Notification.--Not later than 60 days after the date
of the deadline to submit applications for each fiscal year,
the Administrator shall approve or deny any application under
this subsection and notify the applicant for each such
application.
``(4) Award of grants.--
``(A) In general.--Subject to the availability of
appropriations, the Administrator shall make a grant for the
Federal share of the cost of activities described in the
application to each applicant approved under this subsection.
``(B) Amount.--A grant under this subsection shall be for
not more than $150,000, for each year of that grant.
``(C) Federal share.--The Federal share under this
subsection shall be not more than 50 percent.
``(D) Priority.--In allocating funds made available for
grants under this section, the Administrator shall give
applications under this subsection or subsection (l) priority
over first-time applications under subsection (b).
``(5) Renewal.--
``(A) In general.--The Administrator may renew a grant
under this subsection for additional 3-year periods, if the
nonprofit organization submits an application for such
renewal at such time, in such manner, and accompanied by such
information as the Administrator may establish.
``(B) Unlimited renewals.--There shall be no limitation on
the number of times a grant may be renewed under subparagraph
(A).
``(n) Privacy Requirements.--
``(1) In general.--A women's business center may not
disclose the name, address, or telephone number of any
individual or small business concern receiving assistance
under this section without the consent of such individual or
small business concern, unless--
``(A) the Administrator is ordered to make such a
disclosure by a court in any civil or criminal enforcement
action initiated by a Federal or State agency; or
``(B) the Administrator considers such a disclosure to be
necessary for the purpose of conducting a financial audit of
a women's business center, but a disclosure under this
subparagraph shall be limited to the information necessary
for such audit.
``(2) Administration use of information.--This subsection
shall not--
``(A) restrict Administration access to program activity
data; or
``(B) prevent the Administration from using client
information (other than the information described in
subparagraph (A)) to conduct client surveys.
``(3) Regulations.--The Administrator shall issue
regulations to establish standards for requiring disclosures
during a financial audit under paragraph (1)(B).''.
(b) Repeal.--Section 29(l) of the Small Business Act (15
U.S.C. 656(l)) is repealed effective October 1 of the first
full fiscal year after the date of enactment of this Act.
(c) Transitional Rule.--Notwithstanding any other provision
of law, a grant or cooperative agreement that was awarded
under subsection (l) of section 29 of the Small Business Act
(15 U.S.C. 656), on or before the day before the date
described in subsection (b) of this section, shall remain in
full force and effect under the terms, and for the duration,
of such grant or agreement.

SEC. 566. REPORTS ON ACQUISITIONS OF ARTICLES, MATERIALS, AND
SUPPLIES MANUFACTURED OUTSIDE THE UNITED
STATES.

Section 2 of the Buy American Act (41 U.S.C. 10a) is
amended--
(1) by striking ``Notwithstanding'' and inserting the
following:
``(a) In General.--Notwithstanding''; and
(2) by adding at the end the following:
``(b) Reports.--
``(1) In general.--Not later than 180 days after the end of
each of fiscal years 2007 through 2011, the head of each
Federal agency shall submit to the Committee on Homeland
Security and Governmental Affairs of the Senate and the
Committee on Oversight and Government Reform of the House of
Representatives a report on the amount of the acquisitions
made by the agency in that fiscal year of articles,
materials, or supplies purchased from entities that
manufacture the articles, materials, or supplies outside of
the United States.
``(2) Contents of report.--The report required by paragraph
(1) shall separately include, for the fiscal year covered by
such report--
``(A) the dollar value of any articles, materials, or
supplies that were manufactured outside the United States;
``(B) an itemized list of all waivers granted with respect
to such articles, materials, or supplies under this Act, and
a citation to the treaty, international agreement, or other
law under which each waiver was granted;
``(C) if any articles, materials, or supplies were acquired
from entities that manufacture articles, materials, or
supplies outside the United States, the specific exception
under this section that was used to purchase such articles,
materials, or supplies; and
``(D) a summary of--
``(i) the total procurement funds expended on articles,
materials, and supplies manufactured inside the United
States; and
``(ii) the total procurement funds expended on articles,
materials, and supplies manufactured outside the United
States.
``(3) Public availability.--The head of each Federal agency
submitting a report under paragraph (1) shall make the report
publicly available to the maximum extent practicable.
``(4) Exception for intelligence community.--This
subsection shall not apply to acquisitions made by an agency,
or component thereof, that is an element of the intelligence
community as specified in, or designated under, section 3(4)
of the National Security Act of 1947 (50 U.S.C. 401a(4)).''.

SEC. 567. SENSE OF THE SENATE REGARDING REPEAL OF 1993 INCOME
TAX INCREASE ON SOCIAL SECURITY BENEFITS.

It is the sense of the Senate that Congress should repeal
the 1993 tax increase on Social Security benefits and
eliminate wasteful spending, such as spending on unnecessary
tax loopholes, in order to fully offset the cost of such
repeal and avoid forcing taxpayers to pay substantially more
interest to foreign creditors.

SEC. 568. SENSE OF THE SENATE REGARDING PERMANENT TAX
INCENTIVES TO MAKE EDUCATION MORE AFFORDABLE
AND MORE ACCESSIBLE FOR AMERICAN FAMILIES.

It is the sense of the Senate that Congress should make
permanent the tax incentives to make education more
affordable and more accessible for American families and
eliminate wasteful spending, such as spending on unnecessary
tax loopholes, in order to fully offset the cost of such
incentives and avoid forcing taxpayers to pay substantially
more interest to foreign creditors.

SEC. 569. RESPONSIBLE GOVERNMENT CONTRACTOR REQUIREMENTS.

Section 274A(e) of the Immigration and Nationality Act (8
U.S.C. 1324a(e)) is amended by adding at the end the
following new paragraph:
``(10) Prohibition on award of government contracts,
grants, and agreements.--
``(A) Employers with no contracts, grants, or agreements.--
``(i) In general.--Subject to clause (iii) and subparagraph
(C), if an employer who does not hold a Federal contract,
grant, or cooperative agreement is determined to have
violated this section, the employer shall be debarred from
the receipt of a Federal contract, grant, or cooperative
agreement for a period of 7 years.
``(ii) Placement on excluded list.--The Secretary of
Homeland Security or the Attorney General shall advise the
Administrator of General Services of the debarment of an
employer under clause (i) and the Administrator of General
Services shall list the employer on the List of Parties
Excluded from Federal Procurement and Nonprocurement Programs
for a period of 7 years.
``(iii) Waiver.--

``(I) Authority.--The Administrator of General Services, in
consultation with the Secretary of Homeland Security and the
Attorney General, may waive operation of clause (i) or may
limit the duration or scope of a debarment under clause (i)
if such waiver or limitation is necessary to national defense
or in the interest of national security.
``(II) Notification to congress.--If the Administrator
grants a waiver or limitation described in subclause (I), the
Administrator shall submit to each member of the Committee on
the Judiciary of the Senate and of the Committee on the
Judiciary of the House of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial review.--The decision of
whether to debar or take alternative action under this clause
shall not be judicially reviewed.

``(B) Employers with contracts, grants, or agreements.--
``(i) In general.--Subject to clause (iii) and subclause
(C), an employer who holds a Federal contract, grant, or
cooperative agreement and is determined to have violated this
section shall be debarred from the receipt of new Federal
contracts, grants, or cooperative agreements for a period of
10 years.
``(ii) Notice to agencies.--Prior to debarring the employer
under clause (i), the Secretary of Homeland Security, in
cooperation with the Administrator of General Services, shall
advise any agency or department holding a contract, grant, or
cooperative agreement with the employer of the Government's
intention to debar the employer from the receipt of new
Federal contracts, grants, or cooperative agreements for a
period of 10 years.
``(iii) Waiver.--

``(I) Authority.--After consideration of the views of any
agency or department that holds a contract, grant, or
cooperative agreement with the employer, the Administrator of
General Services, in consultation with the Secretary of
Homeland Security and the Attorney General, may waive
operation of clause (i) or may limit the duration or scope of
the debarment under clause (i) if such waiver or limitation
is necessary to the national defense or in the interest of
national security.

[[Page S3925]]

``(II) Notification to congress.--If the Administrator
grants a waiver or limitation described in subclause (I), the
Administrator shall submit to each member of the Committee on
the Judiciary of the Senate and of the Committee on the
Judiciary of the House of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial review.--The decision of
whether to debar or take alternate action under this clause
shall not be judicially reviewed.

``(C) Exemption from penalty for employers participating in
the basic pilot program.--In the case of imposition on an
employer of a debarment from the receipt of a Federal
contract, grant, or cooperative agreement under subparagraph
(A) or (B), that penalty shall be waived if the employer
establishes that the employer was voluntarily participating
in the basic pilot program under section 403(a) of the
Illegal Immigration Reform and Immigrant Responsibility Act
of 1996 (8 U.S.C. 1324a note) at the time of the violations
of this section that resulted in the debarment.''.

SEC. 570. DISABILITY PREFERENCE PROGRAM FOR TAX COLLECTION
CONTRACTS.

(a) In General.--Section 6306 (relating to qualified tax
collection contracts) is amended--
(1) by striking ``Nothing'' in subsection (a) and inserting
``Except as provided in subsection (c), nothing'',
(2) by redesignating subsections (c), (d), (e), and (f) as
subsections (d), (e), (f), and (g), respectively, and
(3) by inserting after subsection (b) the following new
subsection:
``(c) Disability Preference Program for Tax Collection
Contracts.--
``(1) In general.--The Secretary shall provide a qualifying
disability preference to any program under which any
qualified tax collection contract is awarded on or after the
effective date of this subsection and shall ensure compliance
with the requirements of paragraph (3).
``(2) Qualifying disability preference.--
``(A) In general.--For purposes of this subsection, the
term `qualifying disability preference' means a preference
pursuant to which at least 10 percent (in both number and
aggregate dollar amount) of the accounts covered by qualified
tax collection contracts are awarded to persons satisfying
the following criteria:
``(i) Such person employs within the United States at least
50 severely disabled individuals.
``(ii) Such person shall agree as an enforceable condition
of its bid for a qualified tax collection contract that
within 90 days after the date such contract is awarded, not
less than 35 percent of the employees of such person employed
in connection with providing services under such contract
shall--

``(I) be hired after the date such contract is awarded, and
``(II) be severely disabled individuals.

``(B) Determination of satisfaction of criteria.--Within 60
days after the end of the period specified in subparagraph
(A)(ii), the Secretary shall determine whether such person
has met the 35 percent requirement specified in such
subparagraph, and if such requirement has not been met, shall
terminate the contract for nonperformance. For purposes of
determining whether such 35 percent requirement has been
satisfied, severely disabled individuals providing services
under such contract shall not include any severely disabled
individuals who were counted toward satisfaction of the 50-
employee requirement specified in subparagraph (A)(i), unless
such person replaced such individuals by hiring additional
severely disabled individuals who do not perform services
under such contract.
``(3) Program-wide employment of severely disabled
individuals.--Not less than 15 percent of all individuals
hired by all persons to whom tax collection contracts are
issued by the Secretary under this section, to perform work
under such tax collection contracts, shall qualify as
severely disabled individuals.
``(4) Severely disabled individual.--For purposes of this
subsection, the term `severely disabled individual' means any
one of the following:
``(A) Any veteran of the United States Armed Forces with--
``(i) a disability determined by the Secretary of Veterans
Affairs to be service-connected, or
``(ii) a disability deemed by statute to be service-
connected.
``(B) Any individual who is a disabled beneficiary (as
defined in section 1148(k)(2) of the Social Security Act (42
U.S.C. 1320b-19(k)(2)) or who would be considered to be such
a disabled beneficiary but for having income or assets in
excess of the income or asset eligibility limits established
under title II or XVI of the Social Security Act,
respectively.''.
(b) Report by Government Accountability Office.--
(1) In general.--The Comptroller General of the United
States shall conduct a study of the effectiveness and
efficiency of the use of private contractors for Internal
Revenue Service debt collection. The study required by this
paragraph shall be completed in time to be taken into account
by Congress before any new contracting is carried out under
section 6306 of the Internal Revenue Code of 1986 in years
following 2008.
(2) Study of comparable efforts.--As part of the study
required under paragraph (1), the Comptroller General shall--
(A) make every effort to determine the relative
effectiveness and efficiency of debt collection contracting
by Federal staff compared to private contractors, using a
cost calculation for both Federal staff and private
contractors which includes all benefits and overhead costs,
(B) compare the cost effectiveness of the contracting
approach of the Department of the Treasury to that of the
Department of Education's Office of Student Financial
Assistance, and
(C) survey State tax debt collection experiences for
lessons that may be applicable to the Internal Revenue
Service collection efforts.
(c) Effective Date.--The amendments made by this section
shall apply to any tax collection contract awarded on or
after the date of the enactment of this Act.
______

SA 781. Mrs. LINCOLN (for herself, Mr. Smith, and Ms. Cantwell)
submitted an amendment intended to be proposed by her to the bill H.R.
1591, making emergency supplemental appropriations for the fiscal year
ending September 30, 2007, and for other purposes; which was ordered to
lie on the table; as follows:

At the end of title V, add the following:

SEC. ___. DEDUCTION FOR QUALIFIED TIMBER GAIN.

(a) In General.--Part I of subchapter P of chapter 1 is
amended by adding at the end the following new section:

``SEC. 1203. DEDUCTION FOR QUALIFIED TIMBER GAIN.

``(a) In General.--In the case of a taxpayer which elects
the application of this section for a taxable year, there
shall be allowed a deduction against gross income equal to 60
percent of the lesser of--
``(1) the taxpayer's qualified timber gain for such year,
or
``(2) the taxpayer's net capital gain for such year.
``(b) Qualified Timber Gain.--For purposes of this section,
the term `qualified timber gain' means, with respect to any
taxpayer for any taxable year, the excess (if any) of--
``(1) the sum of the taxpayer's gains described in
subsections (a) and (b) of section 631 for such year, over
``(2) the sum of the taxpayer's losses described in such
subsections for such year.
``(c) Special Rules for Pass-Thru Entities.--In the case of
any qualified timber gain of a pass-thru entity (as defined
in section 1(h)(10)), the election under this section shall
be made separately by each taxpayer subject to tax on such
gain.''.
(b) Coordination With Maximum Capital Gains Rates.--
(1) Taxpayers other than corporations.--Paragraph (2) of
section 1(h) is amended to read as follows:
``(2) Reduction of net capital gain.--For purposes of this
subsection, the net capital gain for any taxable year shall
be reduced (but not below zero) by the sum of--
``(A) the amount which the taxpayer takes into account as
investment income under section 163(d)(4)(B)(iii), and
``(B) the lesser of--
``(i) the amount described in paragraph (1) of section
1203(a), or
``(ii) the amount described in paragraph (2) of such
section.''.
(2) Corporations.--Section 1201 is amended by redesignating
subsection (b) as subsection (c) and inserting after
subsection (a) the following new subsection:
``(b) Qualified Timber Gain Not Taken Into Account.--For
purposes of this section, in the case of a corporation with
respect to which an election is in effect under section 1203,
the net capital gain for any taxable year shall be reduced
(but not below zero) by the corporation's qualified timber
gain (as defined in section 1203(b)).''.
(c) Deduction Allowed Whether or Not Individual Itemizes
Other Deductions.--Subsection (a) of section 62 is amended by
inserting before the last sentence the following new
paragraph:
``(21) Qualified timber gains.--The deduction allowed by
section 1203.''.
(d) Deduction Allowed in Computing Adjusted Current
Earnings.--Subparagraph (C) of section 56(g)(4) is amended by
adding at the end the following new clause:
``(vii) Deduction for qualified timber gain.--Clause (i)
shall not apply to any deduction allowed under section
1203.''.
(e) Deduction Allowed in Computing Taxable Income of
Electing Small Business Trusts.--Subparagraph (C) of section
641(c)(2) is amended by inserting after clause (iii) the
following new clause:
``(iv) The deduction allowed under section 1203.''.
(f) Conforming Amendments.--
(1) Subparagraph (B) of section 172(d)(2) is amended to
read as follows:
``(B) the exclusion under section 1202 and the deduction
under section 1203 shall not be allowed.''.
(2) Paragraph (4) of section 642(c) is amended by striking
the first sentence and inserting the following: ``To the
extent that the amount otherwise allowable as a deduction
under this subsection consists of gain described in section
1202(a) or qualified timber gain (as defined in section
1203(b)), proper adjustment shall be made for any exclusion
allowable to the estate or trust under section 1202 and for
any deduction allowable to the estate or trust under section
1203.''

[[Page S3926]]

(3) Paragraph (3) of section 643(a) is amended by striking
the last sentence and inserting the following: ``The
exclusion under section 1202 and the deduction under section
1203 shall not be taken into account.''
(4) Subparagraph (C) of section 643(a)(6) is amended to
read as follows:
``(C) Paragraph (3) shall not apply to a foreign trust. In
the case of such a trust--
``(i) there shall be included gains from the sale or
exchange of capital assets, reduced by losses from such sales
or exchanges to the extent such losses do not exceed gains
from such sales or exchanges, and
``(ii) the deduction under section 1203 shall not be taken
into account.''.
(5) Paragraph (4) of section 691(c) is amended by inserting
``1203,'' after ``1202,''.
(6) Paragraph (2) of section 871(a) is amended by inserting
``and 1203'' after ``section 1202''.
(7) The table of sections for part I of subchapter P of
chapter 1 is amended by adding at the end the following new
item:

``Sec. 1203. Deduction for qualified timber gain.''.

(g) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment
of this Act and before January 1, 2009.
(2) Taxable years which include date of enactment.--In the
case of any taxable year which includes the date of the
enactment of this Act, for purposes of the Internal Revenue
Code of 1986, the taxpayer's qualified timber gain shall not
exceed the excess that would be described in section 1203(b)
of such Code, as added by this section, if only dispositions
of timber after such date were taken into account.
______

SA 782. Mrs. LINCOLN submitted an amendment intended to be proposed
by her to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

At the end of title V, add the following:

SEC. ___. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED
SERVICES RETIRED PAY IS REDUCED AS A RESULT OF
AWARD OF DISABILITY COMPENSATION.

(a) In General.--Subsection (d) of section 6511 (relating
to special rules applicable to income taxes) is amended by
adding at the end the following new paragraph:
``(8) Special rules when uniformed services retired pay is
reduced as a result of award of disability compensation.--
``(A) Period of limitation on filing claim.--If the claim
for credit or refund relates to an overpayment of tax imposed
by subtitle A on account of--
``(i) the reduction of uniformed services retired pay
computed under section 1406 or 1407 of title 10, United
States Code, or
``(ii) the waiver of such pay under section 5305 of title
38 of such Code,
as a result of an award of compensation under title 38 of
such Code pursuant to a determination by the Secretary of
Veterans Affairs, the 3-year period of limitation prescribed
in subsection (a) shall be extended, for purposes of
permitting a credit or refund based upon the amount of such
reduction or waiver, until the end of the 1-year period
beginning on the date of such determination.
``(B) Limitation to 5 taxable years.--Subparagraph (A)
shall not apply with respect to any taxable year which began
more than 5 years before the date of such determination.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to claims for credit or refund filed after the
date of the enactment of this Act.
(c) Transition Rules.--In the case of a determination
described in paragraph (8) of section 6511(d) of the Internal
Revenue Code of 1986 (as added by this section) which is made
by the Secretary of Veterans Affairs after December 31, 2000,
and before the date of the enactment of this Act, such
paragraph--
(1) shall not apply with respect to any taxable year which
began before January 1, 2001, and
(2) shall be applied by substituting ``the date of the
enactment of this paragraph'' for ``the date of such
determination'' in subparagraph (A) thereof.
(d) Penalty for Filing Erroneous Refund Claims.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6675 the following new section:

``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

``(a) Civil Penalty.--If a claim for refund or credit with
respect to income tax (other than a claim for a refund or
credit relating to the earned income credit under section 32)
is made for an excessive amount, unless it is shown that the
claim for such excessive amount has a reasonable basis, the
person making such claim shall be liable for a penalty in an
amount equal to 20 percent of the excessive amount.
``(b) Excessive Amount.--For purposes of this section, the
term `excessive amount' means in the case of any person the
amount by which the amount of the claim for refund or credit
for any taxable year exceeds the amount of such claim
allowable under this title for such taxable year.
``(c) Coordination With Other Penalties.--This section
shall not apply to any portion of the excessive amount of a
claim for refund or credit on which a penalty is imposed
under part II of subchapter A of chapter 68.''.
(2) Conforming amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by inserting after
the item relating to section 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.

(3) Effective date.--The amendments made by this subsection
shall apply to any return filed on or after January 1, 2008.

______

SA 783. Mr. DORGAN submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On Page 62, line 18, insert the following before the
period:
Provided further, That the Secretary of the Army, acting
through the Chief of Engineers, is provided an additional
$3,000,000 under this heading to rehabilitate the flood
damage project for Marmarth, North Dakota, to Federal levee
standards: Provided further, That the amount provided under
this heading is designated as an emergency requirement
pursuant to section 402 of H. Con. Res. 95 (109th Congress).
______

SA 784. Mr. DURBIN (for himself, Mr. Biden, Mr. Menendez, Mr. Levin,
and Mr. Cardin) submitted an amendment intended to be proposed by him
to the bill H.R. 1591, making emergency supplemental appropriations for
the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 44, beginning on line 16, strike ``$323,000,000''
and all that follows through ``$128,000,000'' on line 17 and
insert the following: ``$373,000,000, to remain available
until September 30, 2008, of which up to $178,000,000''.

______

SA 785. Mr. DURBIN (for himself, Mrs. Boxer, and Mr. Brown) submitted
an amendment intended to be proposed by him to the bill H.R. 1591,
making emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

Beginning on page 37, line 25, strike ``$161,000,000'' and
all that follows through page 38, line 7, and insert the
following: ``$211,000,000, to remain available until
September 30, 2008: Provided, That notwithstanding any other
provision of law, funds made available under the heading
`Millennium Challenge Corporation' and `Global HIV/AIDS
Initiative' in prior Acts making appropriations for foreign
operations, export financing and related programs may be made
available to combat the avian influenza, subject to the
regular notification procedures of the Committees on
Appropriations: Provided further, That of the funds
appropriated under this heading, $50,000,000 shall be made
available to combat the spread of multidrug resistant
tuberculosis (MDR-TB) and extremely or extensively drug
resistant tuberculosis (XDR-TB) in sub-Saharan Africa.''.

______

SA 786. Mr. BINGAMAN (for himself and Mrs. Hutchison) submitted an
amendment intended to be proposed by him to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

On page 14, line 21, strike beginning with ``to'' through
``Asia:'' on line 24 and insert ``, to remain available until
expended of which $20,000,000 shall be for the National Guard
Counterdrug Support Program to be allocated to States based
on the most immediate drug threats: Provided, That the
remainder of these funds may be used only for such activities
related to Afghanistan and Central Asia:''.

______

SA 787. Mr. LEVIN (for himself, Ms. Stabenow, and Mr. Durbin)
submitted an amendment intended to be proposed by him to the bill H.R.
1591, making emergency supplemental appropriations for the fiscal year
ending September 30, 2007, and for other purposes; which was ordered to
lie on the table; as follows:

At the appropriate place, insert the following:

SEC. __. EMERALD ASH BORER.

The Secretary shall use $15,000,000 of funds of the
Commodity Credit Corporation to carry out activities for the
eradication of the emerald ash borer in the States of
Michigan, Ohio, Indiana, Illinois and Maryland.
______

SA 788. Mr. GREGG submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

[[Page S3927]]

On page 11, strike line 1 and all that follows through page
155, line 15, and insert the following:

Other Procurement, Army

For an additional amount for ``Other Procurement, Army'',
$12,588,272,000, to remain available until September 30,
2009.

Aircraft Procurement, Navy

For an additional amount for ``Aircraft Procurement,
Navy'', $963,903,000, to remain available until September 30,
2009.

Weapons Procurement, Navy

For an additional amount for ``Weapons Procurement, Navy'',
$163,813,000, to remain available until September 30, 2009.

Procurement of Ammunition, Navy and Marine Corps

For an additional amount for ``Procurement of Ammunition,
Navy and Marine Corps'', $159,833,000, to remain available
until September 30, 2009.

Other Procurement, Navy

For an additional amount for ``Other Procurement, Navy'',
$722,506,000, to remain available until September 30, 2009.

Procurement, Marine Corps

For an additional amount for ``Procurement, Marine Corps'',
$3,896,389,000, to remain available until September 30, 2009.

Aircraft Procurement, Air Force

For an additional amount for ``Aircraft Procurement, Air
Force'', $1,431,756,000, to remain available until September
30, 2009.

Missile Procurement, Air Force

For an additional amount for ``Missile Procurement, Air
Force'', $78,900,000, to remain available until September 30,
2009.

Procurement of Ammunition, Air Force

For an additional amount for ``Procurement of Ammunition,
Air Force'', $6,000,000, to remain available until September
30, 2009.

Other Procurement, Air Force

For an additional amount for ``Other Procurement, Air
Force'', $1,972,131,000, to remain available until September
30, 2009.

Procurement, Defense-Wide

For an additional amount for ``Procurement, Defense-Wide'',
$903,092,000, to remain available until September 30, 2009.

National Guard and Reserve Equipment

For an additional amount for ``National Guard and Reserve
Equipment'', $1,000,000,000, to remain available until
September 30, 2009.

RESEARCH, DEVELOPMENT, TEST AND EVALUATION

Research, Development, Test and Evaluation, Army

For an additional amount for ``Research, Development, Test
and Evaluation, Army'', $125,576,000, to remain available
until September 30, 2008.

Research, Development, Test and Evaluation, Navy

For an additional amount for ``Research, Development, Test
and Evaluation, Navy'', $308,212,000, to remain available
until September 30, 2008.

Research, Development, Test and Evaluation, Air Force

For an additional amount for ``Research, Development, Test
and Evaluation, Air Force'', $233,869,000, to remain
available until September 30, 2008.

Research, Development, Test and Evaluation, Defense-Wide

For an additional amount for ``Research, Development, Test
and Evaluation, Defense-Wide'', $522,804,000, to remain
available until September 30, 2008.

REVOLVING AND MANAGEMENT FUNDS

National Defense Sealift Fund

For an additional amount for ``National Defense Sealift
Fund'', $5,000,000.

Defense Working Capital Funds

For an additional amount for ``Defense Working Capital
Funds'', $1,315,526,000.

OTHER DEPARTMENT OF DEFENSE PROGRAMS

Defense Health Program

For an additional amount for ``Defense Health Program'',
$2,466,847,000; of which $2,277,147,000 shall be for
operation and maintenance; of which $118,000,000, to remain
available for obligation until September 30, 2009, shall be
for Procurement; and of which $71,700,000, to remain
available for obligation until September 30, 2008, shall be
for Research, development, test and evaluation.

Drug Interdiction and Counter-Drug Activities, Defense

(including transfer of funds)

For an additional amount for ``Drug Interdiction and
Counter-Drug Activities, Defense'', $254,665,000, to remain
available until expended: Provided, That these funds may be
used only for such activities related to Afghanistan and
Central Asia: Provided further, That the Secretary of Defense
may transfer such funds only to appropriations for military
personnel; operation and maintenance; procurement; and
research, development, test and evaluation: Provided further,
That the funds transferred shall be merged with and be
available for the same purposes and for the same time period
as the appropriation to which transferred: Provided further,
That the transfer authority provided in this paragraph is in
addition to any other transfer authority available to the
Department of Defense: Provided further, That upon a
determination that all or part of the funds transferred from
this appropriation are not necessary for the purposes
provided herein, such amounts may be transferred back to this
appropriation.

RELATED AGENCY

Intelligence Community Management Account

For an additional amount for ``Intelligence Community
Management Account'', $71,726,000.

GENERAL PROVISIONS--THIS CHAPTER

Sec. 1301. Appropriations provided in this chapter are
available for obligation until September 30, 2007, unless
otherwise provided in this chapter.

(transfer of funds)

Sec. 1302. Upon his determination that such action is
necessary in the national interest, the Secretary of Defense
may transfer between appropriations up to $3,500,000,000 of
the funds made available to the Department of Defense in this
title: Provided, That the Secretary shall notify the Congress
promptly of each transfer made pursuant to the authority in
this section: Provided further, That the authority provided
in this section is in addition to any other transfer
authority available to the Department of Defense and is
subject to the same terms and conditions as the authority
provided in section 8005 of the Department of Defense
Appropriations Act, 2007 (Public Law 109-289; 120 Stat.
1257), except for the fourth proviso: Provided further, That
funds previously transferred to the ``Joint Improvised
Explosive Device Defeat Fund'' and the ``Iraq Security Forces
Fund'' under the authority of section 8005 of Public Law 109-
289 and transferred back to their source appropriations
accounts shall not be taken into account for purposes of the
limitation on the amount of funds that may be transferred
under section 8005.
Sec. 1303. Funds appropriated in this chapter, or made
available by the transfer of funds in or pursuant to this
chapter, for intelligence activities are deemed to be
specifically authorized by the Congress for purposes of
section 504(a)(1) of the National Security Act of 1947 (50
U.S.C. 414(a)(1)).
Sec. 1304. None of the funds provided in this chapter may
be used to finance programs or activities denied by Congress
in fiscal years 2006 or 2007 appropriations to the Department
of Defense or to initiate a procurement or research,
development, test and evaluation new start program without
prior written notification to the congressional defense
committees.
Sec. 1305. During fiscal year 2007, the Secretary of
Defense may transfer not to exceed $6,300,000 of the amounts
in or credited to the Defense Cooperation Account, pursuant
to 10 U.S.C. 2608, to such appropriations or funds of the
Department of Defense as he shall determine for use
consistent with the purposes for which such funds were
contributed and accepted: Provided, That such amounts shall
be available for the same time period as the appropriation to
which transferred: Provided further, That the Secretary shall
report to the Congress all transfers made pursuant to this
authority.
Sec. 1306. (a) Authority to Provide Support.--Of the amount
appropriated by this title under the heading, ``Drug
Interdiction and Counter-Drug Activities, Defense'', not to
exceed $60,000,000 may be used for support for counter-drug
activities of the Governments of Afghanistan, Kazakhstan, and
Pakistan: Provided, That such support shall be in addition to
support provided for the counter-drug activities of such
Governments under any other provision of the law.
(b) Types of Support.--
(1) Except as specified in subsection (b)(2) of this
section, the support that may be provided under the authority
in this section shall be limited to the types of support
specified in section 1033(c)(1) of the National Defense
Authorization Act for Fiscal Year 1998 (Public Law 105-85, as
amended by Public Laws 106-398, 108-136, and 109-364) and
conditions on the provision of support as contained in
section 1033 shall apply for fiscal year 2007.
(2) The Secretary of Defense may transfer vehicles,
aircraft, and detection, interception, monitoring and testing
equipment to said Governments for counter-drug activities.
Sec. 1307. (a) From funds made available for operations and
maintenance in this title to the Department of Defense, not
to exceed $456,400,000 may be used, notwithstanding any other
provision of law, to fund the Commander's Emergency Response
Program, for the purpose of enabling military commanders in
Iraq and Afghanistan to respond to urgent humanitarian relief
and reconstruction requirements within their areas of
responsibility by carrying out programs that will immediately
assist the Iraqi and Afghan people.
(b) Quarterly Reports.--Not later than 15 days after the
end of each fiscal year quarter, the Secretary of Defense
shall submit to the congressional defense committees a report
regarding the source of funds and the allocation and use of
funds during that quarter that were made available pursuant
to the authority provided in this section or under any other
provision of law for the purposes of the programs under
subsection (a).
Sec. 1308. During fiscal year 2007, supervision and
administration costs associated with projects carried out
with funds appropriated to ``Afghanistan Security Forces
Fund'' or ``Iraq Security Forces Fund'' in this chapter may
be obligated at the time a construction contract is awarded:
Provided,

[[Page S3928]]

That for the purpose of this section, supervision and
administration costs include all in-house Government costs.
Sec. 1309. Section 1005(c)(2) of the National Defense
Authorization Act, Fiscal Year 2007 (Public Law 109-364) is
amended by striking ``$310,277,000'' and inserting
``$376,446,000''.
Sec. 1310. None of the funds appropriated or otherwise made
available by this or any other Act shall be obligated or
expended by the United States Government for a purpose as
follows:
(1) To establish any military installation or base for the
purpose of providing for the permanent stationing of United
States Armed Forces in Iraq.
(2) To exercise United States control over any oil resource
of Iraq.
Sec. 1311. None of the funds made available in this Act may
be used in contravention of the following laws enacted or
regulations promulgated to implement the United Nations
Convention Against Torture and Other Cruel, Inhuman or
Degrading Treatment or Punishment (done at New York on
December 10, 1984):
(1) Section 2340A of title 18, United States Code;
(2) Section 2242 of the Foreign Affairs Reform and
Restructuring Act of 1998 (division G of Public Law 105-277;
112 Stat. 2681-822; 8 U.S.C. 1231 note) and regulations
prescribed thereto, including regulations under part 208 of
title 8, Code of Federal Regulations, and part 95 of title
22, Code of Federal Regulations; and
(3) Sections 1002 and 1003 of the Department of Defense,
Emergency Supplemental Appropriations to Address Hurricanes
in the Gulf of Mexico, and Pandemic Influenza Act, 2006
(Public Law 109-148).
Sec. 1312. Section 9007 of Public Law 109-289 is amended by
striking ``20'' and inserting ``287''.
Sec. 1313. Inspection of Military Medical Treatment
Facilities, Military Quarters Housing Medical Hold Personnel,
and Military Quarters Housing Medical Holdover Personnel.l
(a) Periodic Inspection Required.--
(1) In general.--Not later than 180 days after the date of
the enactment of this Act, and annually thereafter, the
Secretary of Defense shall inspect each facility of the
Department of Defense as follows:
(A) Each military medical treatment facility.
(B) Each military quarters housing medical hold personnel.
(C) Each military quarters housing medical holdover
personnel.
(2) Purpose.--The purpose of an inspection under this
subsection is to ensure that the facility or quarters
concerned meets acceptable standards for the maintenance and
operation of medical facilities, quarters housing medical
hold personnel, or quarters housing medical holdover
personnel, as applicable.
(b) Acceptable Standards.--For purposes of this section,
acceptable standards for the operation and maintenance of
military medical treatment facilities, military quarters
housing medical hold personnel, or military quarters housing
medical holdover personnel are each of the following:
(1) Generally accepted standards for the accreditation of
non-military medical facilities, or for facilities used to
quarter individuals with medical conditions that may require
medical supervision, as applicable, in the United States.
(2) Standards under the Americans with Disabilities Act of
1990 (42 U.S.C. 12101 et seq.).
(c) Additional Inspections on Identified Deficiencies.--
(1) In general.--In the event a deficiency is identified
pursuant to subsection (a) at a facility or quarters
described in paragraph (1) of that subsection--
(A) the commander of such facility or quarters, as
applicable, shall submit to the Secretary a detailed plan to
correct the deficiency; and
(B) the Secretary shall reinspect such facility or
quarters, as applicable, not less often than once every 180
days until the deficiency is corrected.
(2) Construction with other inspections.--An inspection of
a facility or quarters under this subsection is in addition
to any inspection of such facility or quarters under
subsection (a).
(d) Reports on Inspections.--A complete copy of the report
on each inspection conducted under subsections (a) and (c)
shall be submitted in unclassified form to the applicable
military medical command and to the congressional defense
committees.
(e) Report on Standards.--In the event no standards for the
maintenance and operation of military medical treatment
facilities, military quarters housing medical hold personnel,
or military quarters housing medical holdover personnel exist
as of the date of the enactment of this Act, or such
standards as do exist do not meet acceptable standards for
the maintenance and operation of such facilities or quarters,
as the case may be, the Secretary shall, not later than 30
days after that date, submit to Congress a report setting
forth the plan of the Secretary to ensure--
(1) the adoption by the Department of standards for the
maintenance and operation of military medical facilities,
military quarters housing medical hold personnel, or military
quarters housing medical holdover personnel, as applicable,
that meet--
(A) acceptable standards for the maintenance and operation
of such facilities or quarters, as the case may be; and
(B) standards under the Americans with Disabilities Act of
1990; and
(2) the comprehensive implementation of the standards
adopted under paragraph (1) at the earliest date practicable.
Sec. 1314. From funds made available for the ``Iraq
Security Forces Fund'' for fiscal year 2007, up to
$155,500,000 may be used, notwithstanding any other provision
of law, to provide assistance, with the concurrence of the
Secretary of State, to the Government of Iraq to support the
disarmament, demobilization, and reintegration of militias
and illegal armed groups.
Sec. 1315. Revision of United States Policy on Iraq. (a)
Findings.--Congress makes the following findings:
(1) Congress and the American people will continue to
support and protect the members of the United States Armed
Forces who are serving or have served bravely and honorably
in Iraq.
(2) The circumstances referred to in the Authorization for
Use of Military Force Against Iraq Resolution of 2002 (Public
Law 107-243) have changed substantially.
(3) United States troops should not be policing a civil
war, and the current conflict in Iraq requires principally a
political solution.
(4) United States policy on Iraq must change to emphasize
the need for a political solution by Iraqi leaders in order
to maximize the chances of success and to more effectively
fight the war on terror.
(b) Prompt Commencement of Phased Redeployment of United
States Forces From Iraq.--
(1) Transition of mission.--The President shall promptly
transition the mission of United States forces in Iraq to the
limited purposes set forth in paragraph (2).
(2) Commencement of phased redeployment from iraq.--The
President shall commence the phased redeployment of United
States forces from Iraq not later than 120 days after the
date of the enactment of this Act, with the goal of
redeploying, by March 31, 2008, all United States combat
forces from Iraq except for a limited number that are
essential for the following purposes:
(A) Protecting United States and coalition personnel and
infrastructure.
(B) Training and equipping Iraqi forces.
(C) Conducting targeted counter-terrorism operations.
(3) Comprehensive strategy.--Paragraph (2) shall be
implemented as part of a comprehensive diplomatic, political,
and economic strategy that includes sustained engagement with
Iraq's neighbors and the international community for the
purpose of working collectively to bring stability to Iraq.
(4) Reports required.--Not later than 60 days after the
date of the enactment of this Act, and every 90 days
thereafter, the President shall submit to Congress a report
on the progress made in transitioning the mission of the
United States forces in Iraq and implementing the phased
redeployment of United States forces from Iraq as required
under this subsection, as well as a classified campaign plan
for Iraq, including strategic and operational benchmarks and
projected redeployment dates of United States forces from
Iraq.
(c) Benchmarks for the Government of Iraq.--
(1) Sense of congress.--It is the sense of Congress that--
(A) achieving success in Iraq is dependent on the
Government of Iraq meeting specific benchmarks, as reflected
in previous commitments made by the Government of Iraq,
including--
(i) deploying trained and ready Iraqi security forces in
Baghdad;
(ii) strengthening the authority of Iraqi commanders to
make tactical and operational decisions without political
intervention;
(iii) disarming militias and ensuring that Iraqi security
forces are accountable only to the central government and
loyal to the constitution of Iraq;
(iv) enacting and implementing legislation to ensure that
the energy resources of Iraq benefit all Iraqi citizens in an
equitable manner;
(v) enacting and implementing legislation that equitably
reforms the de-Ba'athification process in Iraq;
(vi) ensuring a fair process for amending the constitution
of Iraq so as to protect minority rights; and
(vii) enacting and implementing rules to equitably protect
the rights of minority political parties in the Iraqi
Parliament; and
(B) each benchmark set forth in subparagraph (A) should be
completed expeditiously and pursuant to a schedule
established by the Government of Iraq.
(2) Report.--Not later than 30 days after the date of the
enactment of this Act, and every 60 days thereafter, the
Commander, Multi-National Forces-Iraq shall submit to
Congress a report describing and assessing in detail the
current progress being made by the Government of Iraq in
meeting the benchmarks set forth in paragraph (1)(A).

CHAPTER 4

DEPARTMENT OF ENERGY

ATOMIC ENERGY DEFENSE ACTIVITIES

National Nuclear Security Administration

Defense Nuclear Nonproliferation

For an additional amount for ``Defense Nuclear
Nonproliferation'', $63,000,000.

[[Page S3929]]

CHAPTER 5

DEPARTMENT OF HOMELAND SECURITY

United States Customs and Border Protection

Salaries and Expenses

For an additional amount for ``Salaries and Expenses'',
$140,000,000, to remain available until September 30, 2008.

Air and Marine Interdiction, Operations, Maintenance, and Procurement

For an additional amount for ``Air and Marine Interdiction,
Operations, Maintenance, and Procurement'', for air and
marine operations on the Northern Border and the Great Lakes,
including the final Northern Border air wing, $75,000,000, to
remain available until September 30, 2008.

Immigration and Customs Enforcement

Salaries and Expenses

For an additional amount for ``Salaries and Expenses'',
$20,000,000, to remain available until September 30, 2008.

Transportation Security Administration

Aviation Security

For an additional amount for ``Aviation Security'',
$660,000,000; of which $600,000,000 shall be for procurement
and installation of checked baggage explosives detection
systems, to remain available until expended; and $60,000,000
shall be for air cargo security, to remain available until
September 30, 2008.

Federal Air Marshals

For an additional amount for ``Federal Air Marshals'',
$15,000,000, to remain available until September 30, 2008.

Preparedness

management and administration

For an additional amount for ``Office of the Chief Medical
Officer'' for nuclear preparedness and other activities,
$18,000,000, to remain available until September 30, 2008.

Infrastructure Protection and Information Security

For an additional amount for ``Infrastructure Protection
and Information Security'' for chemical site security
activities, $18,000,000, to remain available until September
30, 2008.

Federal Emergency Management Agency

Administrative and Regional Operations

For an additional amount for ``Administrative and Regional
Operations'' for necessary expenses related to title V of the
Homeland Security Act of 2002 (6 U.S.C. 101 et seq. (as
amended by section 611 of the Post-Katrina Emergency
Management Reform Act of 2006 (6 U.S.C. 701 note; Public Law
109-295))), $20,000,000, to remain available until September
30, 2008: Provided, That none of the funds available under
this heading may be obligated until the Committees on
Appropriations of the Senate and the House of Representatives
receive and approve a plan for expenditure.

State and Local Programs

For an additional amount for ``State and Local Programs'',
$850,000,000; of which $190,000,000 shall be for port
security pursuant to section 70107(l) of title 46 United
States Code; $625,000,000 shall be for intercity rail
passenger transportation, freight rail, and transit security
grants; and $35,000,000 shall be for regional grants and
technical assistance to high risk urban areas for
catastrophic event planning and preparedness: Provided, That
none of the funds made available under this heading may be
obligated for such regional grants and technical assistance
until the Committees on Appropriations of the Senate and the
House of Representatives receive and approve a plan for
expenditure: Provided further, That funds for such regional
grants and technical assistance shall remain available until
September 30, 2008.

Emergency Management Performance Grants

For an additional amount for ``Emergency Management
Performance Grants'' for necessary expenses related to the
Nationwide Plan Review, $100,000,000.

United States Citizenship and Immigration Services

For an additional amount for expenses of ``United States
Citizenship and Immigration Services'' to address backlogs of
security checks associated with pending applications and
petitions, $30,000,000, to remain available until September
30, 2008: Provided, That none of the funds made available
under this heading shall be available for obligation until
the Secretary of Homeland Security, in consultation with the
United States Attorney General, submits to the Committees on
Appropriations of the Senate and the House of Representatives
a plan to eliminate the backlog of security checks that
establishes information sharing protocols to ensure United
States Citizenship and Immigration Services has the
information it needs to carry out its mission.

Science and Technology

Research, Development, Acquisition, and Operations

For an additional amount for ``Research, Development,
Acquisition, and Operations'' for air cargo research,
$15,000,000, to remain available until expended.

Domestic Nuclear Detection Office

Research, Development, and Operations

For an additional amount for ``Research, Development, and
Operations'' for non-container, rail, aviation and intermodal
radiation detection activities, $39,000,000, to remain
available until expended.

GENERAL PROVISIONS--THIS CHAPTER

Sec. 1501. None of the funds provided in this Act, or
Public Law 109-295, shall be available to carry out section
872 of Public Law 107-296.
Sec. 1502. Section 550 of the Department of Homeland
Security Appropriations Act, 2007 (6 U.S.C. 121 note) is
amended by adding at the end the following:
``(h) This section shall not preclude or deny any right of
any State or political subdivision thereof to adopt or
enforce any regulation, requirement, or standard of
performance with respect to chemical facility security that
is more stringent than a regulation, requirement, or standard
of performance issued under this section, or otherwise impair
any right or jurisdiction of any State with respect to
chemical facilities within that State, unless there is an
actual conflict between this section and the law of that
State.''.

CHAPTER 6

MILITARY CONSTRUCTION

Military Construction, Army

For an additional amount for ``Military Construction,
Army'', $1,261,390,000, to remain available until September
30, 2008: Provided, That such funds may be obligated and
expended to carry out planning and design and military
construction projects not otherwise authorized by law:
Provided further, That of the funds provided under this
heading, $280,300,000 shall not be obligated or expended
until the Secretary of Defense certifies that none of the
funds are to be used for the purpose of providing facilities
for the permanent basing of U.S. military personnel in Iraq.

Military Construction, Navy and Marine Corps

For an additional amount for ``Military Construction, Navy
and Marine Corps'', $347,890,000, to remain available until
September 30, 2008: Provided, That such funds may be
obligated and expended to carry out planning and design and
military construction projects not otherwise authorized by
law.

Military Construction, Air Force

For an additional amount for ``Military Construction, Air
Force'', $34,700,000, to remain available until September 30,
2008: Provided, That such funds may be obligated and expended
to carry out planning and design and military construction
projects not otherwise authorized by law.

CHAPTER 7

DEPARTMENT OF STATE AND RELATED AGENCY

DEPARTMENT OF STATE

Administration of Foreign Affairs

Diplomatic and Consular Programs

For an additional amount for ``Diplomatic and Consular
Programs'', $815,796,000, to remain available until September
30, 2008, of which $70,000,000 for World Wide Security
Upgrades is available until expended: Provided, That of the
funds appropriated under this heading, not more than
$20,000,000 shall be made available for public diplomacy
programs: Provided further, That prior to the obligation of
funds pursuant to the previous proviso, the Secretary of
State shall submit a report to the Committees on
Appropriations describing a comprehensive public diplomacy
strategy, with goals and expected results, for fiscal years
2007 and 2008: Provided further, That within 15 days of
enactment of this Act, the Office of Management and Budget
shall apportion $15,000,000 from amounts appropriated or
otherwise made available by chapter 8 of title II of division
B of Public Law 109-148 under the heading ``Emergencies in
the Diplomatic and Consular Service'' for emergency
evacuations: Provided further, That of the amount made
available under this heading for Iraq, not to exceed
$20,000,000 may be transferred to, and merged with, funds in
the ``Emergencies in the Diplomatic and Consular Service''
appropriations account, to be available only for emergency
evacuations and terrorism rewards.

Office of Inspector General

For an additional amount for ``Office of Inspector
General'', $36,500,000, to remain available until December
31, 2008: Provided, That of the funds appropriated under this
heading, not less than $1,500,000 shall be made available for
activities related to oversight of assistance furnished for
Iraq and Afghanistan with funds appropriated in this Act and
in prior appropriations Acts: Provided further, That
$35,000,000 of these funds shall be transferred to the
Special Inspector General for Iraq Reconstruction for
reconstruction oversight.

Educational and Cultural Exchange Programs

For an additional amount for ``Educational and Cultural
Exchange Programs'', $25,000,000, to remain available until
expended.

International Organizations

Contributions to International Organizations

For an additional amount for ``Contributions to
International Organizations'', $59,000,000, to remain
available until September 30, 2008.

Contributions for International Peacekeeping Activities

For an additional amount for ``Contributions for
International Peacekeeping Activities'', $200,000,000, to
remain available until September 30, 2008.

[[Page S3930]]

RELATED AGENCY

Broadcasting Board of Governors

International Broadcasting Operations

For an additional amount for ``International Broadcasting
Operations'' for activities related to broadcasting to the
Middle East, $10,000,000, to remain available until September
30, 2008.

FOREIGN OPERATIONS

BILATERAL ECONOMIC ASSISTANCE

FUNDS APPROPRIATED TO THE PRESIDENT

United States Agency for International Development

Child Survival and Health Programs Fund

For an additional amount for ``Child Survival and Health
Programs Fund'', $161,000,000, to remain available until
September 30, 2008: Provided, That notwithstanding any other
provision of law, funds made available under the heading
``Millennium Challenge Corporation'' and ``Global HIV/AIDS
Initiative'' in prior Acts making appropriations for foreign
operations, export financing and related programs may be made
available to combat the avian influenza, subject to the
regular notification procedures of the Committees on
Appropriations.

International Disaster and Famine Assistance

For an additional amount for ``International Disaster and
Famine Assistance'', $187,000,000, to remain available until
expended: Provided, That of the funds appropriated under this
heading, not less than $65,000,000 shall be made available
for assistance for internally displaced persons in Iraq, not
less than $18,000,000 shall be made available for emergency
shelter, fuel and other assistance for internally displaced
persons in Afghanistan, not less than $10,000,000 shall be
made available for assistance for northern Uganda, not less
than $10,000,000 shall be made available for assistance for
eastern Democratic Republic of the Congo, and not less than
$10,000,000 shall be made available for assistance for Chad.

Operating Expenses of the United States Agency for International
Development

For an additional amount for ``Operating Expenses of the
United States Agency for International Development'',
$5,700,000, to remain available until September 30, 2008.

OPERATING EXPENSES OF THE UNITED STATES AGENCY FOR INTERNATIONAL
DEVELOPMENT OFFICE OF INSPECTOR GENERAL

For an additional amount for ``Operating Expenses of the
United States Agency for International Development Office of
Inspector General'', $4,000,000, to remain available until
September 30, 2008: Provided, That of the funds appropriated
under this heading, not less than $3,000,000 shall be made
available for activities related to oversight of assistance
furnished for Iraq with funds appropriated in this Act and in
prior appropriations Acts, and not less than $1,000,000 shall
be made available for activities related to oversight of
assistance furnished for Afghanistan with funds appropriated
in this Act and in prior appropriations Acts.

OTHER BILATERAL ECONOMIC ASSISTANCE

Economic Support Fund

For an additional amount for ``Economic Support Fund'',
$2,602,200,000, to remain available until September 30, 2008:
Provided, That of the funds appropriated under this heading
that are available for assistance for Iraq, not less than
$100,000,000 shall be made available to the United States
Agency for International Development for continued support
for its Community Action Program in Iraq, of which not less
than $5,000,000 shall be made available for the fund
established by section 2108 of Public Law 109-13: Provided
further, That of the funds appropriated under this heading
that are available for assistance for Afghanistan, not less
than $10,000,000 shall be made available to the United States
Agency for International Development for continued support
for its Afghan Civilian Assistance Program: Provided further,
That of the funds appropriated under this heading, not less
than $6,000,000 shall be made available for assistance for
elections, reintegration of ex-combatants, and other
assistance to support the peace process in Nepal: Provided
further, That of the funds appropriated under this heading,
not less than $3,200,000 shall be made available,
notwithstanding any other provision of law, for assistance
for Vietnam for environmental remediation of dioxin storage
sites and to support health programs in communities near
those sites: Provided further, That funds made available
pursuant to the previous proviso should be matched, to the
maximum extent possible, with contributions from other
governments, multilateral organizations, and private sources:
Provided further, That of the funds made available under this
heading, not less than $6,000,000 shall be made available for
typhoon reconstruction assistance for the Philippines:
Provided further, That of the funds made available under this
heading, not less than $110,000,000 shall be made available
for assistance for Pakistan, of which not less than
$5,000,000 shall be made available for political party
development and election monitoring activities: Provided
further, That of the funds appropriated under this heading,
not less than $2,000,000 shall be made available to support
the peace process in northern Uganda: Provided further, That
of the funds made available under the heading ``Economic
Support Fund'' in Public Law 109-234 for Iraq to promote
democracy, rule of law and reconciliation, $2,000,000 should
be made available for the United States Institute of Peace
for programs and activities in Afghanistan to remain
available until September 30, 2008.

DEPARTMENT OF STATE

Assistance for Eastern Europe and the Baltic States

For an additional amount for ``Assistance for Eastern
Europe and the Baltic States'', $214,000,000, to remain
available until September 30, 2008, for assistance for
Kosovo.

Democracy Fund

For an additional amount for ``Democracy Fund'',
$465,000,000, to remain available until September 30, 2008:
Provided, That of the funds appropriated under this heading,
not less than $385,000,000 shall be made available for the
Human Rights and Democracy Fund of the Bureau of Democracy,
Human Rights and Labor, Department of State, for democracy,
human rights, and rule of law programs in Iraq: Provided
further, That prior to the initial obligation of funds made
available under this heading for Iraq for the Political
Participation Fund or the National Institutions Fund, the
Secretary of State shall submit a report to the Committees on
Appropriations describing a comprehensive, long-term
strategy, with goals and expected results, for strengthening
and advancing democracy in Iraq: Provided further, That of
the funds appropriated under this heading, not less than
$5,000,000 shall be made available for media and
reconciliation programs in Somalia.

International Narcotics Control and Law Enforcement

(including rescission of funds)

For an additional amount for ``International Narcotics
Control and Law Enforcement'', $210,000,000, to remain
available until September 30, 2008.
Of the amounts made available for procurement of a maritime
patrol aircraft for the Colombian Navy under this heading in
Public Law 109-234, $13,000,000 are rescinded.

Migration and Refugee Assistance

For an additional amount for ``Migration and Refugee
Assistance'', $143,000,000, to remain available until
September 30, 2008: Provided, That of the funds appropriated
under this heading, not less than $65,000,000 shall be made
available for assistance for Iraqi refugees including not
less than $5,000,000 to rescue Iraqi scholars, and not less
than $18,000,000 shall be made available for assistance for
Afghan refugees.

United States Emergency Refugee and Migration Assistance Fund

For an additional amount for ``United States Emergency
Refugee and Migration Assistance Fund'', $55,000,000, to
remain available until expended.

Nonproliferation, Anti-terrorism, Demining and Related Programs

For an additional amount for ``Nonproliferation, Anti-
Terrorism, Demining and Related Programs'', $27,500,000, to
remain available until September 30, 2008.

DEPARTMENT OF THE TREASURY

International Affairs Technical Assistance Program

For an additional amount for ``International Affairs
Technical Assistance'', $2,750,000, to remain available until
September 30, 2008.

MILITARY ASSISTANCE

FUNDS APPROPRIATED TO THE PRESIDENT

Foreign Military Financing Program

For an additional amount for ``Foreign Military Financing
Program'', $220,000,000, to remain available until September
30, 2008, for assistance for Lebanon.

Peacekeeping Operations

(including transfer of funds)

For an additional amount for ``Peacekeeping Operations'',
$323,000,000, to remain available until September 30, 2008,
of which up to $128,000,000 may be transferred, subject to
the regular notification procedures of the Committees on
Appropriations, to ``Contributions to International
Peacekeeping Activities'', to be made available,
notwithstanding any other provision of law, for assessed
costs of United Nations Peacekeeping Missions: Provided, That
of the funds appropriated under this heading, not less than
$45,000,000 shall be made available, notwithstanding section
660 of the Foreign Assistance Act of 1961, for assistance for
Liberia for security sector reform.

GENERAL PROVISIONS--THIS CHAPTER

authorization of funds

Sec. 1701. Funds appropriated by this title may be
obligated and expended notwithstanding section 10 of Public
Law 91-672 (22 U.S.C. 2412), section 15 of the State
Department Basic Authorities Act of 1956 (22 U.S.C. 2680),
section 313 of the Foreign Relations Authorization Act,
Fiscal Years 1994 and 1995 (22 U.S.C. 6212), and section
504(a)(1) of the National Security Act of 1947 (50 U.S.C.
414(a)(1)).

extension of availability of funds

Sec. 1702. Section 1302(a) of Public Law 109-234 is amended
by striking ``one additional year'' and inserting in lieu
thereof ``two additional years''.

EXTENSION OF OVERSIGHT AUTHORITY

Sec. 1703. Section 3001(o)(1)(B) of the Emergency
Supplemental Appropriations Act for

[[Page S3931]]

Defense and for the Reconstruction of Iraq and Afghanistan,
2004 (Public Law 108-106; 117 Stat. 1238; 5 U.S.C. App., note
to section 8G of Public Law 95-452), as amended by section
1054(b) of the John Warner National Defense Authorization Act
for Fiscal Year 2007 (Public Law 109-364; 120 Stat. 2397) and
section 2 of the Iraq Reconstruction Accountability Act of
2006 (Public Law 109-440), is amended by inserting ``or
fiscal year 2007'' after ``fiscal year 2006''.

DEBT RESTRUCTURING

Sec. 1704. Amounts appropriated for fiscal year 2007 for
``Bilateral Economic Assistance--Department of the Treasury--
Debt Restructuring'' may be used to assist Liberia in
retiring its debt arrearages to the International Monetary
Fund, the International Bank for Reconstruction and
Development, and the African Development Bank.

JORDAN

(Including Transfer of Funds)

Sec. 1705. Of the funds appropriated by this Act for
assistance for Iraq under the heading ``Economic Support
Fund'' that are available to support Provincial
Reconstruction Team activities, up to $100,000,000 may be
transferred to, and merged with, funds appropriated by this
Act under the headings ``Foreign Military Financing Program''
and ``Nonproliferation, Anti-terrorism, Demining and Related
Programs'' for assistance for Jordan: Provided, That funds
transferred pursuant to this section shall be subject to the
regular notification procedures of the Committees on
Appropriations.

LEBANON

Sec. 1706. Prior to the initial obligation of funds made
available in this Act for assistance for Lebanon under the
headings ``Foreign Military Financing Program'' and
``Nonproliferation, Anti-terrorism, Demining and Related
Programs'', the Secretary of State shall certify to the
Committees on Appropriations that all practicable efforts
have been made to ensure that such assistance is not provided
to or through any individual, or private or government
entity, that advocates, plans, sponsors, engages in, or has
engaged in, terrorist activity: Provided, That this section
shall be effective notwithstanding section 534(a) of Public
Law 109-102, which is made applicable to funds appropriated
for fiscal year 2007 by the Continuing Appropriations
Resolution, 2007, as amended.

HUMAN RIGHTS AND DEMOCRACY FUND

Sec. 1707. The Assistant Secretary of State for Democracy,
Human Rights and Labor shall be responsible for all policy,
funding, and programming decisions regarding funds made
available under this Act and prior Acts making appropriations
for foreign operations, export financing and related programs
for the Human Rights and Democracy Fund of the Bureau of
Democracy, Human Rights and Labor.

INSPECTOR GENERAL OVERSIGHT OF IRAQ AND AFGHANISTAN

Sec. 1708. (a) In General.--Subject to paragraph (2), the
Inspector General of the Department of State and the
Broadcasting Board of Governors (referred to in this section
as the ``Inspector General'') may use personal services
contracts to engage citizens of the United States to
facilitate and support the Office of the Inspector General's
oversight of programs and operations related to Iraq and
Afghanistan. Individuals engaged by contract to perform such
services shall not, by virtue of such contract, be considered
to be employees of the United States Government for purposes
of any law administered by the Office of Personnel
Management. The Secretary of State may determine the
applicability to such individuals of any law administered by
the Secretary concerning the performance of such services by
such individuals.
(b) Conditions.--The authority under paragraph (1) is
subject to the following conditions:
(1) The Inspector General determines that existing
personnel resources are insufficient.
(2) The contract length for a personal services contractor,
including options, may not exceed 1 year, unless the
Inspector General makes a finding that exceptional
circumstances justify an extension of up to 2 additional
years.
(3) Not more than 20 individuals may be employed at any
time as personal services contractors under the program.
(c) Termination of Authority.--The authority to award
personal services contracts under this section shall
terminate on December 31, 2008. A contract entered into prior
to the termination date under this paragraph may remain in
effect until not later than December 31, 2009.
(d) Other Authorities Not Affected.--The authority under
this section is in addition to any other authority of the
Inspector General to hire personal services contractors.

FUNDING TABLES

Sec. 1709. (a) Funds provided in this Act for the following
accounts shall be made available for programs and countries
in the amounts contained in the respective tables included in
the report accompanying this Act:
``Diplomatic and Consular Programs''.
``Educational and Cultural Exchange Programs''.
``International Disaster and Famine Assistance''.
``Economic Support Fund''.
``Assistance for Eastern Europe and Baltic States''.
``Democracy Fund''.
``Migration and Refugee Assistance''.
``Nonproliferation, Anti-Terrorism, Demining and Related
Programs''.
``Peacekeeping Operations''.
(b) Any proposed increases or decreases to the amounts
contained in the tables in the accompanying report shall be
subject to the regular notification procedures of the
Committees on Appropriations and section 634A of the Foreign
Assistance Act of 1961.

BENCHMARKS FOR CERTAIN RECONSTRUCTION ASSISTANCE FOR IRAQ

Sec. 1710. (a) Benchmarks.--Notwithstanding any other
provision of law, fifty percent of the funds appropriated by
this Act for assistance for Iraq under the headings
``Economic Support Fund'' and ``International Narcotics and
Law Enforcement'' shall be withheld from obligation until the
President certifies to the Committees on Appropriations and
Foreign Relations of the Senate and the Committees on
Appropriations and Foreign Affairs of the House of
Representatives that the Government of Iraq has--
(1) enacted a broadly accepted hydro-carbon law that
equitably shares oil revenues among all Iraqis;
(2) adopted legislation necessary for the conduct of
provincial and local elections, taken steps to implement such
legislation, and set a schedule to conduct provincial and
local elections;
(3) reformed current laws governing the de-Baathification
process to allow for more equitable treatment of individuals
affected by such laws;
(4) amended the Constitution of Iraq consistent with the
principles contained in Article 137 of such constitution; and
(5) allocated and begun expenditure of $10,000,000,000 in
Iraqi revenues for reconstruction projects, including
delivery of essential services, on an equitable basis.
(b) Exemptions.--The requirement to withhold funds from
obligation pursuant to subsection (a) shall not apply with
respect to funds made available under the heading ``Economic
Support Fund'' that are administered by the United States
Agency for International Development for continued support
for the Community Action Program, assistance for civilian
victims of the military operations, and the Community
Stabilization Program in Iraq, or for programs and activities
to promote democracy, governance, human rights, and rule of
law.
(c) Report.--At the time the President certifies to the
Committees on Appropriations and Foreign Relations of the
Senate and the Committees on Appropriations and Foreign
Affairs of the House of Representatives that the Government
of Iraq has met the benchmarks described in subsection (a),
the President shall submit to such Committees a report that
contains a detailed description of the specific actions that
the Government of Iraq has taken to meet each of the
benchmarks referenced in the certification.

RELIEF FOR IRAQI, HMONG AND OTHER REFUGEES WHO DO NOT POSE A THREAT TO
THE UNITED STATES

Sec. 1711. (a) Amendment to Authority to Determine the Bar
to Admission Inapplicable.--Section 212(d)(3)(B)(i) of the
Immigration and Nationality Act (8 U.S.C. 1182(d)(3)(B)(i))
is amended to read as follows: ``The Secretary of State,
after consultation with the Attorney General and the
Secretary of Homeland Security, or the Secretary of Homeland
Security, after consultation with the Secretary of State and
the Attorney General, may determine in such Secretary's sole
unreviewable discretion that subsection (a)(3)(B) shall not
apply with respect to an alien within the scope of that
subsection, or that subsection (a)(3)(B)(vi)(III) shall not
apply to a group. Such a determination shall neither
prejudice the ability of the United States Government to
commence criminal or civil proceedings involving a
beneficiary of such a determination or any other person, nor
create any substantive or procedural right or benefit for a
beneficiary of such a determination or any other person.
Notwithstanding any other provision of law (statutory or non-
statutory), including but not limited to section 2241 of
title 28, or any other habeas corpus provision, and sections
1361 and 1651 of such title, no court shall have jurisdiction
to review such a determination or revocation except in a
proceeding for review of a final order of removal pursuant to
section 242 and only to the extent provided in section
242(a)(2)(D). The Secretary of State may not exercise the
discretion provided in this clause with respect to an alien
at any time during which the alien is the subject of pending
removal proceedings under section 1229a of title 8.''.
(b) Automatic Relief for the Hmong and Other Groups That do
Not Pose a Threat to the United States.--Section 212(a)(3)(B)
of the Immigration and Nationality Act (8 U.S.C.
1182(a)(3)(B)) is amended--
(1) in clause (vi) in the matter preceding section (I), by
striking ``As'' and inserting ``Except as provided in clause
(vii), as''; and
(2) by adding at the end the following new clause:
``(vii) Notwithstanding clause (vi), for purposes of this
section the Hmong, the Montagnards, the Karen National Union/
Karen Liberation Army (KNU/KNLA), the Chin National Front/
Chin National Army (CNF/CNA), the Chin National League for
Democracy (CNLD), the Kayan New Land Party (KNLP), the Arakan
Liberation Party

[[Page S3932]]

(ALP), the Mustangs, the Alzados, and the Karenni National
Progressive Party shall not be considered to be a terrorist
organization on the basis of any act or event occurring
before the date of enactment of this section. Nothing in this
subsection may be construed to alter or limit the authority
of the Secretary of State and Secretary of Homeland Security
to exercise their discretionary authority pursuant to
212(d)(3)(B)(i) (8 U.S.C. 1182(d)(3)(B)(i)).''.
(c) Duress Exception.--Section 212(a)(3)(B)(iv)(VI) of the
Immigration and Nationality Act (8 U.S.C.
1182(a)(3)(B)(iv)(VI)) is amended by adding ``other than an
act carried out under duress'' after ``act'' and before
``that the actor knows''.
(d) Technical Correction.--Section 212(a)(3)(B)(ii) of the
Immigration and Nationality Act (8 U.S.C. 1182(a)(3)(B)(ii))
is amended by striking ``Subclause (VII)'' and inserting
``Subclause (IX)''.
(e) Regulations.--Section 212(d)(3)(B) of the Immigration
and Nationality Act (8 U.S.C. 1182(d)(3)(B)) is amended by
adding the following subsection:
``(iii) Not later than 180 days after the date of enactment
of this Act, the Secretary of the Department of Homeland
Security and Secretary of State shall each publish in the
Federal Register regulations establishing the process by
which the eligibility of a refugee, asylum seeker, or
individual seeking to adjust his immigration status is
considered eligible for any of the exceptions authorized by
clause (i), including a timeline for issuing a
determination.''.
(f) Effective Date.--The amendments made by this section
shall take effect on the date of enactment of this section,
and these amendments and sections 212(a)(3)(B) and
212(d)(3)(B) of the Immigration and Nationality Act (8 U.S.C.
1182(a)(3)(B) and 1182(d)(3)(B)), as amended by these
sections, shall apply to--
(1) removal proceedings instituted before, on, or after the
date of enactment of this section; and
(2) acts and conditions constituting a ground for
inadmissibility, excludability, deportation, or removal
occurring or existing before, on, or after such date.

SPENDING PLAN AND NOTIFICATION PROCEDURES

Sec. 1712. Not later than 45 days after enactment of this
Act the Secretary of State shall submit to the Committees on
Appropriations a report detailing planned expenditures for
funds appropriated under the headings in this chapter, except
for funds appropriated under the headings ``International
Disaster and Famine Assistance'', ``Office of the United
States Agency for International Development Inspector
General'', and ``Office of the Inspector General'': Provided,
That funds appropriated under the headings in this chapter,
except for funds appropriated under the headings named in
this section, shall be subject to the regular notification
procedures of the Committees on Appropriations.

TITLE II

KATRINA RECOVERY, VETERANS' CARE AND FOR OTHER PURPOSES

CHAPTER 1

GENERAL PROVISION--THIS CHAPTER

emergency forestry conservation reserve program

Sec. 2101. Section 1231(k)(2) of the Food Security Act of
1985 (16 U.S.C. 3831(k)(2)) is amended by striking ``During
calendar year 2006, the'' and inserting ``The''.

CHAPTER 2

DEPARTMENT OF JUSTICE

Office of Justice Programs

STATE AND LOCAL LAW ENFORCEMENT ASSISTANCE

For an additional amount for ``State and Local Law
Enforcement Assistance'', for discretionary grants authorized
by subpart 2 of part E, of title I of the Omnibus Crime
Control and Safe Streets Act of 1968, notwithstanding the
provisions of section 511 of said Act, $170,000,000, to
remain available until September 30, 2008: Provided, That of
the amount made available under this heading, $70,000,000
shall be for local law enforcement initiatives in the gulf
coast region related to the aftermath of Hurricanes Katrina
and Rita, of which no less than $55,000,000 shall be for the
State of Louisiana: Provided further, That of the amount made
available under this heading, $100,000,000 shall be for
reimbursing State and local law enforcement entities for
security and related costs, including overtime, associated
with the 2008 Presidential Candidate Nominating Conventions,
of which $50,000,000 shall be for the city of Denver,
Colorado and $50,000,000 shall be for the city of St. Paul,
Minnesota: Provided further, That the Department of Justice
shall report to the Committees on Appropriations of the House
and the Senate on a quarterly basis on the expenditure of the
funds provided in the previous proviso.

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

OPERATIONS, RESEARCH, AND FACILITIES

For an additional amount for ``Operations, Research, and
Facilities'', for necessary expenses related to fisheries
disasters, $165,900,000, to remain available until September
30, 2008: Provided, That of the amount provided under this
heading, the National Marine Fisheries Service shall cause
$60,400,000 to be distributed among eligible recipients of
assistance for the commercial fishery failure designated
under section 312(a) of the Magnuson-Stevens Fishery
Conservation and Management Act (16 U.S.C. 1861a(a)) and
declared by the Secretary of Commerce on August 10, 2006:
Provided further, That of the amount provided under this
heading, $105,500,000 shall be for necessary expenses related
to the consequences of Hurricanes Katrina and Rita on shrimp
and fishing industries.

PROCUREMENT, ACQUISITION, AND CONSTRUCTION

For an additional amount for ``Procurement, Acquisition and
Construction'', for necessary expenses related to disaster
response and preparedness of the Gulf of Mexico coast,
$6,000,000, to remain available until September 30, 2008.

fisheries disaster mitigation fund

For an additional amount for a ``Fisheries Disaster
Mitigation Fund'', $50,000,000, to remain available until
expended for use in mitigating the effects of commercial
fisheries failures and fishery resource disasters as
determined under the Magnuson Stevens Act (16 U.S.C. 1801 et
seq.) or the Interjurisdictional Fisheries Act (16 U.S.C.
4101 et seq.): Provided, That the Secretary of Commerce shall
obligate funds provided under this heading according to the
Magnuson Stevens Conservation Act, as amended, the
Interjurisdictional Fisheries Act, as amended, or other Acts
as the Secretary determines to be appropriate.

GENERAL PROVISION--THIS CHAPTER

Sec. 2201. Up to $48,000,000 of amounts made available to
the National Aeronautics and Space Administration in Public
Law 109-148 and Public Law 109-234 for emergency hurricane
and other natural disaster-related expenses may be used to
reimburse hurricane-related costs incurred by NASA in fiscal
year 2005.

CHAPTER 3

DEPARTMENT OF DEFENSE--CIVIL

DEPARTMENT OF THE ARMY

Corps of Engineers--Civil

CONSTRUCTION

For an additional amount for ``Construction'' for necessary
expenses related to the consequences of Hurricane Katrina and
other hurricanes of the 2005 season, $150,000,000, to remain
available until expended, which may be used to continue
construction of projects related to interior drainage for the
greater New Orleans metropolitan area.

operation and maintenance

For an additional amount for ``Operation and Maintenance''
to dredge navigation channels related to the consequences of
Hurricane Katrina and other hurricanes of the 2005 season,
$3,000,000, to remain available until expended.

Flood Control and Coastal Emergencies

For an additional amount for ``Flood Control and Coastal
Emergencies'', as authorized by section 5 of the Act of
August 18, 1941 (33 U.S.C. 701n), for necessary expenses
relating to the consequences of Hurricanes Katrina and Rita
and for other purposes, $1,557,700,000, to remain available
until expended: Provided, That $1,300,000,000 of the amount
provided may be used by the Secretary of the Army to carry
out projects and measures to provide the level of protection
necessary to achieve the certification required for the 100-
year level of flood protection in accordance with the
national flood insurance program under the base flood
elevations in existence at the time of construction of the
enhancements for the West Bank and Vicinity and Lake
Ponchartrain and Vicinity, Louisiana, projects, as described
under the heading ``Flood Control and Coastal Emergencies'',
in chapter 3 of Public Law 109-148: Provided further, That
$150,000,000 of the amount provided may be used to support
emergency operations, repairs and other activities in
response to flood, drought and earthquake emergencies as
authorized by law: Provided further, That $107,700,000 of the
amount provided may be used to implement the projects for
hurricane storm damage reduction, flood damage reduction, and
ecosystem restoration within Hancock, Harrison, and Jackson
Counties, Mississippi substantially in accordance with the
Report of the Chief of Engineers dated December 31, 2006, and
entitled ``Mississippi, Coastal Improvements Program Interim
Report, Hancock, Harrison, and Jackson Counties,
Mississippi'': Provided further, That projects authorized for
implementation under this Chief's report shall be carried out
at full Federal expense, except that the non-Federal
interests shall be responsible for providing any lands,
easements, rights-of-way, disposal areas, and relocations
required for construction of the project and for all costs
associated with operation and maintenance of the project:
Provided further, That any project using funds appropriated
under this heading shall be initiated only after non-Federal
interests have entered into binding agreements with the
Secretary requiring the non-Federal interests to pay 100
percent of the operation, maintenance, repair, replacement,
and rehabilitation costs of the project and to hold and save
the United States free from damages due to the construction
or operation and maintenance of the project, except for
damages due to the fault or negligence of the United States
or its contractors.

[[Page S3933]]

DEPARTMENT OF INTERIOR

Bureau of Reclamation

WATER AND RELATED RESOURCES

For an additional amount for ``Water and Related
Resources'', $18,000,000, to remain available until expended
for drought assistance: Provided, That drought assistance may
be provided under the Reclamation States Drought Emergency
Act or other applicable Reclamation authorities to assist
drought plagued areas of the West.

GENERAL PROVISIONS--THIS CHAPTER

Sec. 2301. The Secretary is authorized and directed to
reimburse local governments for expenses they have incurred
in storm-proofing pumping stations, constructing safe houses
for operators, and other interim flood control measures in
and around the New Orleans metropolitan area, provided the
Secretary determines those elements of work and related
expenses to be integral to the overall plan to ensure
operability of the stations during hurricanes, storms and
high water events and the flood control plan for the area.
Sec. 2302. The limitation concerning total project costs in
section 902 of the Water Resources Development Act of 1986,
as amended (33 U.S.C. 2280), shall not apply during fiscal
year 2008 to any water resources project for which funds were
made available during fiscal year 2007.
Sec. 2303. (a) The Secretary of the Army is authorized and
directed to utilize funds remaining available for obligation
from the amounts appropriated in chapter 3 of Public Law 109-
234 under the heading ``Flood Control and Coastal
Emergencies'' for projects in the greater New Orleans
metropolitan area to prosecute these projects in a manner
which promotes the goal of continuing work at an optimal
pace, while maximizing, to the greatest extent practicable,
levels of protection to reduce the risk of storm damage to
people and property.
(b) The expenditure of funds as provided in subsection (a)
may be made without regard to individual amounts or purposes
specified in chapter 3 of Public Law 109-234.
(c) Any reallocation of funds that are necessary to
accomplish the goal established in subsection (a) are
authorized. Reallocation of funds in excess of $250,000,000
or 50 percent, whichever is less, of the individual amounts
specified in chapter 3 of Public Law 109-234 require
notifications of the House and Senate Committees on
Appropriation.

CHAPTER 4

SMALL BUSINESS ADMINISTRATION

Disaster Loans Program Account

(including transfer of funds)

For an additional amount for ``Disaster Loans Program
Account'' for administrative expenses to carry out the
disaster loan program, $25,069,000, to remain available until
expended, which may be transferred to and merged with ``Small
Business Administration, Salaries and Expenses''.

GENERAL PROVISIONS--THIS CHAPTER

Sec. 2401. Economic Injury Disaster Loans. (a)
Definitions.--In this section--
(1) the term ``Administrator'' means the Administrator of
the Small Business Administration;
(2) the term ``covered small business concern'' means a
small business concern--
(A) that is located in any area in Louisiana or Mississippi
for which the President declared a major disaster because of
Hurricane Katrina of 2005 or Hurricane Rita of 2005;
(B) that has not more than 50 full-time employees; and
(C) that--
(i)(I) suffered a substantial economic injury as a result
of Hurricane Katrina of 2005 or Hurricane Rita of 2005,
because of a reduction in travel or tourism to the area
described in subparagraph (A); and
(II) demonstrates that, during the 1-year period ending on
August 28, 2005, not less than 45 percent of the revenue of
that small business concern resulted from tourism or travel
related sales; or
(ii)(I) suffered a substantial economic injury as a result
of Hurricane Katrina of 2005 or Hurricane Rita of 2005; and
(II) operates in a parish or county for which the
population on the date of enactment of this Act, as
determined by the Administrator, is not greater than 75
percent of the population of that parish or county before
August 28, 2005, based on the most recent United States
population estimate available before August 28, 2005;
(3) the term ``major disaster'' has the meaning given that
term in section 102 of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C. 5122); and
(4) the term ``small business concern'' has the meaning
given that term in section 3 of the Small Business Act (15
U.S.C. 632).
(b) Appropriation.--
(1) In general.--There are appropriated, out of any money
in the Treasury not otherwise appropriated, $25,000,000 to
the Administrator, which, except as provided in paragraph (2)
or (3), shall be used for loans under section 7(b)(2) of the
Small Business Act (15 U.S.C. 636(b)(2)) to covered small
business concerns.
(2) Administrative expenses.--Of the amounts made available
under paragraph (1), not more than $8,750,000 may be
transferred to and merged with ``Salaries and Expenses'' to
carry out the disaster loan program of the Small Business
Administration.
(3) Other uses of funds.--The Administrator may use amounts
made available under paragraph (1) for other purposes
authorized for amounts in the ``Disaster Loans Program
Account'' or transfer such amounts to and merge such amounts
with ``Salaries and Expenses'', if--
(A) such amounts are--
(i) not obligated on the later of 5 months after the date
of enactment of this Act and August 29, 2007; or
(ii) necessary to provide assistance in the event of a
major disaster; and
(B) not later than 5 days before any such use or transfer
of amounts, the Administrator provides written notification
of such use or transfer to the Committee on Appropriations of
the Senate and the Committee on Appropriations of the House
of Representatives.
Sec. 2402. Other Programs. (a) HUBZones.--Section 3(p) of
the Small Business Act (15 U.S.C. 632(p)) is amended--
(1) in paragraph (1)--
(A) in subparagraph (D), by striking ``or'';
(B) in subparagraph (E), by striking the period at the end
and inserting ``; or''; and
(C) by adding at the end the following:
``(F) an area in which the President has declared a major
disaster (as that term is defined in section 102 of the
Robert T. Stafford Disaster Relief and Emergency Assistance
Act (42 U.S.C. 5122)) as a result of Hurricane Katrina of
August 2005 or Hurricane Rita of September 2005, during the
time period described in paragraph (8).''; and
(2) by adding at the end the following:
``(8) Time period.--The time period for the purposes of
paragraph (1)(F)--
``(A) shall be the 2-year period beginning on the later of
the date of enactment of this paragraph and August 29, 2007;
and
``(B) may, at the discretion of the Administrator, be
extended to be the 3-year period beginning on the later of
the date of enactment of this paragraph and August 29,
2007.''.
(b) Relief From Test Program.--Section 711(d) of the Small
Business Competitive Demonstration Program Act of 1988 (15
U.S.C. 644 note) is amended--
(1) by striking ``The Program'' and inserting the
following:
``(1) In general.--Except as provided in paragraph (2), the
Program''; and
(2) by adding at the end the following:
``(2) Exception.--
``(A) In general.--The Program shall not apply to any
contract related to relief or reconstruction from Hurricane
Katrina of 2005 or Hurricane Rita of 2005 during the time
period described in subparagraph (B).
``(B) Time period.--The time period for the purposes of
subparagraph (A)--
``(i) shall be the 2-year period beginning on the later of
the date of enactment of this paragraph and August 29, 2007;
and
``(ii) may, at the discretion of the Administrator, be
extended to be the 3-year period beginning on the later of
the date of enactment of this paragraph and August 29,
2007.''.

CHAPTER 5

DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

Disaster Relief

For an additional amount for ``Disaster Relief'' for
necessary expenses under the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.),
$4,310,000,000, to remain available until expended.

GENERAL PROVISIONS--THIS CHAPTER

Sec. 2501. (a) In General.--Notwithstanding any other
provision of law, including any agreement, the Federal share
of assistance, including direct Federal assistance, provided
for the States of Louisiana, Mississippi, Alabama, and Texas
in connection with Hurricanes Katrina and Rita under sections
403, 406, 407, and 408 of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C. 5170b, 5172,
5173, and 5174) shall be 100 percent of the eligible costs
under such sections.
(b) Applicability.--
(1) In general.--Subject to paragraph (2), the Federal
share provided by subsection (a) shall apply to disaster
assistance applied for before the date of enactment of this
Act.
(2) Limitation.--In the case of disaster assistance
provided under sections 403, 406, and 407 of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act, the
Federal share provided by subsection (a) shall be limited to
assistance provided for projects for which applications have
been prepared for the Federal Emergency Management Agency
before the date of enactment of this Act.
Sec. 2502. (a) Section 2(a) of the Community Disaster Loan
Act of 2005 (Public Law 109-88; 119 Stat. 2061) is amended by
striking ``: Provided further, That notwithstanding section
417(c)(1) of the Stafford Act, such loans may not be
canceled''.
(b) Chapter 4 of title II of the Emergency Supplemental
Appropriations Act for Defense, the Global War on Terror, and
Hurricane Recovery, 2006 (Public Law 109-234; 120 Stat. 471)
is amended under the heading ``Disaster Assistance Direct
Loan Program Account'' under the heading ``Federal Emergency
Management Agency'' under the heading ``Department of
Homeland Security'', by striking ``Provided further, That
notwithstanding section 417(c)(1) of such Act, such loans may
not be canceled:''.
Sec. 2503. Section 2401 of the Emergency Supplemental
Appropriations Act for Defense, the Global War on Terror, and
Hurricane Recovery, 2006 (Public Law 109-234; 120 Stat. 460)
is amended by striking ``12 months'' and inserting ``24
months''.

[[Page S3934]]

CHAPTER 6

DEPARTMENT OF THE INTERIOR

Bureau of Land Management

Wildland Fire Management

(Including Transfer of Funds)

For an additional amount for ``Wildland Fire Management'',
$100,000,000, to remain available until expended, for urgent
wildland fire suppression activities: Provided, That such
funds shall only become available if funds previously
provided for wildland fire suppression will be exhausted
imminently and the Secretary of the Interior notifies the
House and Senate Committees on Appropriations in writing of
the need for these additional funds: Provided further, That
such funds are also available for repayment to other
appropriations accounts from which funds were transferred for
wildfire suppression.

United States Fish and Wildlife Service

Resource Management

For an additional amount for ``Resource Management'' for
the detection of highly pathogenic avian influenza in wild
birds, including the investigation of morbidity and mortality
events, targeted surveillance in live wild birds, and
targeted surveillance in hunter-taken birds, $7,398,000, to
remain available until September 30, 2008.

National Park Service

Operation of the National Park System

For an additional amount for ``Operation of the National
Park System'' for the detection of highly pathogenic avian
influenza in wild birds, including the investigation of
morbidity and mortality events, $525,000, to remain available
until September 30, 2008.

Historic Preservation Fund

For an additional amount for the ``Historic Preservation
Fund'' for necessary expenses related to the consequences of
Hurricane Katrina and other hurricanes of the 2005 season,
$15,000,000, to remain available until September 30, 2008:
Provided, That the funds provided under this heading shall be
provided to the State Historic Preservation Officer, after
consultation with the National Park Service, for grants for
disaster relief in areas of Louisiana impacted by Hurricanes
Katrina or Rita: Provided further, That grants shall be for
the preservation, stabilization, rehabilitation, and repair
of historic properties listed in or eligible for the National
Register of Historic Places, for planning and technical
assistance: Provided further, That grants shall only be
available for areas that the President determines to be a
major disaster under section 102(2) of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C.
5122(2)) due to Hurricanes Katrina or Rita: Provided further,
That individual grants shall not be subject to a non-Federal
matching requirement: Provided further, That no more than 5
percent of funds provided under this heading for disaster
relief grants may be used for administrative expenses.

United States Geological Survey

Surveys, Investigations, and Research

For an additional amount for ``Surveys, Investigations, and
Research'' for the detection of highly pathogenic avian
influenza in wild birds, including the investigation of
morbidity and mortality events, targeted surveillance in live
wild birds, and targeted surveillance in hunter-taken birds,
$5,270,000, to remain available until September 30, 2008.

DEPARTMENT OF AGRICULTURE

Forest Service

National Forest System

For an additional amount for ``National Forest System'' for
the implementation of a nationwide initiative to increase
protection of national forest lands from foreign drug-
trafficking organizations, including funding for additional
law enforcement personnel, training, equipment and
cooperative agreements, $12,000,000, to remain available
until expended.

Wildland Fire Management

(Including Transfer of Funds)

For an additional amount for ``Wildland Fire Management'',
$400,000,000, to remain available until expended, for urgent
wildland fire suppression activities: Provided, That such
funds shall only become available if funds provided
previously for wildland fire suppression will be exhausted
imminently and the Secretary of Agriculture notifies the
House and Senate Committees on Appropriations in writing of
the need for these additional funds: Provided further, That
such funds are also available for repayment to other
appropriation accounts from which funds were transferred for
wildfire suppression.

GENERAL PROVISIONS--THIS CHAPTER

Sec. 2601. (a) For fiscal year 2007, payments shall be made
from any revenues, fees, penalties, or miscellaneous receipts
described in sections 102(b)(3) and 103(b)(2) of the Secure
Rural Schools and Community Self-Determination Act of 2000
(Public Law 106-393; 16 U.S.C. 500 note), not to exceed
$100,000,000, and the payments shall be made, to the maximum
extent practicable, in the same amounts, for the same
purposes, and in the same manner as were made to States and
counties in 2006 under that Act.
(b) There is appropriated $425,000,000 to be used to cover
any shortfall for payments made under this section.
(c) Titles II and III of Public Law 106-393 are amended,
effective September 30, 2006, by striking ``2006'' and
``2007'' each place they appear and inserting ``2007'' and
``2008'', respectively.
Sec. 2602. Disaster relief funds from Public Law 109-234,
120 Stat. 418, 461, (June 30, 2006), chapter 5, ``National
Park Service--Historic Preservation Fund,'' for necessary
expenses related to the consequences of Hurricane Katrina and
other hurricanes of the 2005 season, may be used to
reconstruct destroyed properties that at the time of
destruction were listed in the National Register of Historic
Places and are otherwise qualified to receive these funds:
Provided, That the State Historic Preservation Officer
certifies that, for the community where that destroyed
property was located, that the property is iconic to or
essential to illustrating that community's historic identity,
that no other property in that community with the same
associative historic value has survived, and that sufficient
historical documentation exists to ensure an accurate
reproduction.

CHAPTER 7

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Disease Control and Prevention

DISEASE CONTROL, RESEARCH AND TRAINING

For an additional amount for ``Department of Health and
Human Services, Centers for Disease Control and Prevention,
Disease Control, Research and Training'', to carry out
section 501 of the Federal Mine Safety and Health Act of 1977
and section 6 of the Mine Improvement and New Emergency
Response Act of 2006, $13,000,000 for research to develop
mine safety technology, including necessary repairs and
improvements to leased laboratories: Provided, That progress
reports on technology development shall be submitted to the
House and Senate Committees on Appropriations and the
Committee on Health, Education, Labor and Pensions of the
Senate and the Committee on Education and Labor of the House
of Representatives on a quarterly basis: Provided further,
That the amount provided under this heading shall remain
available until September 30, 2008.

Administration for Children and Families

LOW-INCOME HOME ENERGY ASSISTANCE

For an additional amount for ``Low-Income Home Energy
Assistance'' under section 2604(a) through (d) of the Low-
Income Home Energy Assistance Act of 1981 (42 U.S.C. 8623(a)
through (d)), $320,000,000.
For an additional amount for ``Low-Income Home Energy
Assistance'' under section 2604(e) of the Low-Income Home
Energy Assistance Act of 1981 (42 U.S.C. 8623(e)),
$320,000,000.

Office of the Secretary

PUBLIC HEALTH AND SOCIAL SERVICES EMERGENCY FUND

(INCLUDING TRANSFER OF FUNDS)

For an additional amount for ``Public Health and Social
Services Emergency Fund'' to prepare for and respond to an
influenza pandemic, $820,000,000, to remain available until
expended: Provided, That this amount shall be for activities
including the development and purchase of vaccine,
antivirals, necessary medical supplies, diagnostics, and
other surveillance tools: Provided further, That products
purchased with these funds may, at the discretion of the
Secretary of Health and Human Services, be deposited in the
Strategic National Stockpile: Provided further, That
notwithstanding section 496(b) of the Public Health Service
Act, funds may be used for the construction or renovation of
privately owned facilities for the production of pandemic
vaccine and other biologicals, where the Secretary finds such
a contract necessary to secure sufficient supplies of such
vaccines or biologicals: Provided further, That funds
appropriated herein may be transferred to other appropriation
accounts of the Department of Health and Human Services, as
determined by the Secretary to be appropriate, to be used for
the purposes specified in this sentence.

COVERED COUNTERMEASURE PROCESS FUND

For carrying out section 319F-4 of the Public Health
Service Act (42 U.S.C. 247d-6e) to compensate individuals for
injuries caused by H5N1 vaccine, in accordance with the
declaration regarding avian influenza viruses issued by the
Secretary of Health and Human Services on January 26, 2007,
pursuant to section 319F-3(b) of such Act (42 U.S.C. 247d-
6d(b)), $50,000,000, to remain available until expended.

DEPARTMENT OF EDUCATION

Higher Education

For an additional amount under part B of title VII of the
Higher Education Act of 1965 (``HEA'') for institutions of
higher education (as defined in section 102 of that Act) that
are located in an area in which a major disaster was declared
in accordance with section 401 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act related to
hurricanes in the Gulf of Mexico in calendar year 2005,
$30,000,000: Provided, That such funds shall be available to
the Secretary of Education only for payments to help defray
the expenses (which may include lost revenue, reimbursement
for expenses already incurred, and construction) incurred by
such institutions of higher education that were forced to
close, relocate or significantly curtail their activities as
a result of damage directly caused by such hurricanes and for
payments to enable such institutions to provide grants to
students who attend such institutions for academic years
beginning on

[[Page S3935]]

or after July 1, 2006: Provided further, That such payments
shall be made in accordance with criteria established by the
Secretary and made publicly available without regard to
section 437 of the General Education Provisions Act, section
553 of title 5, United States Code, or part B of title VII of
the HEA.

GENERAL PROVISIONS--THIS CHAPTER

Sec. 2701. Section 105(b) of title IV of division B of
Public Law 109-148 is amended by adding at the end the
following new sentence: ``With respect to the program
authorized by section 102 of this Act, the waiver authority
in subsection (a) of this section shall be available until
the end of fiscal year 2008.''

(including rescission)

Sec. 2702. (a) From unexpended balances of the amounts made
available in the 2001 Emergency Supplemental Appropriations
Act for Recovery from and Response to Terrorist Attacks on
the United States (Public Law 107-38) for the Employment
Training Administration, Training and Employment Services
under the Department of Labor, $3,589,000 are rescinded.
(b) For an additional amount for the Centers for Disease
Control and Prevention for carrying out activities under
section 5011(b) of the Emergency Supplemental Appropriations
Act to Address Hurricanes in the Gulf of Mexico and Pandemic
Influenza, 2006 (Public Law 109-148), $3,589,000.
Sec. 2703. Notwithstanding section 2002(c) of the Social
Security Act (42 U.S.C. 1397a(c)), funds made available under
the heading ``Social Services Block Grant'' in division B of
Public Law 109-148 shall be available for expenditure by the
States through the end of fiscal year 2008.
Sec. 2704. Elimination of Remainder of SCHIP Funding
Shortfalls for Fiscal Year 2007. (a) Elimination of Remainder
of Funding Shortfalls, Tiered Match, and Other Limitation on
Expenditures.--Section 2104(h) of the Social Security Act (42
U.S.C. 1397dd(h)), as added by section 201(a) of the National
Institutes of Health Reform Act of 2006 (Public Law 109-482),
is amended--
(1) in the heading for paragraph (2), by striking
``remainder of reduction'' and inserting ``part''; and
(2) by striking paragraph (4) and inserting the following:
``(4) Additional amounts to eliminate remainder of fiscal
year 2007 funding shortfalls.--
``(A) In general.--The Secretary shall allot to each
remaining shortfall State described in subparagraph (B) such
amount as the Secretary determines will eliminate the
estimated shortfall described in such subparagraph for the
State for fiscal year 2007.
``(B) Remaining shortfall state described.--For purposes of
subparagraph (A), a remaining shortfall State is a State with
a State child health plan approved under this title for which
the Secretary estimates, on the basis of the most recent data
available to the Secretary as of the date of the enactment of
this paragraph, that the projected federal expenditures under
such plan for the State for fiscal year 2007 will exceed the
sum of--
``(i) the amount of the State's allotments for each of
fiscal years 2005 and 2006 that will not be expended by the
end of fiscal year 2006;
``(ii) the amount of the State's allotment for fiscal year
2007; and
``(iii) the amounts, if any, that are to be redistributed
to the State during fiscal year 2007 in accordance with
paragraphs (1) and (2).
``(C) Appropriation; allotment authority.--For the purpose
of providing additional allotments to remaining shortfall
States under this paragraph there is appropriated, out of any
funds in the Treasury not otherwise appropriated, such sums
as are necessary for fiscal year 2007.''.
(b) Conforming Amendments.--Section 2104(h) of such Act (42
U.S.C. 1397dd(h)) (as so added), is amended--
(1) in paragraph (1)(B), by striking ``subject to paragraph
(4)(B) and'';
(2) in paragraph (2)(B), by striking ``subject to paragraph
(4)(B) and'';
(3) in paragraph (5)(A), by striking ``and (3)'' and
inserting ``(3), and (4)''; and
(4) in paragraph (6)--
(A) in the first sentence_
(i) by inserting ``or allotted'' after ``redistributed'';
and
(ii) by inserting ``or allotments'' after
``redistributions''; and
(B) by striking ``and (3)'' and inserting ``(3), and (4)''.
(c) General Effective Date; Applicability.--Except as
otherwise provided, the amendments made by this section take
effect on the date of enactment of this Act and apply without
fiscal year limitation.
Sec. 2705. Notwithstanding any other provision of law, the
Secretary of Health and Human Services shall not, prior to
the date that is 2 years after the date of enactment of this
Act, take any action to finalize, or otherwise implement
provisions--
(1) contained in the proposed rule published on January 18,
2007, on pages 2236 through 2258 of volume 72, Federal
Register (relating to parts 433, 447, and 457 of title 42,
Code of Federal Regulations) or any other rule that would
affect the Medicaid program established under title XIX of
the Social Security Act or the State Children's Health
Insurance Program established under title XXI of such Act in
a similar manner; or
(2) restricting payments for graduate medical education
under the Medicaid program.
(b) Increase in Basic Rebate for Single Source Drugs and
Innovator Multiple Source Drugs.--Section 1927(c)(1)(B)(i) of
the Social Security Act (42 U.S.C. 1396r-8(c)(1)(B)(i)) is
amended--
(1) in subclause (IV), by striking ``and'' after the
semicolon;
(2) in subclause (V)--
(A) by inserting ``and before April 1, 2007,'' after
``1995,''; and
(B) by striking the period and inserting ``; and''; and
(3) by adding at the end the following:

``(VI) after March 31, 2007, is 20 percent.''.

Sec. 2706. (a) For grant years beginning in 2006-2007, the
Secretary of Health and Human Services may waive the
requirements of, with respect to Louisiana, Mississippi,
Alabama, and Texas and any eligible metropolitan area in
Louisiana, Mississippi, Alabama, and Texas, the following
sections of the Public Health Service Act:
(1) Section 2612(e)(1) of such Act (42 U.S.C. 300ff-
21(b)(1)).
(2) Section 2617(b)(7)(E) of such Act (42 U.S.C. 300ff-
27(b)(7)(E)).
(3) Section 2617(d) of such Act (42 U.S.C. 300ff-27(d)),
except that such waiver shall apply so that the matching
requirement is reduced to $1 for each $4 of Federal funds
provided under the grant involved.
(b) If the Secretary of Health and Human Services grants a
waiver under subsection (b), the Secretary--
(1) may not prevent Louisiana, Mississippi, Alabama, and
Texas or any eligible metropolitan area in Louisiana,
Mississippi, Alabama, and Texas from receiving or utilizing,
or both, funds granted or distributed, or both, pursuant to
title XXVI of the Public Health Service Act (42 U.S.C. 300ff-
11 et seq.) because of the failure of Louisiana, Mississippi,
Alabama, and Texas or any eligible metropolitan area in
Louisiana, Mississippi, Alabama, and Texas to comply with the
requirements of the sections listed in paragraphs (1) through
(3) of subsection (a);
(2) may not take action due to such noncompliance; and
(3) shall assess, evaluate, and review Louisiana,
Mississippi, Alabama, and Texas or any eligible metropolitan
area's eligibility for funds under such title XXVI as if
Louisiana, Mississippi, Alabama, and Texas or such eligible
metropolitan area had fully complied with the requirements of
the sections listed in paragraphs (1) through (3) of
subsection (a).
(c) For grant years beginning in 2008, Louisiana,
Mississippi, Alabama, and Texas and any eligible metropolitan
area in Louisiana, Mississippi, Alabama, and Texas shall
comply with each of the applicable requirements under title
XXVI of the Public Health Service Act (42 U.S.C. 300ff-11 et
seq.).

CHAPTER 8

LEGISLATIVE BRANCH

ARCHITECT OF THE CAPITOL

Capitol Power Plant

For an additional amount for ``Capitol Power Plant'',
$25,000,000, for emergency utility tunnel repairs and
asbestos abatement, to remain available until September 30,
2011: Provided, That the Architect of the Capitol may not
obligate any of the funds appropriated under this heading
without approval of an obligation plan by the Committees on
Appropriations of the Senate and House of Representatives.

GOVERNMENT ACCOUNTABILITY OFFICE

Salaries and Expenses

For an additional amount for ``Salaries and Expenses'' of
the Government Accountability Office, $374,000, to remain
available until expended.

CHAPTER 9

DEPARTMENT OF DEFENSE

MILITARY CONSTRUCTION

Military Construction, Air Force Reserve

(Including Rescission of Funds)

For an additional amount for ``Military Construction, Air
Force Reserve'', $3,096,000, to remain available until
September 30, 2011: Provided, That such funds may be
obligated and expended to carry out planning and design and
military construction projects not otherwise authorized by
law.
Of the funds appropriated for ``Military Construction, Air
Force Reserve'' under Public Law 109-114, $3,096,000 are
hereby rescinded.

Department of Defense Base Closure Account, 2005

For deposit into the Department of Defense Base Closure
Account 2005, established by section 2906(a)(1) of the
Defense Base Closure and Realignment Act of 1990 (10 U.S.C.
2687 note), $3,136,802,000, to remain available until
expended.

DEPARTMENT OF VETERANS AFFAIRS

Veterans Health Administration

MEDICAL SERVICES

For an additional amount for ``Medical Services'',
$454,131,000, to remain available until expended, of which
$50,000,000 shall be for the establishment of new Level I
comprehensive polytrauma centers; $9,440,000 shall be for the
establishment of polytrauma residential transitional
rehabilitation programs; $20,000,000 shall be for additional
transition caseworkers; $30,000,000 shall be for substance
abuse treatment programs; $20,000,000 for readjustment
counseling; $10,000,000 shall be for blind rehabilitation
services; $100,000,000 shall be for enhancements to mental
health services; $8,000,000

[[Page S3936]]

shall be for polytrauma support clinic teams; $5,356,000 for
additional polytrauma points of contacts; and $201,335,000
shall be for treatment of Operation Enduring Freedom and
Operation Iraqi Freedom veterans.

MEDICAL ADMINISTRATION

For an additional amount for ``Medical Administration'',
$250,000,000, to remain available until expended.

MEDICAL FACILITIES

For an additional amount for ``Medical Facilities'',
$595,000,000, to remain available until expended, of which
$45,000,000 shall be used for facility and equipment upgrades
at the Department of Veterans Affairs polytrauma
rehabilitation centers and the polytrauma network sites; and
$550,000,000 shall be for non-recurring maintenance as
identified in the Department of Veterans Affairs Facility
Condition Assessment report: Provided, That the amount
provided under this heading for non-recurring maintenance
shall be allocated in a manner outside of the Veterans
Equitable Resource Allocation and specific to the needs and
geographic distribution of Operation Enduring Freedom and
Operation Iraqi Freedom veterans: Provided further, That
within 30 days of enactment of this Act the Secretary shall
submit to the Committees on Appropriations of both Houses of
Congress an expenditure plan for non-recurring maintenance
prior to obligation.

MEDICAL AND PROSTHETIC RESEARCH

For an additional amount for ``Medical and Prosthetic
Research'', $30,000,000, to remain available until expended,
which shall be used for research related to the unique
medical needs of returning Operation Enduring Freedom and
Operation Iraqi Freedom veterans.

Departmental Administration

GENERAL OPERATING EXPENSES

For an additional amount for ``General Operating
Expenses'', $46,000,000, to remain available until expended,
for the hiring and training of new pension and compensation
claims processing personnel.

INFORMATION TECHNOLOGY SYSTEMS

For an additional amount for ``Information Technology
Systems'', $36,100,000, to remain available until expended,
of which $20,000,000 shall be for information technology
support and improvements for processing of OIF/OEF veterans
benefits claims, including making electronic DOD medical
records available for claims processing and enabling
electronic benefits applications by veterans; $1,000,000
shall be for the digitization of benefits records; and
$15,100,000 shall be for electronic data breach and
remediation and prevention.

CONSTRUCTION, MINOR PROJECTS

For an additional amount for ``Construction, Minor
Projects'', $355,907,000, to remain available until expended,
of which $36,000,000 shall be for construction costs
associated with the establishment of polytrauma residential
transitional rehabilitation programs.

GENERAL PROVISIONS--THIS CHAPTER

Sec. 2901. (a) Notwithstanding any other provision of law,
none of the funds in this or any other Act shall be used to
downsize staff or to close, realign or phase out essential
services at Walter Reed Army Medical Center until equivalent
medical facilities at the Walter Reed National Military
Medical Center at Naval Medical Center, Bethesda, Maryland,
and/or the Fort Belvoir, Virginia, Community Hospital have
been constructed and equipped, and until the Secretary of
Defense has certified in writing to the Congress that:
(1) the new facilities at Walter Reed National Military
Medical Center at Bethesda and/or the Fort Belvoir Community
Hospital are complete and fully operational, and
(2) replacement medical facilities at Walter Reed National
Military Medical Center at Bethesda have adequate capacity to
meet both the existing and projected demand for complex
medical care and services, including outpatient and medical
hold facilities, for combat veterans and other military
personnel.
(b) Not later than 30 days after enactment of this Act, the
Secretary of Defense shall provide to the Committees on
Appropriations of the Senate and House of Representatives a
report and proposed timetable outlining the Department's plan
to transition patients, staff and medical services to the new
facilities at Bethesda and Fort Belvoir without compromising
patient care, staffing requirements or facility maintenance
at the Walter Reed Medical Center.
(c) To ensure that the quality of care provided by the
Military Health System is not diminished during this
transition, the Walter Reed Army Medical Center shall be
adequately funded, to include necessary renovation and
maintenance of existing facilities, to continue the maximum
level of inpatient and outpatient services.
Sec. 2902. Within existing funds appropriated to
Departmental Administration, General Operating Expenses for
fiscal year 2007, and within 30 days after enactment of this
Act, the Department of Veterans Affairs shall contract with
the National Academy of Public Administration for the purpose
of conducting an independent study and analysis of the
organizational structure, management and coordination
processes, including Seamless Transition, utilized by the
Department of Veterans affairs to:
(1) provide health care to active duty and veterans of
Operation Enduring Freedom and Operation Iraqi Freedom; and
(2) provide benefits to veterans of Operation Enduring
Freedom and Operation Iraqi Freedom.
Sec. 2903. The Director of the Congressional Budget Office
shall, not later than November 15, 2007, submit to the
Committees on Appropriations of the House of Representatives
and the Senate a report projecting appropriations necessary
for the Departments of Defense and Veterans Affairs to
continue providing necessary health care to veterans of the
conflicts in Iraq and Afghanistan. The projections should
span several scenarios for the duration and number of forces
deployed in Iraq and Afghanistan, and more generally, for the
long-term health care needs of deployed troops engaged in the
global war on terrorism over the next ten years.

CHAPTER 10

DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

Federal-Aid Highways

Emergency Relief Program

(including rescission of funds)

For an additional amount for the Emergency Relief Program
as authorized under section 125 of title 23, United States
Code, $388,903,000, to remain available until expended:
Provided, That of the unobligated balances of funds
apportioned to each State under chapter 1 of title 23, United
States Code, $388,903,000 are rescinded: Provided further,
That such rescission shall not apply to the funds distributed
in accordance with sections 130(f) and 104(b)(5) of title 23,
United States Code; sections 133(d)(1) and 163 of such title,
as in effect on the day before the date of enactment of
Public Law 109-59; and the first sentence of section
133(d)(3)(A) of such title: Provided further, That section
4103 of title III of this Act shall not apply to the first
proviso under this paragraph.

Federal Transit Administration

Formula Grants

For an additional amount to be allocated by the Secretary
to recipients of assistance under chapter 53 of title 49,
United States Code, directly affected by Hurricanes Katrina
and Rita, $75,000,000, for the operating and capital costs of
transit services, to remain available until expended:
Provided, That the Federal share for any project funded from
this amount shall be 100 percent.

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of Inspector General

For an additional amount for the Office of Inspector
General, for the necessary costs related to the consequences
of Hurricanes Katrina and Rita, $5,000,000, to remain
available until expended.

GENERAL PROVISIONS--THIS CHAPTER

Sec. 3001. Notwithstanding part 750 of title 23, Code of
Federal Regulations (or a successor regulation), if permitted
by State law, a nonconforming sign that is or has been
damaged, destroyed, abandoned, or discontinued as a result of
a hurricane that is determined to be an act of God (as
defined by State law) may be repaired, replaced, or
reconstructed if the replacement sign has the same dimensions
as the original sign, and said sign is located within a State
found within Federal Emergency Management Agency Region IV or
VI. The provisions of this section shall cease to be in
effect twenty-four months following the date of enactment of
this Act.
Sec. 3002. Section 21033 of the Continuing Appropriations
Resolution, 2007 (division B of Public Law 109-289, as
amended by Public Law 110-5) is amended by adding after the
third proviso: ``: Provided further, That notwithstanding the
previous proviso, except for applying the 2007 Annual
Adjustment Factor and making any other specified adjustments,
public housing agencies that are eligible for assistance
under section 901 in Public Law 109-148 (119 Stat. 2781)
shall receive funding for calendar year 2007 based on the
amount such public housing agencies were eligible to receive
in calendar year 2006''.

TITLE III

OTHER MATTERS

CHAPTER 1

DEPARTMENT OF AGRICULTURE

Farm Service Agency

SALARIES AND EXPENSES

For an additional amount for ``Salaries and Expenses'' of
the Farm Service Agency, $75,000,000, to remain available
until expended: Provided, That this amount shall only be
available for the modernization and repair of the computer
systems used by the Farm Service Agency (including) software,
hardware, and personnel required for modernization and
repair): Provided further, That of this amount $27,000,000
shall be made available 60 days after the date on which the
Farm Service Agency submits to the Committee on
Appropriations of the Senate, the Committee on Appropriations
of the House of Representatives, and the Government
Accountability Office a spending plan for the funds.

GENERAL PROVISIONS--THIS CHAPTER

(rescission)

Sec. 3101. Of the unobligated balances of funds made
available pursuant to section 298(a) of the Trade Act of 1974
(19 U.S.C. 2401G(a)), $75,000,000 are rescinded.
Sec. 3102. (a) Section 1237A(f) of the Food Security Act of
1985 (16 U.S.C. 3837a(f)) is amended in the first sentence by
striking ``fair market value of the land less the fair

[[Page S3937]]

market value of such land encumbered by the easement'' and
inserting ``fair market value of the land as determined in
accordance with the method of valuation used by the Secretary
as of January 1, 2003''.
(b) Section 1238I(c)(1) of the Food Security Act of 1985
(16 U.S.C. 3838i(c)(1)) is amended by inserting at the end
the following:
``(C) Valuation.--The Secretary shall determine fair market
value under this paragraph in accordance with the method of
valuation used by the Secretary as of January 1, 2003.''.
Sec. 3103. Subsection (b)(1) of section 313A of the Rural
Electrification Act shall not apply in the case of a
cooperative lender that has previously received a guarantee
under section 313A and such additional guarantees shall not
exceed the amount provided for in Public Law 110-5.

CHAPTER 2

GENERAL PROVISIONS--THIS CHAPTER

Sec. 3201. Section 20314 of the Continuing Appropriations
Resolution, 2007 (division B of Public Law 109-289, as
amended by Public Law 110-5) is amended by striking
``Resources.'' and inserting in lieu thereof: ``Resources:
Provided, That $22,762,000 of the amount provided be for
geothermal research and development activities.''.
Sec. 3202. Hereafter, federal employees at the National
Energy Technology Laboratory shall be classified as
inherently governmental for the purpose of the Federal
Activities Inventory Reform Act of 1998 (31 U.S.C. 501 note).
Sec. 3203. Prohibition on Certain Uses of Funds by BPA.
None of the funds made available under this or any other Act
shall be used during fiscal year 2007 to make, or plan or
prepare to make, any payment on bonds issued by the
Administrator of the Bonneville Power Administration
(referred in this section as the ``Administrator'') or for an
appropriated Federal Columbia River Power System investment,
if the payment is both--
(1) greater, during any fiscal year, than the payments
calculated in the rate hearing of the Administrator to be
made during that fiscal year using the repayment method used
to establish the rates of the Administrator as in effect on
October 1, 2006; and
(2) based or conditioned on the actual or expected net
secondary power sales receipts of the Administrator.

CHAPTER 3

GENERAL PROVISIONS--THIS CHAPTER

Sec. 3301. The structure of any of the offices or
components within the Office of National Drug Control Policy
shall remain as they were on October 1, 2006. None of the
funds appropriated or otherwise made available in the
Continuing Appropriations Resolution, 2007 (Public Law 110-5)
may be used to implement a reorganization of offices within
the Office of National Drug Control Policy without the
explicit approval of the Committees on Appropriations of the
House of Representatives and the Senate.
Sec. 3302. Funds made available in section 21075 of the
Continuing Appropriations Resolution, 2007 (Public Law 110-5)
shall be made available to a 501(c)(3) entity: (1) with a
wide anti-drug coalition network and membership base, and one
with a demonstrated track record and specific expertise in
providing technical assistance, training, evaluation,
research, and capacity building to community anti-drug
coalitions; (2) with authorization from Congress, both prior
to fiscal year 2007, and in fiscal years 2008 through 2012,
to perform the duties described in subsection (1) of this
section; and (3) that has previously received funding from
Congress, including through a competitive process as well as
direct funding, for providing the duties described in
subsection (1) of this section: Provided, That funds
appropriated in section 21075 shall be obligated within sixty
days after enactment of this Act.
Sec. 3303. Funds made available under section 613 of Public
Law 109-108 (119 Stat. 2338) for Nevada's Commission on
Economic Development shall be made available to the Nevada
Center for Entrepreneurship and Technology (CET).
Sec. 3304. From the amount provided by section 21067 of the
Continuing Appropriations Resolution, 2007 (Public Law 110-
5), the National Archives and Records Administration may
obligate monies necessary to carry out the activities of the
Public Interest Declassification Board.
Sec. 3305. None of the funds appropriated or otherwise made
available in section 21063 of the Continuing Appropriations
Resolution, 2007 (Public Law 110-5) for the ``General
Services Administration, Real Property Activities, Federal
Buildings Fund'', may be obligated for design, construction,
or acquisition until the House and Senate Committees on
Appropriations approve a revised detailed plan, by project,
on the use of such funds: Provided, That the new plan shall
include funding for completion of courthouse construction
projects which received funding in fiscal year 2006 above a
level of $5,000,000: Provided further, That such plan shall
be provided by the Administrator of the General Services
Administration to the House of Representatives and the Senate
Committees on Appropriations within seven days of enactment.
Sec. 3306. Notwithstanding the notice requirement of the
Transportation, Treasury, Housing and Urban Development, the
Judiciary, the District of Columbia, and Independent Agencies
Appropriations Act, 2006, 119 Stat. 2509 (Public Law 109-
115), as continued in section 104 of the Continuing
Appropriations Resolution, 2007 (Public Law 110-5), the
District of Columbia Courts may reallocate not more than
$1,000,000 of the funds provided for fiscal year 2007 under
the Federal Payment to the District of Columbia Courts for
facilities among the items and entities funded under that
heading for operations.
Sec. 3307. (a) Not later than 90 days after the date of
enactment of this Act, the Secretary of the Treasury, in
coordination with the Securities and Exchange Commission and
in consultation with the Departments of State and Energy,
shall prepare and submit to the Senate Committee on
Appropriations, the House of Representatives Committee on
Appropriations, the Senate Foreign Relations Committee, and
the House Foreign Affairs Committee an unclassified report,
suitable to be made public, that contains the names of (1)
all companies trading in securities that are registered under
section 12 of the Securities Exchange Act of 1934 (15 U.S.C.
781) which either directly or through a parent or subsidiary
company, including partly-owned subsidiaries, conduct
business operations in Sudan relating to natural resource
extraction, including oil-related activities and mining of
minerals; and (2) the names of all other companies, which
either directly or through a parent or subsidiary company,
including partly-owned subsidiaries, conduct business
operations in Sudan relating to natural resource extraction,
including oil-related activities and mining of minerals. The
reporting provision shall not apply to companies operating
under licenses from the Office of Foreign Assets Control or
otherwise expressly exempted under United States law from
having to obtain such licenses in order to operate in Sudan.
(b) Not later than 20 days after enactment, the Secretary
of the Treasury shall inform the aforementioned committees of
Congress of any statutory or other legal impediments to the
successful completion of this report.
(c) Not later than 45 days following the submission to
Congress of the list of companies conducting business
operations in Sudan relating to natural resource extraction
required above, the General Services Administration shall
determine whether the United States Government has an active
contract for the procurement of goods or services with any of
the identified companies, and provide notification to the
appropriate committees of Congress of the companies, nature
of the contract, and dollar amounts involved.

(including rescission)

Sec. 3308. (a) Of the funds provided for the General
Services Administration, ``Office of Inspector General'' in
section 21061 of the Continuing Appropriations Resolution,
2007 (division B of Public Law 109-289, as amended by Public
Law 110-5), $8,000,000 are rescinded.
(b) For an additional amount for the General Services
Administration, ``Office of Inspector General'', $8,000,000,
to remain available until September 30, 2008.
Sec. 3309. Section 21073 of the Continuing Appropriations
Resolution, 2007 (Public Law 110-5) is amended by adding a
new subsection (j) as follows:
``(j) Notwithstanding section 101, any appropriation or
funds made available to the District of Columbia pursuant to
this division for `Federal Payment for Foster Care
Improvement in the District of Columbia' shall be available
in accordance with an expenditure plan submitted by the Mayor
of the District of Columbia not later than 60 days after the
enactment of this section which details the activities to be
carried out with such Federal Payment.''.

CHAPTER 4

GENERAL PROVISIONS--THIS CHAPTER

Sec. 3401. Any unobligated balances remaining from prior
appropriations for United States Coast Guard, ``Retired Pay''
shall remain available until expended in the account and for
the purposes for which the appropriations were provided,
including the payment of obligations otherwise chargeable to
lapsed or current appropriations for this purpose.
Sec. 3402. Integrated Deepwater System. (a) Competition for
Acquisition and Modification of Assets.--
(1) In general.--The Commandant of the Coast Guard shall
utilize full and open competition for any contract entered
into after the date of enactment of this Act that provides
for the acquisition or modification of assets under, or in
support of, the Integrated Deepwater System Program of the
Coast Guard.
(2) Exceptions.--Paragraph (1) shall not apply to the
following:
(A) The acquisition or modification of the following asset
classes for which assets of the class and related systems and
components under the Integrated Deepwater System are under a
contract for production:
(i) National Security Cutter;
(ii) Maritime Patrol Aircraft;
(iii) Deepwater Command, Control, Communications, Computer,
Intelligence, Surveillance, and Reconnaissance (C4ISR)
System; and
(iv) HC-130J Fleet Introduction.
(B) The modification of any legacy asset class under the
Integrated Deepwater System Program being performed by a
Coast Guard entity.
(b) Chair of Product and Oversight Teams.--The Commandant
of the Coast Guard shall assign an appropriate officer or
employee of the Coast Guard to act as chair of each of the
following:
(1) Each integrated product team under the Integrated
Deepwater System Program.

[[Page S3938]]

(2) Each higher-level team assigned to the oversight of a
product team referred to in paragraph (1).
(c) Life-cycle Cost Estimate.--The Commandant of the Coast
Guard may not enter into a contract for lead asset production
under the Integrated Deepwater System Program until the
Commandant obtains an independent estimate of life-cycle
costs of the asset concerned.
(d) Review of Acquisitions and Major Design Changes.--
(1) In general.--With the exception of assets covered under
(a)(2) of this section, the Commandant of the Coast Guard may
not carry out an action described in paragraph (2) unless an
independent third party with no financial interest in the
development, construction, or modification of any component
of the Integrated Deepwater System Program, selected by the
Commandant for purposes of the subsection, determines that
such action is advisable.
(2) Covered Actions.--The actions described in the
paragraph are as follows:
(A) The acquisition or modification of an asset under the
Integrated Deepwater System Program.
(B) The implementation of a major design change for an
asset under the Integrated Deepwater System Program.
(e) Linking of Award Fees to Successful Acquisition
Outcomes.--The Commandant of the Coast Guard shall require
that all contracts under the Integrated Deepwater System
Program that provide award fees link such fees to successful
acquisition outcomes (which shall be defined in terms of
cost, schedule, and performance).
(f) Contractual Agreements.--
(1) In general.--The Commandant of the Coast Guard may not
award or issue any contract, task or delivery order, letter
contract modification thereof, or other similar contract, for
the acquisition or modification of an asset under the
Integrated Deepwater System Program unless the Coast Guard
and the contractor concerned have formally agreed to all
terms and conditions.
(2) Exception.--A contract, task or delivery order, letter
contract, modification thereof, or other similar contract
described in paragraph (1) may be awarded or issued if the
head of contracting activity of the Coast Guard determines
that a compelling need exists for the award or issue of such
instrument.
(g) Designation of Technical Authority.--The Commandant of
the Coast Guard shall designate the Assistant Commandant of
the Coast Guard for Engineering and Logistics as the
technical authority for all engineering, design, and
logistics decisions pertaining to the Integrated Deepwater
System Program.
(h) Report on Personnel Required for Acquisition
Management.--Not later than 30 days after the date of the
enactment of this Act, the Commandant of the Coast Guard
shall submit to the Committees on Appropriations of the
Senate and the House of Representatives; the Committee on
Commerce, Science and Transportation of the Senate; and the
Committee on Transportation and Infrastructure of the House
of Representatives a report on the resources (including
training, staff, and expertise) required by the Coast Guard
to provide appropriate management and oversight of the
Integrated Deepwater System Program.
(i) Comptroller General Report on Progress.--Not later than
60 days after the date of enactment of this Act, the
Comptroller General of the United States shall submit to the
Committees on Appropriations of the Senate and the House of
Representatives; the Committee on Commerce, Science and
Transportation of the Senate; and the Committee on
Transportation and Infrastructure of the House of
Representatives a report describing and assessing the
progress of the Coast Guard in complying with the
requirements of this section.
Sec. 3403. None of the funds provided in this Act or any
other Act may be used to alter or reduce operations within
the Civil Engineering Program of the Coast Guard nationwide,
including the civil engineering units, facilities, design and
construction centers, maintenance and logistics command
centers, the Coast Guard Academy and the Coast Guard Research
and Development Center, except as specifically authorized by
a statute enacted after the date of enactment of this Act.

CHAPTER 5

GENERAL PROVISIONS--THIS CHAPTER

Sec. 3501. Section 20515 of the Continuing Appropriations
Resolution, 2007 (division B of Public Law 109-289, as
amended by Public Law 110-5) is amended by inserting before
the period: ``; and of which, not to exceed $143,628,000
shall be available for contract support costs under the terms
and conditions contained in Public Law 109-54''.
Sec. 3502. Section 20512 of the Continuing Appropriations
Resolution, 2007 (division B of Public Law 109-289, as
amended by Public Law 110-5) is amended by inserting after
the first dollar amount: ``, of which not to exceed
$7,300,000 shall be transferred to the `Indian Health
Facilities' account; the amount in the second proviso shall
be $18,000,000; the amount in the third proviso shall be
$525,099,000; the amount in the ninth proviso shall be
$269,730,000; and the $15,000,000 allocation of funding under
the eleventh proviso shall not be required''.
Sec. 3503. Section 20501 of the Continuing Appropriations
Resolution, 2007 (division B of Public Law 109-289, as
amended by Public Law 110-5) is amended by inserting after
$55,663,000: ``of which $13,000,000 shall be for Save
America's Treasures''.
Sec. 3504. Of the funds made available to the United States
Fish and Wildlife Service for fiscal year 2007 under the
heading ``Land Acquisition'', not to exceed $1,980,000 may be
used for land conservation partnerships authorized by the
Highlands Conservation Act of 2004.
Sec. 3505. The Administrator of the Environmental
Protection Agency shall grant to the Water Environment
Research Foundation (WERF) such sums as were directed in
fiscal year 2005 and fiscal year 2006 for the On-Farm
Assessment and Environmental Review program: Provided, That
not less than 95 percent of funds made available shall be
used by WERF to award competitively a contract to perform the
program's environmental assessments: Provided further, That
WERF shall not retain more than 5 percent of such sums for
administrative expenses.

CHAPTER 6

DEPARTMENT OF HEALTH AND HUMAN SERVICES

National Institutes of Health

National Institute of Allergy and Infectious Diseases

(TRANSFER OF FUNDS)

Of the amount provided by the Continuing Appropriations
Resolution, 2007 for ``National Institute of Allergy and
Infectious Diseases'', $49,500,000 shall be transferred to
``Public Health and Social Services Emergency Fund'' to carry
out activities relating to advanced research and development
as provided by section 319L of the Public Health Service Act.

GENERAL PROVISIONS--THIS CHAPTER

(TRANSFER OF FUNDS)

Sec. 3601. Section 20602 of the Continuing Appropriations
Resolution, 2007 (division B of Public Law 109-289, as
amended by Public Law 110-5) is amended by inserting the
following after ``$5,000,000'': ``(together with an
additional $7,000,000 which shall be transferred by the
Pension Benefit Guaranty Corporation as an authorized
administrative cost)''.
Sec. 3602. Section 20625(b)(1) of the Continuing
Appropriations Resolution, 2007 (division B of Public Law
109-289, as amended by Public Law 110-5) is amended by--
(1) striking ``$7,172,994,000'' and inserting
``$7,176,431,000'';
(2) amending subparagraph (A) to read as follows:
``(A) $5,454,824,000 shall be for basic grants under
section 1124 of the Elementary and Secondary Education Act of
1965 (ESEA), of which up to $3,437,000 shall be available to
the Secretary of Education on October 1, 2006, to obtain
annually updated educational-agency-level census poverty data
from the Bureau of the Census;''; and
(3) amending subparagraph (C) to read as follows:
``(C) not to exceed $2,352,000 may be available for section
1608 of the ESEA and for a clearinghouse on comprehensive
school reform under part D of title V of the ESEA;''.
Sec. 3603. (a) From the amounts available for Department of
Education, Safe Schools and Citizenship Education as provided
by the Continuing Appropriations Resolution, 2007,
$321,500,000 shall be available for Safe and Drug-Free
Schools State Grants and $247,335,000 shall be available for
Safe and Drug-Free Schools National Programs.
(b) Of the amount available for Safe and Drug-Free National
Programs, not less than $25,000,000 shall be for competitive
grants to local educational agencies to address youth
violence and related issues.
(c) The competition under subsection (b) shall be limited
to local educational agencies that operate schools currently
identified as persistently dangerous under section 9532 of
the Elementary and Secondary Education Act of 1965.
Sec. 3604. The provision in the first proviso under the
heading ``Rehabilitation Services and Disability Research''
in the Department of Education Appropriations Act, 2006,
relating to alternative financing programs under section
4(b)(2)(D) of the Assistive Technology Act of 1998 shall not
apply to funds appropriated by the Continuing Appropriations
Resolution, 2007.

(transfer of funds)

Sec. 3605. Notwithstanding sections 20639 and 20640 of the
Continuing Appropriations Resolution, 2007, as amended by
section 2 of the Revised Continuing Appropriations
Resolution, 2007 (Public Law 110-5), the Chief Executive
Officer of the Corporation for National and Community Service
may transfer an amount of not more than $1,360,000 from the
account under the heading ``National and Community Service
Programs, Operating Expenses'' under the heading
``Corporation for National and Community Service'', to the
account under the heading ``Salaries and Expenses'' under the
heading ``Corporation for National and Community Service''.
Sec. 3606. Section 1310.12(a) of title 45 of the Code of
Federal Regulations (October 1, 2004) shall be effective 30
days after enactment of this Act except that any vehicles in
use to transport Head Start children as of January 1, 2007,
shall not be subject to a requirement under that part
regarding rear emergency exit doors for two years after the
date of enactment.
The Secretary of Health and Human Services shall revise the
allowable alternate vehicle standards described in that part
1310 (or any corresponding similar regulation or ruling) to
exempt from Federal seat spacing

[[Page S3939]]

requirements and supporting seating requirements related to
compartmentalization any vehicle used to transport children
for a Head Start program if the vehicle meets federal motor
vehicle safety standards for seating systems, occupant crash
protection, seat belt assemblies, and child restraint
anchorage systems consistent with that part 1310 (or any
corresponding similar regulation or ruling). Such revision
shall be made in a manner consistent with the findings of the
National Highway Traffic Safety Administration, pursuant to
its study on occupant protection on Head Start transit
vehicles, related to the Government Accountability Office
report GAO-06-767R.

(including rescission)

Sec. 3607. (a) From the amounts made available by the
Continuing Appropriations Resolution, 2007 (Public Law 109-
289, as amended by the Revised Continuing Appropriations
Resolution, 2007 (Public Law 110-5)) for the Office of the
Secretary, General Departmental Management under the
Department of Health and Human Services, $1,000,000 are
rescinded.
(b) For the activities carried out by the Secretary of
Education under section 3(a) of Public Law 108-406 (42 U.S.C.
15001 note), $1,000,000.

(including RESCISSION)

Sec. 3608. (a) From the amounts made available by the
Continuing Appropriations Resolution, 2007 for ``Department
of Education, Student Aid Administration'', $2,000,000 are
rescinded.
(b) For an additional amount for ``Department of Education,
Higher Education'' under part B of title VII of the Higher
Education Act of 1965 which shall be used to make a grant to
the University of Vermont for the Educational Excellence
Program, $2,000,000.
Sec. 3609. Section 1820 of the Social Security Act (42
U.S.C. 1395i-4) is amended--
(1) by redesignating subsection (j) as subsection (k); and
(2) by inserting after subsection (i) the following new
subsection:
``(j) Delta Health Initiative.--
``(1) In general.--The Secretary is authorized to award a
grant to the Delta Health Alliance, a nonprofit alliance of
academic institutions in the Mississippi Delta region, to
solicit and fund proposals from local governments, hospitals,
health care clinics, academic institutions, and rural public
health-related entities and organizations for research
development, educational programs, health care services, job
training, planning, construction, and the equipment of public
health-related facilities in the Mississippi Delta region.
``(2) Federal interest in property.--With respect to funds
used under this subsection for construction or alteration of
property, the Federal interest in the property shall last for
a period of 1 year following completion or until the Federal
Government is compensated for its proportionate interest in
the property if the property use changes or the property is
transferred or sold, whichever time period is less. At the
conclusion of such period, the Notice of Federal Interest in
such property shall be removed.
``(3) Authorization of appropriations.--There are
authorized to be appropriated such sums as may be necessary
to carry out this subsection in fiscal year 2007 and in each
of the five succeeding fiscal years.''.

CHAPTER 7

GENERAL PROVISIONS--THIS CHAPTER

Sec. 3701. Section 2(c) of the Legislative Branch
Appropriations Act, 1993 (2 U.S.C. 121d(c)) is amended by
adding at the end the following:
``(3) The Secretary of the Senate may transfer from the
fund to the Senate Employee Child Care Center proceeds from
the sale of holiday ornaments by the Senate Gift Shop for the
purpose of funding necessary activities and expenses of the
Center, including scholarships, educational supplies, and
equipment.''.

(including rescission)

Sec. 3702. (a) Of the funds provided for the ``Capitol
Guide Service and Special Services Office'' in section
20703(a) of the Continuing Appropriations Resolution, 2007
(as added by section 2 of the Revised Continuing
Appropriations Resolution, 2007 (Public Law 110-5)),
$3,500,000 are rescinded.
(b) For an additional amount for ``Capitol Guide Service
and Special Services Office'', $3,500,000, to remain
available until September 30, 2008.

CHAPTER 8

GENERAL PROVISION--THIS CHAPTER

Sec. 3801. Notwithstanding any other provision of law,
appropriations made by Public Law 110-5, or any other Act,
which the Secretary of Veterans Affairs contributes to the
Department of Defense/Department of Veterans Affairs Health
Care Sharing Incentive Fund under the authority of section
8111(d) of title 38, United States Code, shall remain
available until expended for any purpose authorized by
section 8111 of title 38, United States Code. 34

CHAPTER 9

GENERAL PROVISIONS--THIS CHAPTER

CONSULTATION REQUIREMENT

Sec. 3901. Of the funds provided in the Revised Continuing
Appropriations Resolution, 2007 (Public Law 110-5) for the
United States-China Economic and Security Review Commission,
$1,000,000 shall be available for obligation only in
accordance with a spending plan submitted to and approved by
the Committees on Appropriations which addresses the
recommendations of the Government Accountability Office's
audit of the Commission.

TECHNICAL AMENDMENT

Sec. 3902. (a) Notwithstanding any other provision of law,
subsection (c) under the heading ``Assistance for the
Independent States of the Former Soviet Union'' in Public Law
109-102, shall not apply to funds appropriated by the
Continuing Appropriations Resolution, 2007 (Public Law 109-
289, division B) as amended by Public Laws 109-369, 109-383,
and 110-5.
(b) Section 534(k) of the Foreign Operations, Export
Financing, and Related Programs Appropriations Act, 2006
(Public Law 109-102) is amended, in the second proviso, by
inserting after ``subsection (b) of that section'' the
following: ``and the requirement that a majority of the
members of the board of directors be United States citizens
provided in subsection (d)(3)(B) of that section''.
(c) Subject to section 101(c)(2) of the Continuing
Appropriations Resolution, 2007 (division B of Public Law
109-289, as amended by Public Law 110-5), the amount of funds
appropriated for ``Foreign Military Financing Program''
pursuant to such Resolution shall be construed to be the
total of the amount appropriated for such program by section
20401 of that Resolution and the amount made available for
such program by section 591 of the Foreign Operations, Export
Financing, and Related Programs Appropriations Act, 2006
(Public Law 109-102) which is made applicable to the fiscal
year 2007 by the provisions of such Resolution.

CHAPTER 10

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of Federal Housing Enterprise Oversight

Salaries and Expenses

(including transfer of funds)

For an additional amount to carry out the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992,
$4,800,000, to remain available until expended, to be derived
from the Federal Housing Enterprises Oversight Fund and to be
subject to the same terms and conditions pertaining to funds
provided under this heading in Public Law 109-115: Provided,
That not to exceed the total amount provided for these
activities for fiscal year 2007 shall be available from the
general fund of the Treasury to the extent necessary to incur
obligations and make expenditures pending the receipt of
collections to the Fund: Provided further, That the general
fund amount shall be reduced as collections are received
during the fiscal year so as to result in a final
appropriation from the general fund estimated at not more
than $0.

GENERAL PROVISIONS--THIS CHAPTER

Sec. 4001. Hereafter, funds limited or appropriated for the
Department of Transportation may be obligated or expended to
grant authority to a Mexican motor carrier to operate beyond
United States municipalities and commercial zones on the
United States-Mexico border only to the extent that--
(1) granting such authority is first tested as part of a
pilot program;
(2) such pilot program complies with the requirements of
section 350 of Public Law 107-87 and the requirements of
section 31315(c) of title 49, United States Code, related to
pilot programs; and
(3) simultaneous and comparable authority to operate within
Mexico is made available to motor carriers domiciled in the
United States.
Sec. 4002. Section 21033 of the Continuing Appropriations
Resolution, 2007 (division B of Public Law 109-289, as
amended by Public Law 110-5) is amended by adding after the
second proviso: ``: Provided further, That paragraph (2)
under such heading in Public Law 109-115 (119 Stat. 2441)
shall be funded at $149,300,000, but additional section 8
tenant protection rental assistance costs may be funded in
2007 by using unobligated balances, notwithstanding the
purposes for which such amounts were appropriated, including
recaptures and carryover, remaining from funds appropriated
to the Department of Housing and Urban Development under this
heading, the heading ``Annual Contributions for Assisted
Housing'', the heading ``Housing Certificate Fund'', and the
heading ``Project-Based Rental Assistance'' for fiscal year
2006 and prior fiscal years: Provided further, That paragraph
(3) under such heading in Public Law 109-115 (119 Stat. 2441)
shall be funded at $47,500,000: Provided further, That
paragraph (4) under such heading in Public Law 109-115 (119
Stat. 2441) shall be funded at $5,900,000: Provided further,
That paragraph (5) under such heading in Public Law 109-115
(119 Stat. 2441) shall be funded at $1,281,100,000, of which
$1,251,100,000 shall be allocated for the calendar year 2007
funding cycle on a pro rata basis to public housing agencies
based on the amount public housing agencies were eligible to
receive in calendar year 2006, and of which up to $30,000,000
shall be available to the Secretary to allocate to public
housing agencies that need additional funds to administer
their section 8 programs, with up to $20,000,000 to be for
fees associated with section 8 tenant protection rental
assistance''.

[[Page S3940]]

Sec. 4003. The dates for subsidy reductions and
demonstrations for discontinuance of reductions in operating
subsidy under the new operating fund formula, pursuant to HUD
regulations at 24 CFR 990.230, shall be moved forward so that
the first demonstration date for asset management compliance
shall be September 1, 2007, and reductions in subsidy for
calendar year 2007 shall be limited to the 5 percent amount
referred to in such regulations. Any public housing agency
that has filed information to demonstrate compliance on or
prior to April 15, 2007 shall be permitted to re-file the
same or different information to demonstrate such compliance
on or before September 1, 2007.

CHAPTER 11

GENERAL PROVISIONS--THIS ACT

AVAILABILITY OF FUNDS

Sec. 4101. No part of any appropriation contained in this
Act shall remain available for obligation beyond the current
fiscal year unless expressly so provided herein.

EMERGENCY DESIGNATION FOR TITLE I

Sec. 4102. Amounts provided in title I of this Act are
designated as emergency requirements pursuant to section 402
of H. Con. Res. 95 (109th Congress), the concurrent
resolution on the budget for fiscal year 2006.

EMERGENCY DESIGNATION FOR TITLE II

Sec. 4103. Amounts provided in title II of this Act are
designated as emergency requirements pursuant to section 402
of H. Con. Res. 95 (109th Congress), the concurrent
resolution on the budget for fiscal year 2006.
______

SA 789. Mr. GREGG submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 11, line 3, strike ``$10,589,272,000'' and insert
``$12,588,272,000''.
On page 11, line 24, strike ``$1,703,389,000'' and insert
``$3,896,389,000''.
Strike title IV.
______

SA 790. Mr. GREGG submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

Strike title IV and insert the following:

TITLE IV--MINE RESISTANT AMBUSH PROTECTION FOR AMERICAN TROOPS

SEC. 401. SHORT TITLE.

This title may be cited as the ``Mine Resistant Ambush
Protection for American Troops Act of 2007''.

PROCUREMENT

Other Procurement, Army

For an additional amount for ``Other Procurement, Army'',
$1,999,000,000, to remain available until September 30, 2009.

Procurement, Marine Corps

For an additional amount for ``Procurement, Marine Corps'',
$2,193,000,000, to remain available until September 30, 2009.

SEC. 402. CONSTRUCTION.

(a) Emergency Designation.--The amounts provided under this
title are designated as an emergency requirement pursuant to
section 402 of H. Con. Res. 95 (109th Congress).
(b) Supplement Not Supplant.--The amounts provided in this
title for the purposes so provided are in addition to any
other amounts provided in this Act for such purposes.
______

SA 791. Mr. BAYH submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At end of chapter 3 of title I, insert the following:

SEC. 1316. REPORT ON CONTINGENCY PLANNING ON IRAQ.

(a) Report Required.--Not later than 60 days after the date
of the enactment of this Act, the President shall submit to
Congress a report on United States contingency planning for
Iraq.
(b) Elements.--The report required by subsection (a) shall
include the following:
(1) Proposed United States strategic military and policy
options if the current United States plan for Iraq fails to
achieve its stated objective of transitioning Iraq to a
stable democracy and having Iraq become an ally in the war on
terror, including options on the following:
(A) Prevent the emergence of terrorist safe-havens in Iraq.
(B) An Iraq that is not allied with or a significant
supporter of Iran.
(2) The number and type of United States military forces
needed for each option proposed under paragraph (1),
including the equipment required for each such option.
(3) An estimate of the cost and schedule for each option
proposed under paragraph (1).
(4) The key assumptions underlying each option proposed
under paragraph (1).
(c) Form.--The report required by subsection (a) shall be
submitted in unclassified form, but may include a classified
annex.
______

SA 792. Mr. BAYH submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

REPORT ON CLOSING THE PREDATOR AND GLOBAL HAWK UAV PRODUCTION GAP

(a) Report Required.--Not later than 30 days after the date
of the enactment of this Act, die Secretary of Defense shall
report to the Congress no later than 90 days after enactment
of this legislation on how the Department of Defense will
rapidly reduce the gap in available Predator unmanned aerial
vehicles and associated orbits with military and intelligence
mission requirements.
(b) Elements.--The report and proposed plan shall include
the following elements:
(1) What is the shortage of available Predators, Global
Hawks and orbits to stated Department of Defense requirements
in the field, including for U.S. forces in Iraq, Afghanistan,
Colombia, East, South and Southeast Asia?
(2) What is the timeline for fully closing this shortage?
(3) Has the Department of Defense requested all necessary
funds to keep Predator, Global Hawk and associated orbit
production lines running at maximum capacity until the
shortage is fully closed? If not, why not?
(4) What steps do you recommend to close this gap?
(5) Does having a sole source producer delay meeting
Predator production and procurement timelines? If so, how can
we best open up the competition?
(6) Please provide the five year Predator, Global Hawk and
orbit requirement? Do you foresee long-endurance UAVs, armed
and for intelligence, surveillance and reconnaissance
purposes, being a long-term and growing requirement for the
United States Armed Forces?
(c) Form.--The report required by subsection (a) shall be
submitted in unclassified form, but may include a classified
annex.
______

SA 793. Ms. KLOBUCHAR submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:
Sec. __. In providing any grants for small and rural
community technical and compliance assistance under the
Fiscal Year 2007 Operating Plan of the Environmental
Protection Agency, the Administrator of the Environmental
Protection Agency shall give priority to small systems and
qualified (as determined by the Administrator) organizations
that have the most need (or a majority of need) from small
communities in each State.
______

SA 794. Mr. SALAZAR submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 56, after line 18, add the following:
Sec. 1713. (a) Quarterly Reports on Effects of
Participation in the Global War on Terrorism on Veterans and
the Department of Veterans Affairs.--
(1) Quarterly reports required.--Not later than 90 days
after the date of the enactment of this Act, and every fiscal
year quarter thereafter, the Secretary of Veterans Affairs
shall submit to the appropriate committees of Congress a
report on the effects of participation in the Global War on
Terrorism on veterans and on the Department of Veterans
Affairs.
(2) Scope of report.--Each report required by paragraph (1)
shall provide the information specified in paragraph (3),
current as of the date of such report, separately for each of
the following periods:
(A) The period of the fiscal year quarter for which such
report is submitted.
(B) The period beginning on October 1, 2001, and ending on
the last day of the most recent fiscal year completed on or
before the date of such report, with such information set
forth--
(i) in aggregate over such period; and
(ii) separately for each complete fiscal year that falls
within such period.
(3) Covered information.--The information specified in this
paragraph for a report under paragraph (1) is information on
the provision to veterans of the Global War on Terrorism of
benefits and services under the laws administered by the
Secretary of Veterans Affairs as follows:
(A) Personal information.--Aggregated personal information
on veterans of the Global War on Terrorism, including--
(i) the number of such veterans by race;
(ii) the number of such veterans by sex;
(iii) the number of such veterans by age;
(iv) the number of such veterans by marital status (whether
married, single, separated, or divorced); and
(v) the number of such veterans by residence (by State,
territory, or country).
(B) Information on military service.--Aggregated
information on the military service of veterans of the Global
War on Terrorism, including information on the following:

[[Page S3941]]

(i) In the case of all veterans of the Global War on
Terrorism--

(I) the number of such veterans by Armed Force, and by
component of Armed Force, in which such veterans served in
the Global War on Terrorism; and
(II) the number of such veterans by duty status in which
such veterans served in the Global War on Terrorism,
including, in the case of veterans who were members of a
reserve component of the Armed Forces, the number of such
veterans who were members of the National Guard.

(ii) In the case of veterans of the Global War on Terrorism
who served only in Operation Enduring Freedom--

(I) the number of such veterans by Armed Force, and by
component of Armed Force, in which such veterans served in
Operation Enduring Freedom; and
(II) the number of such veterans by duty status in which
such veterans served in Operation Enduring Freedom,
including, in the case of veterans who were members of a
reserve component of the Armed Forces, the number of such
veterans who were members of the National Guard.

(iii) In the case of veterans of the Global War on
Terrorism who served only in Operation Iraqi Freedom--

(I) the number of such veterans by Armed Force, and by
component of Armed Force, in which such veterans served in
Operation Iraqi Freedom; and
(II) the number of such veterans by duty status in which
such veterans served in Operation Iraqi Freedom, including,
in the case of veterans who were members of a reserve
component of the Armed Forces, the number of such veterans
who were members of the National Guard.

(iv) In the case of veterans of the Global War on Terrorism
who served in both Operation Enduring Freedom and Operation
Iraqi Freedom--

(I) the number of such veterans by Armed Force, and by
component of Armed Force, in which such veterans served in
each of Operation Enduring Freedom and Operation Iraqi
Freedom; and
(II) the number of such veterans by duty status in which
such veterans served in Operation Enduring Freedom or
Operation Iraqi Freedom, including, in the case of veterans
who were members of a reserve component of the Armed Forces,
the number of such veterans who were members of the National
Guard.

(v) In the case of veterans of the Global War on Terrorism
who served in neither Operation Enduring Freedom nor
Operation Iraqi Freedom--

(I) the number of such veterans by Armed Force, and by
component of Armed Force, in which such veterans served in
the Armed Forces during the Global War on Terrorism; and
(II) the number of such veterans by duty status in which
such veterans served in the Armed Forces during the Global
War on Terrorism, including, in the case of veterans who were
members of a reserve component of the Armed Forces, the
number of such veterans who were members of the National
Guard.

(vi) The number of veterans of the Global War on Terrorism
by deployment location in the Global War on Terrorism,
including the number of such veterans deployed to each
location specified in subsection (c)(2).
(vii) The deployment history of veterans during the Global
War on Terrorism, including--

(I) the number of veterans who were deployed more than
once; and
(II) for each number of veterans who were deployed twice,
three times, four times, or more than four times, the number
of such veterans who were deployed each such number of times.

(viii) The number of veterans of the Global War on
Terrorism by grade upon completion of military service in the
Global War on Terrorism.
(ix) The medical evacuation history of veterans during the
Global War on Terrorism, including--

(I) the number of veterans who were evacuated once or more
during the Global War on Terrorism; and
(II) for each number of veterans who were evacuated twice,
three times, four times, or more than four times, the number
of such veterans who were evacuated each such number of
times.

(C) Health, counseling, and related benefits.--Aggregated
information on the health, counseling, and related benefits
and services provided by the Department of Veterans Affairs
to veterans of the Global War on Terrorism, including
information on the enrollment of such veterans in the patient
enrollment system under section 1705 of title 38, United
States Code, by priority of enrollment status.
(D) Compensation, pension, and other benefits.--Aggregated
information on the compensation, pension, and other benefits
and services provided by the Department of Veterans Affairs
to veterans of the Global War on Terrorism, including
information on the following:
(i) The claims of such veterans for compensation under
chapter 11 of title 38, United Stated Code, including--

(I) the number of claims received;
(II) the number of claims granted;
(III) the number of claims denied; and
(IV) the number of claims pending.

(ii) The amount of compensation paid to such veterans,
stated as an average monthly amount for each of the periods
covered by such report and as a total amount for both such
periods.
(iii) The claims for dependency and indemnity compensation
under chapter 13 of title 38, United States Code, with
respect to such veterans, including--

(I) the number of claims received;
(II) the number of claims granted;
(III) the number of claims denied; and
(IV) the number of claims pending.

(iv) The amount of dependency and indemnity compensation
paid with respect to such veterans, stated as an average
monthly amount for the periods covered by such report and as
a total amount for such periods.
(v) The claims for pension under chapter 15 of title 38,
United States Code, for or with respect to such veterans,
including--

(I) the number of claims received;
(II) the number of claims granted;
(III) the number of claims denied; and
(IV) the number of claims pending.

(vi) The education benefits provided to or with respect to
such veterans or other individuals under chapter 30, 32, or
35 of title 38, United States Code, or chapter 1606 or 1607
of title 10, United States, including--

(I) the number of veterans or other individuals provided
such benefits (set forth by chapter under which provided);
and
(II) the amount of such benefits (set forth by chapter
under which provided).

(vii) The vocational rehabilitation benefits and services
provided to such veterans, including--

(I) the number of veterans submitting applications for such
benefits or services;
(II) the number of applications granted;
(III) the number of applications denied;
(IV) the number of applications pending; and
(V) the type and amount of such benefits and services
provided.

(viii) The housing and small business loan guaranty
benefits provided to such veterans under chapter 37 of title
38, United States Code, and other provisions of law,
including--

(I) the number of veterans submitting applications for such
benefits;
(II) the type, and number and amount by type, of such
benefits provided; and
(III) the number and amount by type of loans in default.

(ix) The specially adapted housing assistance provided to
such veterans under chapter 21 of title 38, United States
Code, including the type and amount of assistance provided.
(x) The insurance benefits provided to or with respect to
such veterans under chapter 19 of title 38, United States
Code, including the amount of benefits provided under each
type of insurance offered by the Secretary.
(E) Burial and cemetery benefits.--Aggregated information
on the burial and cemetery benefits provided by the
Department of Veterans Affairs with respect to veterans of
the Global War on Terrorism, including information on the
following:
(i) The number of burials in a cemetery of the National
Cemetery System or Arlington National Cemetery.
(ii) The number of flags furnished under section 2301 of
title 38, United States Code.
(iii) The amount of burial allowances paid under section
2302 of title 38, United States Code.
(iv) The amount of plot allowances paid under section 2303
of title 38, United States Code.
(v) The number of headstones, markers, and burial
receptacles furnished under section 2306 of title 38, United
States Code, and the cost of furnishing such headstones,
markers, and receptacles.
(vi) The amount of burial and funeral expenses paid under
section 2307 of title 38, United States Code, for veterans
who die from a service-connected disability.
(vii) The costs of the transportation of the remains of
deceased veterans to a national cemetery under section 2308
of title 38, United States Code.
(F) Service-connected status.--A description of the way in
which the Secretary of Veterans Affairs distinguishes between
service-connected disabilities and disabilities that are not
service-connected.
(4) Protection of identities.--The Secretary shall take
appropriate actions in preparing and submitting reports under
this subsection to ensure that no personally identifying
information on any particular veteran is included or
otherwise improperly released in such reports.
(5) Definitions.--In this subsection:
(A) Appropriate committees of congress.--The term
``appropriate committees of Congress'' means--
(i) the Committees on Armed Services, Appropriations, and
Veterans' Affairs of the Senate; and
(ii) the Committees on Armed Services, Appropriations, and
Veterans' Affairs of the House of Representatives.
(B) Veteran of the global war on terrorism.--The term
``veteran of the Global War on Terrorism'' means a veteran of
the Global War on Terrorism who served on active military,
naval, or air service during the Global War on Terrorism in a
location specified in subsection (c)(2).
(b) Quarterly Reports on Effects of Participation in the
Global War on Terrorism on Members of the Armed Forces and
the Department of Defense.--
(1) Quarterly reports required.--Not later than 90 days
after the date of the enactment of this Act, and every 90
days thereafter, the Secretary of Defense shall submit to the
congressional defense committees a

[[Page S3942]]

report on the effects of participation in the Global War on
Terrorism on the members of the Armed Forces and on the
Department of Defense.
(2) Scope of report.--Each report required by paragraph (1)
shall include the information specified in paragraph (3),
current as of the date of such report, separately for each of
the following periods:
(A) The 90-day period ending on the date of such report.
(B) The period beginning on September 11, 2001, and ending
on the date of such report.
(3) Covered information.--The information specified in this
paragraph for a report under paragraph (1) is information on
the participation of members of the Armed Forces in the
Global War on Terrorism as follows:
(A) Personal information.--Aggregated personal information
on members of the Armed Forces participating in the Global
War on Terrorism, including--
(i) the number of such members by race;
(ii) the number of such members by sex;
(iii) the number of such members by age;
(iv) the number of such members by marital status (whether
married, single, separated, or divorced); and
(v) the number of such members by home of record (by State
or territory).
(B) Information on military service.--Aggregated
information on the military service of members of the Armed
Forces participating in the Global War on Terrorism,
including information on the following:
(i) The number of such members by Armed Force, and by
component of Armed Force, in which such members are serving
in the Global War on Terrorism.
(ii) The number of such members by duty status in which
such members are serving in the Global War on Terrorism,
including, in the case of members who are members of a
reserve component of the Armed Forces, the number of such
members who are members of the National Guard.
(iii) The number of such members by deployment status in
which such members are serving in the Global War on
Terrorism, including the number of such members who--

(I) have served only in Operation Enduring Freedom;
(II) have served only in Operation Iraqi Freedom;
(III) have served in both Operation Enduring Freedom and
Operation Iraqi Freedom; or
(IV) have served in neither Operation Enduring Freedom nor
Operation Iraqi Freedom.

(iv) The number of such members by deployment location in
the Global War on Terrorism, including the number of such
members deployed to each location specified in subsection
(c)(2).
(v) The deployment history of such members during the
Global War on Terrorism, including--

(I) the number of members who have been deployed more than
once; and
(II) for each number of members who have been deployed
twice, three times, four times, or more than four times, the
number of such members who have been deployed each such
number of times.

(vi) The number of such members by grade.
(vii) The medical evacuation history of such members during
the Global War on Terrorism, including--

(I) the number of members who have been evacuated once or
more during the Global War on Terrorism; and
(II) for each number of members who have been evacuated
twice, three times, four times, or more than four times, the
number of such members who have been evacuated each such
number of times.

(viii) The number of such members whose enlistment or
period of obligated service has been extended, or whose
eligibility for retirement has been suspended, during the
Global War on Terrorism under a provision of law (commonly
referred to as a ``stop-loss authority'') authorizing the
President to extend an enlistment or period of obligated
service, or suspend eligibility for retirement, of a member
of the Armed Forces in a time of war or national emergency
declared by Congress or the President, including--

(I) the number of such members who have been subject to the
exercise of such authority; and
(II) for each number of times being subject to the exercise
of such authority, the number of such members who have been
so subject to such authority each such number of times.

(ix) The number of such members who have been discharged or
released from the Armed Forces, including, for each category
of condition of discharge, the number of members discharged
under such category.
(C) Information on administration of armed forces.--
Aggregated information on the administration of the Armed
Forces participating in of the Global War on Terrorism,
including information on the following:
(i) The number of members of the reserve components of the
Armed Forces called or ordered to active duty for service in
the Global War on Terrorism, including--

(I) the number of members of the National Guard and the
number of Reserves so ordered;
(II) for each number of times of being so called or ordered
to active duty, the number of such members who have been so
called or order to active duty each such number of times; and
(III) the average number times being so called or ordered
to active duty among all members of the National Guard and
Reserve who have been so called or ordered to active duty.

(ii) The number of members of the Armed Forces who have
been subject to medical evacuation once or more in the Global
War on Terrorism.
(iii) The number of members of the Armed Forces whose
enlistment or period of obligated service has been extended,
or whose eligibility for retirement has been suspended, for
purposes of the Global War on Terrorism under a provision of
law (commonly referred to as a ``stop-loss authority'')
authorizing the President to extend an enlistment or period
of obligated service, or suspend eligibility for retirement,
of a member of the Armed Forces in a time of war or national
emergency declared by Congress or the President.
(iv) The number of members of the Armed Forces
participating in the Global War on Terrorism who have been
discharged or released from the Armed Forces, including--

(I) the military status of such members at the time of
discharge or release; and
(II) the nature of such discharge or release, including
less than honorable discharge for drug abuse, alcohol abuse,
domestic violence, discipline problems, and other war-related
reintegration problems.

(v) The number of members of the Armed Forces described in
subparagraph (H) who have had their discharge upgraded, set
forth by deployment status in the Global War on Terrorism and
by nature of discharge upon discharge.
(4) Definitions.--In this subsection:
(A) Congressional defense committees.--The term
``congressional defense committees'' means--
(i) the Committees on Armed Services and Appropriations of
the Senate; and
(ii) the Committees on Armed Services and Appropriations of
the House of Representatives.
(B) Member of the armed forces participating in the global
war on terrorism.--The term ``member of the Armed Forces
participating in the Global War on Terrorism'' means a member
of the Armed Forces who served on active duty in the Global
War on Terrorism at a location specified in section (c)(2).
(c) Definitional Matters.--
(1) General definition of global war on terrorism.--In this
section, the term ``Global War on Terrorism'' means the
period beginning on September 11, 2001, and ending on the
date thereafter prescribed by Presidential proclamation or by
law.
(2) Specification of locations of global war on
terrorism.--For purposes of this section, the geographic
location of the Global War on Terrorism shall be the
locations (including the airspace above) as follows:
Afghanistan, Algeria, the Arabian Sea, Armenia, Bab el
Mandeb, Bahrain, Bulgaria, Cyprus, Diego Garcia (United
Kingdom Indian Ocean Territory), Djibouti, Egypt, Eritrea,
Ethiopia, the Republic of Georgia, Greece, Guantanamo Bay,
Cuba, the Gulf of Aden, the Gulf of Aqaba, the Gulf of Oman,
the Gulf of Suez, Indonesia, the Ionian Sea, Iran, Iraq,
Israel, Japan, Jordan, Kazakhstan, Kenya, Kyrgyzstan, Kuwait,
Lebanon, the Mediterranean Sea, Oman, Pakistan, the Pentagon
Reservation, Virginia (but only on September 11, 2001), the
Persian Gulf, the Philippines, Qatar, the Red Sea, Romania,
Saudi Arabia, Somalia, the Spratley Islands, the Strait of
Hormuz, the Suez Canal, Syria, Tajikistan, Turkey,
Turkmenistan, the United Arab Emirates, Uzbekistan, Yemen,
and any other location specified for purposes of this Act by
the Secretary of Veterans Affairs in consultation with the
Secretary of Defense.
______

SA 795. Mr. THUNE submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the end of chapter 3 of title I, add insert the
following:

SEC. 1316. ADDITIONAL AMOUNT FOR OPERATION AND MAINTENANCE,
AIR FORCE.

The amount appropriated or otherwise made available by this
chapter under the heading ``Operation and Maintenance, Air
Force'' is hereby increased by $222,000,000: Provided, that
the amount provided under this heading is designated as an
emergency requirement pursuant to section 402 of H. Con. Res.
95 (109th Congress).
______

SA 796. Mr. REID submitted an amendment intended to be proposed by
him to the bill H.R. 1591, making emergency supplemental appropriations
for the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

At the end of title III, insert the following:

CLARIFICATIONS

Sec. __. The Consolidated Appropriations Act, 2005, is
amended in the matter under the heading ``community
development fund (including transfers of funds)'', in title
II, by striking ``equipment'' and inserting ``renovation and
construction''. The Transportation, Treasury, Housing and
Urban Development, the Judiciary, the District of Columbia,
and Independent Agencies Appropriations Act, 2006 is amended
in the matter under the

[[Page S3943]]

heading ``community development fund (including transfers of
funds)'', in title III, by adding at the end the following:
``Funds made available under this heading for a Small
Business Development Center shall be used for revitalization
costs at the College of Agriculture, Biotechnology, and
Natural Resources at the institution involved.''.
______

SA 797. Mr. GRASSLEY submitted an amendment intended to be proposed
by him to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

At the appropriate place insert the following:

V--FAIR MINIMUM WAGE AND TAX RELIEF

Subtitle A--Fair Minimum Wage

SEC. 500. SHORT TITLE.

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

SEC. 501. 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. 502. 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.

Subtitle B--Small Business Tax Incentives

SEC. 510. SHORT TITLE; AMENDMENT OF CODE.

(a) Short Title.--This subtitle 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 subtitle 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.

PART I--SMALL BUSINESS TAX RELIEF PROVISIONS

Subpart A--General Provisions

SEC. 511. 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. 512. 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 ``January 1,
2009''.
(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 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 January 1, 2009.''.
(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 subsection
shall apply to property placed in service after the date of
the enactment of this Act.

SEC. 513. 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.--

[[Page S3944]]

``(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.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 514. 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, renewal community, or
rural renewal county.
``(B) Individual must continue to reside in zone,
community, or county.--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, renewal community, or
rural renewal county.
``(C) Rural renewal county.--For purposes of this
paragraph, the term `rural renewal county' means any county
which--
``(i) is outside a metropolitan statistical area (defined
as such by the Office of Management and Budget), and
``(ii) during the 5-year periods 1990 through 1994 and 1995
through 1999 had a net population loss.''.
(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 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. 515. 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).

[[Page S3945]]

``(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 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

[[Page S3946]]

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.

SEC. 516. ACCELERATED DEPRECIATION FOR INVESTMENT IN HIGH
OUT-MIGRATION COUNTIES.

(a) In General.--Section 168 (relating to accelerated cost
recovery system) is amended by adding at the end the
following new subsection:
``(m) Rural Investment Property.--
``(1) In general.--For purposes of subsection (a), the
applicable recovery period for qualified rural investment
property shall be determined in accordance with the table
contained in paragraph (2) in lieu of the table contained in
subsection (c).
``(2) Applicable recovery period for rural investment
property.--For purposes of paragraph (1)--
The applicable
``  ``In the case of:                               recovery period is:
3-year property.................................................2 years
5-year property.................................................3 years
7-year property.................................................4 years
10-year property................................................6 years
15-year property................................................9 years
20-year property...............................................12 years
Nonresidential real property..................................22 years.
``(3) Qualified rural investment property defined.--For
purposes of this subsection--
``(A) In general.--The term `qualified rural investment
property' means property which is property described in the
table in paragraph (2) and which is--
``(i) used by the taxpayer predominantly in the active
conduct of a trade or business within a high out-migration
county,
``(ii) not used or located outside such county on a regular
basis,
``(iii) not acquired (directly or indirectly) by the
taxpayer from a person who is related to the taxpayer (within
the meaning of section 465(b)(3)(C)), and
``(iv) not property (or any portion thereof) placed in
service for purposes of operating any racetrack or other
facility used for gambling.
``(B) High out-migration county.--The term `high out-
migration county' means any county which--
``(i) is outside a metropolitan statistical area (defined
as such by the Office of Management and Budget), and
``(ii) during the 5-year periods 1990 through 1994 and 1995
through 1999 had a net population loss.
``(4) Termination.--This subsection shall not apply to
property placed in service after March 31, 2008.''.
(b) Effective Date.--The amendment made by this section
shall apply to 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.

SEC. 517. EXTENSION OF INCREASED EXPENSING FOR QUALIFIED
SECTION 179 GULF OPPORTUNITY ZONE PROPERTY.

Paragraph (2) of section 1400N(e) (relating to qualified
section 179 Gulf Opportunity Zone property) is amended--
(1) by striking ``this subsection, the term'' and inserting
``this subsection--
``(A) In general.--The term'', and
(2) by adding at the end the following new subparagraph:
``(B) Extension for certain property.--In the case of
property substantially all of the use of which is in one or
more specified portions of the GO Zone (as defined by
subsection (d)(6)), such term shall include section 179
property (as so defined) which is described in subsection
(d)(2), determined--
``(i) without regard to subsection (d)(6), and
``(ii) by substituting `2008' for `2007' in subparagraph
(A)(v) thereof.''.

Subpart B--Subchapter S Provisions

SEC. 521. 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.

SEC. 522. 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. 523. 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

[[Page S3947]]

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. 524. 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. 525. 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. 526. 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.

SEC. 527. DEDUCTIBILITY OF INTEREST EXPENSE ON INDEBTEDNESS
INCURRED BY AN ELECTING SMALL BUSINESS TRUST TO
ACQUIRE S CORPORATION STOCK.

(a) In General.--Subparagraph (C) of section 641(c)(2)
(relating to modifications) is amended by inserting after
clause (iii) the following new clause:
``(iv) Any interest expense paid or accrued on indebtedness
incurred to acquire stock in an S corporation.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2006.

PART II--REVENUE PROVISIONS

SEC. 531. 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. 532. 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. 533. 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).''.
(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. 534. 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--
``(A) the violation of any law, or
``(B) an investigation or inquiry into the potential
violation of any law which is initiated by such government or
entity.
``(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 (or 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 an amount described in clause (i) or
(ii) of subparagraph (A), as the case may be, in the court
order or settlement

[[Page S3948]]

agreement, except that the requirement of this subparagraph
shall not apply in the case of any settlement agreement which
requires the taxpayer to pay or incur an amount not greater
than $1,000,000.

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 unless such amount
is paid or incurred for a cost or fee regularly charged for
any routine audit or other customary review performed by
the government or entity.
``(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 by the 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. 535. 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
``(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.--

[[Page S3949]]

``(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 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

[[Page S3950]]

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) 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.--

[[Page S3951]]

(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. 536. 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), 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. 537. MODIFICATION OF CRIMINAL PENALTIES FOR WILLFUL
FAILURES INVOLVING TAX PAYMENTS AND FILING
REQUIREMENTS.

(a) Increase in Penalty for Attempt to Evade or Defeat
Tax.--Section 7201 (relating to attempt to evade or defeat
tax) is amended--
(1) by striking ``$100,000'' and inserting ``$500,000'',
(2) by striking ``$500,000'' and inserting ``$1,000,000'',
and
(3) by striking ``5 years'' and inserting ``10 years''.
(b) Modification of Penalties for Willful Failure to File
Return, Supply Information, or Pay Tax.--
(1) In general.--Section 7203 (relating to willful failure
to file return, supply information, or pay tax) 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) `$250,000 ($500,000' for `$50,000 ($100,000', and
``(C) `5 years' for `1 year'.
``(2) Failure described.--A failure described in this
paragraph is--
``(A) a failure to make a return described in subsection
(a) for any 3 taxable years occurring during any period of 5
consecutive taxable years if the aggregate tax liability for
such period is not less than $50,000, or
``(B) a failure to make a return if the tax liability
giving rise to the requirement to

[[Page S3952]]

make such return is attributable to an activity which is a
felony under any State or Federal law.''.
(2) Penalty may be applied in addition to other
penalties.--Section 7204 (relating to fraudulent statement or
failure to make statement to employees) is amended by
striking ``the penalty provided in section 6674'' and
inserting ``the penalties provided in sections 6674 and
7203(b)''.
(c) Fraud and False Statements.--Section 7206 (relating to
fraud and false statements) is amended--
(1) by striking ``$100,000'' and inserting ``$500,000'',
(2) by striking ``$500,000'' and inserting ``$1,000,000'',
and
(3) by striking ``3 years'' and inserting ``5 years''.
(d) Increase in Monetary Limitation for Underpayment or
Overpayment of Tax Due to Fraud.--Section 7206 (relating to
fraud and false statements), as amended by subsection (a)(3),
is amended--
(1) by striking ``Any person who--'' and inserting ``(a) In
General.--Any person who--'', 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.''.
(e) 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. 538. 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. 539. 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. 540. 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 1 or more contingent payments,
any regulations which require original issue discount to be
determined by reference to the comparable yield of a fixed-
rate debt instrument shall be applied as if the regulations
require that such comparable yield be determined by reference
to a 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. 541. 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. 542. 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. 543. 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 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.

[[Page S3953]]

``(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. 544. 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.

SEC. 545. INCREASE IN AGE OF MINOR CHILDREN WHOSE UNEARNED
INCOME IS TAXED AS IF PARENT'S INCOME.

(a) In General.--Subparagraph (A) of section 1(g)(2)
(relating to child to whom subsection applies) is amended to
read as follows:
``(A) such child--
``(i) has not attained age 18 before the close of the
taxable year, or
``(ii)(I) has attained age 18 before the close of the
taxable year and meets the age requirements of section
152(c)(3) (determined without regard to subparagraph (B)
thereof), and
``(II) whose earned income (as defined in section
911(d)(2)) for such taxable year does not exceed one-half of
the amount of the individual's support (within the meaning of
section 152(c)(1)(D) after the application of section
152(f)(5) (without regard to subparagraph (A) thereof) for
such taxable year,''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 546. INCREASE IN INFORMATION RETURN PENALTIES.

(a) Failure To File Correct Information Returns.--
(1) In general.--Section 6721(a)(1) is amended--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$250,000'' and inserting ``$3,000,000''.
(2) Reduction where correction in specified period.--
(A) Correction within 30 days.--Section 6721(b)(1) is
amended--
(i) by striking ``$15'' and inserting ``$50'',
(ii) by striking ``$50'' and inserting ``$250'', and
(iii) by striking ``$75,000'' and inserting ``$500,000''.
(B) Failures corrected on or before august 1.--Section
6721(b)(2) is amended--
(i) by striking ``$30'' and inserting ``$100'',
(ii) by striking ``$50'' and inserting ``$250'', and
(iii) by striking ``$150,000'' and inserting
``$1,500,000''.
(3) Lower limitation for persons with gross receipts of not
more than $5,000,000.--Section 6721(d)(1) is amended--
(A) in subparagraph (A)--
(i) by striking ``$100,000'' and inserting ``$1,000,000'',
and
(ii) by striking ``$250,000'' and inserting ``$3,000,000'',
(B) in subparagraph (B)--
(i) by striking ``$25,000'' and inserting ``$175,000'', and
(ii) by striking ``$75,000'' and inserting ``$500,000'',
and
(C) in subparagraph (C)--
(i) by striking ``$50,000'' and inserting ``$500,000'', and
(ii) by striking ``$150,000'' and inserting ``$1,500,000''.
(4) Penalty in case of intentional disregard.--Section
6721(e) is amended--
(A) by striking ``$100'' in paragraph (2) and inserting
``$500'',
(B) by striking ``$250,000'' in paragraph (3)(A) and
inserting ``$3,000,000''.
(b) Failure To Furnish Correct Payee Statements.--
(1) In general.--Section 6722(a) is amended--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$100,000'' and inserting ``$1,000,000''.
(2) Penalty in case of intentional disregard.--Section
6722(c) is amended--
(A) by striking ``$100'' in paragraph (1) and inserting
``$500'', and
(B) by striking ``$100,000'' in paragraph (2)(A) and
inserting ``$1,000,000''.
(c) Failure To Comply With Other Information Reporting
Requirements.--Section 6723 is amended--
(1) by striking ``$50'' and inserting ``$250'', and
(2) by striking ``$100,000'' and inserting ``$1,000,000''.
(d) Effective Date.--The amendments made by this section
shall apply with respect to information returns required to
be filed on or after January 1, 2008.

SEC. 547. E-FILING REQUIREMENT FOR CERTAIN LARGE
ORGANIZATIONS.

(a) In General.--The first sentence of section 6011(e)(2)
is amended to read as follows: ``In prescribing regulations
under paragraph (1), the Secretary shall take into account
(among other relevant factors) the ability of the taxpayer to
comply at reasonable cost with the requirements of such
regulations.''.
(b) Conforming Amendment.--Section 6724 is amended by
striking subsection (c).
(c) Effective Date.--The amendments made by this section
shall apply to taxable years ending on or after December 31,
2008.

SEC. 548. EXPANSION OF IRS ACCESS TO INFORMATION IN NATIONAL
DIRECTORY OF NEW HIRES FOR TAX ADMINISTRATION
PURPOSES.

(a) In General.--Paragraph (3) of section 453(j) of the
Social Security Act (42 U.S.C. 653(j)) is amended to read as
follows:
``(3) Administration of federal tax laws.--The Secretary of
the Treasury shall have access to the information in the
National Directory of New Hires for purposes of administering
the Internal Revenue Code of 1986.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.

SEC. 549. DISCLOSURE OF PRISONER RETURN INFORMATION TO
FEDERAL BUREAU OF PRISONS.

(a) Disclosure.--
(1) In general.--Subsection (l) of section 6103 (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:
``(22) Disclosure of return information of prisoners to
federal bureau of prisons.--
``(A) In general.--Under such procedures as the Secretary
may prescribe, the Secretary may disclose return information
with respect to persons incarcerated in Federal prisons whom
the Secretary believes filed or facilitated the filing of
false or fraudulent returns to the head of the Federal Bureau
of Prisons if the Secretary determines that such disclosure
is necessary to permit effective tax administration.
``(B) Disclosure by agency to employees.--The head of the
Federal Bureau of Prisons may redisclose information received
under subparagraph (A)--
``(i) only to those officers and employees of the Bureau
who are personally and directly engaged in taking
administrative actions to address violations of
administrative rules and regulations of the prison facility,
and
``(ii) solely for the purposes described in subparagraph
(C).
``(C) Restriction on use of disclosed information.--Return
information disclosed under this paragraph may be used only
for the purposes of--

[[Page S3954]]

``(i) preventing the filing of false or fraudulent returns;
and
``(ii) taking administrative actions against individuals
who have filed or attempted to file false or fraudulent
returns.''.
(2) Procedures and record keeping related to disclosure.--
Subsection (p)(4) of section 6103 is amended--
(A) by striking ``(14), or (17)'' in the matter before
subparagraph (A) and inserting ``(14), (17), or (22)'', and
(B) by striking ``(9), or (16)'' in subparagraph (F)(i) and
inserting ``(9), (16), or (22)''.
(3) Evaluation by treasury inspector general for tax
administration.--Paragraph (3) of section 7803(d) is amended
by striking ``and'' at the end of subparagraph (A), by
striking the period at the end of subparagraph (B) and
inserting ``; and'', and by adding at the end the following
new subparagraph:
``(C) not later than 3 years after the date of the
enactment of section 6103(l)(22), submit a written report to
Congress on the implementation of such section.''.
(b) Annual Reports.--
(1) In general.--The Secretary of the Treasury shall submit
to Congress and make publicly available an annual report on
the filing of false and fraudulent returns by individuals
incarcerated in Federal and State prisons.
(2) Contents of report.--The report submitted under
paragraph (1) shall contain statistics on the number of false
or fraudulent returns associated with each Federal and State
prison and such other information that the Secretary
determines is appropriate.
(3) Exchange of information.--For the purpose of gathering
information necessary for the reports required under
paragraph (1), the Secretary of the Treasury shall enter into
agreements with the head of the Federal Bureau of Prisons and
the heads of State agencies charged with responsibility for
administration of State prisons under which the head of the
Bureau or Agency provides to the Secretary not less
frequently than annually the names and other identifying
information of prisoners incarcerated at each facility
administered by the Bureau or Agency.
(c) Effective Date.--The amendments made by this section
shall apply to disclosures on or after January 1, 2008.

SEC. 550. UNDERSTATEMENT OF TAXPAYER LIABILITY BY RETURN
PREPARERS.

(a) Application of Return Preparer Penalties to All Tax
Returns.--
(1) Definition of tax return preparer.--Paragraph (36) of
section 7701(a) (relating to income tax preparer) is
amended--
(A) by striking ``income'' each place it appears in the
heading and the text, and
(B) in subparagraph (A), by striking ``subtitle A'' each
place it appears and inserting ``this title''.
(2) Conforming amendments.--
(A)(i) Section 6060 is amended by striking ``INCOME TAX
RETURN PREPARERS'' in the heading and inserting ``TAX RETURN
PREPARERS''.
(ii) Section 6060(a) is amended--
(I) by striking ``AN INCOME TAX RETURN PREPARER'' each
place it appears and inserting ``A TAX RETURN PREPARER'',
(II) by striking ``each income tax return preparer'' and
inserting ``each tax return preparer'', and
(III) by striking ``another income tax return preparer''
and inserting ``another tax return preparer''.
(iii) The item relating to section 6060 in the table of
sections for subpart F of part III of subchapter A of chapter
61 is amended by striking ``income tax return preparers'' and
inserting ``tax return preparers''.
(iv) Subpart F of part III of subchapter A of chapter 61 is
amended by striking ``Income Tax Return Preparers'' in the
heading and inserting ``Tax Return Preparers''.
(v) The item relating to subpart F in the table of subparts
for part III of subchapter A of chapter 61 is amended by
striking ``income tax return preparers'' and inserting ``tax
return preparers''.
(B) Section 6103(k)(5) is amended--
(i) by striking ``income tax return preparer'' each place
it appears and inserting ``tax return preparer'', and
(ii) by striking ``income tax return preparers'' each place
it appears and inserting ``tax return preparers''.
(C)(i) Section 6107 is amended--
(I) by striking ``income tax return preparer'' in the
heading and inserting ``tax return preparer'',
(II) by striking ``an income tax return preparer'' each
place it appears in subsections (a) and (b) and inserting ``a
tax return preparer'',
(III) by striking ``Income Tax Return Preparer'' in the
heading for subsection (b) and inserting ``Tax Return
Preparer'', and
(IV) in subsection (c), by striking ``income tax return
preparers'' and inserting ``tax return preparers''.
(ii) The item relating to section 6107 in the table of
sections for subchapter B of chapter 61 is amended by
striking ``Income tax return preparer'' and inserting ``Tax
return preparer''.
(D) Section 6109(a)(4) is amended--
(i) by striking ``an income tax return preparer'' and
inserting ``a tax return preparer'', and
(ii) by striking ``income return preparer'' in the heading
and inserting ``tax return preparer''.
(E) Section 6503(k)(4) is amended by striking ``Income tax
return preparers'' and inserting ``Tax return preparers''.
(F)(i) Section 6694 is amended--
(I) by striking ``INCOME TAX RETURN PREPARER'' in the
heading and inserting ``TAX RETURN PREPARER'',
(II) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer'',
(III) in subsection (c)(2), by striking ``the income tax
return preparer'' and inserting ``the tax return preparer'',
(IV) in subsection (e), by striking ``subtitle A'' and
inserting ``this title'', and
(V) in subsection (f), by striking ``income tax return
preparer'' and inserting ``tax return preparer''.
(ii) The item relating to section 6694 in the table of
sections for part I of subchapter B of chapter 68 is amended
by striking ``income tax return preparer'' and inserting
``tax return preparer''.
(G)(i) Section 6695 is amended--
(I) by striking ``INCOME'' in the heading, and
(II) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer''.
(ii) Section 6695(f) is amended--
(I) by striking ``subtitle A'' and inserting ``this
title'', and
(II) by striking ``the income tax return preparer'' and
inserting ``the tax return preparer''.
(iii) The item relating to section 6695 in the table of
sections for part I of subchapter B of chapter 68 is amended
by striking ``income''.
(H) Section 6696(e) is amended by striking ``subtitle A''
each place it appears and inserting ``this title''.
(I)(i) Section 7407 is amended--
(I) by striking ``INCOME TAX RETURN PREPARERS'' in the
heading and inserting ``TAX RETURN PREPARERS'',
(II) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer'',
(III) by striking ``income tax preparer'' both places it
appears in subsection (a) and inserting ``tax return
preparer'', and
(IV) by striking ``income tax return'' in subsection (a)
and inserting ``tax return''.
(ii) The item relating to section 7407 in the table of
sections for subchapter A of chapter 76 is amended by
striking ``income tax return preparers'' and inserting ``tax
return preparers''.
(J)(i) Section 7427 is amended--
(I) by striking ``INCOME TAX RETURN PREPARERS'' in the
heading and inserting ``TAX RETURN PREPARERS'', and
(II) by striking ``an income tax return preparer'' and
inserting ``a tax return preparer''.
(ii) The item relating to section 7427 in the table of
sections for subchapter B of chapter 76 is amended to read as
follows:

``Sec. 7427. Tax return preparers.''.

(b) Modification of Penalty for Understatement of
Taxpayer's Liability by Tax Return Preparer.--Subsections (a)
and (b) of section 6694 are amended to read as follows:
``(a) Understatement Due to Unreasonable Positions.--
``(1) In general.--Any tax return preparer who prepares any
return or claim for refund with respect to which any part of
an understatement of liability is due to a position described
in paragraph (2) shall pay a penalty with respect to each
such return or claim in an amount equal to the greater of--
``(A) $1,000, or
``(B) 50 percent of the income derived (or to be derived)
by the tax return preparer with respect to the return or
claim.
``(2) Unreasonable position.--A position is described in
this paragraph if--
``(A) the tax return preparer knew (or reasonably should
have known) of the position,
``(B) there was not a reasonable belief that the position
would more likely than not be sustained on its merits, and
``(C)(i) the position was not disclosed as provided in
section 6662(d)(2)(B)(ii), or
``(ii) there was no reasonable basis for the position.
``(3) Reasonable cause exception.--No penalty shall be
imposed under this subsection if it is shown that there is
reasonable cause for the understatement and the tax return
preparer acted in good faith.
``(b) Understatement Due to Willful or Reckless Conduct.--
``(1) In general.--Any tax return preparer who prepares any
return or claim for refund with respect to which any part of
an understatement of liability is due to a conduct described
in paragraph (2) shall pay a penalty with respect to each
such return or claim in an amount equal to the greater of--
``(A) $5,000, or
``(B) 50 percent of the income derived (or to be derived)
by the tax return preparer with respect to the return or
claim.
``(2) Willful or reckless conduct.--Conduct described in
this paragraph is conduct by the tax return preparer which
is--
``(A) a willful attempt in any manner to understate the
liability for tax on the return or claim, or
``(B) a reckless or intentional disregard of rules or
regulations.
``(3) Reduction in penalty.--The amount of any penalty
payable by any person by reason of this subsection for any
return or claim for refund shall be reduced by the amount of
the penalty paid by such person by reason of subsection
(a).''.
(c) Effective Date.--The amendments made by this section
shall apply to returns prepared after the date of the
enactment of this Act.

[[Page S3955]]

SEC. 551. PENALTY FOR FILING ERRONEOUS REFUND CLAIMS.

(a) In General.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6675 the following new section:

``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

``(a) Civil Penalty.--If a claim for refund or credit with
respect to income tax (other than a claim for a refund or
credit relating to the earned income credit under section 32)
is made for an excessive amount, unless it is shown that the
claim for such excessive amount has a reasonable basis, the
person making such claim shall be liable for a penalty in an
amount equal to 20 percent of the excessive amount.
``(b) Excessive Amount.--For purposes of this section, the
term `excessive amount' means in the case of any person the
amount by which the amount of the claim for refund or credit
for any taxable year exceeds the amount of such claim
allowable under this title for such taxable year.
``(c) Coordination With Other Penalties.--This section
shall not apply to any portion of the excessive amount of a
claim for refund or credit on which a penalty is imposed
under part II of subchapter A of chapter 68.''.
(b) Conforming Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by inserting after
the item relating to section 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.
(c) Effective Date.--The amendments made by this section
shall apply to any claim--
(1) filed or submitted after the date of the enactment of
this Act, or
(2) filed or submitted prior to such date but not withdrawn
before the date which is 30 days after such date of
enactment.

SEC. 552. SUSPENSION OF CERTAIN PENALTIES AND INTEREST.

(a) In General.--Paragraphs (1)(A) and (3)(A) of section
6404(g) are each amended by striking ``18-month period'' and
inserting ``36-month period''.
(b) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to notices
provided by the Secretary of the Treasury, or his delegate
after the date which is 6 months after the date of the
enactment of this Act.
(2) Exception for certain taxpayers.--The amendments made
by this section shall not apply to any taxpayer with respect
to whom a suspension of any interest, penalty, addition to
tax, or other amount is in effect on the date which is 6
months after the date of the enactment of this Act.

SEC. 553. ADDITIONAL REASONS FOR SECRETARY TO TERMINATE
INSTALLMENT AGREEMENTS.

(a) In General.--Section 6159(b)(4) (relating to failure to
pay an installment or any other tax liability when due or to
provide requested financial information) is amended by
striking ``or'' at the end of subparagraph (B), by
redesignating subparagraph (C) as subparagraph (E), and by
inserting after subparagraph (B) the following new
subparagraphs:
``(C) to make a Federal tax deposit under section 6302 at
the time such deposit is required to be made,
``(D) to file a return of tax imposed under this title by
its due date (including extensions), or''.
(b) Conforming Amendment.--The heading for paragraph (4) of
section 6159(b) is amended by striking ``Failure to pay an
installment or any other tax liability when due or to provide
requested financial information'' and inserting ``Failure to
make payments or deposits or file returns when due or to
provide requested financial information''.
(c) Effective Date.--The amendments made by this section
shall apply to failures occurring on or after the date of the
enactment of this Act.

SEC. 554. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS-IN-
COMPROMISE.

(a) In General.--Section 7122(b) (relating to record) is
amended by striking ``Whenever a compromise'' and all that
follows through ``his delegate, with his reasons therefor''
and inserting ``If the Secretary determines that an opinion
of the General Counsel for the Department of the Treasury, or
the Counsel's delegate, is required with respect to a
compromise, there shall be placed on file in the office of
the Secretary such opinion, with the reasons therefor''.
(b) Conforming Amendments.--Section 7122(b) is amended by
striking the second and third sentences.
(c) Effective Date.--The amendments made by this section
shall apply to offers-in-compromise submitted or pending on
or after the date of the enactment of this Act.

SEC. 555. AUTHORIZATION FOR FINANCIAL MANAGEMENT SERVICE
RETENTION OF TRANSACTION FEES FROM LEVIED
AMOUNTS.

(a) In General.--Subsection (h) of section 6331 (relating
to continuing levy on certain payments) is amended by adding
at the end the following new paragraph:
``(4) Imposition of financial management services
transaction fees.--If the Secretary approves a levy under
this subsection, the Secretary may impose on the taxpayer a
transaction fee sufficient to cover the full cost of
implementing the levy under this subsection. Such fee--
``(A) shall be treated as an expense under section 6341,
``(B) may be collected through a levy under this
subsection, and
``(C) shall be in addition to the amount of tax liability
with respect to which such levy was approved.''.
(b) Retention of Fees by Financial Management Service.--The
Financial Management Service may retain the amount of any
transaction fee imposed under section 6331(h)(4) of the
Internal Revenue Code of 1986. Any amount retained by the
Financial Management Service under that section shall be
deposited into the account of the Department of the Treasury
under section 3711(g)(7) of title 31, United States Code.
(c) Effective Date.--The amendment made by this section
shall apply to amounts levied after the date of the enactment
of this Act.

SEC. 556. AUTHORITY FOR UNDERCOVER OPERATIONS.

Paragraph (6) of section 7608(c) (relating to application
of section) is amended by striking ``2007'' both places it
appears and inserting ``2008''.

SEC. 557. INCREASE IN PENALTY EXCISE TAXES ON THE POLITICAL
AND EXCESS LOBBYING ACTIVITIES OF SECTION
501(C)(3) ORGANIZATIONS.

(a) Taxes on Disqualifying Lobbying Expenditures of Certain
Organizations.--
(1) In general.--Section 4912(a) (relating to tax on
organization) is amended by striking ``5 percent'' and
inserting ``10 percent''.
(2) Tax on management.--Section 4912(b) is amended by
striking ``5 percent'' and inserting ``10 percent''.
(b) Taxes on Political Expenditures of Section 501(c)(3)
Organizations.--
(1) In general.--Section 4955(a) (relating to initial
taxes) is amended--
(A) in paragraph (1), by striking ``10 percent'' and
inserting ``20 percent'', and
(B) in paragraph (2), by striking ``2\1/2\ percent'' and
inserting ``5 percent''.
(2) Increased limitation for managers.--Section 4955(c)(2)
is amended--
(A) by striking ``$5,000'' and inserting ``$10,000'', and
(B) by striking ``$10,000'' and inserting ``$20,000''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 558. INCREASED PENALTY FOR FAILURE TO FILE FOR EXEMPT
ORGANIZATIONS.

(a) In General.--Subparagraph (A) of section 6652(c)(1)
(relating to annual returns under section 6033(a)(1) or
6012(a)(6)) is amended by adding at the end the following new
sentence: ``In the case of an organization having gross
receipts exceeding $25,000,000 for any year, with respect to
the return so required, the first sentence of this
subparagraph shall be applied by substituting `$250' for
`$20' and, in lieu of applying the second sentence of this
subparagraph, the maximum penalty under this subparagraph
shall not exceed $125,000.''.
(b) Conforming Amendment.--The third sentence of section
6652(c)(1)(A) is amended by inserting ``but not exceeding
$25,000,000'' after ``$1,000,000''.
(c) Effective Date.--The amendments made by this section
shall apply to returns required to be filed on or after
January 1, 2008.

SEC. 559. PENALTIES FOR FAILURE TO FILE CERTAIN RETURNS
ELECTRONICALLY.

(a) In General.--Part I of subchapter A of chapter 68
(relating to additions to the tax, additional amounts, and
assessable penalties) is amended by inserting after section
6652 the following new section:

``SEC. 6652A. FAILURE TO FILE CERTAIN RETURNS ELECTRONICALLY.

``(a) In General.--If a person fails to file a return
described in section 6651 or 6652(c)(1) in electronic form as
required under section 6011(e)--
``(1) such failure shall be treated as a failure to file
such return (even if filed in a form other than electronic
form), and
``(2) the penalty imposed under section 6651 or 6652(c),
whichever is appropriate, shall be equal to the greater of--
``(A) the amount of the penalty under such section,
determined without regard to this section, or
``(B) the amount determined under subsection (b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), the penalty determined under this subsection is equal to
$40 for each day during which a failure described under
subsection (a) continues. The maximum penalty under this
paragraph on failures with respect to any 1 return shall not
exceed the lesser of $20,000 or 10 percent of the gross
receipts of the taxpayer for the year.
``(2) Increased penalties for taxpayers with gross receipts
between $1,000,000 and $100,000,000.--
``(A) Taxpayers with gross receipts between $1,000,000 and
$25,000,000.--In the case of a taxpayer having gross receipts
exceeding $1,000,000 but not exceeding $25,000,000 for any
year--
``(i) the first sentence of paragraph (1) shall be applied
by substituting `$200' for `$40', and
``(ii) in lieu of applying the second sentence of paragraph
(1), the maximum penalty under paragraph (1) shall not exceed
$100,000.
``(B) Taxpayers with gross receipts over $25,000,000.--
Except as provided in paragraph (3), in the case of a
taxpayer having gross receipts exceeding $25,000,000 for any
year--

[[Page S3956]]

``(i) the first sentence of paragraph (1) shall be applied
by substituting `$500' for `$40', and
``(ii) in lieu of applying the second sentence of paragraph
(1), the maximum penalty under paragraph (1) shall not exceed
$250,000.
``(3) Increased penalties for certain taxpayers with gross
receipts exceeding $100,000,000.--In the case of a return
described in section 6651--
``(A) Taxpayers with gross receipts between $100,000,000
and $250,000,000.--In the case of a taxpayer having gross
receipts exceeding $100,000,000 but not exceeding
$250,000,000 for any year--
``(i) the amount of the penalty determined under this
subsection shall equal the sum of--

``(I) $50,000, plus
``(II) $1,000 for each day during which such failure
continues (twice such amount for each day such failure
continues after the first such 60 days), and

``(ii) the maximum amount under clause (i)(II) on failures
with respect to any 1 return shall not exceed $200,000.
``(B) Taxpayers with gross receipts over $250,000,000.--In
the case of a taxpayer having gross receipts exceeding
$250,000,000 for any year--
``(i) the amount of the penalty determined under this
subsection shall equal the sum of--

``(I) $250,000, plus
``(II) $2,500 for each day during which such failure
continues (twice such amount for each day such failure
continues after the first such 60 days), and

``(ii) the maximum amount under clause (i)(II) on failures
with respect to any 1 return shall not exceed $250,000.
``(C) Exception for certain returns.--Subparagraphs (A) and
(B) shall not apply to any return of tax imposed under
section 511.''.
(b) Clerical Amendment.--The table of sections for part I
of subchapter A of chapter 68 is amended by inserting after
the item relating to section 6652 the following new item:

``Sec. 6652A. Failure to file certain returns electronically.''.

(c) Effective Date.--The amendments made by this section
shall apply to returns required to be filed on or after
January 1, 2008.

PART III--GENERAL PROVISIONS

SEC. 561. 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, except that, compliance with any procedures
described pursuant to this section does not establish
compliance with the rule, or establish a presumption or
inference of such compliance.
``(C) Procedures.--Procedures described under subparagraph
(B)(ii)--
``(i) shall be suggestions to assist small entities; and
``(ii) shall not be additional requirements, or diminish
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 Fair Minimum Wage 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, the Committee on Small Business of the House of
Representatives, and any other committee of relevant
jurisdiction 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''.

SEC. 562. 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

[[Page S3957]]

(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), 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.

SEC. 563. 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 benefits, costs, risks, and
barriers to workers and 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.

SEC. 564. 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 Social Security program was enacted to serve as the
safest component of a retirement system that also includes
employer-sponsored retirement plans and personal savings.
(b) Sense of the Senate.--It is the sense of the Senate
that--
(1) Congress should enact policies that promote savings
vehicles for retirement that are simple, easily accessible
and provide adequate financial security 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; and
(3) regularly contributing money to a financially-sound
investment account is one important method for helping to
achieve one's retirement goals.

SEC. 565. RENEWAL GRANTS FOR WOMEN'S BUSINESS CENTERS.

(a) In General.--Section 29 of the Small Business Act (15
U.S.C. 656) is amended by adding at the end the following:
``(m) Continued Funding for Centers.--
``(1) In general.--A nonprofit organization described in
paragraph (2) shall be eligible to receive, subject to
paragraph (3), a 3-year grant under this subsection.
``(2) Applicability.--A nonprofit organization described in
this paragraph is a nonprofit organization that has received
funding under subsection (b) or (l).
``(3) Application and approval criteria.--
``(A) Criteria.--Subject to subparagraph (B), the
Administrator shall develop and publish criteria for the
consideration and approval of applications by nonprofit
organizations under this subsection.
``(B) Contents.--Except as otherwise provided in this
subsection, the conditions for participation in the grant
program under this subsection shall be the same as the
conditions for participation in the program under subsection
(l), as in effect on the date of enactment of this Act.
``(C) Notification.--Not later than 60 days after the date
of the deadline to submit applications for each fiscal year,
the Administrator shall approve or deny any application under
this subsection and notify the applicant for each such
application.
``(4) Award of grants.--
``(A) In general.--Subject to the availability of
appropriations, the Administrator shall make a grant for the
Federal share of the cost of activities described in the
application to each applicant approved under this subsection.
``(B) Amount.--A grant under this subsection shall be for
not more than $150,000, for each year of that grant.
``(C) Federal share.--The Federal share under this
subsection shall be not more than 50 percent.
``(D) Priority.--In allocating funds made available for
grants under this section, the Administrator shall give
applications under this subsection or subsection (l) priority
over first-time applications under subsection (b).
``(5) Renewal.--
``(A) In general.--The Administrator may renew a grant
under this subsection for additional 3-year periods, if the
nonprofit organization submits an application for such
renewal at such time, in such manner, and accompanied by such
information as the Administrator may establish.
``(B) Unlimited renewals.--There shall be no limitation on
the number of times a grant may be renewed under subparagraph
(A).
``(n) Privacy Requirements.--
``(1) In general.--A women's business center may not
disclose the name, address, or telephone number of any
individual or small business concern receiving assistance
under this section without the consent of such individual or
small business concern, unless--
``(A) the Administrator is ordered to make such a
disclosure by a court in any civil or criminal enforcement
action initiated by a Federal or State agency; or
``(B) the Administrator considers such a disclosure to be
necessary for the purpose of conducting a financial audit of
a women's business center, but a disclosure under this
subparagraph shall be limited to the information necessary
for such audit.
``(2) Administration use of information.--This subsection
shall not--
``(A) restrict Administration access to program activity
data; or

[[Page S3958]]

``(B) prevent the Administration from using client
information (other than the information described in
subparagraph (A)) to conduct client surveys.
``(3) Regulations.--The Administrator shall issue
regulations to establish standards for requiring disclosures
during a financial audit under paragraph (1)(B).''.
(b) Repeal.--Section 29(l) of the Small Business Act (15
U.S.C. 656(l)) is repealed effective October 1 of the first
full fiscal year after the date of enactment of this Act.
(c) Transitional Rule.--Notwithstanding any other provision
of law, a grant or cooperative agreement that was awarded
under subsection (l) of section 29 of the Small Business Act
(15 U.S.C. 656), on or before the day before the date
described in subsection (b) of this section, shall remain in
full force and effect under the terms, and for the duration,
of such grant or agreement.

SEC. 566. REPORTS ON ACQUISITIONS OF ARTICLES, MATERIALS, AND
SUPPLIES MANUFACTURED OUTSIDE THE UNITED
STATES.

Section 2 of the Buy American Act (41 U.S.C. 10a) is
amended--
(1) by striking ``Notwithstanding'' and inserting the
following:
``(a) In General.--Notwithstanding''; and
(2) by adding at the end the following:
``(b) Reports.--
``(1) In general.--Not later than 180 days after the end of
each of fiscal years 2007 through 2011, the head of each
Federal agency shall submit to the Committee on Homeland
Security and Governmental Affairs of the Senate and the
Committee on Oversight and Government Reform of the House of
Representatives a report on the amount of the acquisitions
made by the agency in that fiscal year of articles,
materials, or supplies purchased from entities that
manufacture the articles, materials, or supplies outside of
the United States.
``(2) Contents of report.--The report required by paragraph
(1) shall separately include, for the fiscal year covered by
such report--
``(A) the dollar value of any articles, materials, or
supplies that were manufactured outside the United States;
``(B) an itemized list of all waivers granted with respect
to such articles, materials, or supplies under this Act, and
a citation to the treaty, international agreement, or other
law under which each waiver was granted;
``(C) if any articles, materials, or supplies were acquired
from entities that manufacture articles, materials, or
supplies outside the United States, the specific exception
under this section that was used to purchase such articles,
materials, or supplies; and
``(D) a summary of--
``(i) the total procurement funds expended on articles,
materials, and supplies manufactured inside the United
States; and
``(ii) the total procurement funds expended on articles,
materials, and supplies manufactured outside the United
States.
``(3) Public availability.--The head of each Federal agency
submitting a report under paragraph (1) shall make the report
publicly available to the maximum extent practicable.
``(4) Exception for intelligence community.--This
subsection shall not apply to acquisitions made by an agency,
or component thereof, that is an element of the intelligence
community as specified in, or designated under, section 3(4)
of the National Security Act of 1947 (50 U.S.C. 401a(4)).''.

SEC. 567. SENSE OF THE SENATE REGARDING REPEAL OF 1993 INCOME
TAX INCREASE ON SOCIAL SECURITY BENEFITS.

It is the sense of the Senate that Congress should repeal
the 1993 tax increase on Social Security benefits and
eliminate wasteful spending, such as spending on unnecessary
tax loopholes, in order to fully offset the cost of such
repeal and avoid forcing taxpayers to pay substantially more
interest to foreign creditors.

SEC. 568. SENSE OF THE SENATE REGARDING PERMANENT TAX
INCENTIVES TO MAKE EDUCATION MORE AFFORDABLE
AND MORE ACCESSIBLE FOR AMERICAN FAMILIES.

It is the sense of the Senate that Congress should make
permanent the tax incentives to make education more
affordable and more accessible for American families and
eliminate wasteful spending, such as spending on unnecessary
tax loopholes, in order to fully offset the cost of such
incentives and avoid forcing taxpayers to pay substantially
more interest to foreign creditors.

SEC. 569. RESPONSIBLE GOVERNMENT CONTRACTOR REQUIREMENTS.

Section 274A(e) of the Immigration and Nationality Act (8
U.S.C. 1324a(e)) is amended by adding at the end the
following new paragraph:
``(10) Prohibition on award of government contracts,
grants, and agreements.--
``(A) Employers with no contracts, grants, or agreements.--
``(i) In general.--Subject to clause (iii) and subparagraph
(C), if an employer who does not hold a Federal contract,
grant, or cooperative agreement is determined to have
violated this section, the employer shall be debarred from
the receipt of a Federal contract, grant, or cooperative
agreement for a period of 7 years.
``(ii) Placement on excluded list.--The Secretary of
Homeland Security or the Attorney General shall advise the
Administrator of General Services of the debarment of an
employer under clause (i) and the Administrator of General
Services shall list the employer on the List of Parties
Excluded from Federal Procurement and Nonprocurement Programs
for a period of 7 years.
``(iii) Waiver.--

``(I) Authority.--The Administrator of General Services, in
consultation with the Secretary of Homeland Security and the
Attorney General, may waive operation of clause (i) or may
limit the duration or scope of a debarment under clause (i)
if such waiver or limitation is necessary to national defense
or in the interest of national security.
``(II) Notification to congress.--If the Administrator
grants a waiver or limitation described in subclause (I), the
Administrator shall submit to each member of the Committee on
the Judiciary of the Senate and of the Committee on the
Judiciary of the House of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial review.--The decision of
whether to debar or take alternative action under this clause
shall not be judicially reviewed.

``(B) Employers with contracts, grants, or agreements.--
``(i) In general.--Subject to clause (iii) and subclause
(C), an employer who holds a Federal contract, grant, or
cooperative agreement and is determined to have violated this
section shall be debarred from the receipt of new Federal
contracts, grants, or cooperative agreements for a period of
10 years.
``(ii) Notice to agencies.--Prior to debarring the employer
under clause (i), the Secretary of Homeland Security, in
cooperation with the Administrator of General Services, shall
advise any agency or department holding a contract, grant, or
cooperative agreement with the employer of the Government's
intention to debar the employer from the receipt of new
Federal contracts, grants, or cooperative agreements for a
period of 10 years.
``(iii) Waiver.--

``(I) Authority.--After consideration of the views of any
agency or department that holds a contract, grant, or
cooperative agreement with the employer, the Administrator of
General Services, in consultation with the Secretary of
Homeland Security and the Attorney General, may waive
operation of clause (i) or may limit the duration or scope of
the debarment under clause (i) if such waiver or limitation
is necessary to the national defense or in the interest of
national security.
``(II) Notification to congress.--If the Administrator
grants a waiver or limitation described in subclause (I), the
Administrator shall submit to each member of the Committee on
the Judiciary of the Senate and of the Committee on the
Judiciary of the House of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial review.--The decision of
whether to debar or take alternate action under this clause
shall not be judicially reviewed.

``(C) Exemption from penalty for employers participating in
the basic pilot program.--In the case of imposition on an
employer of a debarment from the receipt of a Federal
contract, grant, or cooperative agreement under subparagraph
(A) or (B), that penalty shall be waived if the employer
establishes that the employer was voluntarily participating
in the basic pilot program under section 403(a) of the
Illegal Immigration Reform and Immigrant Responsibility Act
of 1996 (8 U.S.C. 1324a note) at the time of the violations
of this section that resulted in the debarment.''.

SEC. 570. DISABILITY PREFERENCE PROGRAM FOR TAX COLLECTION
CONTRACTS.

(a) In General.--Section 6306 (relating to qualified tax
collection contracts) is amended--
(1) by striking ``Nothing'' in subsection (a) and inserting
``Except as provided in subsection (c), nothing'',
(2) by redesignating subsections (c), (d), (e), and (f) as
subsections (d), (e), (f), and (g), respectively, and
(3) by inserting after subsection (b) the following new
subsection:
``(c) Disability Preference Program for Tax Collection
Contracts.--
``(1) In general.--The Secretary shall provide a qualifying
disability preference to any program under which any
qualified tax collection contract is awarded on or after the
effective date of this subsection and shall ensure compliance
with the requirements of paragraph (3).
``(2) Qualifying disability preference.--
``(A) In general.--For purposes of this subsection, the
term `qualifying disability preference' means a preference
pursuant to which at least 10 percent (in both number and
aggregate dollar amount) of the accounts covered by qualified
tax collection contracts are awarded to persons satisfying
the following criteria:
``(i) Such person employs within the United States at least
50 severely disabled individuals.
``(ii) Such person shall agree as an enforceable condition
of its bid for a qualified tax collection contract that
within 90 days after the date such contract is awarded, not
less than 35 percent of the employees of such person employed
in connection with providing services under such contract
shall--

``(I) be hired after the date such contract is awarded, and
``(II) be severely disabled individuals.

``(B) Determination of satisfaction of criteria.--Within 60
days after the end of the period specified in subparagraph
(A)(ii), the Secretary shall determine whether such person
has met the 35 percent requirement

[[Page S3959]]

specified in such subparagraph, and if such requirement has
not been met, shall terminate the contract for
nonperformance. For purposes of determining whether such 35
percent requirement has been satisfied, severely disabled
individuals providing services under such contract shall not
include any severely disabled individuals who were counted
toward satisfaction of the 50-employee requirement specified
in subparagraph (A)(i), unless such person replaced such
individuals by hiring additional severely disabled
individuals who do not perform services under such contract.
``(3) Program-wide employment of severely disabled
individuals.--Not less than 15 percent of all individuals
hired by all persons to whom tax collection contracts are
issued by the Secretary under this section, to perform work
under such tax collection contracts, shall qualify as
severely disabled individuals.
``(4) Severely disabled individual.--For purposes of this
subsection, the term `severely disabled individual' means any
one of the following:
``(A) Any veteran of the United States Armed Forces with--
``(i) a disability determined by the Secretary of Veterans
Affairs to be service-connected, or
``(ii) a disability deemed by statute to be service-
connected.
``(B) Any individual who is a disabled beneficiary (as
defined in section 1148(k)(2) of the Social Security Act (42
U.S.C. 1320b-19(k)(2)) or who would be considered to be such
a disabled beneficiary but for having income or assets in
excess of the income or asset eligibility limits established
under title II or XVI of the Social Security Act,
respectively.''.
(b) Report by Government Accountability Office.--
(1) In general.--The Comptroller General of the United
States shall conduct a study of the effectiveness and
efficiency of the use of private contractors for Internal
Revenue Service debt collection. The study required by this
paragraph shall be completed in time to be taken into account
by Congress before any new contracting is carried out under
section 6306 of the Internal Revenue Code of 1986 in years
following 2008.
(2) Study of comparable efforts.--As part of the study
required under paragraph (1), the Comptroller General shall--
(A) make every effort to determine the relative
effectiveness and efficiency of debt collection contracting
by Federal staff compared to private contractors, using a
cost calculation for both Federal staff and private
contractors which includes all benefits and overhead costs,
(B) compare the cost effectiveness of the contracting
approach of the Department of the Treasury to that of the
Department of Education's Office of Student Financial
Assistance, and
(C) survey State tax debt collection experiences for
lessons that may be applicable to the Internal Revenue
Service collection efforts.
(c) Effective Date.--The amendments made by this section
shall apply to any tax collection contract awarded on or
after the date of the enactment of ths Act.
______

SA 798. Mr. GRASSLEY submitted an amendment intended to be proposed
to amendment SA 680 submitted by Mr. Kennedy (for himself, Mr. Enzi,
Mr. Baucus, and Mr. Grassley) to the bill H.R. 1591, making emergency
supplemental appropriations for the fiscal year ending September 30,
2007, and for other purposes; as follows:

Strike all after the Page 3 line 12 and insert:

Subtitle B--Small Business Tax Incentives

SEC. 510. SHORT TITLE; AMENDMENT OF CODE.

(a) Short Title.--This subtitle 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 subtitle 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.

PART I--SMALL BUSINESS TAX RELIEF PROVISIONS

Subpart A--General Provisions

SEC. 511. 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. 512. 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 ``January 1,
2009''.
(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 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 January 1, 2009.''.
(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 subsection
shall apply to property placed in service after the date of
the enactment of this Act.

SEC. 513. 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

[[Page S3960]]

(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.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 514. 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, renewal community, or
rural renewal county.
``(B) Individual must continue to reside in zone,
community, or county.--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, renewal community, or
rural renewal county.
``(C) Rural renewal county.--For purposes of this
paragraph, the term `rural renewal county' means any county
which--
``(i) is outside a metropolitan statistical area (defined
as such by the Office of Management and Budget), and
``(ii) during the 5-year periods 1990 through 1994 and 1995
through 1999 had a net population loss.''.
(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 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. 515. 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'.

[[Page S3961]]

``(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 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:

[[Page S3962]]

``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.

SEC. 516. ACCELERATED DEPRECIATION FOR INVESTMENT IN HIGH
OUT-MIGRATION COUNTIES.

(a) In General.--Section 168 (relating to accelerated cost
recovery system) is amended by adding at the end the
following new subsection:
``(m) Rural Investment Property.--
``(1) In general.--For purposes of subsection (a), the
applicable recovery period for qualified rural investment
property shall be determined in accordance with the table
contained in paragraph (2) in lieu of the table contained in
subsection (c).
``(2) Applicable recovery period for rural investment
property.--For purposes of paragraph (1)--
The applicable
``  ``In the case of:                               recovery period is:
3-year property...........................................2 years
5-year property...........................................3 years
7-year property...........................................4 years
10-year property..........................................6 years
15-year property..........................................9 years
20-year property.........................................12 years
Nonresidential real property..............................22 years.
``(3) Qualified rural investment property defined.--For
purposes of this subsection--
``(A) In general.--The term `qualified rural investment
property' means property which is property described in the
table in paragraph (2) and which is--
``(i) used by the taxpayer predominantly in the active
conduct of a trade or business within a high out-migration
county,
``(ii) not used or located outside such county on a regular
basis,
``(iii) not acquired (directly or indirectly) by the
taxpayer from a person who is related to the taxpayer (within
the meaning of section 465(b)(3)(C)), and
``(iv) not property (or any portion thereof) placed in
service for purposes of operating any racetrack or other
facility used for gambling.
``(B) High out-migration county.--The term `high out-
migration county' means any county which--
``(i) is outside a metropolitan statistical area (defined
as such by the Office of Management and Budget), and
``(ii) during the 5-year periods 1990 through 1994 and 1995
through 1999 had a net population loss.
``(4) Termination.--This subsection shall not apply to
property placed in service after March 31, 2008.''.
(b) Effective Date.--The amendment made by this section
shall apply to 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.

SEC. 517. EXTENSION OF INCREASED EXPENSING FOR QUALIFIED
SECTION 179 GULF OPPORTUNITY ZONE PROPERTY.

Paragraph (2) of section 1400N(e) (relating to qualified
section 179 Gulf Opportunity Zone property) is amended--
(1) by striking ``this subsection, the term'' and inserting
``this subsection--
``(A) In general.--The term'', and
(2) by adding at the end the following new subparagraph:
``(B) Extension for certain property.--In the case of
property substantially all of the use of which is in one or
more specified portions of the GO Zone (as defined by
subsection (d)(6)), such term shall include section 179
property (as so defined) which is described in subsection
(d)(2), determined--
``(i) without regard to subsection (d)(6), and
``(ii) by substituting `2008' for `2007' in subparagraph
(A)(v) thereof.''.

Subpart B--Subchapter S Provisions

SEC. 521. 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.

SEC. 522. 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

[[Page S3963]]

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. 523. 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. 524. 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. 525. 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. 526. 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.

SEC. 527. DEDUCTIBILITY OF INTEREST EXPENSE ON INDEBTEDNESS
INCURRED BY AN ELECTING SMALL BUSINESS TRUST TO
ACQUIRE S CORPORATION STOCK.

(a) In General.--Subparagraph (C) of section 641(c)(2)
(relating to modifications) is amended by inserting after
clause (iii) the following new clause:
``(iv) Any interest expense paid or accrued on indebtedness
incurred to acquire stock in an S corporation.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2006.

PART II--REVENUE PROVISIONS

SEC. 531. 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. 532. 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. 533. 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).''.
(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. 534. 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.--

[[Page S3964]]

``(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--
``(A) the violation of any law, or
``(B) an investigation or inquiry into the potential
violation of any law which is initiated by such government or
entity.
``(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 (or 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 an amount described in clause (i) or
(ii) of subparagraph (A), as the case may be, in the court
order or settlement agreement, except that the requirement of
this subparagraph shall not apply in the case of any
settlement agreement which requires the taxpayer to pay or
incur an amount not greater than $1,000,000.
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 unless such amount
is paid or incurred for a cost or fee regularly charged for
any routine audit or other customary review performed by the
government or entity.
``(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 by the 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. 535. 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
``(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

[[Page S3965]]

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 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)--

[[Page S3966]]

``(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) 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:

[[Page S3967]]

``(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. 536. 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), 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. 537. MODIFICATION OF CRIMINAL PENALTIES FOR WILLFUL
FAILURES INVOLVING TAX PAYMENTS AND FILING
REQUIREMENTS.

(a) Increase in Penalty for Attempt to Evade or Defeat
Tax.--Section 7201 (relating to attempt to evade or defeat
tax) is amended--
(1) by striking ``$100,000'' and inserting ``$500,000'',
(2) by striking ``$500,000'' and inserting ``$1,000,000'',
and
(3) by striking ``5 years'' and inserting ``10 years''.
(b) Modification of Penalties for Willful Failure to File
Return, Supply Information, or Pay Tax.--
(1) In general.--Section 7203 (relating to willful failure
to file return, supply information, or pay tax) is amended--

[[Page S3968]]

(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) `$250,000 ($500,000' for `$50,000 ($100,000', and
``(C) `5 years' for `1 year'.
``(2) Failure described.--A failure described in this
paragraph is--
``(A) a failure to make a return described in subsection
(a) for any 3 taxable years occurring during any period of 5
consecutive taxable years if the aggregate tax liability for
such period is not less than $50,000, or
``(B) a failure to make a return if the tax liability
giving rise to the requirement to make such return is
attributable to an activity which is a felony under any State
or Federal law.''.
(2) Penalty may be applied in addition to other
penalties.--Section 7204 (relating to fraudulent statement or
failure to make statement to employees) is amended by
striking ``the penalty provided in section 6674'' and
inserting ``the penalties provided in sections 6674 and
7203(b)''.
(c) Fraud and False Statements.--Section 7206 (relating to
fraud and false statements) is amended--
(1) by striking ``$100,000'' and inserting ``$500,000'',
(2) by striking ``$500,000'' and inserting ``$1,000,000'',
and
(3) by striking ``3 years'' and inserting ``5 years''.
(d) Increase in Monetary Limitation for Underpayment or
Overpayment of Tax Due to Fraud.--Section 7206 (relating to
fraud and false statements), as amended by subsection (a)(3),
is amended--
(1) by striking ``Any person who--'' and inserting ``(a) In
General.--Any person who--'', 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.''.
(e) 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. 538. 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. 539. 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. 540. 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 1 or more contingent payments,
any regulations which require original issue discount to be
determined by reference to the comparable yield of a fixed-
rate debt instrument shall be applied as if the regulations
require that such comparable yield be determined by reference
to a 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. 541. 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. 542. 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. 543. 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 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,

[[Page S3969]]

``(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. 544. 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.

SEC. 545. INCREASE IN AGE OF MINOR CHILDREN WHOSE UNEARNED
INCOME IS TAXED AS IF PARENT'S INCOME.

(a) In General.--Subparagraph (A) of section 1(g)(2)
(relating to child to whom subsection applies) is amended to
read as follows:
``(A) such child--
``(i) has not attained age 18 before the close of the
taxable year, or
``(ii)(I) has attained age 18 before the close of the
taxable year and meets the age requirements of section
152(c)(3) (determined without regard to subparagraph (B)
thereof), and
``(II) whose earned income (as defined in section
911(d)(2)) for such taxable year does not exceed one-half of
the amount of the individual's support (within the meaning of
section 152(c)(1)(D) after the application of section
152(f)(5) (without regard to subparagraph (A) thereof) for
such taxable year,''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 546. INCREASE IN INFORMATION RETURN PENALTIES.

(a) Failure to File Correct Information Returns.--
(1) In general.--Section 6721(a)(1) is amended--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$250,000'' and inserting ``$3,000,000''.
(2) Reduction where correction in specified period.--
(A) Correction within 30 days.--Section 6721(b)(1) is
amended--
(i) by striking ``$15'' and inserting ``$50'',
(ii) by striking ``$50'' and inserting ``$250'', and
(iii) by striking ``$75,000'' and inserting ``$500,000''.
(B) Failures corrected on or before august 1.--Section
6721(b)(2) is amended--
(i) by striking ``$30'' and inserting ``$100'',
(ii) by striking ``$50'' and inserting ``$250'', and
(iii) by striking ``$150,000'' and inserting
``$1,500,000''.
(3) Lower limitation for persons with gross receipts of not
more than $5,000,000.--Section 6721(d)(1) is amended--
(A) in subparagraph (A)--
(i) by striking ``$100,000'' and inserting ``$1,000,000'',
and
(ii) by striking ``$250,000'' and inserting ``$3,000,000'',
(B) in subparagraph (B)--
(i) by striking ``$25,000'' and inserting ``$175,000'', and
(ii) by striking ``$75,000'' and inserting ``$500,000'',
and
(C) in subparagraph (C)--
(i) by striking ``$50,000'' and inserting ``$500,000'', and
(ii) by striking ``$150,000'' and inserting ``$1,500,000''.
(4) Penalty in case of intentional disregard.--Section
6721(e) is amended--
(A) by striking ``$100'' in paragraph (2) and inserting
``$500'',
(B) by striking ``$250,000'' in paragraph (3)(A) and
inserting ``$3,000,000''.
(b) Failure to Furnish Correct Payee Statements.--
(1) In general.--Section 6722(a) is amended--
(A) by striking ``$50'' and inserting ``$250'', and
(B) by striking ``$100,000'' and inserting ``$1,000,000''.
(2) Penalty in case of intentional disregard.--Section
6722(c) is amended--
(A) by striking ``$100'' in paragraph (1) and inserting
``$500'', and
(B) by striking ``$100,000'' in paragraph (2)(A) and
inserting ``$1,000,000''.
(c) Failure to Comply With Other Information Reporting
Requirements.--Section 6723 is amended--
(1) by striking ``$50'' and inserting ``$250'', and
(2) by striking ``$100,000'' and inserting ``$1,000,000''.
(d) Effective Date.--The amendments made by this section
shall apply with respect to information returns required to
be filed on or after January 1, 2008.

SEC. 547. E-FILING REQUIREMENT FOR CERTAIN LARGE
ORGANIZATIONS.

(a) In General.--The first sentence of section 6011(e)(2)
is amended to read as follows: ``In prescribing regulations
under paragraph (1), the Secretary shall take into account
(among other relevant factors) the ability of the taxpayer to
comply at reasonable cost with the requirements of such
regulations.''.
(b) Conforming Amendment.--Section 6724 is amended by
striking subsection (c).
(c) Effective Date.--The amendments made by this section
shall apply to taxable years ending on or after December 31,
2008.

SEC. 548. EXPANSION OF IRS ACCESS TO INFORMATION IN NATIONAL
DIRECTORY OF NEW HIRES FOR TAX ADMINISTRATION
PURPOSES.

(a) In General.--Paragraph (3) of section 453(j) of the
Social Security Act (42 U.S.C. 653(j)) is amended to read as
follows:
``(3) Administration of federal tax laws.--The Secretary of
the Treasury shall have access to the information in the
National Directory of New Hires for purposes of administering
the Internal Revenue Code of 1986.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.

SEC. 549. DISCLOSURE OF PRISONER RETURN INFORMATION TO
FEDERAL BUREAU OF PRISONS.

(a) Disclosure.--
(1) In general.--Subsection (l) of section 6103 (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:

[[Page S3970]]

``(22) Disclosure of return information of prisoners to
federal bureau of prisons.--
``(A) In general.--Under such procedures as the Secretary
may prescribe, the Secretary may disclose return information
with respect to persons incarcerated in Federal prisons whom
the Secretary believes filed or facilitated the filing of
false or fraudulent returns to the head of the Federal Bureau
of Prisons if the Secretary determines that such disclosure
is necessary to permit effective tax administration.
``(B) Disclosure by agency to employees.--The head of the
Federal Bureau of Prisons may redisclose information received
under subparagraph (A)--
``(i) only to those officers and employees of the Bureau
who are personally and directly engaged in taking
administrative actions to address violations of
administrative rules and regulations of the prison facility,
and
``(ii) solely for the purposes described in subparagraph
(C).
``(C) Restriction on use of disclosed information.--Return
information disclosed under this paragraph may be used only
for the purposes of--
``(i) preventing the filing of false or fraudulent returns;
and
``(ii) taking administrative actions against individuals
who have filed or attempted to file false or fraudulent
returns.''.
(2) Procedures and record keeping related to disclosure.--
Subsection (p)(4) of section 6103 is amended--
(A) by striking ``(14), or (17)'' in the matter before
subparagraph (A) and inserting ``(14), (17), or (22)'', and
(B) by striking ``(9), or (16)'' in subparagraph (F)(i) and
inserting ``(9), (16), or (22)''.
(3) Evaluation by treasury inspector general for tax
administration.--Paragraph (3) of section 7803(d) is amended
by striking ``and'' at the end of subparagraph (A), by
striking the period at the end of subparagraph (B) and
inserting ``; and'', and by adding at the end the following
new subparagraph:
``(C) not later than 3 years after the date of the
enactment of section 6103(l)(22), submit a written report to
Congress on the implementation of such section.''.
(b) Annual Reports.--
(1) In general.--The Secretary of the Treasury shall submit
to Congress and make publicly available an annual report on
the filing of false and fraudulent returns by individuals
incarcerated in Federal and State prisons.
(2) Contents of report.--The report submitted under
paragraph (1) shall contain statistics on the number of false
or fraudulent returns associated with each Federal and State
prison and such other information that the Secretary
determines is appropriate.
(3) Exchange of information.--For the purpose of gathering
information necessary for the reports required under
paragraph (1), the Secretary of the Treasury shall enter into
agreements with the head of the Federal Bureau of Prisons and
the heads of State agencies charged with responsibility for
administration of State prisons under which the head of the
Bureau or Agency provides to the Secretary not less
frequently than annually the names and other identifying
information of prisoners incarcerated at each facility
administered by the Bureau or Agency.
(c) Effective Date.--The amendments made by this section
shall apply to disclosures on or after January 1, 2008.

SEC. 550. UNDERSTATEMENT OF TAXPAYER LIABILITY BY RETURN
PREPARERS.

(a) Application of Return Preparer Penalties to All Tax
Returns.--
(1) Definition of tax return preparer.--Paragraph (36) of
section 7701(a) (relating to income tax preparer) is
amended--
(A) by striking ``income'' each place it appears in the
heading and the text, and
(B) in subparagraph (A), by striking ``subtitle A'' each
place it appears and inserting ``this title''.
(2) Conforming amendments.--
(A)(i) Section 6060 is amended by striking ``INCOME TAX
RETURN PREPARERS'' in the heading and inserting ``TAX RETURN
PREPARERS''.
(ii) Section 6060(a) is amended--
(I) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer'',
(II) by striking ``each income tax return preparer'' and
inserting ``each tax return preparer'', and
(III) by striking ``another income tax return preparer''
and inserting ``another tax return preparer''.
(iii) The item relating to section 6060 in the table of
sections for subpart F of part III of subchapter A of chapter
61 is amended by striking ``income tax return preparers'' and
inserting ``tax return preparers''.
(iv) Subpart F of part III of subchapter A of chapter 61 is
amended by striking ``INCOME TAX RETURN PREPARERS'' in the
heading and inserting ``TAX RETURN PREPARERS''.
(v) The item relating to subpart F in the table of subparts
for part III of subchapter A of chapter 61 is amended by
striking ``income tax return preparers'' and inserting ``tax
return preparers''.
(B) Section 6103(k)(5) is amended--
(i) by striking ``income tax return preparer'' each place
it appears and inserting ``tax return preparer'', and
(ii) by striking ``income tax return preparers'' each place
it appears and inserting ``tax return preparers''.
(C)(i) Section 6107 is amended--
(I) by striking ``INCOME TAX RETURN PREPARER'' in the
heading and inserting ``TAX RETURN PREPARER'',
(II) by striking ``an income tax return preparer'' each
place it appears in subsections (a) and (b) and inserting ``a
tax return preparer'',
(III) by striking ``Income Tax Return Preparer'' in the
heading for subsection (b) and inserting ``Tax Return
Preparer'', and
(IV) in subsection (c), by striking ``income tax return
preparers'' and inserting ``tax return preparers''.
(ii) The item relating to section 6107 in the table of
sections for subchapter B of chapter 61 is amended by
striking ``Income tax return preparer'' and inserting ``Tax
return preparer''.
(D) Section 6109(a)(4) is amended--
(i) by striking ``an income tax return preparer'' and
inserting ``a tax return preparer'', and
(ii) by striking ``income return preparer'' in the heading
and inserting ``tax return preparer''.
(E) Section 6503(k)(4) is amended by striking ``Income tax
return preparers'' and inserting ``Tax return preparers''.
(F)(i) Section 6694 is amended--
(I) by striking ``INCOME TAX RETURN PREPARER'' in the
heading and inserting ``TAX RETURN PREPARER'',
(II) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer'',
(III) in subsection (c)(2), by striking ``the income tax
return preparer'' and inserting ``the tax return preparer'',
(IV) in subsection (e), by striking ``subtitle A'' and
inserting ``this title'', and
(V) in subsection (f), by striking ``income tax return
preparer'' and inserting ``tax return preparer''.
(ii) The item relating to section 6694 in the table of
sections for part I of subchapter B of chapter 68 is amended
by striking ``income tax return preparer'' and inserting
``tax return preparer''.
(G)(i) Section 6695 is amended--
(I) by striking ``INCOME'' in the heading, and
(II) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer''.
(ii) Section 6695(f) is amended--
(I) by striking ``subtitle A'' and inserting ``this
title'', and
(II) by striking ``the income tax return preparer'' and
inserting ``the tax return preparer''.
(iii) The item relating to section 6695 in the table of
sections for part I of subchapter B of chapter 68 is amended
by striking ``income''.
(H) Section 6696(e) is amended by striking ``subtitle A''
each place it appears and inserting ``this title''.
(I)(i) Section 7407 is amended--
(I) by striking ``INCOME TAX RETURN PREPARERS'' in the
heading and inserting ``TAX RETURN PREPARERS'',
(II) by striking ``an income tax return preparer'' each
place it appears and inserting ``a tax return preparer'',
(III) by striking ``income tax preparer'' both places it
appears in subsection (a) and inserting ``tax return
preparer'', and
(IV) by striking ``income tax return'' in subsection (a)
and inserting ``tax return''.
(ii) The item relating to section 7407 in the table of
sections for subchapter A of chapter 76 is amended by
striking ``income tax return preparers'' and inserting ``tax
return preparers''.
(J)(i) Section 7427 is amended--
(I) by striking ``INCOME TAX RETURN PREPARERS'' in the
heading and inserting ``TAX RETURN PREPARERS'', and
(II) by striking ``an income tax return preparer'' and
inserting ``a tax return preparer''.
(ii) The item relating to section 7427 in the table of
sections for subchapter B of chapter 76 is amended to read as
follows:

``Sec. 7427. Tax return preparers.''.
(b) Modification of Penalty for Understatement of
Taxpayer's Liability by Tax Return Preparer.--Subsections (a)
and (b) of section 6694 are amended to read as follows:
``(a) Understatement Due to Unreasonable Positions.--
``(1) In general.--Any tax return preparer who prepares any
return or claim for refund with respect to which any part of
an understatement of liability is due to a position described
in paragraph (2) shall pay a penalty with respect to each
such return or claim in an amount equal to the greater of--
``(A) $1,000, or
``(B) 50 percent of the income derived (or to be derived)
by the tax return preparer with respect to the return or
claim.
``(2) Unreasonable position.--A position is described in
this paragraph if--
``(A) the tax return preparer knew (or reasonably should
have known) of the position,
``(B) there was not a reasonable belief that the position
would more likely than not be sustained on its merits, and
``(C)(i) the position was not disclosed as provided in
section 6662(d)(2)(B)(ii), or
``(ii) there was no reasonable basis for the position.
``(3) Reasonable cause exception.--No penalty shall be
imposed under this subsection if it is shown that there is
reasonable cause for the understatement and the tax return
preparer acted in good faith.
``(b) Understatement Due to Willful or Reckless Conduct.--

[[Page S3971]]

``(1) In general.--Any tax return preparer who prepares any
return or claim for refund with respect to which any part of
an understatement of liability is due to a conduct described
in paragraph (2) shall pay a penalty with respect to each
such return or claim in an amount equal to the greater of--
``(A) $5,000, or
``(B) 50 percent of the income derived (or to be derived)
by the tax return preparer with respect to the return or
claim.
``(2) Willful or reckless conduct.--Conduct described in
this paragraph is conduct by the tax return preparer which
is--
``(A) a willful attempt in any manner to understate the
liability for tax on the return or claim, or
``(B) a reckless or intentional disregard of rules or
regulations.
``(3) Reduction in penalty.--The amount of any penalty
payable by any person by reason of this subsection for any
return or claim for refund shall be reduced by the amount of
the penalty paid by such person by reason of subsection
(a).''.
(c) Effective Date.--The amendments made by this section
shall apply to returns prepared after the date of the
enactment of this Act.

SEC. 551. PENALTY FOR FILING ERRONEOUS REFUND CLAIMS.

(a) In General.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6675 the following new section:

``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

``(a) Civil Penalty.--If a claim for refund or credit with
respect to income tax (other than a claim for a refund or
credit relating to the earned income credit under section 32)
is made for an excessive amount, unless it is shown that the
claim for such excessive amount has a reasonable basis, the
person making such claim shall be liable for a penalty in an
amount equal to 20 percent of the excessive amount.
``(b) Excessive Amount.--For purposes of this section, the
term `excessive amount' means in the case of any person the
amount by which the amount of the claim for refund or credit
for any taxable year exceeds the amount of such claim
allowable under this title for such taxable year.
``(c) Coordination With Other Penalties.--This section
shall not apply to any portion of the excessive amount of a
claim for refund or credit on which a penalty is imposed
under part II of subchapter A of chapter 68.''.
(b) Conforming Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by inserting after
the item relating to section 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.
(c) Effective Date.--The amendments made by this section
shall apply to any claim--
(1) filed or submitted after the date of the enactment of
this Act, or
(2) filed or submitted prior to such date but not withdrawn
before the date which is 30 days after such date of
enactment.

SEC. 552. SUSPENSION OF CERTAIN PENALTIES AND INTEREST.

(a) In General.--Paragraphs (1)(A) and (3)(A) of section
6404(g) are each amended by striking ``18-month period'' and
inserting ``36-month period''.
(b) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to notices
provided by the Secretary of the Treasury, or his delegate
after the date which is 6 months after the date of the
enactment of this Act.
(2) Exception for certain taxpayers.--The amendments made
by this section shall not apply to any taxpayer with respect
to whom a suspension of any interest, penalty, addition to
tax, or other amount is in effect on the date which is 6
months after the date of the enactment of this Act.

SEC. 553. ADDITIONAL REASONS FOR SECRETARY TO TERMINATE
INSTALLMENT AGREEMENTS.

(a) In General.--Section 6159(b)(4) (relating to failure to
pay an installment or any other tax liability when due or to
provide requested financial information) is amended by
striking ``or'' at the end of subparagraph (B), by
redesignating subparagraph (C) as subparagraph (E), and by
inserting after subparagraph (B) the following new
subparagraphs:
``(C) to make a Federal tax deposit under section 6302 at
the time such deposit is required to be made,
``(D) to file a return of tax imposed under this title by
its due date (including extensions), or''.
(b) Conforming Amendment.--The heading for paragraph (4) of
section 6159(b) is amended by striking ``Failure to pay an
installment or any other tax liability when due or to provide
requested financial information'' and inserting ``Failure to
make payments or deposits or file returns when due or to
provide requested financial information''.
(c) Effective Date.--The amendments made by this section
shall apply to failures occurring on or after the date of the
enactment of this Act.

SEC. 554. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS-IN-
COMPROMISE.

(a) In General.--Section 7122(b) (relating to record) is
amended by striking ``Whenever a compromise'' and all that
follows through ``his delegate, with his reasons therefor''
and inserting ``If the Secretary determines that an opinion
of the General Counsel for the Department of the Treasury, or
the Counsel's delegate, is required with respect to a
compromise, there shall be placed on file in the office of
the Secretary such opinion, with the reasons therefor''.
(b) Conforming Amendments.--Section 7122(b) is amended by
striking the second and third sentences.
(c) Effective Date.--The amendments made by this section
shall apply to offers-in-compromise submitted or pending on
or after the date of the enactment of this Act.

SEC. 555. AUTHORIZATION FOR FINANCIAL MANAGEMENT SERVICE
RETENTION OF TRANSACTION FEES FROM LEVIED
AMOUNTS.

(a) In General.--Subsection (h) of section 6331 (relating
to continuing levy on certain payments) is amended by adding
at the end the following new paragraph:
``(4) Imposition of financial management services
transaction fees.--If the Secretary approves a levy under
this subsection, the Secretary may impose on the taxpayer a
transaction fee sufficient to cover the full cost of
implementing the levy under this subsection. Such fee--
``(A) shall be treated as an expense under section 6341,
``(B) may be collected through a levy under this
subsection, and
``(C) shall be in addition to the amount of tax liability
with respect to which such levy was approved.''.
(b) Retention of Fees by Financial Management Service.--The
Financial Management Service may retain the amount of any
transaction fee imposed under section 6331(h)(4) of the
Internal Revenue Code of 1986. Any amount retained by the
Financial Management Service under that section shall be
deposited into the account of the Department of the Treasury
under section 3711(g)(7) of title 31, United States Code.
(c) Effective Date.--The amendment made by this section
shall apply to amounts levied after the date of the enactment
of this Act.

SEC. 556. AUTHORITY FOR UNDERCOVER OPERATIONS.

Paragraph (6) of section 7608(c) (relating to application
of section) is amended by striking ``2007'' both places it
appears and inserting ``2008''.

SEC. 557. INCREASE IN PENALTY EXCISE TAXES ON THE POLITICAL
AND EXCESS LOBBYING ACTIVITIES OF SECTION
501(C)(3) ORGANIZATIONS.

(a) Taxes on Disqualifying Lobbying Expenditures of Certain
Organizations.--
(1) In general.--Section 4912(a) (relating to tax on
organization) is amended by striking ``5 percent'' and
inserting ``10 percent''.
(2) Tax on management.--Section 4912(b) is amended by
striking ``5 percent'' and inserting ``10 percent''.
(b) Taxes on Political Expenditures of Section 501(c)(3)
Organizations.--
(1) In general.--Section 4955(a) (relating to initial
taxes) is amended--
(A) in paragraph (1), by striking ``10 percent'' and
inserting ``20 percent'', and
(B) in paragraph (2), by striking ``2\1/2\ percent'' and
inserting ``5 percent''.
(2) Increased limitation for managers.--Section 4955(c)(2)
is amended--
(A) by striking ``$5,000'' and inserting ``$10,000'', and
(B) by striking ``$10,000'' and inserting ``$20,000''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.

SEC. 558. INCREASED PENALTY FOR FAILURE TO FILE FOR EXEMPT
ORGANIZATIONS.

(a) In General.--Subparagraph (A) of section 6652(c)(1)
(relating to annual returns under section 6033(a)(1) or
6012(a)(6)) is amended by adding at the end the following new
sentence: ``In the case of an organization having gross
receipts exceeding $25,000,000 for any year, with respect to
the return so required, the first sentence of this
subparagraph shall be applied by substituting `$250' for
`$20' and, in lieu of applying the second sentence of this
subparagraph, the maximum penalty under this subparagraph
shall not exceed $125,000.''.
(b) Conforming Amendment.--The third sentence of section
6652(c)(1)(A) is amended by inserting ``but not exceeding
$25,000,000'' after ``$1,000,000''.
(c) Effective Date.--The amendments made by this section
shall apply to returns required to be filed on or after
January 1, 2008.

SEC. 559. PENALTIES FOR FAILURE TO FILE CERTAIN RETURNS
ELECTRONICALLY.

(a) In General.--Part I of subchapter A of chapter 68
(relating to additions to the tax, additional amounts, and
assessable penalties) is amended by inserting after section
6652 the following new section:

``SEC. 6652A. FAILURE TO FILE CERTAIN RETURNS ELECTRONICALLY.

``(a) In General.--If a person fails to file a return
described in section 6651 or 6652(c)(1) in electronic form as
required under section 6011(e)--
``(1) such failure shall be treated as a failure to file
such return (even if filed in a form other than electronic
form), and
``(2) the penalty imposed under section 6651 or 6652(c),
whichever is appropriate, shall be equal to the greater of--
``(A) the amount of the penalty under such section,
determined without regard to this section, or

[[Page S3972]]

``(B) the amount determined under subsection (b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), the penalty determined under this subsection is equal to
$40 for each day during which a failure described under
subsection (a) continues. The maximum penalty under this
paragraph on failures with respect to any 1 return shall not
exceed the lesser of $20,000 or 10 percent of the gross
receipts of the taxpayer for the year.
``(2) Increased penalties for taxpayers with gross receipts
between $1,000,000 and $100,000,000.--
``(A) Taxpayers with gross receipts between $1,000,000 and
$25,000,000.--In the case of a taxpayer having gross receipts
exceeding $1,000,000 but not exceeding $25,000,000 for any
year--
``(i) the first sentence of paragraph (1) shall be applied
by substituting `$200' for `$40', and
``(ii) in lieu of applying the second sentence of paragraph
(1), the maximum penalty under paragraph (1) shall not exceed
$100,000.
``(B) Taxpayers with gross receipts over $25,000,000.--
Except as provided in paragraph (3), in the case of a
taxpayer having gross receipts exceeding $25,000,000 for any
year--
``(i) the first sentence of paragraph (1) shall be applied
by substituting `$500' for `$40', and
``(ii) in lieu of applying the second sentence of paragraph
(1), the maximum penalty under paragraph (1) shall not exceed
$250,000.
``(3) Increased penalties for certain taxpayers with gross
receipts exceeding $100,000,000.--In the case of a return
described in section 6651--
``(A) Taxpayers with gross receipts between $100,000,000
and $250,000,000.--In the case of a taxpayer having gross
receipts exceeding $100,000,000 but not exceeding
$250,000,000 for any year--
``(i) the amount of the penalty determined under this
subsection shall equal the sum of--

``(I) $50,000, plus
``(II) $1,000 for each day during which such failure
continues (twice such amount for each day such failure
continues after the first such 60 days), and

``(ii) the maximum amount under clause (i)(II) on failures
with respect to any 1 return shall not exceed $200,000.
``(B) Taxpayers with gross receipts over $250,000,000.--In
the case of a taxpayer having gross receipts exceeding
$250,000,000 for any year--
``(i) the amount of the penalty determined under this
subsection shall equal the sum of--

``(I) $250,000, plus
``(II) $2,500 for each day during which such failure
continues (twice such amount for each day such failure
continues after the first such 60 days), and

``(ii) the maximum amount under clause (i)(II) on failures
with respect to any 1 return shall not exceed $250,000.
``(C) Exception for certain returns.--Subparagraphs (A) and
(B) shall not apply to any return of tax imposed under
section 511.''.
(b) Clerical Amendment.--The table of sections for part I
of subchapter A of chapter 68 is amended by inserting after
the item relating to section 6652 the following new item:

``Sec. 6652A. Failure to file certain returns electronically.''.
(c) Effective Date.--The amendments made by this section
shall apply to returns required to be filed on or after
January 1, 2008.

PART III--GENERAL PROVISIONS

SEC. 561. 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, except that, compliance with any procedures
described pursuant to this section does not establish
compliance with the rule, or establish a presumption or
inference of such compliance.
``(C) Procedures.--Procedures described under subparagraph
(B)(ii)--
``(i) shall be suggestions to assist small entities; and
``(ii) shall not be additional requirements, or diminish
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 Fair Minimum Wage 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, the Committee on Small Business of the House of
Representatives, and any other committee of relevant
jurisdiction 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''.

SEC. 562. 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

[[Page S3973]]

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), 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.

SEC. 563. 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 benefits, costs, risks, and
barriers to workers and 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.

SEC. 564. 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 Social Security program was enacted to serve as the
safest component of a retirement system that also includes
employer-sponsored retirement plans and personal savings.
(b) Sense of the Senate.--It is the sense of the Senate
that--
(1) Congress should enact policies that promote savings
vehicles for retirement that are simple, easily accessible
and provide adequate financial security 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; and
(3) regularly contributing money to a financially-sound
investment account is one important method for helping to
achieve one's retirement goals.

SEC. 565. RENEWAL GRANTS FOR WOMEN'S BUSINESS CENTERS.

(a) In General.--Section 29 of the Small Business Act (15
U.S.C. 656) is amended by adding at the end the following:
``(m) Continued Funding for Centers.--
``(1) In general.--A nonprofit organization described in
paragraph (2) shall be eligible to receive, subject to
paragraph (3), a 3-year grant under this subsection.
``(2) Applicability.--A nonprofit organization described in
this paragraph is a nonprofit organization that has received
funding under subsection (b) or (l).
``(3) Application and approval criteria.--
``(A) Criteria.--Subject to subparagraph (B), the
Administrator shall develop and publish criteria for the
consideration and approval of applications by nonprofit
organizations under this subsection.
``(B) Contents.--Except as otherwise provided in this
subsection, the conditions for participation in the grant
program under this subsection shall be the same as the
conditions for participation in the program under subsection
(l), as in effect on the date of enactment of this Act.
``(C) Notification.--Not later than 60 days after the date
of the deadline to submit applications for each fiscal year,
the Administrator shall approve or deny any application under
this subsection and notify the applicant for each such
application.
``(4) Award of grants.--
``(A) In general.--Subject to the availability of
appropriations, the Administrator shall make a grant for the
Federal share of the cost of activities described in the
application to each applicant approved under this subsection.
``(B) Amount.--A grant under this subsection shall be for
not more than $150,000, for each year of that grant.
``(C) Federal share.--The Federal share under this
subsection shall be not more than 50 percent.
``(D) Priority.--In allocating funds made available for
grants under this section, the Administrator shall give
applications under this subsection or subsection (l) priority
over first-time applications under subsection (b).
``(5) Renewal.--

[[Page S3974]]

``(A) In general.--The Administrator may renew a grant
under this subsection for additional 3-year periods, if the
nonprofit organization submits an application for such
renewal at such time, in such manner, and accompanied by such
information as the Administrator may establish.
``(B) Unlimited renewals.--There shall be no limitation on
the number of times a grant may be renewed under subparagraph
(A).
``(n) Privacy Requirements.--
``(1) In general.--A women's business center may not
disclose the name, address, or telephone number of any
individual or small business concern receiving assistance
under this section without the consent of such individual or
small business concern, unless--
``(A) the Administrator is ordered to make such a
disclosure by a court in any civil or criminal enforcement
action initiated by a Federal or State agency; or
``(B) the Administrator considers such a disclosure to be
necessary for the purpose of conducting a financial audit of
a women's business center, but a disclosure under this
subparagraph shall be limited to the information necessary
for such audit.
``(2) Administration use of information.--This subsection
shall not--
``(A) restrict Administration access to program activity
data; or
``(B) prevent the Administration from using client
information (other than the information described in
subparagraph (A)) to conduct client surveys.
``(3) Regulations.--The Administrator shall issue
regulations to establish standards for requiring disclosures
during a financial audit under paragraph (1)(B).''.
(b) Repeal.--Section 29(l) of the Small Business Act (15
U.S.C. 656(l)) is repealed effective October 1 of the first
full fiscal year after the date of enactment of this Act.
(c) Transitional Rule.--Notwithstanding any other provision
of law, a grant or cooperative agreement that was awarded
under subsection (l) of section 29 of the Small Business Act
(15 U.S.C. 656), on or before the day before the date
described in subsection (b) of this section, shall remain in
full force and effect under the terms, and for the duration,
of such grant or agreement.

SEC. 566. REPORTS ON ACQUISITIONS OF ARTICLES, MATERIALS, AND
SUPPLIES MANUFACTURED OUTSIDE THE UNITED
STATES.

Section 2 of the Buy American Act (41 U.S.C. 10a) is
amended--
(1) by striking ``Notwithstanding'' and inserting the
following:
``(a) In General.--Notwithstanding''; and
(2) by adding at the end the following:
``(b) Reports.--
``(1) In general.--Not later than 180 days after the end of
each of fiscal years 2007 through 2011, the head of each
Federal agency shall submit to the Committee on Homeland
Security and Governmental Affairs of the Senate and the
Committee on Oversight and Government Reform of the House of
Representatives a report on the amount of the acquisitions
made by the agency in that fiscal year of articles,
materials, or supplies purchased from entities that
manufacture the articles, materials, or supplies outside of
the United States.
``(2) Contents of report.--The report required by paragraph
(1) shall separately include, for the fiscal year covered by
such report--
``(A) the dollar value of any articles, materials, or
supplies that were manufactured outside the United States;
``(B) an itemized list of all waivers granted with respect
to such articles, materials, or supplies under this Act, and
a citation to the treaty, international agreement, or other
law under which each waiver was granted;
``(C) if any articles, materials, or supplies were acquired
from entities that manufacture articles, materials, or
supplies outside the United States, the specific exception
under this section that was used to purchase such articles,
materials, or supplies; and
``(D) a summary of--
``(i) the total procurement funds expended on articles,
materials, and supplies manufactured inside the United
States; and
``(ii) the total procurement funds expended on articles,
materials, and supplies manufactured outside the United
States.
``(3) Public availability.--The head of each Federal agency
submitting a report under paragraph (1) shall make the report
publicly available to the maximum extent practicable.
``(4) Exception for intelligence community.--This
subsection shall not apply to acquisitions made by an agency,
or component thereof, that is an element of the intelligence
community as specified in, or designated under, section 3(4)
of the National Security Act of 1947 (50 U.S.C. 401a(4)).''.

SEC. 567. SENSE OF THE SENATE REGARDING REPEAL OF 1993 INCOME
TAX INCREASE ON SOCIAL SECURITY BENEFITS.

It is the sense of the Senate that Congress should repeal
the 1993 tax increase on Social Security benefits and
eliminate wasteful spending, such as spending on unnecessary
tax loopholes, in order to fully offset the cost of such
repeal and avoid forcing taxpayers to pay substantially more
interest to foreign creditors.

SEC. 568. SENSE OF THE SENATE REGARDING PERMANENT TAX
INCENTIVES TO MAKE EDUCATION MORE AFFORDABLE
AND MORE ACCESSIBLE FOR AMERICAN FAMILIES.

It is the sense of the Senate that Congress should make
permanent the tax incentives to make education more
affordable and more accessible for American families and
eliminate wasteful spending, such as spending on unnecessary
tax loopholes, in order to fully offset the cost of such
incentives and avoid forcing taxpayers to pay substantially
more interest to foreign creditors.

SEC. 569. RESPONSIBLE GOVERNMENT CONTRACTOR REQUIREMENTS.

Section 274A(e) of the Immigration and Nationality Act (8
U.S.C. 1324a(e)) is amended by adding at the end the
following new paragraph:
``(10) Prohibition on award of government contracts,
grants, and agreements.--
``(A) Employers with no contracts, grants, or agreements.--
``(i) In general.--Subject to clause (iii) and subparagraph
(C), if an employer who does not hold a Federal contract,
grant, or cooperative agreement is determined to have
violated this section, the employer shall be debarred from
the receipt of a Federal contract, grant, or cooperative
agreement for a period of 7 years.
``(ii) Placement on excluded list.--The Secretary of
Homeland Security or the Attorney General shall advise the
Administrator of General Services of the debarment of an
employer under clause (i) and the Administrator of General
Services shall list the employer on the List of Parties
Excluded from Federal Procurement and Nonprocurement Programs
for a period of 7 years.
``(iii) Waiver.--

``(I) Authority.--The Administrator of General Services, in
consultation with the Secretary of Homeland Security and the
Attorney General, may waive operation of clause (i) or may
limit the duration or scope of a debarment under clause (i)
if such waiver or limitation is necessary to national defense
or in the interest of national security.
``(II) Notification to congress.--If the Administrator
grants a waiver or limitation described in subclause (I), the
Administrator shall submit to each member of the Committee on
the Judiciary of the Senate and of the Committee on the
Judiciary of the House of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial review.--The decision of
whether to debar or take alternative action under this clause
shall not be judicially reviewed.

``(B) Employers with contracts, grants, or agreements.--
``(i) In general.--Subject to clause (iii) and subclause
(C), an employer who holds a Federal contract, grant, or
cooperative agreement and is determined to have violated this
section shall be debarred from the receipt of new Federal
contracts, grants, or cooperative agreements for a period of
10 years.
``(ii) Notice to agencies.--Prior to debarring the employer
under clause (i), the Secretary of Homeland Security, in
cooperation with the Administrator of General Services, shall
advise any agency or department holding a contract, grant, or
cooperative agreement with the employer of the Government's
intention to debar the employer from the receipt of new
Federal contracts, grants, or cooperative agreements for a
period of 10 years.
``(iii) Waiver.--

``(I) Authority.--After consideration of the views of any
agency or department that holds a contract, grant, or
cooperative agreement with the employer, the Administrator of
General Services, in consultation with the Secretary of
Homeland Security and the Attorney General, may waive
operation of clause (i) or may limit the duration or scope of
the debarment under clause (i) if such waiver or limitation
is necessary to the national defense or in the interest of
national security.
``(II) Notification to congress.--If the Administrator
grants a waiver or limitation described in subclause (I), the
Administrator shall submit to each member of the Committee on
the Judiciary of the Senate and of the Committee on the
Judiciary of the House of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial review.--The decision of
whether to debar or take alternate action under this clause
shall not be judicially reviewed.

``(C) Exemption from penalty for employers participating in
the basic pilot program.--In the case of imposition on an
employer of a debarment from the receipt of a Federal
contract, grant, or cooperative agreement under subparagraph
(A) or (B), that penalty shall be waived if the employer
establishes that the employer was voluntarily participating
in the basic pilot program under section 403(a) of the
Illegal Immigration Reform and Immigrant Responsibility Act
of 1996 (8 U.S.C. 1324a note) at the time of the violations
of this section that resulted in the debarment.''.

SEC. 570. DISABILITY PREFERENCE PROGRAM FOR TAX COLLECTION
CONTRACTS.

(a) In General.--Section 6306 (relating to qualified tax
collection contracts) is amended--
(1) by striking ``Nothing'' in subsection (a) and inserting
``Except as provided in subsection (c), nothing'',
(2) by redesignating subsections (c), (d), (e), and (f) as
subsections (d), (e), (f), and (g), respectively, and
(3) by inserting after subsection (b) the following new
subsection:
``(c) Disability Preference Program for Tax Collection
Contracts.--
``(1) In general.--The Secretary shall provide a qualifying
disability preference to any

[[Page S3975]]

program under which any qualified tax collection contract is
awarded on or after the effective date of this subsection and
shall ensure compliance with the requirements of paragraph
(3).
``(2) Qualifying disability preference.--
``(A) In general.--For purposes of this subsection, the
term `qualifying disability preference' means a preference
pursuant to which at least 10 percent (in both number and
aggregate dollar amount) of the accounts covered by qualified
tax collection contracts are awarded to persons satisfying
the following criteria:
``(i) Such person employs within the United States at least
50 severely disabled individuals.
``(ii) Such person shall agree as an enforceable condition
of its bid for a qualified tax collection contract that
within 90 days after the date such contract is awarded, not
less than 35 percent of the employees of such person employed
in connection with providing services under such contract
shall--

``(I) be hired after the date such contract is awarded, and
``(II) be severely disabled individuals.

``(B) Determination of satisfaction of criteria.--Within 60
days after the end of the period specified in subparagraph
(A)(ii), the Secretary shall determine whether such person
has met the 35 percent requirement specified in such
subparagraph, and if such requirement has not been met, shall
terminate the contract for nonperformance. For purposes of
determining whether such 35 percent requirement has been
satisfied, severely disabled individuals providing services
under such contract shall not include any severely disabled
individuals who were counted toward satisfaction of the 50-
employee requirement specified in subparagraph (A)(i), unless
such person replaced such individuals by hiring additional
severely disabled individuals who do not perform services
under such contract.
``(3) Program-wide employment of severely disabled
individuals.--Not less than 15 percent of all individuals
hired by all persons to whom tax collection contracts are
issued by the Secretary under this section, to perform work
under such tax collection contracts, shall qualify as
severely disabled individuals.
``(4) Severely disabled individual.--For purposes of this
subsection, the term `severely disabled individual' means any
one of the following:
``(A) Any veteran of the United States Armed Forces with--
``(i) a disability determined by the Secretary of Veterans
Affairs to be service-connected, or
``(ii) a disability deemed by statute to be service-
connected.
``(B) Any individual who is a disabled beneficiary (as
defined in section 1148(k)(2) of the Social Security Act (42
U.S.C. 1320b-19(k)(2)) or who would be considered to be such
a disabled beneficiary but for having income or assets in
excess of the income or asset eligibility limits established
under title II or XVI of the Social Security Act,
respectively.''.
(b) Report by Government Accountability Office.--
(1) In general.--The Comptroller General of the United
States shall conduct a study of the effectiveness and
efficiency of the use of private contractors for Internal
Revenue Service debt collection. The study required by this
paragraph shall be completed in time to be taken into account
by Congress before any new contracting is carried out under
section 6306 of the Internal Revenue Code of 1986 in years
following 2008.
(2) Study of comparable efforts.--As part of the study
required under paragraph (1), the Comptroller General shall--
(A) make every effort to determine the relative
effectiveness and efficiency of debt collection contracting
by Federal staff compared to private contractors, using a
cost calculation for both Federal staff and private
contractors which includes all benefits and overhead costs,
(B) compare the cost effectiveness of the contracting
approach of the Department of the Treasury to that of the
Department of Education's Office of Student Financial
Assistance, and
(C) survey State tax debt collection experiences for
lessons that may be applicable to the Internal Revenue
Service collection efforts.
(c) Effective Date.--The amendments made by this section
shall apply to any tax collection contract awarded on or
after the date of the enactment of ths Act.
______

SA 799. Mr. LUGAR (for himself, Mr. Bond, and Mr. Coleman) submitted
an amendment intended to be proposed by him to the bill H.R. 1591,
making emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the appropriate place, insert the following:

SEC. __. SPECIAL IMMIGRANT STATUS FOR CERTAIN ALIENS SERVING
AS TRANSLATORS OR INTERPRETERS WITH FEDERAL
AGENCIES.

(a) Increase in Numbers Admitted.--Section 1059 of the
National Defense Authorization Act for Fiscal Year 2006 (8
U.S.C. 1101 note) is amended--
(1) in subsection (b)(1)--
(A) in subparagraph (B), by striking ``as a translator''
and inserting ``, or under Chief of Mission authority, as a
translator or interpreter'';
(B) in subparagraph (C), by inserting ``the Chief of
Mission or'' after ``recommendation from''; and
(C) in subparagraph (D), by inserting ``the Chief of
Mission or'' after ``as determined by''; and
(2) in subsection (c)(1), by striking ``50'' and inserting
``300''.
(b) Exclusion From Numerical Limitation.--Section
1059(c)(2) of such Act is amended--
(1) in the subsection header, by striking ``Counting
against'' and inserting ``Exclusion from''; and
(2) by striking ``.'' at the end and inserting ``and shall
not be counted against the numerical limitations under
sections 201(d), 202(a) and 203(b)(4) of the Immigration and
Nationality Act (8 U.S.C. 1151(d), 1152(a) and
1153(b)(4)).''.
(c) Adjustment of Status.--Section 1059 of such Act is
further amended--
(1) by redesignating subsection (d) as subsection (e); and
(2) by inserting after subsection (c) the following:
``(d) Adjustment of Status.--Notwithstanding paragraphs
(2), (7) and (8) of section 245(c) of the Immigration and
Nationality Act (8 U.S.C. 1255(c)), the Secretary of Homeland
Security may adjust the status of an alien to that of a
lawful permanent resident under section 245(a) of such Act if
the alien--
``(1) was paroled or admitted as a nonimmigrant into the
United States; and
``(2) is otherwise eligible for special immigrant status
under this section and under the Immigration and Nationality
Act.''.
(d) Sunset Provision.--Section 1059 of such Act is further
amended by adding at the end the following:
``(f) Sunset Provision.--
``(1) In general.--This section is repealed on the date
that is 3 years after the date of the enactment of this
subsection.
``(2) Applicability.--Notwithstanding paragraph (1), the
Secretary of Homeland Security may provide an alien with the
status of a special immigrant under this section if--
``(A) the alien's petition for such status was pending
before the date described in paragraph (1); and
``(B) the alien was eligible for such status at the time
the petition was filed.''.

______

SA 800. Mrs. LINCOLN (for himself, Mr. Smith, and Ms. Cantwell)
submitted an amendment intended to be proposed to amendment SA 680
submitted by Mr. Kennedy (for himself, Mr. Enzi, Mr. Baucus, and Mr.
Grassley) to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

At the end of title V, add the following:

SEC. ___. DEDUCTION FOR QUALIFIED TIMBER GAIN.

(a) In General.--Part I of subchapter P of chapter 1 is
amended by adding at the end the following new section:

``SEC. 1203. DEDUCTION FOR QUALIFIED TIMBER GAIN.

``(a) In General.--In the case of a taxpayer which elects
the application of this section for a taxable year, there
shall be allowed a deduction against gross income equal to 60
percent of the lesser of--
``(1) the taxpayer's qualified timber gain for such year,
or
``(2) the taxpayer's net capital gain for such year.
``(b) Qualified Timber Gain.--For purposes of this section,
the term `qualified timber gain' means, with respect to any
taxpayer for any taxable year, the excess (if any) of--
``(1) the sum of the taxpayer's gains described in
subsections (a) and (b) of section 631 for such year, over
``(2) the sum of the taxpayer's losses described in such
subsections for such year.
``(c) Special Rules for Pass-Thru Entities.--In the case of
any qualified timber gain of a pass-thru entity (as defined
in section 1(h)(10)), the election under this section shall
be made separately by each taxpayer subject to tax on such
gain.''.
(b) Coordination With Maximum Capital Gains Rates.--
(1) Taxpayers other than corporations.--Paragraph (2) of
section 1(h) is amended to read as follows:
``(2) Reduction of net capital gain.--For purposes of this
subsection, the net capital gain for any taxable year shall
be reduced (but not below zero) by the sum of--
``(A) the amount which the taxpayer takes into account as
investment income under section 163(d)(4)(B)(iii), and
``(B) the lesser of--
``(i) the amount described in paragraph (1) of section
1203(a), or
``(ii) the amount described in paragraph (2) of such
section.''.
(2) Corporations.--Section 1201 is amended by redesignating
subsection (b) as subsection (c) and inserting after
subsection (a) the following new subsection:
``(b) Qualified Timber Gain Not Taken Into Account.--For
purposes of this section, in the case of a corporation with
respect to which an election is in effect under section 1203,
the net capital gain for any taxable year shall be reduced
(but not below zero) by the corporation's qualified timber
gain (as defined in section 1203(b)).''.
(c) Deduction Allowed Whether or Not Individual Itemizes
Other Deductions.--

[[Page S3976]]

Subsection (a) of section 62 is amended by inserting before
the last sentence the following new paragraph:
``(21) Qualified timber gains.--The deduction allowed by
section 1203.''.
(d) Deduction Allowed in Computing Adjusted Current
Earnings.--Subparagraph (C) of section 56(g)(4) is amended by
adding at the end the following new clause:
``(vii) Deduction for qualified timber gain.--Clause (i)
shall not apply to any deduction allowed under section
1203.''.
(e) Deduction Allowed in Computing Taxable Income of
Electing Small Business Trusts.--Subparagraph (C) of section
641(c)(2) is amended by inserting after clause (iii) the
following new clause:
``(iv) The deduction allowed under section 1203.''.
(f) Conforming Amendments.--
(1) Subparagraph (B) of section 172(d)(2) is amended to
read as follows:
``(B) the exclusion under section 1202 and the deduction
under section 1203 shall not be allowed.''.
(2) Paragraph (4) of section 642(c) is amended by striking
the first sentence and inserting the following: ``To the
extent that the amount otherwise allowable as a deduction
under this subsection consists of gain described in section
1202(a) or qualified timber gain (as defined in section
1203(b)), proper adjustment shall be made for any exclusion
allowable to the estate or trust under section 1202 and for
any deduction allowable to the estate or trust under section
1203.''
(3) Paragraph (3) of section 643(a) is amended by striking
the last sentence and inserting the following: ``The
exclusion under section 1202 and the deduction under section
1203 shall not be taken into account.''
(4) Subparagraph (C) of section 643(a)(6) is amended to
read as follows:
``(C) Paragraph (3) shall not apply to a foreign trust. In
the case of such a trust--
``(i) there shall be included gains from the sale or
exchange of capital assets, reduced by losses from such sales
or exchanges to the extent such losses do not exceed gains
from such sales or exchanges, and
``(ii) the deduction under section 1203 shall not be taken
into account.''.
(5) Paragraph (4) of section 691(c) is amended by inserting
``1203,'' after ``1202,''.
(6) Paragraph (2) of section 871(a) is amended by inserting
``and 1203'' after ``section 1202''.
(7) The table of sections for part I of subchapter P of
chapter 1 is amended by adding at the end the following new
item:

``Sec. 1203. Deduction for qualified timber gain.''.

(g) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment
of this Act and before January 1, 2009.
(2) Taxable years which include date of enactment.--In the
case of any taxable year which includes the date of the
enactment of this Act, for purposes of the Internal Revenue
Code of 1986, the taxpayer's qualified timber gain shall not
exceed the excess that would be described in section 1203(b)
of such Code, as added by this section, if only dispositions
of timber after such date were taken into account.
______

SA 801. Mrs. LINCOLN (for herself, Mr. Smith, and Ms. Cantwell)
submitted an amendment intended to be proposed to amendment SA 658
submitted by Mr. Grassley (for himself and Mr. Baucus) and intended to
be proposed to the bill H.R. 1591, making emergency supplemental
appropriations for the fiscal year ending September 30, 2007, and for
other purposes; which was ordered to lie on the table; as follows:

At the end of title V, add the following:

SEC. ___. DEDUCTION FOR QUALIFIED TIMBER GAIN.

(a) In General.--Part I of subchapter P of chapter 1 is
amended by adding at the end the following new section:

``SEC. 1203. DEDUCTION FOR QUALIFIED TIMBER GAIN.

``(a) In General.--In the case of a taxpayer which elects
the application of this section for a taxable year, there
shall be allowed a deduction against gross income equal to 60
percent of the lesser of--
``(1) the taxpayer's qualified timber gain for such year,
or
``(2) the taxpayer's net capital gain for such year.
``(b) Qualified Timber Gain.--For purposes of this section,
the term `qualified timber gain' means, with respect to any
taxpayer for any taxable year, the excess (if any) of--
``(1) the sum of the taxpayer's gains described in
subsections (a) and (b) of section 631 for such year, over
``(2) the sum of the taxpayer's losses described in such
subsections for such year.
``(c) Special Rules for Pass-Thru Entities.--In the case of
any qualified timber gain of a pass-thru entity (as defined
in section 1(h)(10)), the election under this section shall
be made separately by each taxpayer subject to tax on such
gain.''.
(b) Coordination With Maximum Capital Gains Rates.--
(1) Taxpayers other than corporations.--Paragraph (2) of
section 1(h) is amended to read as follows:
``(2) Reduction of net capital gain.--For purposes of this
subsection, the net capital gain for any taxable year shall
be reduced (but not below zero) by the sum of--
``(A) the amount which the taxpayer takes into account as
investment income under section 163(d)(4)(B)(iii), and
``(B) the lesser of--
``(i) the amount described in paragraph (1) of section
1203(a), or
``(ii) the amount described in paragraph (2) of such
section.''.
(2) Corporations.--Section 1201 is amended by redesignating
subsection (b) as subsection (c) and inserting after
subsection (a) the following new subsection:
``(b) Qualified Timber Gain Not Taken Into Account.--For
purposes of this section, in the case of a corporation with
respect to which an election is in effect under section 1203,
the net capital gain for any taxable year shall be reduced
(but not below zero) by the corporation's qualified timber
gain (as defined in section 1203(b)).''.
(c) Deduction Allowed Whether or Not Individual Itemizes
Other Deductions.--Subsection (a) of section 62 is amended by
inserting before the last sentence the following new
paragraph:
``(21) Qualified timber gains.--The deduction allowed by
section 1203.''.
(d) Deduction Allowed in Computing Adjusted Current
Earnings.--Subparagraph (C) of section 56(g)(4) is amended by
adding at the end the following new clause:
``(vii) Deduction for qualified timber gain.--Clause (i)
shall not apply to any deduction allowed under section
1203.''.
(e) Deduction Allowed in Computing Taxable Income of
Electing Small Business Trusts.--Subparagraph (C) of section
641(c)(2) is amended by inserting after clause (iii) the
following new clause:
``(iv) The deduction allowed under section 1203.''.
(f) Conforming Amendments.--
(1) Subparagraph (B) of section 172(d)(2) is amended to
read as follows:
``(B) the exclusion under section 1202 and the deduction
under section 1203 shall not be allowed.''.
(2) Paragraph (4) of section 642(c) is amended by striking
the first sentence and inserting the following: ``To the
extent that the amount otherwise allowable as a deduction
under this subsection consists of gain described in section
1202(a) or qualified timber gain (as defined in section
1203(b)), proper adjustment shall be made for any exclusion
allowable to the estate or trust under section 1202 and for
any deduction allowable to the estate or trust under section
1203.''
(3) Paragraph (3) of section 643(a) is amended by striking
the last sentence and inserting the following: ``The
exclusion under section 1202 and the deduction under section
1203 shall not be taken into account.''
(4) Subparagraph (C) of section 643(a)(6) is amended to
read as follows:
``(C) Paragraph (3) shall not apply to a foreign trust. In
the case of such a trust--
``(i) there shall be included gains from the sale or
exchange of capital assets, reduced by losses from such sales
or exchanges to the extent such losses do not exceed gains
from such sales or exchanges, and
``(ii) the deduction under section 1203 shall not be taken
into account.''.
(5) Paragraph (4) of section 691(c) is amended by inserting
``1203,'' after ``1202,''.
(6) Paragraph (2) of section 871(a) is amended by inserting
``and 1203'' after ``section 1202''.
(7) The table of sections for part I of subchapter P of
chapter 1 is amended by adding at the end the following new
item:

``Sec. 1203. Deduction for qualified timber gain.''.

(g) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment
of this Act and before January 1, 2009.
(2) Taxable years which include date of enactment.--In the
case of any taxable year which includes the date of the
enactment of this Act, for purposes of the Internal Revenue
Code of 1986, the taxpayer's qualified timber gain shall not
exceed the excess that would be described in section 1203(b)
of such Code, as added by this section, if only dispositions
of timber after such date were taken into account.
______

SA 802. Mrs. LINCOLN submitted an amendment intended to be proposed
to amendment SA 658 submitted by Mr. Grassley (for himself and Mr.
Baucus) and intended to be proposed to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the end of title V, add the following:

SEC. ___. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED
SERVICES RETIRED PAY IS REDUCED AS A RESULT OF
AWARD OF DISABILITY COMPENSATION.

(a) In General.--Subsection (d) of section 6511 (relating
to special rules applicable to income taxes) is amended by
adding at the end the following new paragraph:
``(8) Special rules when uniformed services retired pay is
reduced as a result of award of disability compensation.--
``(A) Period of limitation on filing claim.--If the claim
for credit or refund relates to an overpayment of tax imposed
by subtitle A on account of--
``(i) the reduction of uniformed services retired pay
computed under section 1406 or 1407 of title 10, United
States Code, or

[[Page S3977]]

``(ii) the waiver of such pay under section 5305 of title
38 of such Code,
as a result of an award of compensation under title 38 of
such Code pursuant to a determination by the Secretary of
Veterans Affairs, the 3-year period of limitation prescribed
in subsection (a) shall be extended, for purposes of
permitting a credit or refund based upon the amount of such
reduction or waiver, until the end of the 1-year period
beginning on the date of such determination.
``(B) Limitation to 5 taxable years.--Subparagraph (A)
shall not apply with respect to any taxable year which began
more than 5 years before the date of such determination.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to claims for credit or refund filed after the
date of the enactment of this Act.
(c) Transition Rules.--In the case of a determination
described in paragraph (8) of section 6511(d) of the Internal
Revenue Code of 1986 (as added by this section) which is made
by the Secretary of Veterans Affairs after December 31, 2000,
and before the date of the enactment of this Act, such
paragraph--
(1) shall not apply with respect to any taxable year which
began before January 1, 2001, and
(2) shall be applied by substituting ``the date of the
enactment of this paragraph'' for ``the date of such
determination'' in subparagraph (A) thereof.
(d) Penalty for Filing Erroneous Refund Claims.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6675 the following new section:

``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

``(a) Civil Penalty.--If a claim for refund or credit with
respect to income tax (other than a claim for a refund or
credit relating to the earned income credit under section 32)
is made for an excessive amount, unless it is shown that the
claim for such excessive amount has a reasonable basis, the
person making such claim shall be liable for a penalty in an
amount equal to 20 percent of the excessive amount.
``(b) Excessive Amount.--For purposes of this section, the
term `excessive amount' means in the case of any person the
amount by which the amount of the claim for refund or credit
for any taxable year exceeds the amount of such claim
allowable under this title for such taxable year.
``(c) Coordination With Other Penalties.--This section
shall not apply to any portion of the excessive amount of a
claim for refund or credit on which a penalty is imposed
under part II of subchapter A of chapter 68.''.
(2) Conforming amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by inserting after
the item relating to section 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.

(3) Effective date.--The amendments made by this subsection
shall apply to any return filed on or after January 1, 2008.

______

SA 803. Mrs. LINCOLN submitted an amendment intended to be proposed
to amendment SA 680 submitted by Mr. Kennedy (for himself, Mr. Enzi,
Mr. Baucus, and Mr. Grassley) to the bill H.R. 1591, making emergency
supplemental appropriations for the fiscal year ending September 30,
2007, and for other purposes; which was ordered to lie on the table; as
follows:

At the end of title V, add the following:

SEC. ___. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED
SERVICES RETIRED PAY IS REDUCED AS A RESULT OF
AWARD OF DISABILITY COMPENSATION.

(a) In General.--Subsection (d) of section 6511 (relating
to special rules applicable to income taxes) is amended by
adding at the end the following new paragraph:
``(8) Special rules when uniformed services retired pay is
reduced as a result of award of disability compensation.--
``(A) Period of limitation on filing claim.--If the claim
for credit or refund relates to an overpayment of tax imposed
by subtitle A on account of--
``(i) the reduction of uniformed services retired pay
computed under section 1406 or 1407 of title 10, United
States Code, or
``(ii) the waiver of such pay under section 5305 of title
38 of such Code,
as a result of an award of compensation under title 38 of
such Code pursuant to a determination by the Secretary of
Veterans Affairs, the 3-year period of limitation prescribed
in subsection (a) shall be extended, for purposes of
permitting a credit or refund based upon the amount of such
reduction or waiver, until the end of the 1-year period
beginning on the date of such determination.
``(B) Limitation to 5 taxable years.--Subparagraph (A)
shall not apply with respect to any taxable year which began
more than 5 years before the date of such determination.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to claims for credit or refund filed after the
date of the enactment of this Act.
(c) Transition Rules.--In the case of a determination
described in paragraph (8) of section 6511(d) of the Internal
Revenue Code of 1986 (as added by this section) which is made
by the Secretary of Veterans Affairs after December 31, 2000,
and before the date of the enactment of this Act, such
paragraph--
(1) shall not apply with respect to any taxable year which
began before January 1, 2001, and
(2) shall be applied by substituting ``the date of the
enactment of this paragraph'' for ``the date of such
determination'' in subparagraph (A) thereof.
(d) Penalty for Filing Erroneous Refund Claims.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6675 the following new section:

``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

``(a) Civil Penalty.--If a claim for refund or credit with
respect to income tax (other than a claim for a refund or
credit relating to the earned income credit under section 32)
is made for an excessive amount, unless it is shown that the
claim for such excessive amount has a reasonable basis, the
person making such claim shall be liable for a penalty in an
amount equal to 20 percent of the excessive amount.
``(b) Excessive Amount.--For purposes of this section, the
term `excessive amount' means in the case of any person the
amount by which the amount of the claim for refund or credit
for any taxable year exceeds the amount of such claim
allowable under this title for such taxable year.
``(c) Coordination With Other Penalties.--This section
shall not apply to any portion of the excessive amount of a
claim for refund or credit on which a penalty is imposed
under part II of subchapter A of chapter 68.''.
(2) Conforming amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by inserting after
the item relating to section 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.
(3) Effective date.--The amendments made by this subsection
shall apply to any return filed on or after January 1, 2008.

______

SA 804. Mrs. LINCOLN submitted an amendment intended to be proposed
to amendment SA 780 submitted by Mr. Grassley (for himself and Mr.
Baucus) and intended to be proposed to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the end of title V, add the following:

SEC. ___. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED
SERVICES RETIRED PAY IS REDUCED AS A RESULT OF
AWARD OF DISABILITY COMPENSATION.

(a) In General.--Subsection (d) of section 6511 (relating
to special rules applicable to income taxes) is amended by
adding at the end the following new paragraph:
``(8) Special rules when uniformed services retired pay is
reduced as a result of award of disability compensation.--
``(A) Period of limitation on filing claim.--If the claim
for credit or refund relates to an overpayment of tax imposed
by subtitle A on account of--
``(i) the reduction of uniformed services retired pay
computed under section 1406 or 1407 of title 10, United
States Code, or
``(ii) the waiver of such pay under section 5305 of title
38 of such Code,
as a result of an award of compensation under title 38 of
such Code pursuant to a determination by the Secretary of
Veterans Affairs, the 3-year period of limitation prescribed
in subsection (a) shall be extended, for purposes of
permitting a credit or refund based upon the amount of such
reduction or waiver, until the end of the 1-year period
beginning on the date of such determination.
``(B) Limitation to 5 taxable years.--Subparagraph (A)
shall not apply with respect to any taxable year which began
more than 5 years before the date of such determination.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to claims for credit or refund filed after the
date of the enactment of this Act.
(c) Transition Rules.--In the case of a determination
described in paragraph (8) of section 6511(d) of the Internal
Revenue Code of 1986 (as added by this section) which is made
by the Secretary of Veterans Affairs after December 31, 2000,
and before the date of the enactment of this Act, such
paragraph--
(1) shall not apply with respect to any taxable year which
began before January 1, 2001, and
(2) shall be applied by substituting ``the date of the
enactment of this paragraph'' for ``the date of such
determination'' in subparagraph (A) thereof.
(d) Penalty for Filing Erroneous Refund Claims.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6675 the following new section:

``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

``(a) Civil Penalty.--If a claim for refund or credit with
respect to income tax (other than a claim for a refund or
credit relating to the earned income credit under section 32)
is made for an excessive amount, unless it is

[[Page S3978]]

shown that the claim for such excessive amount has a
reasonable basis, the person making such claim shall be
liable for a penalty in an amount equal to 20 percent of the
excessive amount.
``(b) Excessive Amount.--For purposes of this section, the
term `excessive amount' means in the case of any person the
amount by which the amount of the claim for refund or credit
for any taxable year exceeds the amount of such claim
allowable under this title for such taxable year.
``(c) Coordination With Other Penalties.--This section
shall not apply to any portion of the excessive amount of a
claim for refund or credit on which a penalty is imposed
under part II of subchapter A of chapter 68.''.
(2) Conforming amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by inserting after
the item relating to section 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.
(3) Effective date.--The amendments made by this subsection
shall apply to any return filed on or after January 1, 2008.

______

SA 805. Mrs. LINCOLN submitted an amendment intended to be proposed
to amendment SA 78D submitted by Mr. Grassley (for himself and Mr.
Baucus) and intended to be proposed to the bill H.R. 1591, making
emergency supplemental appropriations for the fiscal year ending
September 30, 2007, and for other purposes; which was ordered to lie on
the table; as follows:

At the end of title V, add the following:

SEC. ___. DEDUCTION FOR QUALIFIED TIMBER GAIN.

(a) In General.--Part I of subchapter P of chapter 1 is
amended by adding at the end the following new section:

``SEC. 1203. DEDUCTION FOR QUALIFIED TIMBER GAIN.

``(a) In General.--In the case of a taxpayer which elects
the application of this section for a taxable year, there
shall be allowed a deduction against gross income equal to 60
percent of the lesser of--
``(1) the taxpayer's qualified timber gain for such year,
or
``(2) the taxpayer's net capital gain for such year.
``(b) Qualified Timber Gain.--For purposes of this section,
the term `qualified timber gain' means, with respect to any
taxpayer for any taxable year, the excess (if any) of--
``(1) the sum of the taxpayer's gains described in
subsections (a) and (b) of section 631 for such year, over
``(2) the sum of the taxpayer's losses described in such
subsections for such year.
``(c) Special Rules for Pass-Thru Entities.--In the case of
any qualified timber gain of a pass-thru entity (as defined
in section 1(h)(10)), the election under this section shall
be made separately by each taxpayer subject to tax on such
gain.''.
(b) Coordination With Maximum Capital Gains Rates.--
(1) Taxpayers other than corporations.--Paragraph (2) of
section 1(h) is amended to read as follows:
``(2) Reduction of net capital gain.--For purposes of this
subsection, the net capital gain for any taxable year shall
be reduced (but not below zero) by the sum of--
``(A) the amount which the taxpayer takes into account as
investment income under section 163(d)(4)(B)(iii), and
``(B) the lesser of--
``(i) the amount described in paragraph (1) of section
1203(a), or
``(ii) the amount described in paragraph (2) of such
section.''.
(2) Corporations.--Section 1201 is amended by redesignating
subsection (b) as subsection (c) and inserting after
subsection (a) the following new subsection:
``(b) Qualified Timber Gain Not Taken Into Account.--For
purposes of this section, in the case of a corporation with
respect to which an election is in effect under section 1203,
the net capital gain for any taxable year shall be reduced
(but not below zero) by the corporation's qualified timber
gain (as defined in section 1203(b)).''.
(c) Deduction Allowed Whether or Not Individual Itemizes
Other Deductions.--Subsection (a) of section 62 is amended by
inserting before the last sentence the following new
paragraph:
``(21) Qualified timber gains.--The deduction allowed by
section 1203.''.
(d) Deduction Allowed in Computing Adjusted Current
Earnings.--Subparagraph (C) of section 56(g)(4) is amended by
adding at the end the following new clause:
``(vii) Deduction for qualified timber gain.--Clause (i)
shall not apply to any deduction allowed under section
1203.''.
(e) Deduction Allowed in Computing Taxable Income of
Electing Small Business Trusts.--Subparagraph (C) of section
641(c)(2) is amended by inserting after clause (iii) the
following new clause:
``(iv) The deduction allowed under section 1203.''.
(f) Conforming Amendments.--
(1) Subparagraph (B) of section 172(d)(2) is amended to
read as follows:
``(B) the exclusion under section 1202 and the deduction
under section 1203 shall not be allowed.''.
(2) Paragraph (4) of section 642(c) is amended by striking
the first sentence and inserting the following: ``To the
extent that the amount otherwise allowable as a deduction
under this subsection consists of gain described in section
1202(a) or qualified timber gain (as defined in section
1203(b)), proper adjustment shall be made for any exclusion
allowable to the estate or trust under section 1202 and for
any deduction allowable to the estate or trust under section
1203.''
(3) Paragraph (3) of section 643(a) is amended by striking
the last sentence and inserting the following: ``The
exclusion under section 1202 and the deduction under section
1203 shall not be taken into account.''
(4) Subparagraph (C) of section 643(a)(6) is amended to
read as follows:
``(C) Paragraph (3) shall not apply to a foreign trust. In
the case of such a trust--
``(i) there shall be included gains from the sale or
exchange of capital assets, reduced by losses from such sales
or exchanges to the extent such losses do not exceed gains
from such sales or exchanges, and
``(ii) the deduction under section 1203 shall not be taken
into account.''.
(5) Paragraph (4) of section 691(c) is amended by inserting
``1203,'' after ``1202,''.
(6) Paragraph (2) of section 871(a) is amended by inserting
``and 1203'' after ``section 1202''.
(7) The table of sections for part I of subchapter P of
chapter 1 is amended by adding at the end the following new
item:

``Sec. 1203. Deduction for qualified timber gain.''.

(g) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment
of this Act and before January 1, 2009.
(2) Taxable years which include date of enactment.--In the
case of any taxable year which includes the date of the
enactment of this Act, for purposes of the Internal Revenue
Code of 1986, the taxpayer's qualified timber gain shall not
exceed the excess that would be described in section 1203(b)
of such Code, as added by this section, if only dispositions
of timber after such date were taken into account.

______

SA 806. Mr. THOMAS submitted an amendment intended to be proposed to
amendment SA 675 submitted by Mr. Thomas and intended to be proposed to
the bill H.R. 1591, making emergency supplemental appropriations for
the fiscal year ending September 30, 2007, and for other purposes;
which was ordered to lie on the table; as follows:

On page 1, line 2, strike ``any other provision'' and all
that follows and insert the following: ``any other provision
of this Act, the following amounts provided in this Act are
rescinded and shall be null and void:
``(1) $24,000,000 for funding sugar beets.
``(2) $3,000,000 for funding for sugar cane.
``(3) $20,000,000 for insect infestation damage
reimbursements in Nevada, Idaho, and Utah.
``(4) $2,100,000,000 for crop production losses.
``(5) $1,500,000,000 for livestock production losses.
``(6) $100,000,000 for Dairy Production losses.
``(7) $13,000,000 for Ewe Lamb Replacement and Retention
program.
``(8) $32,000,000 for Livestock Indemnity program.
``(9) $40,000,000 for the Tree Assistance program.
``(10) $100,000,000 million for Small Agricultural
Dependent Businesses.
``(11) $6,000,000 for North Dakota flooded crop land.
``(12) $35,000,000 for emergency conservation program.
``(13) $50,000,000 for the emergency watershed program.
``(14) $115,000,000 for the conservation security program.
``(15) $18,000,000 for drought assistance in upper Great
Plains/South West.
``(16) Provisions that extend the availability by a year
$3,500,000 in funding for guided tours of the Capitol. Also a
provision allows transfer of funds from holiday ornament
sales in the Senate gift shop.
``(17) $165,900,000 for fisheries disaster relief, funded
through NOAA.
``(18) $12,000,000 for forest service money (requested by
the President in the non-emergency fiscal year 2008 budget).
``(19) $425,000,000 for education grants for rural areas-
(Secure Rural Schools program).
``(20) $640,000,000 for LIHEAP.
``(21) $25,000,000 for asbestos abatement at the Capitol
Power Plant.
``(22) $388,900,000 for funding for backlog of old
Department of Transportation projects.
``(23) $22,800,000 for geothermal research and development.
``(24) $500,000,000 for wildland fire management.
``(25) $13,000,000 for mine safety technology research.
``(26) $31,000,000 for 1 month extension of Milk Income
Loss Contract program (MILC).
``(27) $50,000,000 for fisheries disaster mitigation fund.
``(28) Subsections (a) and (b) of section 1315 (Iraq
withdraw).
``(29) Any provision relating to Hurricane Katrina,
Hurricane Rita, Hurricane Wilma, or Hurricane Dennis
emergency assistance.
``(30) $100,000,000 for the 2008 Presidential Candidate
Nominating Conventions.
``(31) $660,000,000 for Aviation Security for procurement
and installation related to baggage systems and air cargo
security.

[[Page S3979]]

``(32) $850,000,000 for State and Local Programs for
regional grants and technical assistance.
``(33) $15,000,000 for Research, Development, Acquisition,
and Operations for air cargo research.
``(34) $39,000,000 for Research, Development, and
Operations for non-container, rail, aviation and intermodal
radiation detection activities.
``(35) $820,000,000 for Public Health and Social Services
Emergency Fund for influenza pandemic.
``(36) $170,000,000 for State and Local Law Enforcement
Assistance for discretionary grants.
``(b) Notwithstanding any other provision of this Act, the
following provisions of this Act shall be null and void:
``(1) Any provision relating to the Federal minimum wage
and any related changes to the Internal Revenue Code of 1986.
``(2) Sections 2704, 2705, and 2706, relating to SCHIP
funding.''.

____________________