S. 414Senate108th Congress (2003-2005)Introduced

Economic Recovery Act of 2003

Introduced February 14, 2003

Legislative Activity

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2 earlier actions
SenateCalendars Latest Action

Read the second time. Placed on Senate Legislative Calendar under General Orders. Calendar No. 21.

February 24, 2003

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SenateIntro Referral

Introduced in Senate

February 14, 2003

SenateCalendars

Introduced in the Senate. Read the first time. Placed on Senate Legislative Calendar under Read the First Time. (text of measure as introduced: CR S2523-2537)

February 14, 2003

SenateCalendars

Read the second time. Placed on Senate Legislative Calendar under General Orders. Calendar No. 21.

February 24, 2003

Floor Debate

19 members

What members said about S. 414 on the floor

7 Republicans12 Democrats
Byron L. Dorgan
Sen. Byron L. DorganD-ND · Feb 26, 2003

Mr. President, I hope I perhaps am one of those clear thinkers and ``reasonable'' people the Senator from Utah was referring to. I suspect there are a good many in this Chamber who are self-…

Orrin G. Hatch
Sen. Orrin G. HatchR-UT · Feb 26, 2003

Mr. President, I have been interested in the approach by the other side. Yesterday, they came on the floor and said, oh, my goodness, we should get rid of this because we have so many important…

Harry Reid
Sen. Harry ReidD-NV · Feb 25, 2003

Will the Senator yield for a question? I have listened on the floor and off the floor to the Senator's statement, and especially about Medicare and Medicaid. I ask the Senator, we have heard now for…

Larry E. Craig
Sen. Larry E. CraigR-ID · Feb 25, 2003

Mr. President, the Senator from Nevada has asked that we vote on Miguel Estrada. I ask unanimous consent that we proceed to a vote on Miguel Estrada now. Mr. President, I object and restate my…

Arlen Specter
Sen. Arlen SpecterR-PA · Feb 26, 2003

Mr. President, I have sought recognition to support the confirmation of Miguel Estrada to be a judge for the Court of Appeals for the District of Columbia Circuit. We are seeing a Democratic…

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Hillary Rodham Clinton
Sen. Hillary Rodham ClintonD-NY · Feb 25, 2003

Madam President, I thank the Senator from Utah for his kindness and consideration with respect to the order. I was happy to have the opportunity to hear him, as I often am. With respect to the…

Charles E. Schumer
Sen. Charles E. SchumerD-NY · Feb 26, 2003

Mr. President, will my colleague yield for a unanimous consent request? I understand, Mr. President, that there has already been a request that Senator Specter immediately follow Senator Dorgan. I…

Thomas A. Daschle
Sen. Thomas A. DaschleD-SD · Feb 25, 2003

Mr. President, I was home in South Dakota over the last week, and I had the opportunity to talk with farmers and ranchers, businesspeople, educators, and government leaders. What I bring back from…

Robert F. Bennett
Sen. Robert F. BennettR-UT · Feb 25, 2003

Madam President, I understand that the Senator from New York wishes to speak. I don't wish to delay her, but in the spirit of going back and forth, I have sought to be recognized. I will not take a…

Jim Talent
Sen. Jim TalentR-MO · Feb 25, 2003

When I was growing up, there was a tradition in the Senate that I observed as an outsider, of course, about how the Senate handled its constitutional function of giving advice and consent for…

Thomas A. Daschle
Sen. Thomas A. DaschleD-SD · Feb 14, 2003

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record. Mr. President, today I am introducing the Wind Cave National Park Boundary Revision Act of 2003. The Senate…

Orrin G. Hatch
Sen. Orrin G. HatchR-UT · Feb 25, 2003

Mr. President, I object. Mr. President, I have heard these crocodile tears on the other side. It is amazing to me because they know what a phony issue is--the request for confidential and privileged…

Patrick J. Leahy
Sen. Patrick J. LeahyD-VT · Feb 25, 2003

Mr. President, I rise today in support of Democratic Leader Daschle's request to bring before the Senate the Economic Recovery Act of 2003, S. 414, which includes legislation I introduced last month:…

Show 11 more
Richard J. Durbin
Sen. Richard J. DurbinD-IL · Feb 25, 2003

Mr. President, first, let me respond to my colleague and friend from the State of Missouri which adjoins my home State of Illinois. I say to him, I do not disagree with many of the things he said.…

Rick Santorum
Sen. Rick SantorumR-PA · Feb 14, 2003

Mr. President, I rise today to introduce the Partial Birth Abortion Ban Act of 2003. I am joined in introducing this bill by 38 of my colleagues, over a third of the Senate. This bill is written to…

Charles E. Schumer
Sen. Charles E. SchumerD-NY · Feb 25, 2003

Will the Senator yield? Two questions. I want to follow up again on what the Senator from South Dakota said in the dialog with my colleague from Illinois. First, I know the Estrada judge issue has…

Susan M. Collins
Sen. Susan M. CollinsR-ME · Feb 14, 2003

Mr. President, I am pleased to join with my colleague from Wisconsin, Senator Feingold, in introducing legislation to prohibit health insurers from denying benefits to plan participants if they are…

Richard J. Durbin
Sen. Richard J. DurbinD-IL · Feb 25, 2003

Will the Senator from South Dakota yield? I thank the minority leader for coming to the floor, and I hope those who are following the debate understand what just happened. The minority leader of the…

Maria Cantwell
Sen. Maria CantwellD-WA · Feb 14, 2003

Mr. President, I rise today to introduce--along with my colleagues Senators Smith, Murray and Feinstein--the Renewable Energy Production Incentive, REPI, Reform Act. This bill reauthorizes the REPI…

Jon S. Corzine
Sen. Jon S. CorzineD-NJ · Feb 25, 2003

Will the minority leader yield for a question? I truly appreciate the focus on issues that matter directly to the people who live in our States and who live across the country. The Senator spoke…

Jeff Bingaman
Sen. Jeff BingamanD-NM · Feb 14, 2003

Mr. President, today I am introducing a bipartisan bill to address the energy needs of Native Americans in this country. In doing so, I hope to build upon the widespread support for these provisions…

Russell D. Feingold
Sen. Russell D. FeingoldD-WI · Feb 14, 2003

Mr. President, I rise today with my colleague from Maine to introduce legislation to promote health care parity for individuals participating in legal transportation and recreational activities. This…

Edward M. Kennedy
Sen. Edward M. KennedyD-MA · Feb 25, 2003

I am glad to. Absolutely not. And your observation goes right to the heart of the central issue that we have in the Senate; that this is a question of choices. It is a question of priorities. It is a…

Byron L. Dorgan
Sen. Byron L. DorganD-ND · Feb 25, 2003

Will the Senator yield for a unanimous consent request? I ask unanimous consent that I may speak following the speech of the Senator from New York. Reserving the right to object, I have not followed…

Bill Text

2 versions available

Reading Mode
Latest
Placed on Calendar SenateIssued February 24, 2003
        [Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 414 Placed on Calendar Senate (PCS)]

Calendar No. 21
108th CONGRESS
1st Session
S. 414

To provide an economic stimulus package, and for other purposes.

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

February 14, 2003

Mr. Daschle introduced the following bill; which was read the first
time

February 24, 2003

Read the second time and placed on the calendar

_______________________________________________________________________

A BILL

To provide an economic stimulus package, and for other purposes.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Economic Recovery
Act of 2003''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--

Sec. 1. Short title; amendment of 1986 Code; table of contents.
TITLE I--BROAD-BASED TAX CUT

Sec. 101. Broad-based tax cut.
TITLE II--BUSINESS TAX CUT

Sec. 201. Increased bonus depreciation.
Sec. 202. Modifications to expensing under section 179.
Sec. 203. Credit for employee health insurance expenses.
Sec. 204. Broadband Internet access tax credit.
TITLE III--STATE FISCAL RELIEF

Sec. 301. General revenue sharing with States and their local
governments.
Sec. 302. Homeland security.
Sec. 303. Funding for education.
Sec. 304. Temporary State FMAP relief.
Sec. 305. Funding for transportation infrastructure.
TITLE IV--UNEMPLOYMENT ASSISTANCE

Subtitle A--Additional Weeks of Temporary Extended Unemployment
Compensation

Sec. 401. Entitlement to additional weeks of temporary extended
unemployment compensation.
Subtitle B--Temporary Enhanced Regular Unemployment Compensation

Sec. 411. Federal-State agreements.
Sec. 412. Payments to States having agreements under this title.
Sec. 413. Financing provisions.
Sec. 414. Definitions.
Sec. 415. Applicability.
Sec. 416. Coordination with the Temporary Extended Unemployment
Compensation Act of 2002.
TITLE V--LONG-TERM FISCAL DISCIPLINE

Subtitle A--Provisions Designed To Curtail Tax Shelters

Sec. 501. Clarification of economic substance doctrine.
Sec. 502. Penalty for failing to disclose reportable transaction.
Sec. 503. Accuracy-related penalty for listed transactions and other
reportable transactions having a
significant tax avoidance purpose.
Sec. 504. Penalty for understatements attributable to transactions
lacking economic substance, etc.
Sec. 505. Modifications of substantial understatement penalty for
nonreportable transactions.
Sec. 506. Tax shelter exception to confidentiality privileges relating
to taxpayer communications.
Sec. 507. Disclosure of reportable transactions.
Sec. 508. Modifications to penalty for failure to register tax
shelters.
Sec. 509. Modification of penalty for failure to maintain lists of
investors.
Sec. 510. Modification of actions to enjoin certain conduct related to
tax shelters and reportable transactions.
Sec. 511. Understatement of taxpayer's liability by income tax return
preparer.
Sec. 512. Penalty on failure to report interests in foreign financial
accounts.
Sec. 513. Frivolous tax submissions.
Sec. 514. Regulation of individuals practicing before the Department of
Treasury.
Sec. 515. Penalty on promoters of tax shelters.
Sec. 516. Statute of limitations for taxable years for which listed
transactions not reported.
Sec. 517. Denial of deduction for interest on underpayments
attributable to nondisclosed reportable and
noneconomic substance transactions.
Sec. 518. Authorization of appropriations for tax law enforcement.
Subtitle B--Other Provisions

Sec. 521. Affirmation of consolidated return regulation authority.
Sec. 522. Signing of corporate tax returns by chief executive officer.
Sec. 523. Disclosure of tax shelters to corporate audit committee.
Subtitle C--Budget Points of Order

Sec. 531. Extension of pay-as-you-go enforcement in the Senate.

TITLE I--BROAD-BASED TAX CUT

SEC. 101. BROAD-BASED TAX CUT.

(a) In General.--The Secretary of the Treasury shall pay, out of
any money in the Treasury not otherwise appropriated, to each eligible
taxpayer an amount equal to 10 percent of the eligible portion of the
taxpayer's adjusted gross income (as defined in section 62 of the
Internal Revenue Code of 1986) for a taxable year beginning in 2002.
(b) Eligible Taxpayer.--For purposes of this section, the term
``eligible taxpayer'' means any individual other than--
(1) any estate or trust,
(2) any nonresident alien, or
(3) any individual with respect to whom a deduction under
section 151 of such Code is allowable to another taxpayer for a
taxable year beginning in 2003.
(c) Eligible Portion.--For purposes of this section--
(1) In general.--With respect to each eligible taxpayer,
the eligible portion shall be equal to the sum of--
(A) $3,000 ($6,000 in the case of a taxpayer filing
a joint return under section 6013 of such Code), plus
(B) $3,000 for each qualifying child of the
taxpayer, not to exceed $6,000.
(2) Qualifying child.--The term ``qualifying child'' has
the meaning given such term by section 24(c) of such Code.
(d) Remittance of Payment.--The Secretary of the Treasury shall
remit the payment described in subsection (a) to the taxpayer as soon
as practicable after the date of the enactment of this section.

TITLE II--BUSINESS TAX CUT

SEC. 201. INCREASED BONUS DEPRECIATION.

(a) In General.--Subsection (k) of section 168 (relating to
accelerated cost recovery system) is amended--
(1) by adding at the end of paragraph (1) the following new
flush sentence:
``In the case of any qualified property acquired by the
taxpayer pursuant to a written binding contract which was
entered into after December 31, 2002, subparagraph (A) shall be
applied by substituting `50 percent' for `30 percent'.'',
(2) by striking ``September 11, 2004'' each place it
appears and inserting ``January 1, 2004'',
(3) by striking ``September 11, 2004'' and inserting
``January 1, 2004'', and
(4) by striking ``pre-september 11, 2004'' and inserting
``pre-january 1, 2004''.
(b) Conforming Amendments.--
(1) The heading for clause (i) of section 1400L(b)(2)(C) of
the Internal Revenue Code of 1986 is amended by striking ``30
percent additional'' and inserting ``Additional''.
(2) Section 1400L(b)(2)(D) of such Code is amended by
inserting ``(as in effect on the day after the date of the
enactment of this section)'' after ``section 168(k)(2)(D)''.
(c) Effective Date.--The amendments made by this section shall
apply to property acquired after December 31, 2002.

SEC. 202. MODIFICATIONS TO EXPENSING UNDER SECTION 179.

(a) Increase of Amount Which May Be Expensed.--
(1) In general.--Paragraph (1) of section 179(b) (relating
to dollar limitation) is amended to read as follows:
``(1) Dollar limitation.--The aggregate cost which may be
taken into account under subsection (a) for any taxable year
shall not exceed $25,000 ($75,000 in the case of any taxable
year beginning in 2003).''
(2) Increase in phaseout threshold.--Paragraph (2) of
section 179(b) is amended by striking ``$200,000'' and
inserting ``$200,000 ($325,000 in the case of any taxable year
beginning in 2003)''.
(b) Effective Date.--The amendments made by this section shall
apply to property placed in service in taxable years beginning after
December 31, 2002.

SEC. 203. CREDIT FOR EMPLOYEE HEALTH INSURANCE EXPENSES.

(a) In General.--Subpart D of part IV of subchapter A of chapter 1
(relating to business-related credits) is amended by adding at the end
the following:

``SEC. 45G. EMPLOYEE HEALTH INSURANCE EXPENSES.

``(a) General Rule.--For purposes of section 38, in the case of a
qualified small employer, the employee health insurance expenses credit
determined under this section is an amount equal to the applicable
percentage of the amount paid by the taxpayer during the taxable year
for qualified employee health insurance expenses.
``(b) Applicable Percentage.--For purposes of subsection (a), the
applicable percentage is equal to--
``(1) 50 percent in the case of an employer with less than
26 qualified employees,
``(2) 40 percent in the case of an employer with more than
25 but less than 36 qualified employees, and
``(3) 30 percent in the case of an employer with more than
35 but less than 51 qualified employees.
``(c) Per Employee Dollar Limitation.--The amount of qualified
employee health insurance expenses taken into account under subsection
(a) with respect to any qualified employee for any taxable year shall
not exceed the maximum employer contribution for self-only coverage or
family coverage (as applicable) determined under section 8906(a) of
title 5, United States Code, for the calendar year in which such
taxable year begins.
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Qualified small employer.--
``(A) In general.--The term `qualified small
employer' means any small employer which provides
eligibility for health insurance coverage (after any
waiting period (as defined in section 9801(b)(4)) to
all qualified employees of the employer.
``(B) Small employer.--
``(i) In general.--For purposes of this
paragraph, the term `small employer' means,
with respect to any calendar year, any employer
if such employer employed an average of not
less than 2 and not more than 50 qualified
employees on business days during either of the
2 preceding calendar years. For purposes of the
preceding sentence, a preceding calendar year
may be taken into account only if the employer
was in existence throughout such year.
``(ii) Employers not in existence in
preceding year.--In the case of an employer
which was not in existence throughout the 1st
preceding calendar year, the determination
under clause (i) shall be based on the average
number of qualified employees that it is
reasonably expected such employer will employ
on business days in the current calendar year.
``(2) Qualified employee health insurance expenses.--
``(A) In general.--The term `qualified employee
health insurance expenses' means any amount paid by an
employer for health insurance coverage to the extent
such amount is attributable to coverage provided to any
employee while such employee is a qualified employee.
``(B) Exception for amounts paid under salary
reduction arrangements.--No amount paid or incurred for
health insurance coverage pursuant to a salary
reduction arrangement shall be taken into account under
subparagraph (A).
``(C) Health insurance coverage.--The term `health
insurance coverage' has the meaning given such term by
paragraph (1) of section 9832(b) (determined by
disregarding the last sentence of paragraph (2) of such
section).
``(3) Qualified employee.--The term `qualified employee'
means an employee of an employer who, with respect to any
period, is not provided health insurance coverage under--
``(A) a health plan of the employee's spouse,
``(B) title XVIII, XIX, or XXI of the Social
Security Act,
``(C) chapter 17 of title 38, United States Code,
``(D) chapter 55 of title 10, United States Code,
``(E) chapter 89 of title 5, United States Code, or
``(F) any other provision of law.
``(4) Employee--The term `employee'--
``(A) means any individual, with respect to any
calendar year, who is reasonably expected to receive at
least $5,000 of compensation from the employer during
such year,
``(B) does not include an employee within the
meaning of section 401(c)(1), and
``(C) includes a leased employee within the meaning
of section 414(n).
``(5) Compensation.--The term `compensation' means amounts
described in section 6051(a)(3).
``(e) Certain Rules Made Applicable.--For purposes of this section,
rules similar to the rules of section 52 shall apply.
``(f) Denial of Double Benefit.--No deduction or credit under any
other provision of this chapter shall be allowed with respect to
qualified employee health insurance expenses taken into account under
subsection (a).
``(g) Termination.--This section shall not apply to taxable years
beginning after December 31, 2003.''.
(b) Credit To Be Part of General Business Credit.--Section 38(b)
(relating to current year business credit) is amended by striking
``plus'' at the end of paragraph (14), by striking the period at the
end of paragraph (15) and inserting ``, plus'', and by adding at the
end the following:
``(16) the employee health insurance expenses credit
determined under section 45G.''.
(c) Credit Allowed Against Minimum Tax.--
(1) In general.--Subsection (c) of section 38 (relating to
limitation based on amount of tax) is amended by redesignating
paragraph (3) as paragraph (4) and by inserting after paragraph
(2) the following new paragraph:
``(3) Special rules for employee health insurance credit.--
``(A) In general.--In the case of the employee
health insurance credit--
``(i) this section and section 39 shall be
applied separately with respect to the credit,
and
``(ii) in applying paragraph (1) to the
credit--
``(I) the amounts in subparagraphs
(A) and (B) thereof shall be treated as
being zero, and
``(II) the limitation under
paragraph (1) (as modified by subclause
(I)) shall be reduced by the credit
allowed under subsection (a) for the
taxable year (other than the employee
health insurance credit).
``(B) Employee health insurance credit.--For
purposes of this subsection, the term `employee health
insurance credit' means the credit allowable under
subsection (a) by reason of section 45G(a).''.
(2) Conforming amendment.--Subclause (II) of section
38(c)(2)(A)(ii) is amended by striking ``(other'' and all that
follows through ``credit)'' and inserting ``(other than the
empowerment zone employment credit or the employee health
insurance credit)''.
(d) No Carrybacks.--Subsection (d) of section 39 (relating to
carryback and carryforward of unused credits) is amended by adding at
the end the following:
``(11) No carryback of section 45g credit before effective
date.--No portion of the unused business credit for any taxable
year which is attributable to the employee health insurance
expenses credit determined under section 45G may be carried
back to a taxable year ending before the date of the enactment
of section 45G.''.
(e) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amended by adding at the end
the following:

``Sec. 45G. Employee health insurance
expenses.''.
(f) Employer Outreach.--The Internal Revenue Service shall, in
conjunction with the Small Business Administration, develop materials
and implement an educational program to ensure that business personnel
are aware of--
(1) the eligibility criteria for the tax credit provided
under section 45G of the Internal Revenue Code of 1986 (as
added by this section),
(2) the methods to be used in calculating such credit,
(3) the documentation needed in order to claim such credit,
and
(4) any available health plan purchasing alliances
established under title II,
so that the maximum number of eligible businesses may claim the tax
credit.
(g) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after
December 31, 2002.

SEC. 204. BROADBAND INTERNET ACCESS TAX CREDIT.

(a) In General.--Subpart E of part IV of chapter 1 (relating to
rules for computing investment credit) is amended by inserting after
section 48 the following new section:

``SEC. 48A. BROADBAND INTERNET ACCESS CREDIT.

``(a) General Rule.--For purposes of section 46, the broadband
credit for any taxable year is the sum of--
``(1) the current generation broadband credit, plus
``(2) the next generation broadband credit.
``(b) Current Generation Broadband Credit; Next Generation
Broadband Credit.--For purposes of this section--
``(1) Current generation broadband credit.--The current
generation broadband credit for any taxable year is equal to 10
percent of the qualified expenditures incurred with respect to
qualified equipment providing current generation broadband
services to qualified subscribers and taken into account with
respect to such taxable year.
``(2) Next generation broadband credit.--The next
generation broadband credit for any taxable year is equal to 20
percent of the qualified expenditures incurred with respect to
qualified equipment providing next generation broadband
services to qualified subscribers and taken into account with
respect to such taxable year.
``(c) When Expenditures Taken Into Account.--For purposes of this
section--
``(1) In general.--Qualified expenditures with respect to
qualified equipment shall be taken into account with respect to
the first taxable year in which--
``(A) current generation broadband services are
provided through such equipment to qualified
subscribers, or
``(B) next generation broadband services are
provided through such equipment to qualified
subscribers.
``(2) Limitation.--
``(A) In general.--Qualified expenditures shall be
taken into account under paragraph (1) only with
respect to qualified equipment--
``(i) the original use of which commences
with the taxpayer, and
``(ii) which is placed in service,
after December 31, 2002.
``(B) Sale-leasebacks.--For purposes of
subparagraph (A), if property--
``(i) is originally placed in service after
December 31, 2002, by a person, and
``(ii) sold and leased back by such person
within 3 months after the date such property
was originally placed in service,
such property shall be treated as originally placed in
service not earlier than the date on which such
property is used under the leaseback referred to in
clause (ii).
``(d) Special Allocation Rules.--
``(1) Current generation broadband services.--For purposes
of determining the current generation broadband credit under
subsection (a)(1) with respect to qualified equipment through
which current generation broadband services are provided, if
the qualified equipment is capable of serving both qualified
subscribers and other subscribers, the qualified expenditures
shall be multiplied by a fraction--
``(A) the numerator of which is the sum of the
number of potential qualified subscribers within the
rural areas and the underserved areas which the
equipment is capable of serving with current generation
broadband services, and
``(B) the denominator of which is the total
potential subscriber population of the area which the
equipment is capable of serving with current generation
broadband services.
``(2) Next generation broadband services.--For purposes of
determining the next generation broadband credit under
subsection (a)(2) with respect to qualified equipment through
which next generation broadband services are provided, if the
qualified equipment is capable of serving both qualified
subscribers and other subscribers, the qualified expenditures
shall be multiplied by a fraction--
``(A) the numerator of which is the sum of--
``(i) the number of potential qualified
subscribers within the rural areas and
underserved areas, plus
``(ii) the number of potential qualified
subscribers within the area consisting only of
residential subscribers not described in clause
(i),
which the equipment is capable of serving with next
generation broadband services, and
``(B) the denominator of which is the total
potential subscriber population of the area which the
equipment is capable of serving with next generation
broadband services.
``(e) Definitions.--For purposes of this section--
``(1) Antenna.--The term `antenna' means any device used to
transmit or receive signals through the electromagnetic
spectrum, including satellite equipment.
``(2) Cable operator.--The term `cable operator' has the
meaning given such term by section 602(5) of the Communications
Act of 1934 (47 U.S.C. 522(5)).
``(3) Commercial mobile service carrier.--The term
`commercial mobile service carrier' means any person authorized
to provide commercial mobile radio service as defined in
section 20.3 of title 47, Code of Federal Regulations.
``(4) Current generation broadband service.--The term
`current generation broadband service' means the transmission
of signals at a rate of at least 1,000,000 bits per second to
the subscriber and at least 128,000 bits per second from the
subscriber.
``(5) Multiplexing or demultiplexing.--The term
`multiplexing' means the transmission of 2 or more signals over
a single channel, and the term `demultiplexing' means the
separation of 2 or more signals previously combined by
compatible multiplexing equipment.
``(6) Next generation broadband service.--The term `next
generation broadband service' means the transmission of signals
at a rate of at least 22,000,000 bits per second to the
subscriber and at least 5,000,000 bits per second from the
subscriber.
``(7) Nonresidential subscriber.--The term `nonresidential
subscriber' means a person who purchases broadband services
which are delivered to the permanent place of business of such
person.
``(8) Open video system operator.--The term `open video
system operator' means any person authorized to provide service
under section 653 of the Communications Act of 1934 (47 U.S.C.
573).
``(9) Other wireless carrier.--The term `other wireless
carrier' means any person (other than a telecommunications
carrier, commercial mobile service carrier, cable operator,
open video system operator, or satellite carrier) providing
current generation broadband services or next generation
broadband service to subscribers through the wireless
transmission of energy through radio or light waves.
``(10) Packet switching.--The term `packet switching' means
controlling or routing the path of a digitized transmission
signal which is assembled into packets or cells.
``(11) Provider.--The term `provider' means, with respect
to any qualified equipment--
``(A) a cable operator,
``(B) a commercial mobile service carrier,
``(C) an open video system operator,
``(D) a satellite carrier,
``(E) a telecommunications carrier, or
``(F) any other wireless carrier,
providing current generation broadband services or next
generation broadband services to subscribers through such
qualified equipment.
``(12) Provision of services.--A provider shall be treated
as providing services to a subscriber if--
``(A) a subscriber has been passed by the
provider's equipment and can be connected to such
equipment for a standard connection fee,
``(B) the provider is physically able to deliver
current generation broadband services or next
generation broadband services, as applicable, to such
subscribers without making more than an insignificant
investment with respect to any such subscriber,
``(C) the provider has made reasonable efforts to
make such subscribers aware of the availability of such
services,
``(D) such services have been purchased by one or
more such subscribers, and
``(E) such services are made available to such
subscribers at average prices comparable to those at
which the provider makes available similar services in
any areas in which the provider makes available such
services.
``(13) Qualified equipment.--
``(A) In general.--The term `qualified equipment'
means equipment which provides current generation
broadband services or next generation broadband
services--
``(i) at least a majority of the time
during periods of maximum demand to each
subscriber who is utilizing such services, and
``(ii) in a manner substantially the same
as such services are provided by the provider
to subscribers through equipment with respect
to which no credit is allowed under subsection
(a)(1).
``(B) Only certain investment taken into account.--
Except as provided in subparagraph (C) or (D),
equipment shall be taken into account under
subparagraph (A) only to the extent it--
``(i) extends from the last point of
switching to the outside of the unit, building,
dwelling, or office owned or leased by a
subscriber in the case of a telecommunications
carrier,
``(ii) extends from the customer side of
the mobile telephone switching office to a
transmission/receive antenna (including such
antenna) owned or leased by a subscriber in the
case of a commercial mobile service carrier,
``(iii) extends from the customer side of
the headend to the outside of the unit,
building, dwelling, or office owned or leased
by a subscriber in the case of a cable operator
or open video system operator, or
``(iv) extends from a transmission/receive
antenna (including such antenna) which
transmits and receives signals to or from
multiple subscribers, to a transmission/receive
antenna (including such antenna) on the outside
of the unit, building, dwelling, or office
owned or leased by a subscriber in the case of
a satellite carrier or other wireless carrier,
unless such other wireless carrier is also a
telecommunications carrier.
``(C) Packet switching equipment.--Packet switching
equipment, regardless of location, shall be taken into
account under subparagraph (A) only if it is deployed
in connection with equipment described in subparagraph
(B) and is uniquely designed to perform the function of
packet switching for current generation broadband
services or next generation broadband services, but
only if such packet switching is the last in a series
of such functions performed in the transmission of a
signal to a subscriber or the first in a series of such
functions performed in the transmission of a signal
from a subscriber.
``(D) Multiplexing and demultiplexing equipment.--
Multiplexing and demultiplexing equipment shall be
taken into account under subparagraph (A) only to the
extent it is deployed in connection with equipment
described in subparagraph (B) and  is uniquely designed
to perform the function of multiplexing and demultiplexing packets or
cells of data and making associated application adaptions, but only if
such multiplexing or demultiplexing equipment is located between packet
switching equipment described in subparagraph (C) and the subscriber's
premises.
``(14) Qualified expenditure.--
``(A) In general.--The term `qualified expenditure'
means any amount--
``(i) chargeable to capital account with
respect to the purchase and installation of
qualified equipment (including any upgrades
thereto) for which depreciation is allowable
under section 168, and
``(ii) incurred after December 31, 2002,
and before January 1, 2004.
``(B) Certain satellite expenditures excluded.--
Such term shall not include any expenditure with
respect to the launching of any satellite equipment.
``(15) Qualified subscriber.--The term `qualified
subscriber' means--
``(A) with respect to the provision of current
generation broadband services--
``(i) a nonresidential subscriber
maintaining a permanent place of business in a
rural area or underserved area, or
``(ii) a residential subscriber residing in
a dwelling located in a rural area or
underserved area which is not a saturated
market, and
``(B) with respect to the provision of next
generation broadband services--
``(i) a nonresidential subscriber
maintaining a permanent place of business in a
rural area or underserved area, or
``(ii) a residential subscriber.
``(16) Residential subscriber.--The term `residential
subscriber' means an individual who purchases broadband
services which are delivered to such individual's dwelling.
``(17) Rural area.--The term `rural area' means any census
tract which--
``(A) is not within 10 miles of any incorporated or
census designated place containing more than 25,000
people, and
``(B) is not within a county or county equivalent
which has an overall population density of more than
500 people per square mile of land.
``(18) Rural subscriber.--The term `rural subscriber' means
a residential subscriber residing in a dwelling located in a
rural area or nonresidential subscriber maintaining a permanent
place of business located in a rural area.
``(19) Satellite carrier.--The term `satellite carrier'
means any person using the facilities of a satellite or
satellite service licensed by the Federal Communications
Commission and operating in the Fixed-Satellite Service under
part 25 of title 47 of the Code of Federal Regulations or the
Direct Broadcast Satellite Service under part 100 of title 47
of such Code to establish and operate a channel of
communications for distribution of signals, and owning or
leasing a capacity or service on a satellite in order to
provide such distribution.
``(20) Saturated market.--The term `saturated market' means
any census tract in which, as of the date of the enactment of
this section--
``(A) current generation broadband services have
been provided by one or more providers to 85 percent or
more of the total number of potential residential
subscribers residing in dwellings located within such
census tract, and
``(B) such services can be utilized--
``(i) at least a majority of the time
during periods of maximum demand by each such
subscriber who is utilizing such services, and
``(ii) in a manner substantially the same
as such services are provided by the provider
to subscribers through equipment with respect
to which no credit is allowed under subsection
(a)(1).
``(21) Subscriber.--The term `subscriber' means a person
who purchases current generation broadband services or next
generation broadband services.
``(22) Telecommunications carrier.--The term
`telecommunications carrier' has the meaning given such term by
section 3(44) of the Communications Act of 1934 (47 U.S.C.
153(44)), but--
``(A) includes all members of an affiliated group
of which a telecommunications carrier is a member, and
``(B) does not include a commercial mobile service
carrier.
``(23) Total potential subscriber population.--The term
`total potential subscriber population' means, with respect to
any area and based on the most recent census data, the total
number of potential residential subscribers residing in
dwellings located in such area and potential nonresidential
subscribers maintaining permanent places of business located in
such area.
``(24) Underserved area.--The term `underserved area' means
any census tract which is located in--
``(A) an empowerment zone or enterprise community
designated under section 1391,
``(B) the District of Columbia Enterprise Zone
established under section 1400,
``(C) a renewal community designated under section
1400E, or
``(D) a low-income community designated under
section 45D.
``(25) Underserved subscriber.--The term `underserved
subscriber' means a residential subscriber residing in a
dwelling located in an underserved area or nonresidential
subscriber maintaining a permanent place of business located in
an underserved area.''.
(b) Credit To Be Part of Investment Credit.--Section 46 (relating
to the amount of investment credit) is amended by striking ``and'' at
the end of paragraph (2), by striking the period at the end of
paragraph (3) and inserting ``, and'', and by adding at the end the
following:
``(4) the broadband Internet access credit.''
(c) Special Rule for Mutual or Cooperative Telephone Companies.--
Section 501(c)(12)(B) (relating to list of exempt organizations) is
amended by striking ``or'' at the end of clause (iii), by striking the
period at the end of clause (iv) and inserting ``, or'', and by adding
at the end the following new clause:
``(v) from the sale of property subject to
a lease described in section 48A(c)(2)(B), but
only to the extent such income does not in any
year exceed an amount equal to the credit for
qualified expenditures which would be
determined under section 48A for such year if
the mutual or cooperative telephone company was
not exempt from taxation and was treated as the
owner of the property subject to such lease.''.
(d) Conforming Amendment.--The table of sections for subpart E of
part IV of subchapter A of chapter 1 is amended by inserting after the
item relating to section 48 the following:

``Sec. 48A. Broadband internet access credit.''.
(e) Designation of Census Tracts.--
(1) In general.--The Secretary of the Treasury shall, not
later than 90 days after the date of the enactment of this Act,
designate and publish those census tracts meeting the criteria
described in paragraphs (17) and (24) of section 48A(e) of the
Internal Revenue Code of 1986 (as added by this section). In
making such designations, the Secretary of the Treasury shall
consult with such other departments and agencies as the
Secretary determines appropriate.
(2) Saturated market.--
(A) In general.--For purposes of designating and
publishing those census tracts meeting the criteria
described in subsection (e)(20) of such section 48A--
(i) the Secretary of the Treasury shall
prescribe not later than 30 days after the date
of the enactment of this Act the form upon
which any provider which takes the position
that it meets such criteria with respect to any
census tract shall submit a list of such census
tracts (and any other information required by
the Secretary) not later than 60 days after the
date of the publication of such form, and
(ii) the Secretary of the Treasury shall
publish an aggregate list of such census tracts
submitted and the applicable providers not
later than 30 days after the last date such
submissions are allowed under clause (i).
(B) No subsequent lists required.--The Secretary of
the Treasury shall not be required to publish any list
of census tracts meeting such criteria subsequent to
the list described in subparagraph (A)(ii).
(C) Penalties for submission of false
information.--The Secretary of the Treasury shall
designate appropriate penalties for knowingly
submitting false information on the form described in
subparagraph (A)(i).
(f) Other Regulatory Matters.--
(1) Prohibition.--No Federal or State agency or
instrumentality shall adopt regulations or ratemaking
procedures that would have the effect of confiscating any
credit or portion thereof allowed under section 48A of the
Internal Revenue Code of 1986 (as added by this section) or
otherwise subverting the purpose of this section.
(2) Treasury regulatory authority.--It is the intent of
Congress in providing the broadband Internet access credit
under section 48A of the Internal Revenue Code of 1986 (as
added by this section) to provide incentives for the purchase,
installation, and connection of equipment and facilities
offering expanded broadband access to the Internet for users in
certain low income and rural areas of the United States, as
well as to residential users nationwide, in a manner that
maintains competitive neutrality among the various classes of
providers of broadband services. Accordingly, the Secretary of
the Treasury shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of section
48A of such Code, including--
(A) regulations to determine how and when a
taxpayer that incurs qualified expenditures satisfies
the requirements of section 48A of such Code to provide
broadband services, and
(B) regulations describing the information,
records, and data taxpayers are required to provide the
Secretary to substantiate compliance with the
requirements of section 48A of such Code.
(g) Effective Date.--The amendments made by this section shall
apply to expenditures incurred after December 31, 2002, and before
January 1, 2004.

TITLE III--STATE FISCAL RELIEF

SEC. 301. GENERAL REVENUE SHARING WITH STATES AND THEIR LOCAL
GOVERNMENTS.

(a) Appropriation.--There is authorized to be appropriated and is
appropriated to carry out this section $15,000,000,000 for fiscal year
2003.
(b) Allotments.--From the amount appropriated under subsection (a)
for fiscal year 2003, the Secretary of the Treasury shall, as soon as
practicable after the date of the enactment of this Act, allot to each
of the States as follows, except that no State shall receive less than
\1/2\ of 1 percent of such amount:
(1) State level.--$12,000,000,000 shall be allotted among
such States on the basis of the relative population of each
such State, as determined by the Secretary on the basis of the
most recent satisfactory data.
(2) Local government level.--$3,000,000,000 shall be
allotted among such States as determined under paragraph (1)
for distribution to the various units of general local
government within such States on the basis of the relative
population of each such unit within each such State, as
determined by the Secretary on the basis of the most recent
satisfactory data.
(c) Definitions.--For purposes of this section--
(1) State.--The term ``State'' means any of the several
States, the District of Columbia, and the Commonwealth of
Puerto Rico.
(2) Unit of general local government.--
(A) In general.--The term ``unit of general local
government'' means--
(i) a county, parish, township, city, or
political subdivision of a county, parish,
township, or city, that is a unit of general
local government as determined by the Secretary
of Commerce for general statistical purposes;
and
(ii) the District of Columbia, the
Commonwealth of Puerto Rico, and the recognized
governing body of an Indian tribe or Alaskan
native village that carries out substantial
governmental duties and powers.
(B) Treatment of subsumed areas.--For purposes of
determining a unit of general local government under
this section, the rules under section 6720(c) of title
31, United States Code, shall apply.

SEC. 302. HOMELAND SECURITY.

(a) Short Title; Purpose.--
(1) Short title.--This section may be cited as the ``First
Responders Partnership Grant Act of 2003''.
(2) Purpose.--The purpose of this section is to support
first responders to protect homeland security and prevent and
respond to acts of terrorism.
(b) Definitions.--In this section:
(1) Indian tribe.--The term ``Indian tribe'' has the same
meaning as in section 4(e) of the Indian Self-Determination and
Education Assistance Act (25 U.S.C. 450b(e)).
(2) Law enforcement officer.--The term ``law enforcement
officer'' means any officer, agent, or employee of a State,
unit of local government, public or private college or
university, or Indian tribe authorized by law or by a
government agency to engage in or supervise the prevention,
detection, or investigation of any violation of criminal law,
or authorized by law to supervise sentenced criminal offenders.
(3) Public safety officer.--The term ``public safety
officer'' means any person serving a public or private agency
with or without compensation as a law enforcement officer, as a
firefighter, or as a member of a rescue squad or ambulance
crew.
(4) State.--The term ``State'' means each of the 50 States,
the District of Columbia, and the Commonwealth of Puerto Rico.
(5) Unit of local government.--The term ``unit of local
government'' means a county, municipality, town, township,
village, parish, borough, or other unit of general government
below the State level.
(c) First Responders Partnership Grant Program for Public Safety
Officers.--
(1) In general.--The Secretary of Homeland Security
(referred to in this section as the ``Secretary'') is
authorized to make grants to States, units of local government,
and Indian tribes to support public safety officers in their
efforts to protect homeland security and prevent and respond to
acts of terrorism.
(2) Use of funds.--Grants awarded under this subsection
shall be--
(A) distributed directly to the State, unit of
local government, or Indian tribe; and
(B) used to fund personnel expenses, equipment,
training, and facilities to support public safety
officers in their efforts to protect homeland security
and prevent and respond to acts of terrorism.
(3) Allocation and distribution of funds.--
(A) Set-aside for indian tribes.--
(i) In general.--The Secretary shall
reserve 1 percent of the amount appropriated
for grants pursuant to this Act to be used for
grants to Indian tribes.
(ii) Selection of indian tribes.--
(I) In general.--The Secretary
shall award grants under this
subparagraph to Indian tribes on the
basis of a competition conducted
pursuant to specific criteria.
(II) Rulemaking.--The criteria
under subclause (I) shall be contained
in a regulation promulgated by the
Attorney General after notice and
public comment.
(B) Set-aside for rural states.--
(i) In general.--The Secretary shall
reserve 5 percent of the amount appropriated
for grants pursuant to this Act to be used for
grants to rural States.
(ii) Selection of rural states.--The
Secretary shall award grants under this
subparagraph to rural States (as defined in
section 1501(b) of the Omnibus Crime Control
and Safe Streets Act of 1968 (42 U.S.C.
3796bb(b))).
(C) Minimum amount.--The Secretary shall allocate,
from the total amount appropriated for grants to States
under this subsection--
(i) not less than 0.75 percent for each
State; and
(ii) not less than 0.25 percent for
American Samoa, Guam, the Northern Mariana
Islands, and the United States Virgin Islands,
respectively.
(D) Allocation to metropolitan cities and urban
counties.--
(i) Allocation percentage.--The balance of
the total amount appropriated for grants to
States under this subsection after allocations
have been made to Indian tribes, rural States,
and the minimum amount to each State pursuant
to subparagraphs (A) through (C), shall be
allocated by the Secretary to metropolitan
cities and urban counties.
(E) Computation of amount allocated to metropolitan
cities.--
(i) Computation ratios.--The Secretary
shall determine the amount to be allocated to
each metropolitan city, which shall bear the
same ratio to the allocation for all
metropolitan cities as the weighted average
of--
(I) the population of the
metropolitan city divided by the
population of all metropolitan cities;
(II) the potential chemical
security risk of the metropolitan city
divided by the potential chemical
security risk of all metropolitan
cities;
(III) the proximity of the
metropolitan city to the nearest
operating nuclear power plant compared
to the proximity of all metropolitan
cities to the nearest operating nuclear
power plant to each such city;
(IV) the proximity of the
metropolitan cities to the nearest
United States land or water port
compared with the proximity of all
metropolitan cities to the nearest
United States land or water port to
each such city;
(V) the proximity of the
metropolitan city to the nearest
international border compared with the
proximity of all metropolitan cities to
the nearest international border to
each such city; and
(VI) the proximity of the
metropolitan city to the nearest
Disaster Medical Assistance Team
(referred to in this subsection as
``DMAT'') compared with the proximity
of all metropolitan cities to the
nearest DMAT to each such city.
(ii) Clarification of computation ratios.--
(I) Relative weight of factor.--In
determining the average of the ratios
under clause (i)--
(aa) the ratio involving
population shall constitute 50
percent of the formula in
calculating the allocation; and
(bb) the remaining factors
shall be equally weighted.
(II) Potential chemical security
risk.--If a metropolitan city is within
the vulnerable zone of a worst-case
chemical release (as specified in the
most recent risk management plans filed
with the Environmental Protection
Agency, or another instrument developed
by the Environmental Protection Agency
or the Homeland Security Department
that captures the same information for
the same facilities), the ratio under
clause (i)(II) shall be 1 divided by
the total number of metropolitan cities
that are within such a zone.
(III) Proximity as it pertains to
nuclear security.--If a metropolitan
city is located within 50 miles of an
operating nuclear power plant (as
identified by the Nuclear Regulatory
Commission), the ratio under clause
(i)(III) shall be 1 divided by the
total number of metropolitan cities,
not to exceed 100, which are located
within 50 miles of an operating nuclear
power plant.
(IV) Proximity as it pertains to
port security.--If a metropolitan city
is located within 50 miles of 1 of the
100 largest United States ports (as
stated by the Department of
Transportation, Bureau of
Transportation Statistics, United
States Port Report by All Land Modes),
or within 50 miles of 1 of the 30
largest United States water ports by
metric tons and value (as stated by the
Department of Transportation, Maritime
Administration, United States Foreign
Waterborne Transportation Statistics),
the ratio under clause (i)(IV) shall be
1 divided by the total number of
metropolitan cities that are located
within 50 miles of a United States land
or water port.
(V) Proximity to international
border.--If a metropolitan city is
located within 50 miles of an
international border, the ratio under
clause (i)(V) shall be 1 divided by the
total number of metropolitan cities
that are located within 50 miles of an
international border.
(VI) Proximity to disaster medical
assistance team.--If a metropolitan
city is located within 50 miles of a
DMAT, as organized by the National
Disaster Medical System, the ratio
under clause (i)(VI) shall be 1 divided
by the total number of metropolitan
cities that are located within 50 miles
of a DMAT.
(F) Computation of amount allocated to urban
counties.--
(i) Computation ratios.--The Secretary
shall determine the amount to be allocated to
each urban county, which shall bear the same
ratio to the allocation for all urban counties
as the weighted average of--
(I) the population of the urban
county divided by the population of all
urban counties;
(II) the potential chemical
security risk of the urban county
divided by the potential chemical
security risk of all urban counties;
(III) the proximity of the urban
county to the nearest operating nuclear
power plant compared to the proximity
of all urban counties to the nearest
operating nuclear power plant to each
such city;
(IV) the proximity of the urban
counties to the nearest United States
land or water port compared with the
proximity of all urban counties to the
nearest United States land or water
port to each such city;
(V) the proximity of the urban
county to the nearest international
border compared with the proximity of
all urban counties to the nearest
international border to each such city;
and
(VI) the proximity of the urban
county to the nearest Disaster Medical
Assistance Team (referred to in this
subsection as ``DMAT'') compared with
the proximity of all urban counties to
the nearest DMAT to each such city.
(ii) Clarification of computation ratios.--
(I) Relative weight of factor.--In
determining the average of the ratios
under clause (i)--
(aa) the ratio involving
population shall constitute 50
percent of the formula in
calculating the allocation; and
(bb) the remaining factors
shall be equally weighted.
(II) Potential chemical security
risk.--If an urban county is within the
vulnerable zone of a worst-case
chemical release (as specified in the
most recent risk management plans filed
with the Environmental Protection
Agency, or another instrument developed
by the Environmental Protection Agency
or the Homeland Security Department
that captures the same information for
the same facilities), the ratio under
clause (i)(II) shall be 1 divided by
the total number of urban counties that
are within such a zone.
(III) Proximity as it pertains to
nuclear security.--If an urban county
is located within 50 miles of an
operating nuclear power plant (as
identified by the Nuclear Regulatory
Commission), the ratio under clause
(i)(III) shall be 1 divided by the
total number of urban counties, not to
exceed 100, which are located within 50
miles of an operating nuclear power
plant.
(IV) Proximity as it pertains to
port security.--If an urban county is
located within 50 miles of 1 of the 100
largest United States ports (as stated
by the Department of Transportation,
Bureau of Transportation Statistics,
United States Port Report by All Land
Modes), or within 50 miles of 1 of the
30 largest United States water ports by
metric tons and value (as stated by the
Department of Transportation, Maritime
Administration, United States Foreign
Waterborne Transportation Statistics),
the ratio under clause (i)(IV) shall be
1 divided by the total number of urban
counties that are located within 50
miles of a United States land or water
port.
(V) Proximity to international
border.--If an urban county is located
within 50 miles of an international
border, the ratio under clause (i)(V)
shall be 1 divided by the total number
of urban counties that are located
within 50 miles of an international
border.
(VI) Proximity to disaster medical
assistance team.--If an urban county is
located within 50 miles of a DMAT, as
organized by the National Disaster
Medical System, the ratio under clause
(i)(VI) shall be 1 divided by the total
number of urban counties that are
located within 50 miles of a DMAT.
(G) Exclusions.--
(i) In general.--In computing amounts or
exclusions under subparagraph (F) with respect
to any urban county, units of general local
government located in the county shall be
excluded if the populations of such units are
not counted to determine the eligibility of the
urban county to receive a grant under this
subsection.
(ii) Independent cities.--
(I) In general.--In computing
amounts under clause (i), there shall
be included any independent city (as
defined by the Bureau of the Census)
which--
(aa) is not part of any
county;
(bb) is not eligible for a
grant;
(cc) is contiguous to the
urban county;
(dd) has entered into
cooperation agreements with the
urban county which provide that
the urban county is to
undertake or to assist in the
undertaking of essential
community development and
housing assistance activities
with respect to such
independent city; and
(ee) is not included as a
part of any other unit of
general local government for
purposes of this subsection.
(II) Limitation.--Any independent
city that is included in the
computation under this clause (i) shall
not be eligible to receive assistance
under this subsection for the fiscal
year for which such computation is used
to allocate such assistance.
(H) Inclusion.--
(i) Local government straddling county
line.--In computing amounts or exclusions under
subparagraph (F) with respect to any urban
county, all of the area of any unit of local
government shall be included, which is part of,
but is not located entirely within the
boundaries of, such urban county if--
(I) the part of such unit of local
government that is within the
boundaries of such urban county would
otherwise be included in computing the
amount for such urban county under this
paragraph; and
(II) the part of such unit of local
government that is not within the
boundaries of such urban county is not
included as a part of any other unit of
local government for the purpose of
this paragraph.
(ii) Use of grant funds outside urban
county.--Any amount received under this
subsection by an urban county described under
clause (i) may be used with respect to the part
of such unit of local government that is
outside the boundaries of such urban county.
(I) Population.--
(i) Effect of consolidation.--Where data
are available, the amount to be allocated to a
metropolitan city that has been formed by the
consolidation of 1 or more metropolitan cities
within an urban county shall be equal to the
sum of the amounts that would have been
allocated to the urban county or cities and the
balance of the consolidated government if such
consolidation had not occurred.
(ii) Limitation.--Clause (i) shall apply
only to a consolidation that--
(I) included all metropolitan
cities that received grants under this
subsection for the fiscal year
preceding such consolidation and that
were located within the urban county;
(II) included the entire urban
county that received a grant under this
subsection for the fiscal year
preceding such consolidation; and
(III) took place on or after
January 1, 2003
(iii) Growth rate.--The population growth
rate of all metropolitan cities defined in this
subsection shall be based on the population
of--
(I) metropolitan cities other than
consolidated governments the grant for
which is determined under this
paragraph; and
(II) cities that were metropolitan
cities before their incorporation into
consolidated governments.
(4) Maximum amount per grantee.--
(A) In general.--A qualifying State, unit of local
government, or Indian tribe may not receive more than 5
percent of the total amount appropriated for grants
under this section.
(B) Aggregate amount per state.--A State, together
with the grantees within the State may not receive more
than 20 percent of the total amount appropriated for
grants under this section.
(5) Matching funds.--
(A) In general.--The portion of the costs of a
program provided by a grant under paragraph (1) may not
exceed 90 percent.
(B) Waiver.--If the Secretary determines that a
grantee is experiencing fiscal hardship, the Secretary
may waive, in whole or in part, the matching
requirement under subparagraph (A).
(C) Exception.--Any funds appropriated by Congress
for the activities of any agency of an Indian tribal
government or the Bureau of Indian Affairs performing
law enforcement functions on any Indian lands may be
used to provide the non-Federal share of a matching
requirement under subparagraph (A).
(d) Applications.--
(1) In general.--To request a grant under this section, the
chief executive of a State, unit of local government, or Indian
tribe shall submit an application to the Secretary of the
Bureau of Justice Assistance in such form and containing such
information as the Secretary may reasonably require.
(2) Regulations.--Not later than 90 days after the date of
enactment of this Act, the Attorney General shall promulgate
regulations to implement this section (including the
information that must be included and the requirements that the
States, units of local government, and Indian tribes must meet)
in submitting the applications required under this section.
(e) Authorization and Appropriations.--There are authorized to be
appropriated and are appropriated $5,000,000,000 for fiscal year 2003
to carry out this section.

SEC. 303. FUNDING FOR EDUCATION.

(a) Basic Programs Operated by Local Educational Agencies.--In
addition to amounts appropriated under the Departments of Labor, Health
and Human Services, and Education, and Related Agencies Appropriations
Act, 2003, the following sums are appropriated, out of any money in the
Treasury not otherwise appropriated, for the fiscal year ending
September 30, 2003, for carrying out part A of title I of the
Elementary and Secondary Education Act of 1965, $4,250,000,000.  The
Secretary of Education shall reserve 1 percent of such amount for the
Secretary of the Interior for programs under part B of title I of such
Act in schools operated or funded by the Bureau of Indian Affairs.
(b) High Quality Teachers and Principals.--In addition to amounts
appropriated under the Departments of Labor, Health and Human Services,
and Education, and Related Agencies Appropriations Act, 2003, the
following sums are appropriated, out of any money in the Treasury not
otherwise appropriated, for the fiscal year ending September 30, 2003,
for carrying out part A of title II (other than subpart 5) of the
Elementary and Secondary Education Act of 1965, $550,000,000. The
Secretary of Education shall reserve 1 percent of such amount for the
Secretary of the Interior for programs under such part A in schools
operated or funded by the Bureau of Indian Affairs.
(c) Language Instruction for Limited English Proficient and
Immigrant Students.--In addition to amounts appropriated under the
Departments of Labor, Health and Human Services, and Education, and
Related Agencies Appropriations Act, 2003, the following sums are
appropriated, out of any money in the Treasury not otherwise
appropriated, for the fiscal year ending September 30, 2003, for
carrying out title III (other than subpart 4 of part B) of the
Elementary and Secondary Education Act of 1965, $410,000,000. The
Secretary of Education shall reserve 1 percent of such amount for
payment of entities under section 3112(a) of such Act.
(d) 21st Century Community Learning Centers.--In addition to
amounts appropriated under the Departments of Labor, Health and Human
Services, and Education, and Related Agencies Appropriations Act, 2003,
the following sums are appropriated, out of any money in the Treasury
not otherwise appropriated, for the fiscal year ending September 30,
2003, for carrying out part B of title IV of the Elementary and
Secondary Education Act of 1965, $500,000,000. The Secretary of
Education shall reserve 1 percent of such amount for payments to the
Bureau of Indian Affairs to enable the Bureau to carry out the purposes
of such part B.
(e) Rural Education Initiative.--In addition to amounts
appropriated under the Departments of Labor, Health and Human Services,
and Education, and Related Agencies Appropriations Act, 2003, the
following sums are appropriated, out of any money in the Treasury not
otherwise appropriated, for the fiscal year ending September 30, 2003,
for carrying out part B of title VI of the Elementary and Secondary
Education Act of 1965, $131,000,000.
(f) Student Financial Assistance.--
(1) In general.--In addition to amounts appropriated under
the Departments of Labor, Health and Human Services, and
Education, and Related Agencies Appropriations Act, 2003, the
following sums are appropriated, out of any money in the
Treasury not otherwise appropriated, for the fiscal year ending
September 30, 2003, for carrying out subpart 1 of part A of
title IV of the Higher Education Act of 1965, $200,000,000.
(2) Maximum pell grant.--The maximum Pell Grant for which a
student shall be eligible during award year 2003-2004 shall be
$4,100.

SEC. 304. TEMPORARY STATE FMAP RELIEF.

(a) Permitting Maintenance of Fiscal Year 2002 FMAP for Last 3
Calendar Quarters of Fiscal Year 2003.--Notwithstanding any other
provision of law, but subject to subsection (e), if the FMAP determined
without regard to this subsection for a State for fiscal year 2003 is
less than the FMAP as so determined for fiscal year 2002, the FMAP for
the State for fiscal year 2002 shall be substituted for the State's
FMAP for the second, third, and fourth calendar quarters of fiscal year
2003, before the application of this section.
(b) Permitting Maintenance of Fiscal Year 2003 FMAP for First
Calendar Quarter of Fiscal Year 2004.--Notwithstanding any other
provision of law, but subject to subsection (e), if the FMAP determined
without regard to this subsection for a State for fiscal year 2004 is
less than the FMAP as so determined for fiscal year 2003, the FMAP for
the State for fiscal year 2003 shall be substituted for the State's
FMAP for the first calendar quarter of fiscal year 2004, before the
application of this section.
(c) General 3.76 Percentage Points Increase for Last 3 Calendar
Quarters of Fiscal Year 2003 and First Calendar Quarter of Fiscal Year
2004.--Notwithstanding any other provision of law, but subject to
subsections (e) and (f), for each State for the second, third, and
fourth calendar quarters of fiscal year 2003 and the first calendar
quarter of fiscal year 2004, the FMAP (taking into account the
application of subsections (a) and (b)) shall be increased by 3.76
percentage points.
(d) Increase in Cap on Medicaid Payments To Territories.--
Notwithstanding any other provision of law, but subject to subsection
(f), with respect to the second, third, and fourth calendar quarters of
fiscal year 2003 and the first calendar quarter of fiscal year 2004,
the amounts otherwise determined for Puerto Rico, the Virgin Islands,
Guam, the Northern Mariana Islands, and American Samoa under
subsections (f) and (g) of section 1108 of the Social Security Act (42
U.S.C. 1308) shall each be increased by an amount equal to 7.52 percent
of such amounts.
(e) Scope of Application.--The increases in the FMAP for a State
under this section shall apply only for purposes of title XIX of the
Social Security Act and shall not apply with respect to--
(1) disproportionate share hospital payments described in
section 1923 of such Act (42 U.S.C. 1396r-4);
(2) payments under title IV or XXI of such Act (42 U.S.C.
601 et seq. and 1397aa et seq.); or
(3) the percentage described in the third sentence of
section 1905(b) of the Social Security Act (42 U.S.C. 1396d(b))
(relating to amounts expended as medical assistance for
services received through an Indian Health Service facility
whether operated by the Indian Health Service or by an Indian
tribe or tribal organization (as defined in section 4 of the
Indian Health Care Improvement Act)).
(f) State Eligibility.--
(1) In general.--Subject to paragraph (2), a State is
eligible for an increase in its FMAP under subsection (c) or an
increase in a cap amount under subsection (d) only if the
eligibility under its State plan under title XIX of the Social
Security Act (including any waiver under such title or under
section 1115 of such Act (42 U.S.C. 1315)) is no more
restrictive than the eligibility under such plan (or waiver) as
in effect on July 1, 2003.
(2) State reinstatement of eligibility permitted.--A State
that has restricted eligibility under its State plan under
title XIX of the Social Security Act (including any waiver
under such title or under section 1115 of such Act (42 U.S.C.
1315)) after July 1, 2003, but prior to the date of enactment
of this Act is eligible for an increase in its FMAP under
subsection (c) or an increase in a cap amount under subsection
(d) in the first calendar quarter (and any subsequent calendar
quarters) in which the State has reinstated eligibility that is
no more restrictive than the eligibility under such plan (or
waiver) as in effect on July 1, 2003.
(3) Rule of construction.--Nothing in paragraph (1) or (2)
shall be construed as affecting a State's flexibility with
respect to benefits offered under the State medicaid program
under title XIX of the Social Security Act (42 U.S.C. 1396 et
seq.) (including any waiver under such title or under section
1115 of such Act (42 U.S.C. 1315)).
(g) Definitions.--In this section:
(1) FMAP.--The term ``FMAP'' means the Federal medical
assistance percentage, as defined in section 1905(b) of the
Social Security Act (42 U.S.C. 1396d(b)).
(2) State.--The term ``State'' has the meaning given such
term for purposes of title XIX of the Social Security Act (42
U.S.C. 1396 et seq.).
(h) Repeal.--Effective as of January 1, 2004, this section is
repealed.

SEC. 305. FUNDING FOR TRANSPORTATION INFRASTRUCTURE.

(a) Highway Programs.--
(1) Appropriations.--Subject to subsection (d), in addition
to amounts appropriated under the Department of Transportation
and Related Agencies Appropriations Act, 2003, there are
appropriated to the Secretary of Transportation, out of any
money in the Treasury not otherwise appropriated, for the
fiscal year ending September 30, 2003--
(A) $2,480,000,000--
(i) to be apportioned among the States in
accordance with the formula specified in
section 104(b)(3) of title 23, United States
Code; and
(ii) to be used for projects eligible under
section 133 of that title, without regard to
section 133(d) of that title;
(B) $80,000,000, to be used by the Secretary in the
same manner as funds are used under section 118(c) of
that title, except that section 118(c)(2)(A) of that
title shall not apply to funds appropriated under this
subparagraph;
(C) $80,000,000, to be used by the Secretary in the
same manner as funds are used under section 144(g)(2)
of that title;
(D) $80,000,000, to be used by the Secretary in the
same manner as funds are used under subsections (a)
through (c) and (e) of section 202 of that title;
(E) $80,000,000, to be used by the Secretary in the
same manner as funds are used under section 202(d) of
that title; and
(F) $80,000,000, to be used by the Secretary in the
same manner as funds are used under sections 1118 and
1119 of the Transportation Equity Act for the 21st
Century (23 U.S.C. 101 note; 112 Stat. 161).
(2) Redistribution of unused obligation authority.--Funds
made available under paragraph (1)(A) that are not obligated
within 180 days after the date of enactment of this Act shall
be redistributed in the manner described in section 1102(d) of
the Transportation Equity Act for the 21st Century (23 U.S.C.
104 note; 112 Stat. 117).
(b) Transit Program.--
(1) Appropriations.--Subject to subsection (d)(1), in
addition to amounts appropriated under the Department of
Transportation and Related Agencies Appropriations Act, 2003,
there are appropriated to the Secretary of Transportation, out
of any money in the Treasury not otherwise appropriated, for
the fiscal year ending September 30, 2003, $720,000,000--
(A) to be distributed between and used for projects
eligible under sections 5307 and 5311 of title 49,
United States Code, in the same ratio as funds were
distributed under section 5338 of that title for fiscal
years 1998 through 2003; and
(B) to be apportioned among the States in
accordance with the formulas specified in sections 5307
and 5311 of title 49, United States Code.
(2) Redistribution of unused obligation authority.--Funds
made available under paragraph (1) that are not obligated
within 180 days after the date of enactment of this Act shall
be redistributed among the States giving priority to those
States having large unobligated balances of funds apportioned
under sections 5307 and 5311 of title 49, United States Code.
(c) Airport Programs.--Subject to subsection (d), in addition to
any amounts appropriated for fiscal year 2003, there is appropriated
$400,000,000 out of any money in the Treasury not otherwise
appropriated for the fiscal year ending September 30, 2003, to the
Secretary of Transportation as discretionary funds to be used by the
Secretary for grants to make safety and security improvements at
airports in the same manner as funds are used under subtitle VII of
title 49, United States Code, except that none of the funds may be used
to expedite a letter of intent in effect on the date of enactment of
this Act.
(d) General Provisions.--Notwithstanding any other provision of
law--
(1) the Federal share of the cost of a project carried out
with funds made available under this section shall be 100
percent; and
(2) funds made available under subparagraphs (B) through
(F) of subsection (a)(1) and under subsection (c) shall be--
(A) obligated not later than 180 days after the
date of enactment of this Act; and
(B) expended as expeditiously as practicable.

TITLE IV--UNEMPLOYMENT ASSISTANCE

Subtitle A--Additional Weeks of Temporary Extended Unemployment
Compensation

SEC. 401. ENTITLEMENT TO ADDITIONAL WEEKS OF TEMPORARY EXTENDED
UNEMPLOYMENT COMPENSATION.

(a) Entitlement to Additional Weeks.--
(1) In general.--Paragraph (1) of section 203(b) of the
Temporary Extended Unemployment Compensation Act of 2002
(Public Law 107-147; 116 Stat. 28) is amended--
(A) in subparagraph (A), by striking ``50 percent''
and inserting ``100 percent''; and
(B) in subparagraph (B), by striking ``13 times''
and inserting ``26 times''.
(2) Repeal of restriction on augmentation during
transitional period.--Section 208(b) of the Temporary Extended
Unemployment Compensation Act of 2002 (Public Law 107-147), as
amended by Public Law 108-1 (117 Stat. 3), is amended--
(A) in paragraph (1)--
(i) by striking ``paragraphs (2) and (3)''
and inserting ``paragraph (2)''; and
(ii) by inserting before the period at the
end the following: ``, including such
compensation by reason of amounts deposited in
such account after such date pursuant to the
application of subsection (c) of such
section'';
(B) by striking paragraph (2); and
(C) by redesignating paragraph (3) as paragraph
(2).
(3) Extension of transition limitation.--Section 208(b)(2)
of the Temporary Extended Unemployment Compensation Act of 2002
(Public Law 107-147), as amended by Public Law 108-1 (117 Stat.
3) and as redesignated by paragraph (2), is amended by striking
``August 30, 2003'' and inserting ``December 31, 2003''.
(4) Conforming amendment for augmented benefits.--Section
203(c)(1) of the Temporary Extended Unemployment Compensation
Act of 2002 (Public Law 107-147; 116 Stat. 28) is amended by
striking ``the amount originally established in such account
(as determined under subsection (b)(1))'' and inserting ``7
times the individual's average weekly benefit amount for the
benefit year''.
(b) Effective Date and Application.--
(1) In general.--The amendments made by subsection (a)
shall apply with respect to weeks of unemployment beginning on
or after the date of enactment this Act.
(2) TEUC-X amounts deposited in account prior to date of
enactment deemed to be the additional teuc amounts provided by
this section.--In applying the amendments made by subsection
(a) under the Temporary Extended Unemployment Compensation Act
of 2002 (Public Law 107-147; 116 Stat. 26), the Secretary of
Labor shall deem any amounts deposited into an individual's
temporary extended unemployment compensation account by reason
of section 203(c) of such Act (commonly known as ``TEUC-X
amounts'') prior to the date of enactment of this Act to be
amounts deposited in such account by reason of section 203(b)
of such Act, as amended by subsection (a) (commonly known as
``TEUC amounts'').
(3) Application to exhaustees and current beneficiaries.--
(A) Exhaustees.--In the case of any individual--
(i) to whom any temporary extended
unemployment compensation was payable for any
week beginning before the date of enactment of
this Act; and
(ii) who exhausted such individual's rights
to such compensation (by reason of the payment
of all amounts in such individual's temporary
extended unemployment compensation account)
before such date,
such individual's eligibility for any additional weeks
of temporary extended unemployment compensation by
reason of the amendments made by subsection (a) shall
apply with respect to weeks of unemployment beginning
on or after the date of enactment of this Act.
(B) Current beneficiaries.--In the case of any
individual--
(i) to whom any temporary extended
unemployment compensation was payable for any
week beginning before the date of enactment of
this Act; and
(ii) as to whom the condition described in
subparagraph (A)(ii) does not apply,
such individual shall be eligible for temporary
extended unemployment compensation (in accordance with
the provisions of the Temporary Extended Unemployment
Compensation Act of 2002, as amended by subsection (a))
with respect to weeks of unemployment beginning on or
after the date of enactment of this Act.
(4) Redetermination of eligibility for augmented amounts
for individuals for whom such a determination was made prior to
the date of enactment.--Any determination of whether the
individual's State is in an extended benefit period under
section 203(c) of the Temporary Extended Unemployment
Compensation Act of 2002 (Public Law 107-147; 116 Stat. 28)
made prior to the date of enactment of this Act shall be
disregarded and the determination under such section shall be
made as follows:
(A) Individuals who exhausted 13 teuc and 13 teux-x
weeks prior to the date of enactment.--In the case of
an individual who, prior to the date of enactment of
this Act, received 26 times the individual's average
weekly benefit amount through an account established
under section 203 of the Temporary Extended
Unemployment Compensation Act of 2002 (Public Law 107-
147; 116 Stat. 28) (by reason of augmentation under
subsection (c) of such section), the determination
shall be made as of the date of enactment of this Act.
(B) All other individuals.--In the case of an
individual who is not described in subparagraph (A),
the determination shall be made at the time that the
individual's account established under such section
203, as amended by subsection (a), is exhausted.

Subtitle B--Temporary Enhanced Regular Unemployment Compensation

SEC. 411. FEDERAL-STATE AGREEMENTS.

(a) In General.--Any State which desires to do so may enter into
and participate in an agreement under this title with the Secretary of
Labor (in this title referred to as the ``Secretary''). Any State which
is a party to an agreement under this title may, upon providing 30
days' written notice to the Secretary, terminate such agreement.
(b) Provisions of Agreement.--
(1) In general.--Subject to paragraph (3), any agreement
under subsection (a) shall provide that the State agency of the
State, in addition to any amounts of regular compensation to
which an individual may be entitled under the State law, shall
make payments of temporary enhanced regular unemployment
compensation to an individual in an amount and to the extent
that the individual would be entitled to regular compensation
if the State law were applied with the modifications described
in paragraph (2).
(2) Modifications described.--The modifications described
in this paragraph are as follows:
(A) In the case of an individual who is not
eligible for regular compensation under the State law
because of the use of a definition of base period that
does not count wages earned in the most recently
completed calendar quarter, then eligibility for
compensation shall be determined by applying a base
period ending at the close of the most recently
completed calendar quarter.
(B) In the case of an individual who is not
eligible for regular compensation under the State law
because such individual does not meet requirements
relating to availability for work, active search for
work, or refusal to accept work, because such
individual is seeking, or is available for, less than
full-time work, then compensation shall not be denied
by such State to an otherwise eligible individual who
seeks less than full-time work or fails to accept full-
time work.
(3) Reduction of amounts of regular compensation available
for individuals who sought part-time work or failed to accept
full-time work.--Any agreement under subsection (a) shall
provide that the State agency of the State shall reduce the
amount of regular compensation available to an individual who
has received temporary enhanced regular unemployment
compensation as a result of the application of the modification
described in paragraph (2)(B) by the amount of such temporary
enhanced regular unemployment compensation.
(c) Coordination Rule.--The modifications described in subsection
(b)(2) shall also apply in determining the amount of benefits payable
under any Federal law to the extent that those benefits are determined
by reference to regular compensation payable under the State law of the
State involved.

SEC. 412. PAYMENTS TO STATES HAVING AGREEMENTS UNDER THIS TITLE.

(a) General Rule.--There shall be paid to each State which has
entered into an agreement under this title an amount equal to--
(1) 100 percent of any temporary enhanced regular
unemployment compensation; and
(2) 100 percent of any regular compensation which is paid
to individuals by such State by reason of the fact that its
State law contains provisions comparable to the modifications
described in subparagraphs (A) and (B) of section 411(b)(2),
but  only to the extent that those amounts would, if such
amounts were instead payable by virtue of the State law's being deemed
to be so modified pursuant to section 411(b)(1), have been reimbursable
under paragraph (1).
(b) Determination of Amount.--Sums under subsection (a) payable to
any State by reason of such State having an agreement under this title
shall be payable, either in advance or by way of reimbursement (as may
be determined by the Secretary), in such amounts as the Secretary
estimates the State will be entitled to receive under this title for
each calendar month, reduced or increased, as the case may be, by any
amount by which the Secretary finds that the Secretary's estimates for
any prior calendar month were greater or less than the amounts which
should have been paid to the State. Such estimates may be made on the
basis of such statistical, sampling, or other method as may be agreed
upon by the Secretary and the State agency of the State involved.

SEC. 413. FINANCING PROVISIONS.

(a) In General.--Funds in the extended unemployment compensation
account (as established by section 905(a) of the Social Security Act
(42 U.S.C. 1105(a))), and the Federal unemployment account (as
established by section 904(g) of such Act (42 U.S.C. 1104(g))), of the
Unemployment Trust Fund (as established by section 904(a) of such Act
(42 U.S.C. 1104(a))) shall be used for the making of payments to States
having agreements entered into under this title.
(b) Certification.--The Secretary shall from time to time certify
to the Secretary of the Treasury for payment to each State the sums
which are payable to such State under this title. The Secretary of the
Treasury, prior to audit or settlement by the General Accounting
Office, shall make payments to the State in accordance with such
certification by transfers from the extended unemployment compensation
account (as so established), or, to the extent that there are
insufficient funds in that account, from the Federal unemployment
account, to the account of such State in the Unemployment Trust Fund
(as so established).
(c) Assistance to States.--There are appropriated out of the
employment security administration account of the Unemployment Trust
Fund (as established by section 901(a) of the Social Security Act (42
U.S.C. 1101(a))) $500,000,000 to reimburse States for the costs of the
administration of agreements under this title (including any
improvements in technology in connection therewith) and to provide
reemployment services to unemployment compensation claimants in States
having agreements under this title. Each State's share of the amount
appropriated by the preceding sentence shall be determined by the
Secretary according to the factors described in section 302(a) of the
Social Security Act (42 U.S.C. 502(a)) and certified by the Secretary
to the Secretary of the Treasury.
(d) Appropriations for Certain Payments.--There are appropriated
from the general fund of the Treasury, without fiscal year limitation,
to the extended unemployment compensation account (as so established)
of the Unemployment Trust Fund (as so established) such sums as the
Secretary estimates to be necessary to make the payments under this
section in respect of--
(1) compensation payable under chapter 85 of title 5,
United States Code; and
(2) compensation payable on the basis of services to which
section 3309(a)(1) of the Internal Revenue Code of 1986
applies.
Amounts appropriated pursuant to the preceding sentence shall not be
required to be repaid.

SEC. 414. DEFINITIONS.

For purposes of this title, the terms ``compensation'', ``base
period'', ``regular compensation'', ``State'', ``State agency'',
``State law'', and ``week'' have the respective meanings given such
terms under section 205 of the Federal-State Extended Unemployment
Compensation Act of 1970.

SEC. 415. APPLICABILITY.

(a) In General.--Except as provided in subsection (b), an agreement
entered into under this title shall apply to weeks of unemployment--
(1) beginning after the date on which such agreement is
entered into; and
(2) ending before July 1, 2004.
(b) Phase-Out of TERUC.--
(1) In general.--Subject to paragraph (2), in the case of
an individual who has established eligibility for temporary
enhanced regular unemployment compensation, but who has not
exhausted all rights to such compensation, as of the last day
of the week ending before July 1, 2004, such compensation shall
continue to be payable to such individual for any week
beginning after such date for which the individual meets the
eligibility requirements of this title.
(2) Limitation.--No compensation shall be payable by reason
of paragraph (1) for any week beginning after December 31,
2004.

SEC. 416. COORDINATION WITH THE TEMPORARY EXTENDED UNEMPLOYMENT
COMPENSATION ACT OF 2002.

(a) In General.--The Temporary Extended Unemployment Compensation
Act of 2002 (Public Law 107-147; 116 Stat. 30) is amended--
(1) in section 202(b)(1), by inserting ``, and who have
exhausted all rights to temporary enhanced regular unemployment
compensation'' before the semicolon at the end;
(2) in section 202(b)(2), by inserting ``, temporary
enhanced regular unemployment compensation,'' after ``regular
compensation'';
(3) in section 202(c), by inserting ``(or, as the case may
be, such individual's rights to temporary enhanced regular
unemployment compensation)'' after ``State law'' in the matter
preceding paragraph (1);
(4) in section 202(c)(1), by inserting ``and no payments of
temporary enhanced regular unemployment compensation can be
made'' after ``under such law'';
(5) in section 202(d)(1), by inserting ``or the amount of
any temporary enhanced regular unemployment compensation
(including dependents' allowances) payable to such individual
for such a week,'' after ``total unemployment'';
(6) in section 202(d)(2)(A), by inserting ``, or, as the
case may be, to temporary enhanced regular unemployment
compensation,'' after ``State law'';
(7) in section 203(b)(1)(A), by inserting ``plus the amount
of any temporary enhanced regular unemployment compensation
payable to such individual for such week,'' after ``under such
law''; and
(8) in section 203(b)(2), by inserting ``or the amount of
any temporary enhanced regular unemployment compensation
payable to such individual for such week,'' after ``total
unemployment''.
(b) Amount of TEUC Offset by Amount of TERUC.--Section 203(b)(1) of
the Temporary Extended Unemployment Compensation Act of 2002 (Public
Law 107-147; 116 Stat. 28) is amended--
(1) in subparagraph (B), by striking the period at the end
and inserting a comma; and
(2) by adding at the end the following:
``minus the number of weeks in which the individual was
entitled to temporary enhanced regular unemployment
compensation as a result of the application of the modification
described in section 411(b)(2)(A) of the Economic Recovery Act
of 2003 (relating to the alternative base period) multiplied by
the individual's average weekly benefit amount for the benefit
year.''.
(c) Temporary Enhanced Regular Unemployment Compensation Defined.--
Section 207 of the Temporary Extended Unemployment Compensation Act of
2002 (Public Law 107-147; 116 Stat. 30) is amended to read as follows:

``SEC. 207. DEFINITIONS.

``In this title:
``(1) General definitions.--The terms `compensation',
`regular compensation', `extended compensation', `additional
compensation', `benefit year', `base period', `State', `State
agency', `State law', and `week' have the respective meanings
given such terms under section 205 of the Federal-State
Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304
note).
``(2) Temporary enhanced regular unemployment
compensation.--The term `temporary enhanced regular
unemployment compensation' means temporary enhanced regular
unemployment benefits payable under title IV of the Economic
Recovery Act of 2003.''.

TITLE V--LONG-TERM FISCAL DISCIPLINE

Subtitle A--Provisions Designed To Curtail Tax Shelters

SEC. 501. CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.

(a) In General.--Section 7701 is amended by redesignating
subsection (m) as subsection (n) and by inserting after subsection (l)
the following new subsection:
``(m) Clarification of Economic Substance Doctrine; Etc.--
``(1) General rules.--
``(A) In general.--In applying the economic
substance doctrine, the determination of whether a
transaction has economic substance shall be made as
provided in this paragraph.
``(B) Definition of economic substance.--For
purposes of subparagraph (A)--
``(i) In general.--A transaction has
economic substance only if--
``(I) the transaction changes in a
meaningful way (apart from Federal tax
effects and, if there is any Federal
tax effects, also apart from any
foreign, State, or local tax effects)
the taxpayer's economic position, and
``(II) the taxpayer has a
substantial nontax purpose for entering
into such transaction and the
transaction is a reasonable means of
accomplishing such purpose.
``(ii) Special rule where taxpayer relies
on profit potential.--A transaction shall not
be treated as having economic substance by
reason of having a potential for profit
unless--
``(I) the present value of the
reasonably expected pre-tax profit from
the transaction is substantial in
relation to the present value of the
expected net tax benefits that would be
allowed if the transaction were
respected, and
``(II) the reasonably expected pre-
tax profit from the transaction exceeds
a risk-free rate of return.
``(C) Treatment of fees and foreign taxes.--Fees
and other transaction expenses and foreign taxes shall
be taken into account as expenses in determining pre-
tax profit under subparagraph (B)(ii).
``(2) Special rules for transactions with tax-indifferent
parties.--
``(A) Special rules for financing transactions.--
The form of a transaction which is in substance the
borrowing of money or the acquisition of financial
capital directly or indirectly from a tax-indifferent
party shall not be respected if the present value of
the deductions to be claimed with respect to the
transaction is substantially in excess of the present
value of the anticipated economic returns of the person
lending the money or providing the financial capital. A
public offering shall be treated as a borrowing, or an
acquisition of financial capital, from a tax-
indifferent party if it is reasonably expected that at
least 50 percent of the offering will be placed with
tax-indifferent parties.
``(B) Artificial income shifting and basis
adjustments.--The form of a transaction with a tax-
indifferent party shall not be respected if--
``(i) it results in an allocation of income
or gain to the tax-indifferent party in excess
of such party's economic income or gain, or
``(ii) it results in a basis adjustment or
shifting of basis on account of overstating the
income or gain of the tax-indifferent party.
``(3) Definitions and special rules.--For purposes of this
subsection--
``(A) Economic substance doctrine.--The term
`economic substance doctrine' means the common law
doctrine under which tax benefits under subtitle A with
respect to a transaction are not allowable if the
transaction does not have economic substance or lacks a
business purpose.
``(B) Tax-indifferent party.--The term `tax-
indifferent party' means any person or entity not
subject to tax imposed by subtitle A. A person shall be
treated as a tax-indifferent party with respect to a
transaction if the items taken into account with
respect to the transaction have no substantial impact
on such person's liability under subtitle A.
``(C) Exception for personal transactions of
individuals.--In the case of an individual, this
subsection shall apply only to transactions entered
into in connection with a trade or business or an
activity engaged in for the production of income.
``(D) Treatment of lessors.--In applying subclause
(I) of paragraph (1)(B)(ii) to the lessor of tangible
property subject to a lease, the expected net tax
benefits shall not include the benefits of
depreciation, or any tax credit, with respect to the
leased property and subclause (II) of paragraph
(1)(B)(ii) shall be disregarded in determining whether
any of such benefits are allowable.
``(4) Other common law doctrines not affected.--Except as
specifically provided in this subsection, the provisions of
this subsection shall not be construed as altering or
supplanting any other rule of law, and the requirements of this
subsection shall be construed as being in addition to any such
other rule of law.
``(5) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this subsection. Such regulations may include
exemptions from the application of this subsection.''
(b) Effective Date.--The amendments made by this section shall
apply to transactions entered into after February 15, 2004.

SEC. 502. PENALTY FOR FAILING TO DISCLOSE REPORTABLE TRANSACTION.

(a) In General.--Part I of subchapter B of chapter 68 (relating to
assessable penalties) is amended by inserting after section 6707 the
following new section:

``SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE REPORTABLE TRANSACTION
INFORMATION WITH RETURN OR STATEMENT.

``(a) Imposition of Penalty.--Any person who fails to include on
any return or statement any information with respect to a reportable
transaction which is required under section 6011 to be included with
such return or statement shall pay a penalty in the amount determined
under subsection (b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), the amount of the penalty under subsection (a) shall be
$50,000.
``(2) Listed transaction.--The amount of the penalty under
subsection (a) with respect to a listed transaction shall be
$100,000.
``(3) Increase in penalty for large entities and high net
worth individuals.--
``(A) In general.--In the case of a failure under
subsection (a) by--
``(i) a large entity, or
``(ii) a high net worth individual,
the penalty under paragraph (1) or (2) shall be twice
the amount determined without regard to this paragraph.
``(B) Large entity.--For purposes of subparagraph
(A), the term `large entity' means, with respect to any
taxable year, a person (other than a natural person)
with gross receipts in excess of $10,000,000 for the
taxable year in which the reportable transaction occurs
or the preceding taxable year. Rules similar to the
rules of paragraph (2) and subparagraphs (B), (C), and
(D) of paragraph (3) of section 448(c) shall apply for
purposes of this subparagraph.
``(C) High net worth individual.--The term `high
net worth individual' means, with respect to a
transaction, a natural person whose net worth exceeds
$2,000,000 immediately before the transaction.
``(c) Definitions.--For purposes of this section--
``(1) Reportable transaction.--The term `reportable
transaction' means any transaction with respect to which
information is required to be included with a return or
statement because, as determined under regulations prescribed
under section 6011, such transaction is of a type which the
Secretary determines as having a potential for tax avoidance or
evasion.
``(2) Listed transaction.--Except as provided in
regulations, the term `listed transaction' means a reportable
transaction which is the same as, or substantially similar to,
a transaction specifically identified by the Secretary as a tax
avoidance transaction for purposes of section 6011.
``(d) Authority To Rescind Penalty.--
``(1) In general.--The Commissioner of Internal Revenue may
rescind all or any portion of any penalty imposed by this
section with respect to any violation if--
``(A) the violation is with respect to a reportable
transaction other than a listed transaction,
``(B) the person on whom the penalty is imposed has
a history of complying with the requirements of this
title,
``(C) it is shown that the violation is due to an
unintentional mistake of fact;
``(D) imposing the penalty would be against equity
and good conscience, and
``(E) rescinding the penalty would promote
compliance with the requirements of this title and
effective tax administration.
``(2) Discretion.--The exercise of authority under
paragraph (1) shall be at the sole discretion of the
Commissioner and may be delegated only to the head of the
Office of Tax Shelter Analysis. The Commissioner, in the
Commissioner's sole discretion, may establish a procedure to
determine if a penalty should be referred to the Commissioner
or the head of such Office for a determination under paragraph
(1).
``(3) No appeal.--Notwithstanding any other provision of
law, any determination under this subsection may not be
reviewed in any administrative or judicial proceeding.
``(4) Records.--If a penalty is rescinded under paragraph
(1), the Commissioner shall place in the file in the Office of
the Commissioner the opinion of the Commissioner or the head of
the Office of Tax Shelter Analysis with respect to the
determination, including--
``(A) the facts and circumstances of the
transaction,
``(B) the reasons for the rescission, and
``(C) the amount of the penalty rescinded.
``(5) Report.--The Commissioner shall each year report to
the Committee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate--
``(A) a summary of the total number and aggregate
amount of penalties imposed, and rescinded, under this
section, and
``(B) a description of each penalty rescinded under
this subsection and the reasons therefor.
``(e) Penalty Reported to SEC.--In the case of a person--
``(1) which is required to file periodic reports under
section 13 or 15(d) of the Securities Exchange Act of 1934 or
is required to be consolidated with another person for purposes
of such reports, and
``(2) which--
``(A) is required to pay a penalty under this
section with respect to a listed transaction,
``(B) is required to pay a penalty under section
6662A with respect to any reportable transaction at a
rate prescribed under section 6662A(c), or
``(C) is required to pay a penalty under section
6662B with respect to any noneconomic substance
transaction,
the requirement to pay such penalty shall be disclosed in such reports
filed by such person for such periods as the Secretary shall specify.
Failure to make a disclosure in accordance with the preceding sentence
shall be treated as a failure to which the penalty under subsection
(b)(2) applies.
``(f) Coordination With Other Penalties.--The penalty imposed by
this section is in addition to any penalty imposed under this title.''
(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 6707 the following:

``Sec. 6707A. Penalty for failure to
include reportable transaction
information with return or
statement.''
(c) Effective Date.--The amendments made by this section shall
apply to returns and statements the due date for which is after the
date of the enactment of this Act.

SEC. 503. ACCURACY-RELATED PENALTY FOR LISTED TRANSACTIONS AND OTHER
REPORTABLE TRANSACTIONS HAVING A SIGNIFICANT TAX
AVOIDANCE PURPOSE.

(a) In General.--Subchapter A of chapter 68 is amended by inserting
after section 6662 the following new section:

``SEC. 6662A. IMPOSITION OF ACCURACY-RELATED PENALTY ON UNDERSTATEMENTS
WITH RESPECT TO REPORTABLE TRANSACTIONS.

``(a) Imposition of Penalty.--If a taxpayer has a reportable
transaction understatement for any taxable year, there shall be added
to the tax an amount equal to 20 percent of the amount of such
understatement.
``(b) Reportable Transaction Understatement.--For purposes of this
section--
``(1) In general.--The term `reportable transaction
understatement' means the sum of--
``(A) the product of--
``(i) the amount of the increase (if any)
in taxable income which results from a
difference between the proper tax treatment of
an item to which this section applies and the
taxpayer's treatment of such item (as shown on
the taxpayer's return of tax), and
``(ii) the highest rate of tax imposed by
section 1 (section 11 in the case of a taxpayer
which is a corporation), and
``(B) the amount of the decrease (if any) in the
aggregate amount of credits determined under subtitle A
which results from a difference between the taxpayer's
treatment of an item to which this section applies (as
shown on the taxpayer's return of tax) and the proper
tax treatment of such item.
For purposes of subparagraph (A), any reduction of the excess
of deductions allowed for the taxable year over gross income
for such year, and any reduction in the amount of capital
losses which would (without regard to section 1211) be allowed
for such year, shall be treated as an increase in taxable
income.
``(2) Items to which section applies.--This section shall
apply to any item which is attributable to--
``(A) any listed transaction, and
``(B) any reportable transaction (other than a
listed transaction) if a significant purpose of such
transaction is the avoidance or evasion of Federal
income tax.
``(c) Higher Penalty for Nondisclosed Listed and Other Avoidance
Transactions.--
``(1) In general.--Subsection (a) shall be applied by
substituting `30 percent' for `20 percent' with respect to the
portion of any reportable transaction understatement with
respect to which the requirement of section 6664(d)(2)(A) is
not met.
``(2) Rules applicable to compromise of penalty.--
``(A) In general.--If the 1st letter of proposed
deficiency which allows the taxpayer an opportunity for
administrative review in the Internal Revenue Service
Office of Appeals has been sent with respect to a
penalty to which paragraph (1) applies, only the
Commissioner of Internal Revenue may compromise all or
any portion of such penalty.
``(B) Applicable rules.--The rules of paragraphs
(2), (3), (4), and (5) of section 6707A(d) shall apply
for purposes of subparagraph (A).
``(d) Definitions of Reportable and Listed Transactions.--For
purposes of this section, the terms `reportable transaction' and
`listed transaction' have the respective meanings given to such terms
by section 6707A(c).
``(e) Special Rules.--
``(1) Coordination with penalties, etc., on other
understatements.--In the case of an understatement (as defined
in section 6662(d)(2))--
``(A) the amount of such understatement (determined
without regard to this paragraph) shall be increased by
the aggregate amount of reportable transaction
understatements and noneconomic substance transaction
understatements for purposes of determining whether
such understatement is a substantial understatement
under section 6662(d)(1), and
``(B) the addition to tax under section 6662(a)
shall apply only to the excess of the amount of the
substantial understatement (if any) after the
application of subparagraph (A) over the aggregate
amount of reportable transaction understatements and
noneconomic substance transaction understatements.
``(2) Coordination with other penalties.--
``(A) Application of fraud penalty.--References to
an underpayment in section 6663 shall be treated as
including references to a reportable transaction
understatement and a noneconomic substance transaction
understatement.
``(B) No double penalty.--This section shall not
apply to any portion of an understatement on which a
penalty is imposed under section 6662B or 6663.
``(3) Special rule for amended returns.--Except as provided
in regulations, in no event shall any tax treatment included
with an amendment or supplement to a return of tax be taken
into account in determining the amount of any reportable
transaction understatement or noneconomic substance transaction
understatement if the amendment or supplement is filed after
the earlier of the date the taxpayer is first contacted by the
Secretary regarding the examination of the return or such other
date as is specified by the Secretary.
``(4) Noneconomic substance transaction understatement.--
For purposes of this subsection, the term `noneconomic
substance transaction understatement' has the meaning given
such term by section 6662B(c).
``(5) Cross reference.--

``For reporting of section 6662A(c)
penalty to the Securities and Exchange Commission, see section
6707A(e).''
(b) Determination of Other Understatements.--Subparagraph (A) of
section 6662(d)(2) is amended by adding at the end the following flush
sentence:
``The excess under the preceding sentence shall be
determined without regard to items to which section
6662A applies and without regard to items with respect
to which a penalty is imposed by section 6662B.''
(c) Reasonable Cause Exception.--
(1) In general.--Section 6664 is amended by adding at the
end the following new subsection:
``(d) Reasonable Cause Exception for Reportable Transaction
Understatements.--
``(1) In general.--No penalty shall be imposed under
section 6662A with respect to any portion of a reportable
transaction understatement if it is shown that there was a
reasonable cause for such portion and that the taxpayer acted
in good faith with respect to such portion.
``(2) Special rules.--Paragraph (1) shall not apply to any
reportable transaction understatement unless--
``(A) the relevant facts affecting the tax
treatment of the item are adequately disclosed in
accordance with the regulations prescribed under
section 6011,
``(B) there is or was substantial authority for
such treatment, and
``(C) the taxpayer reasonably believed that such
treatment was more likely than not the proper
treatment.
A taxpayer failing to adequately disclose in accordance with
section 6011 shall be treated as meeting the requirements of
subparagraph (A) if the penalty for such failure was rescinded
under section 6707A(d).
``(3) Rules relating to reasonable belief.--For purposes of
paragraph (2)(C)--
``(A) In general.--A taxpayer shall be treated as
having a reasonable belief with respect to the tax
treatment of an item only if such belief--
``(i) is based on the facts and law that
exist at the time the return of tax which
includes such tax treatment is filed, and
``(ii) relates solely to the taxpayer's
chances of success on the merits of such
treatment and does not take into account the
possibility that a return will not be audited,
such treatment will not be raised on audit, or
such treatment will be resolved through
settlement if it is raised.
``(B) Certain opinions may not be relied upon.--
``(i) In general.--An opinion of a tax
advisor may not be relied upon to establish the
reasonable belief of a taxpayer if--
``(I) the tax advisor is described
in clause (ii), or
``(II) the opinion is described in
clause (iii).
``(ii) Disqualified tax advisors.--A tax
advisor is described in this clause if the tax
advisor--
``(I) is a material advisor (within
the meaning of section 6111(b)(1)) who
participates in the organization,
management, promotion, or sale of the
transaction or who is related (within
the meaning of section 267(b) or
707(b)(1)) to any person who so
participates,
``(II) is compensated directly or
indirectly by a material advisor with
respect to the transaction,
``(III) has a fee arrangement with
respect to the transaction which is
contingent on all or part of the
intended tax benefits from the
transaction being sustained, or
``(IV) as determined under
regulations prescribed by the
Secretary, has a continuing financial
interest with respect to the
transaction.
``(iii) Disqualified opinions.--For
purposes of clause (i), an opinion is
disqualified if the opinion--
``(I) is based on unreasonable
factual or legal assumptions (including
assumptions as to future events),
``(II) unreasonably relies on
representations, statements, findings,
or agreements of the taxpayer or any
other person,
``(III) does not identify and
consider all relevant facts, or
``(IV) fails to meet any other
requirement as the Secretary may
prescribe.''
(2) Conforming amendment.--The heading for subsection (c)
of section 6664 is amended by inserting ``for Underpayments''
after ``Exception''.
(d) Conforming Amendments.--
(1) Subparagraph (C) of section 461(i)(3) is amended by
striking ``section 6662(d)(2)(C)(iii)'' and inserting ``section
1274(b)(3)(C)''.
(2) Paragraph (3) of section 1274(b) is amended--
(A) by striking ``(as defined in section
6662(d)(2)(C)(iii))'' in subparagraph (B)(i), and
(B) by adding at the end the following new
subparagraph:
``(C) Tax shelter.--For purposes of subparagraph
(B), the term `tax shelter' means--
``(i) a partnership or other entity,
``(ii) any investment plan or arrangement,
or
``(iii) any other plan or arrangement,
if a significant purpose of such partnership, entity,
plan, or arrangement is the avoidance or evasion of
Federal income tax.''
(3) Section 6662(d)(2) is amended by striking subparagraphs
(C) and (D).
(4) Section 6664(c)(1) is amended by striking ``this part''
and inserting ``section 6662 or 6663''.
(5) Subsection (b) of section 7525 is amended by striking
``section 6662(d)(2)(C)(iii)'' and inserting ``section
1274(b)(3)(C)''.
(6)(A) The heading for section 6662 is amended to read as
follows:

``SEC. 6662. IMPOSITION OF ACCURACY-RELATED PENALTY ON UNDERPAYMENTS.''

(B) The table of sections for part II of subchapter A of
chapter 68 is amended by striking the item relating to section
6662 and inserting the following new items:

``Sec. 6662. Imposition of accuracy-
related penalty on
underpayments.
``Sec. 6662A. Imposition of accuracy-
related penalty on
understatements with respect to
reportable transactions.''
(e) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.

SEC. 504. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO TRANSACTIONS
LACKING ECONOMIC SUBSTANCE, ETC.

(a) In General.--Subchapter A of chapter 68 is amended by inserting
after section 6662A the following new section:

``SEC. 6662B. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO TRANSACTIONS
LACKING ECONOMIC SUBSTANCE, ETC.

``(a) Imposition of Penalty.--If a taxpayer has an noneconomic
substance transaction understatement for any taxable year, there shall
be added to the tax an amount equal to 40 percent of the amount of such
understatement.
``(b) Reduction of Penalty for Disclosed Transactions.--Subsection
(a) shall be applied by substituting `20 percent' for `40 percent' with
respect to the portion of any noneconomic substance transaction
understatement with respect to which the relevant facts affecting the
tax treatment of the item are adequately disclosed in the return or a
statement attached to the return.
``(c) Noneconomic Substance Transaction Understatement.--For
purposes of this section--
``(1) In general.--The term `noneconomic substance
transaction understatement' means any amount which would be an
understatement under section 6662A(b)(1) if section 6662A were
applied by taking into account items attributable to
noneconomic substance transactions rather than items to which
section 6662A applies.
``(2) Noneconomic substance transaction.--The term
`noneconomic substance transaction' means any transaction if--
``(A) there is a lack of economic substance (within
the meaning of section 7701(m)(1)) for the transaction
giving rise to the claimed benefit or the transaction
was not respected under section 7701(m)(2), or
``(B) the transaction fails to meet the
requirements of any similar rule of law.
``(d) Rules Applicable To Compromise of Penalty.--
``(1) In general.--If the 1st letter of proposed deficiency
which allows the taxpayer an opportunity for administrative
review in the Internal Revenue Service Office of Appeals has
been sent with respect to a penalty to which this section
applies, only the Commissioner of Internal Revenue may
compromise all or any portion of such penalty.
``(2) Applicable rules.--The rules of paragraphs (2), (3),
(4), and (5) of section 6707A(d) shall apply for purposes of
paragraph (1).
``(e) Coordination With Other Penalties.--Except as otherwise
provided in this part, the penalty imposed by this section shall be in
addition to any other penalty imposed by this title.
``(f) Cross References.--

``(1) For coordination of penalty with
understatements under section 6662 and other special rules, see section
6662A(e).
``(2) For reporting of penalty imposed
under this section to the Securities and Exchange Commission, see
section 6707A(e).''
(b) Clerical Amendment.--The table of sections for part II of
subchapter A of chapter 68 is amended by inserting after the item
relating to section 6662A the following new item:

``Sec. 6662B. Penalty for understatements
attributable to transactions
lacking economic substance,
etc.''
(c) Effective Date.--The amendments made by this section shall
apply to transactions entered into after February 15, 2004.

SEC. 505. MODIFICATIONS OF SUBSTANTIAL UNDERSTATEMENT PENALTY FOR
NONREPORTABLE TRANSACTIONS.

(a) Substantial Understatement of Corporations.--Section
6662(d)(1)(B) (relating to special rule for corporations) is amended to
read as follows:
``(B) Special rule for corporations.--In the case
of a corporation other than an S corporation or a
personal holding company (as defined in section 542),
there is a substantial understatement of income tax for
any taxable year if the amount of the understatement
for the taxable year exceeds the lesser of--
``(i) 10 percent of the tax required to be
shown on the return for the taxable year (or,
if greater, $10,000), or
``(ii) $10,000,000.''
(b) Reduction for Understatement of Taxpayer Due to Position of
Taxpayer or Disclosed Item.--
(1) In general.--Section 6662(d)(2)(B)(i) (relating to
substantial authority) is amended to read as follows:
``(i) the tax treatment of any item by the
taxpayer if the taxpayer had reasonable belief
that the tax treatment was more likely than not
the proper treatment, or''.
(2) Conforming amendment.--Section 6662(d) is amended by
adding at the end the following new paragraph:
``(3) Secretarial list.--For purposes of this subsection,
section 6664(d)(2), and section 6694(a)(1), the Secretary may
prescribe a list of positions for which the Secretary believes
there is not substantial authority or there is no reasonable
belief that the tax treatment is more likely than not the
proper tax treatment. Such list (and any revisions thereof)
shall be published in the Federal Register or the Internal
Revenue Bulletin.''
(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. 506. TAX SHELTER EXCEPTION TO CONFIDENTIALITY PRIVILEGES RELATING
TO TAXPAYER COMMUNICATIONS.

(a) In General.--Section 7525(b) (relating to section not to apply
to communications regarding corporate tax shelters) is amended to read
as follows:
``(b) Section Not To Apply to Communications Regarding Tax
Shelters.--The privilege under subsection (a) shall not apply to any
written communication which is--
``(1) between a federally authorized tax practitioner and--
``(A) any person,
``(B) any director, officer, employee, agent, or
representative of the person, or
``(C) any other person holding a capital or profits
interest in the person, and
``(2) in connection with the promotion of the direct or
indirect participation of the person in any tax shelter (as
defined in section 1274(b)(3)(C)).''
(b) Effective Date.--The amendment made by this section shall apply
to communications made on or after the date of the enactment of this
Act.

SEC. 507. DISCLOSURE OF REPORTABLE TRANSACTIONS.

(a) In General.--Section 6111 (relating to registration of tax
shelters) is amended to read as follows:

``SEC. 6111. DISCLOSURE OF REPORTABLE TRANSACTIONS.

``(a) In General.--Each material advisor with respect to any
reportable transaction shall make a return (in such form as the
Secretary may prescribe) setting forth--
``(1) information identifying and describing the
transaction,
``(2) information describing any potential tax benefits
expected to result from the transaction, and
``(3) such other information as the Secretary may
prescribe.
Such return shall be filed not later than the date specified by the
Secretary.
``(b) Definitions.--For purposes of this section--
``(1) Material advisor.--
``(A) In general.--The term `material advisor'
means any person--
``(i) who provides any material aid,
assistance, or advice with respect to
organizing, promoting, selling, implementing,
or carrying out any reportable transaction, and
``(ii) who directly or indirectly derives
gross income in excess of the threshold amount
for such advice or assistance.
``(B) Threshold amount.--For purposes of
subparagraph (A), the threshold amount is--
``(i) $50,000 in the case of a reportable
transaction substantially all of the tax
benefits from which are provided to natural
persons, and
``(ii) $250,000 in any other case.
``(2) Reportable transaction.--The term `reportable
transaction' has the meaning given to such term by section
6707A(c).
``(c) Regulations.--The Secretary may prescribe regulations which
provide--
``(1) that only 1 person shall be required to meet the
requirements of subsection (a) in cases in which 2 or more
persons would otherwise be required to meet such requirements,
``(2) exemptions from the requirements of this section, and
``(3) such rules as may be necessary or appropriate to
carry out the purposes of this section.''
(b) Conforming Amendments.--
(1) The item relating to section 6111 in the table of
sections for subchapter B of chapter 61 is amended to read as
follows:

``Sec. 6111. Disclosure of reportable
transactions.''
(2)(A) So much of section 6112 as precedes subsection (c)
thereof is amended to read as follows:

``SEC. 6112. MATERIAL ADVISORS OF REPORTABLE TRANSACTIONS MUST KEEP
LISTS OF ADVISEES.

``(a) In General.--Each material advisor (as defined in section
6111) with respect to any reportable transaction (as defined in section
6707A(c)) shall maintain, in such manner as the Secretary may by
regulations prescribe, a list--
``(1) identifying each person with respect to whom such
advisor acted as such a material advisor with respect to such
transaction, and
``(2) containing such other information as the Secretary
may by regulations require.
This section shall apply without regard to whether a material advisor
is required to file a return under section 6111 with respect to such
transaction.''
(B) Section 6112 is amended by redesignating subsection (c)
as subsection (b).
(C) Section 6112(b), as redesignated by subparagraph (B),
is amended--
(i) by inserting ``written'' before ``request'' in
paragraph (1)(A), and
(ii) by striking ``shall prescribe'' in paragraph
(2) and inserting ``may prescribe''.
(D) The item relating to section 6112 in the table of
sections for subchapter B of chapter 61 is amended to read as
follows:

``Sec. 6112. Material advisors of
reportable transactions must
keep lists of advisees.''
(3)(A) The heading for section 6708 is amended to read as
follows:

``SEC. 6708. FAILURE TO MAINTAIN LISTS OF ADVISEES WITH RESPECT TO
REPORTABLE TRANSACTIONS.''

(B) The item relating to section 6708 in the table of
sections for part I of subchapter B of chapter 68 is amended to
read as follows:

``Sec. 6708. Failure to maintain lists of
advisees with respect to
reportable transactions.''
(c) Effective Date.--The amendments made by this section shall
apply to transactions with respect to which material aid, assistance,
or advice referred to in section 6111(b)(1)(A)(i) of the Internal
Revenue Code of 1986 (as added by this section) is provided after the
date of the enactment of this Act.

SEC. 508. MODIFICATIONS TO PENALTY FOR FAILURE TO REGISTER TAX
SHELTERS.

(a) In General.--Section 6707 (relating to failure to furnish
information regarding tax shelters) is amended to read as follows:

``SEC. 6707. FAILURE TO FURNISH INFORMATION REGARDING REPORTABLE
TRANSACTIONS.

``(a) In General.--If a person who is required to file a return
under section 6111(a) with respect to any reportable transaction--
``(1) fails to file such return on or before the date
prescribed therefor, or
``(2) files false or incomplete information with the
Secretary with respect to such transaction,
such person shall pay a penalty with respect to such return in the
amount determined under subsection (b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraph (2), the
penalty imposed under subsection (a) with respect to any
failure shall be $50,000.
``(2) Listed transactions.--The penalty imposed under
subsection (a) with respect to any listed transaction shall be
an amount equal to the greater of--
``(A) $200,000, or
``(B) 50 percent of the gross income derived by
such person with respect to aid, assistance, or advice
which is provided with respect to the reportable
transaction before the date the return including the
transaction is filed under section 6111.
Subparagraph (B) shall be applied by substituting `75 percent'
for `50 percent' in the case of an intentional failure or act
described in subsection (a).
``(c) Rescission Authority.--The provisions of section 6707A(d)
(relating to authority of Commissioner to rescind penalty) shall apply
to any penalty imposed under this section.
``(d) Reportable and Listed Transactions.--The terms `reportable
transaction' and `listed transaction' have the respective meanings
given to such terms by section 6707A(c).''.
(b) Clerical Amendment.--The item relating to section 6707 in the
table of sections for part I of subchapter B of chapter 68 is amended
by striking ``tax shelters'' and inserting ``reportable transactions''.
(c) Effective Date.--The amendments made by this section shall
apply to returns the due date for which is after the date of the
enactment of this Act.

SEC. 509. MODIFICATION OF PENALTY FOR FAILURE TO MAINTAIN LISTS OF
INVESTORS.

(a) In General.--Subsection (a) of section 6708 is amended to read
as follows:
``(a) Imposition of Penalty.--
``(1) In general.--If any person who is required to
maintain a list under section 6112(a) fails to make such list
available upon written request to the Secretary in accordance
with section 6112(b)(1)(A) within 20 business days after the
date of the Secretary's request, such person shall pay a
penalty of $10,000 for each day of such failure after such 20th
day.
``(2) Reasonable cause exception.--No penalty shall be
imposed by paragraph (1) with respect to the failure on any day
if such failure is due to reasonable cause.''
(b) Effective Date.--The amendment made by this section shall apply
to requests made after the date of the enactment of this Act.

SEC. 510. MODIFICATION OF ACTIONS TO ENJOIN CERTAIN CONDUCT RELATED TO
TAX SHELTERS AND REPORTABLE TRANSACTIONS.

(a) In General.--Section 7408 (relating to action to enjoin
promoters of abusive tax shelters, etc.) is amended by redesignating
subsection (c) as subsection (d) and by striking subsections (a) and
(b) and inserting the following new subsections:
``(a) Authority To Seek Injunction.--A civil action in the name of
the United States to enjoin any person from further engaging in
specified conduct may be commenced at the request of the Secretary. Any
action under this section shall be brought in the district court of the
United States for the district in which such person resides, has his
principal place of business, or has engaged in specified conduct. The
court may exercise its jurisdiction over such action (as provided in
section 7402(a)) separate and apart from any other action brought by
the United States against such person.
``(b) Adjudication and Decree.--In any action under subsection (a),
if the court finds--
``(1) that the person has engaged in any specified conduct,
and
``(2) that injunctive relief is appropriate to prevent
recurrence of such conduct,
the court may enjoin such person from engaging in such conduct or in
any other activity subject to penalty under this title.
``(c) Specified Conduct.--For purposes of this section, the term
`specified conduct' means any action, or failure to take action,
subject to penalty under section 6700, 6701, 6707, or 6708.''
(b) Conforming Amendments.--
(1) The heading for section 7408 is amended to read as
follows:

``SEC. 7408. ACTIONS TO ENJOIN SPECIFIED CONDUCT RELATED TO TAX
SHELTERS AND REPORTABLE TRANSACTIONS.''

(2) The table of sections for subchapter A of chapter 67 is
amended by striking the item relating to section 7408 and
inserting the following new item:

``Sec. 7408. Actions to enjoin specified conduct related to tax
shelters and reportable transactions.''
(c) Effective Date.--The amendment made by this section shall take
effect on the day after the date of the enactment of this Act.

SEC. 511. UNDERSTATEMENT OF TAXPAYER'S LIABILITY BY INCOME TAX RETURN
PREPARER.

(a) Standards Conformed to Taxpayer Standards.--Section 6694(a)
(relating to understatements due to unrealistic positions) is amended--
(1) by striking ``realistic possibility of being sustained
on its merits'' in paragraph (1) and inserting ``reasonable
belief that the tax treatment in such position was more likely
than not the proper treatment'',
(2) by striking ``or was frivolous'' in paragraph (3) and
inserting ``or there was no reasonable basis for the tax
treatment of such position'', and
(3) by striking ``Unrealistic'' in the heading and
inserting ``Improper''.
(b) Amount of Penalty.--Section 6694 is amended--
(1) by striking ``$250'' in subsection (a) and inserting
``$1,000'', and
(2) by striking ``$1,000'' in subsection (b) and inserting
``$5,000''.
(c) Effective Date.--The amendments made by this section shall
apply to documents prepared after the date of the enactment of this
Act.

SEC. 512. PENALTY ON FAILURE TO REPORT INTERESTS IN FOREIGN FINANCIAL
ACCOUNTS.

(a) In General.--Section 5321(a)(5) of title 31, United States
Code, is amended to read as follows:
``(5) Foreign financial agency transaction violation.--
``(A) Penalty authorized.--The Secretary of the
Treasury may impose a civil money penalty on any person
who violates, or causes any violation of, any provision
of section 5314.
``(B) Amount of penalty.--
``(i) In general.--Except as provided in
subparagraph (C), the amount of any civil
penalty imposed under subparagraph (A) shall
not exceed $5,000.
``(ii) Reasonable cause exception.--No
penalty shall be imposed under subparagraph (A)
with respect to any violation if--
``(I) such violation was due to
reasonable cause, and
``(II) the amount of the
transaction or the balance in the
account at the time of the transaction
was properly reported.
``(C) Willful violations.--In the case of any
person willfully violating, or willfully causing any
violation of, any provision of section 5314--
``(i) the maximum penalty under
subparagraph (B)(i) shall be increased to the
greater of--
``(I) $25,000, or
``(II) the amount (not exceeding
$100,000) determined under subparagraph
(D), and
``(ii) subparagraph (B)(ii) shall not
apply.
``(D) Amount.--The amount determined under this
subparagraph is--
``(i) in the case of a violation involving
a transaction, the amount of the transaction,
or
``(ii) in the case of a violation involving
a failure to report the existence of an account
or any identifying information required to be
provided with respect to an account, the
balance in the account at the time of the
violation.''
(b) Effective Date.--The amendment made by this section shall apply
to violations occurring after the date of the enactment of this Act.

SEC. 513. FRIVOLOUS TAX SUBMISSIONS.

(a) Civil Penalties.--Section 6702 is amended to read as follows:

``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.

``(a) Civil Penalty for Frivolous Tax Returns.--A person shall pay
a penalty of $5,000 if--
``(1) such person files what purports to be a return of a
tax imposed by this title but which--
``(A) does not contain information on which the
substantial correctness of the self-assessment may be
judged, or
``(B) contains information that on its face
indicates that the self-assessment is substantially
incorrect; and
``(2) the conduct referred to in paragraph (1)--
``(A) is based on a position which the Secretary
has identified as frivolous under subsection (c), or
``(B) reflects a desire to delay or impede the
administration of Federal tax laws.
``(b) Civil Penalty for Specified Frivolous Submissions.--
``(1) Imposition of penalty.--Except as provided in
paragraph (3), any person who submits a specified frivolous
submission shall pay a penalty of $5,000.
``(2) Specified frivolous submission.--For purposes of this
section--
``(A) Specified frivolous submission.--The term
`specified frivolous submission' means a specified
submission if any portion of such submission--
``(i) is based on a position which the
Secretary has identified as frivolous under
subsection (c), or
``(ii) reflects a desire to delay or impede
the administration of Federal tax laws.
``(B) Specified submission.--The term `specified
submission' means--
``(i) a request for a hearing under--
``(I) section 6320 (relating to
notice and opportunity for hearing upon
filing of notice of lien), or
``(II) section 6330 (relating to
notice and opportunity for hearing
before levy), and
``(ii) an application under--
``(I) section 6159 (relating to
agreements for payment of tax liability
in installments),
``(II) section 7122 (relating to
compromises), or
``(III) section 7811 (relating to
taxpayer assistance orders).
``(3) Opportunity to withdraw submission.--If the Secretary
provides a person with notice that a submission is a specified
frivolous submission and such person withdraws such submission
within 30 days after such notice, the penalty imposed under
paragraph (1) shall not apply with respect to such submission.
``(c) Listing of Frivolous Positions.--The Secretary shall
prescribe (and periodically revise) a list of positions which the
Secretary has identified as being frivolous for purposes of this
subsection. The Secretary shall not include in such list any position
that the Secretary determines meets the requirement of section
6662(d)(2)(B)(ii)(II).
``(d) Reduction of Penalty.--The Secretary may reduce the amount of
any penalty imposed under this section if the Secretary determines that
such reduction would promote compliance with and administration of the
Federal tax laws.
``(e) Penalties in Addition to Other Penalties.--The penalties
imposed by this section shall be in addition to any other penalty
provided by law.''
(b) Treatment of Frivolous Requests for Hearings Before Levy.--
(1) Frivolous requests disregarded.--Section 6330 (relating
to notice and opportunity for hearing before levy) is amended
by adding at the end the following new subsection:
``(g) Frivolous Requests for Hearing, Etc.--Notwithstanding any
other provision of this section, if the Secretary determines that any
portion of a request for a hearing under this section or section 6320
meets the requirement of clause (i) or (ii) of section 6702(b)(2)(A),
then the Secretary may treat such portion as if it were never submitted
and such portion shall not be subject to any further administrative or
judicial review.''
(2) Preclusion from raising frivolous issues at hearing.--
Section 6330(c)(4) is amended--
(A) by striking ``(A)'' and inserting ``(A)(i)'';
(B) by striking ``(B)'' and inserting ``(ii)'';
(C) by striking the period at the end of the first
sentence and inserting ``; or''; and
(D) by inserting after subparagraph (A)(ii) (as so
redesignated) the following:
``(B) the issue meets the requirement of clause (i)
or (ii) of section 6702(b)(2)(A).''
(3) Statement of grounds.--Section 6330(b)(1) is amended by
striking ``under subsection (a)(3)(B)'' and inserting ``in
writing under subsection (a)(3)(B) and states the grounds for
the requested hearing''.
(c) Treatment of Frivolous Requests for Hearings Upon Filing of
Notice of Lien.--Section 6320 is amended--
(1) in subsection (b)(1), by striking ``under subsection
(a)(3)(B)'' and inserting ``in writing under subsection
(a)(3)(B) and states the grounds for the requested hearing'',
and
(2) in subsection (c), by striking ``and (e)'' and
inserting ``(e), and (g)''.
(d) Treatment of Frivolous Applications for Offers-in-Compromise
and Installment Agreements.--Section 7122 is amended by adding at the
end the following new subsection:
``(e) Frivolous Submissions, Etc.--Notwithstanding any other
provision of this section, if the Secretary determines that any portion
of an application for an offer-in-compromise or installment agreement
submitted under this section or section 6159 meets the requirement of
clause (i) or (ii) of section 6702(b)(2)(A), then the Secretary may
treat such portion as if it were never submitted and such portion shall
not be subject to any further administrative or judicial review.''
(e) Clerical Amendment.--The table of sections for part I of
subchapter B of chapter 68 is amended by striking the item relating to
section 6702 and inserting the following new item:

``Sec. 6702. Frivolous tax submissions.''
(f) Effective Date.--The amendments made by this section shall
apply to submissions made and issues raised after the date on which the
Secretary first prescribes a list under section 6702(c) of the Internal
Revenue Code of 1986, as amended by subsection (a).

SEC. 514. REGULATION OF INDIVIDUALS PRACTICING BEFORE THE DEPARTMENT OF
TREASURY.

(a) Censure; Imposition of Penalty.--
(1) In general.--Section 330(b) of title 31, United States
Code, is amended--
(A) by inserting ``, or censure,'' after
``Department'', and
(B) by adding at the end the following new flush
sentence:
``The Secretary may impose a monetary penalty on any representative
described in the preceding sentence. If the representative was acting
on behalf of an employer or any firm or other entity in connection with
the conduct giving rise to such penalty, the Secretary may impose a
monetary penalty on such employer, firm, or entity if it knew, or
reasonably should have known, of such conduct. Such penalty shall not
exceed the gross income derived (or to be derived) from the conduct
giving rise to the penalty and may be in addition to, or in lieu of,
any suspension, disbarment, or censure.''
(2) Effective date.--The amendments made by this subsection
shall apply to actions taken after the date of the enactment of
this Act.
(b) Tax Shelter Opinions, Etc.--Section 330 of such title 31 is
amended by adding at the end the following new subsection:
``(d) Nothing in this section or in any other provision of law
shall be construed to limit the authority of the Secretary of the
Treasury to impose standards applicable to the rendering of written
advice with respect to any entity, transaction plan or arrangement, or
other plan or arrangement, which is of a type which the Secretary
determines as having a potential for tax avoidance or evasion.''

SEC. 515. PENALTY ON PROMOTERS OF TAX SHELTERS.

(a) Penalty on Promoting Abusive Tax Shelters.--Section 6700(a) is
amended by adding at the end the following new sentence:
``Notwithstanding the first sentence, if an activity with respect to
which a penalty imposed under this subsection involves a statement
described in paragraph (2)(A), the amount of the penalty shall be equal
to 50 percent of the gross income derived (or to be derived) from such
activity by the person on which the penalty is imposed.''
(b) Effective Date.--The amendment made by this section shall apply
to activities after the date of the enactment of this Act.

SEC. 516. STATUTE OF LIMITATIONS FOR TAXABLE YEARS FOR WHICH LISTED
TRANSACTIONS NOT REPORTED.

(a) In General.--Section 6501(e)(1) (relating to substantial
omission of items for income taxes) is amended by adding at the end the
following new subparagraph:
``(C) Listed transactions.--If a taxpayer fails to
include on any return or statement for any taxable year
any information with respect to a listed transaction
(as defined in section 6707A(c)(2)) which is required
under section 6011 to be included with such return or
statement, the tax for such taxable year may be
assessed, or a proceeding in court for collection of
such tax may be begun without assessment, at any time
within 6 years after the time the return is filed. This
subparagraph shall not apply to any taxable year if the
time for assessment or beginning the proceeding in
court has expired before the time a transaction is
treated as a listed transaction under section 6011.''
(b) Effective Date.--The amendment made by this section shall apply
to transactions in taxable years beginning after the date of the
enactment of this Act.

SEC. 517. DENIAL OF DEDUCTION FOR INTEREST ON UNDERPAYMENTS
ATTRIBUTABLE TO NONDISCLOSED REPORTABLE AND NONECONOMIC
SUBSTANCE TRANSACTIONS.

(a) In General.--Section 163 (relating to deduction for interest)
is amended by redesignating subsection (m) as subsection (n) and by
inserting after subsection (l) the following new subsection:
``(m) Interest on Unpaid Taxes Attributable To Nondisclosed
Reportable Transactions and Noneconomic Substance Transactions.--No
deduction shall be allowed under this chapter for any interest paid or
accrued under section 6601 on any underpayment of tax which is
attributable to--
``(1) the portion of any reportable transaction
understatement (as defined in section 6662A(b)) with respect to
which the requirement of section 6664(d)(2)(A) is not met, or
``(2) any noneconomic substance transaction understatement
(as defined in section 6662B(c)).''
(b) Effective Date.--The amendments made by this section shall
apply to transactions in taxable years beginning after the date of the
enactment of this Act.

SEC. 518. AUTHORIZATION OF APPROPRIATIONS FOR TAX LAW ENFORCEMENT.

There is authorized to be appropriated $300,000,000 for each fiscal
year beginning after September 30, 2002, for the purpose of carrying
out tax law enforcement to combat tax avoidance transactions and other
tax shelters, including the use of offshore financial accounts to
conceal taxable income.

Subtitle B--Other Provisions

SEC. 521. AFFIRMATION OF CONSOLIDATED RETURN REGULATION AUTHORITY.

(a) In General.--Section 1502 (relating to consolidated return
regulations) is amended by adding at the end the following new
sentence: ``In prescribing such regulations, the Secretary may
prescribe rules applicable to corporations filing consolidated returns
under section 1501 that are different from other provisions of this
title that would apply if such corporations filed separate returns.''
(b) Result Not Overturned.--Notwithstanding subsection (a), the
Internal Revenue Code of 1986 shall be construed by treating Treasury
regulation Sec. 1.1502-20(c)(1)(iii) (as in effect on January 1, 2001)
as being inapplicable to the type of factual situation in 255 F.3d 1357
(Fed. Cir. 2001).
(c) Effective Date.--The provisions of this section shall apply to
taxable years beginning before, on, or after the date of the enactment
of this Act.

SEC. 522. SIGNING OF CORPORATE TAX RETURNS BY CHIEF EXECUTIVE OFFICER.

(a) In General.--Section 6062 (relating to signing of corporation
returns) is amended by striking the first sentence and inserting the
following new sentence: ``The return of a corporation with respect to
income shall be signed by the chief executive officer of such
corporation (or other such officer of the corporation as the Secretary
may designate if the corporation does not have a chief executive
officer). The preceding sentence shall not apply to any return of a
regulated investment company (within the meaning of section 851).''.
(b) Effective Date.--The amendment made by this section shall apply
to returns filed after the date of the enactment of this Act.

SEC. 523. DISCLOSURE OF TAX SHELTERS TO CORPORATE AUDIT COMMITTEE.

(a) In General.--Subchapter B of chapter 61 (relating to
information and returns) is amended by inserting after section 6111 the
following new section:

``SEC. 6111A. DISCLOSURE OF REPORTABLE TRANSACTIONS TO CORPORATE AUDIT
COMMITTEE.

``If a corporation is required under section 6011 to include on any
return or statement any information with respect to a reportable
transaction (as defined in section 6707A(c)), the chief executive
officer of such corporation (or other such officer of the corporation
as the Secretary may designate if the corporation does not have a chief
executive officer) shall disclose such information in a statement to
the audit committee of the board of directors of such corporation or
any similar committee or entity performing auditing functions on behalf
of such corporation.''.
(b) Penalty for Failure to Disclose.--Section 6707A(a) (relating to
penalty for failure to include reportable transaction information with
return or statement) is amended by inserting ``, or fails to file a
statement required under section 6111A,'' before ``shall pay''.
(c) Clerical Amendment.--The table of sections for subchapter B of
chapter 61 is amended by inserting after the item relating to section
6111 the following new item:

``Sec. 6111A. Disclosure of reportable
transactions to corporate audit
committee.''
(d) Effective Date.--The amendments made by this section shall
apply to transactions in taxable years beginning after the date of the
enactment of this Act.

Subtitle C--Budget Points of Order

SEC. 531. EXTENSION OF PAY-AS-YOU-GO ENFORCEMENT IN THE SENATE.

Section 2 of Senate Resolution 304 (107th Congress) is amended--
(1) in subsection (a)(1), by striking ``April 15, 2003''
and inserting ``the end of the 108th Congress''; and
(2) in subsection (b)(1)(B), by striking ``April 15, 2003''
and inserting ``at the end of the 108th Congress''.

Calendar No. 21

108th CONGRESS

1st Session

S. 414

_______________________________________________________________________

A BILL

To provide an economic stimulus package, and for other purposes.

_______________________________________________________________________

February 24, 2003

Read the second time and placed on the calendar