Fair Minimum Wage Act of 2007

        [Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2 Engrossed Amendment Senate (EAS)]

In the Senate of the United States,

February 1, 2007.
Resolved, That the bill from the House of Representatives (H.R. 2)
entitled ``An Act to amend the Fair Labor Standards Act of 1938 to
provide for an increase in the Federal minimum wage.'', do pass with
the following

AMENDMENT:

Strike out all after the enacting clause and insert:

TITLE I--FAIR MINIMUM WAGE

SEC. 100. SHORT TITLE.

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

SEC. 101. MINIMUM WAGE.

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

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

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

TITLE II--SMALL BUSINESS TAX INCENTIVES

SEC. 200. SHORT TITLE; AMENDMENT OF CODE.

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

Subtitle A--Small Business Tax Relief Provisions

PART I--GENERAL PROVISIONS

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

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

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

(a) Extension of Leasehold and Restaurant Improvements.--
(1) In general.--Clauses (iv) and (v) of section
168(e)(3)(E) (relating to 15-year property) are each amended by
striking ``January 1, 2008'' and inserting ``April 1, 2008''.
(2) Effective date.--The amendment made by this subsection
shall apply to property placed in service after December 31,
2007.
(b) Modification of Treatment of Qualified Restaurant Property as
15-Year Property for Purposes of Depreciation Deduction.--
(1) Treatment to include new construction.--Paragraph (7)
of section 168(e) (relating to classification of property) is
amended to read as follows:
``(7) Qualified restaurant property.--The term `qualified
restaurant property' means any section 1250 property which is a
building (or its structural components) or an improvement to
such building if more than 50 percent of such building's square
footage is devoted to preparation of, and seating for on-
premises consumption of, prepared meals.''.
(2) Effective date.--The amendment made by this subsection
shall apply to any property placed in service after the date of
the enactment of this Act, the original use of which begins
with the taxpayer after such date.
(c) Recovery Period for Depreciation of Certain Improvements to
Retail Space.--
(1) 15-year recovery period.--Section 168(e)(3)(E)
(relating to 15-year property) is amended by striking ``and''
at the end of clause (vii), by striking the period at the end
of clause (viii) and inserting ``, and'', and by adding at the
end the following new clause:
``(ix) any qualified retail improvement
property placed in service before April 1,
2008.''.
(2) Qualified retail improvement property.--Section 168(e)
is amended by adding at the end the following new paragraph:
``(8) Qualified retail improvement property.--
``(A) In general.--The term `qualified retail
improvement property' means any improvement to an
interior portion of a building which is nonresidential
real property if--
``(i) such portion is open to the general
public and is used in the retail trade or
business of selling tangible personal property
to the general public, and
``(ii) such improvement is placed in
service more than 3 years after the date the
building was first placed in service.
``(B) Improvements made by owner.--In the case of
an improvement made by the owner of such improvement,
such improvement shall be qualified retail improvement
property (if at all) only so long as such improvement
is held by such owner. Rules similar to the rules under
paragraph (6)(B) shall apply for purposes of the
preceding sentence.
``(C) Certain improvements not included.--Such term
shall not include any improvement for which the
expenditure is attributable to--
``(i) the enlargement of the building,
``(ii) any elevator or escalator,
``(iii) any structural component
benefitting a common area, or
``(iv) the internal structural framework of
the building.''.
(3) Requirement to use straight line method.--Section
168(b)(3) is amended by adding at the end the following new
subparagraph:
``(I) Qualified retail improvement property
described in subsection (e)(8).''.
(4) Alternative system.--The table contained in section
168(g)(3)(B) is amended by inserting after the item relating to
subparagraph (E)(viii) the following new item:

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

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

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

(a) Cash Accounting Permitted.--
(1) In general.--Section 446 (relating to general rule for
methods of accounting) is amended by adding at the end the
following new subsection:
``(g) Certain Small Business Taxpayers Permitted To Use Cash
Accounting Method Without Limitation.--
``(1) In general.--An eligible taxpayer shall not be
required to use an accrual method of accounting for any taxable
year.
``(2) Eligible taxpayer.--For purposes of this subsection,
a taxpayer is an eligible taxpayer with respect to any taxable
year if--
``(A) for each of the prior taxable years ending on
or after the date of the enactment of this subsection,
the taxpayer (or any predecessor) met the gross
receipts test in effect under section 448(c) for such
taxable year, and
``(B) the taxpayer is not subject to section 447 or
448.''.
(2) Expansion of gross receipts test.--
(A) In general.--Paragraph (3) of section 448(b)
(relating to entities with gross receipts of not more
than $5,000,000) is amended to read as follows:
``(3) Entities meeting gross receipts test.--Paragraphs (1)
and (2) of subsection (a) shall not apply to any corporation or
partnership for any taxable year if, for each of the prior
taxable years ending on or after the date of the enactment of
the Small Business and Work Opportunity Act of 2007, the entity
(or any predecessor) met the gross receipts test in effect
under subsection (c) for such prior taxable year.''.
(B) Conforming amendments.--Section 448(c) of such
Code is amended--
(i) by striking ``$5,000,000'' in the
heading thereof,
(ii) by striking ``$5,000,000'' each place
it appears in paragraph (1) and inserting
``$10,000,000'', and
(iii) by adding at the end the following
new paragraph:
``(4) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2008, the dollar amount
contained in paragraph (1) shall be increased by an amount
equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, by substituting `calendar year
2007' for `calendar year 1992' in subparagraph (B)
thereof.
If any amount as adjusted under this subparagraph is not a
multiple of $100,000, such amount shall be rounded to the
nearest multiple of $100,000.''.
(b) Clarification of Inventory Rules for Small Business.--
(1) In general.--Section 471 (relating to general rule for
inventories) is amended by redesignating subsection (c) as
subsection (d) and by inserting after subsection (b) the
following new subsection:
``(c) Small Business Taxpayers Not Required To Use Inventories.--
``(1) In general.--A qualified taxpayer shall not be
required to use inventories under this section for a taxable
year.
``(2) Treatment of taxpayers not using inventories.--If a
qualified taxpayer does not use inventories with respect to any
property for any taxable year beginning after the date of the
enactment of this subsection, such property shall be treated as
a material or supply which is not incidental.
``(3) Qualified taxpayer.--For purposes of this subsection,
the term `qualified taxpayer' means--
``(A) any eligible taxpayer (as defined in section
446(g)(2)), and
``(B) any taxpayer described in section
448(b)(3).''.
(2) Conforming amendments.--
(A) Subpart D of part II of subchapter E of chapter
1 is amended by striking section 474.
(B) The table of sections for subpart D of part II
of subchapter E of chapter 1 is amended by striking the
item relating to section 474.
(c) Effective Date and Special Rules.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after the date of the
enactment of this Act.
(2) Change in method of accounting.--In the case of any
taxpayer changing the taxpayer's method of accounting for any
taxable year under the amendments made by this section--
(A) such change shall be treated as initiated by
the taxpayer;
(B) such change shall be treated as made with the
consent of the Secretary of the Treasury; and
(C) the net amount of the adjustments required to
be taken into account by the taxpayer under section 481
of the Internal Revenue Code of 1986 shall be taken
into account over a period (not greater than 4 taxable
years) beginning with such taxable year.

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

(a) Extension.--Section 51(c)(4)(B) (relating to termination) is
amended by striking ``2007'' and inserting ``2012''.
(b) Increase in Maximum Age for Designated Community Residents.--
(1) In general.--Paragraph (5) of section 51(d) is amended
to read as follows:
``(5) Designated community residents.--
``(A) In general.--The term `designated community
resident' means any individual who is certified by the
designated local agency--
``(i) as having attained age 18 but not age
40 on the hiring date, and
``(ii) as having his principal place of
abode within an empowerment zone, enterprise
community, or renewal community.
``(B) Individual must continue to reside in zone or
community.--In the case of a designated community
resident, the term `qualified wages' shall not include
wages paid or incurred for services performed while the
individual's principal place of abode is outside an
empowerment zone, enterprise community, or renewal
community.''.
(2) Conforming amendment.--Subparagraph (D) of section
51(d)(1) is amended to read as follows:
``(D) a designated community resident,''.
(c) Clarification of Treatment of Individuals Under Individual Work
Plans.--Subparagraph (B) of section 51(d)(6) (relating to vocational
rehabilitation referral) is amended by striking ``or'' at the end of
clause (i), by striking the period at the end of clause (ii) and
inserting ``, or'', and by adding at the end the following new clause:
``(iii) an individual work plan developed
and implemented by an employment network
pursuant to subsection (g) of section 1148 of
the Social Security Act with respect to which
the requirements of such subsection are met.''.
(d) Treatment of Disabled Veterans Under the Work Opportunity Tax
Credit.--
(1) Disabled veterans treated as members of targeted
group.--
(A) In general.--Subparagraph (A) of section
51(d)(3) (relating to qualified veteran) is amended by
striking ``agency as being a member of a family'' and
all that follows and inserting ``agency as--
``(i) being a member of a family receiving
assistance under a food stamp program under the
Food Stamp Act of 1977 for at least a 3-month
period ending during the 12-month period ending
on the hiring date, or
``(ii) entitled to compensation for a
service-connected disability incurred after
September 10, 2001.''.
(B) Definitions.--Paragraph (3) of section 51(d) is
amended by adding at the end the following new
subparagraph:
``(C) Other definitions.--For purposes of
subparagraph (A), the terms `compensation' and
`service-connected' have the meanings given such terms
under section 101 of title 38, United States Code.''.
(2) Increase in amount of wages taken into account for
disabled veterans.--Paragraph (3) of section 51(b) is amended--
(A) by inserting ``($12,000 per year in the case of
any individual who is a qualified veteran by reason of
subsection (d)(3)(A)(ii))'' before the period at the
end, and
(B) by striking ``Only first  $6,000 of'' in the
heading and inserting ``Limitation on''.
(e) Effective Date.--The amendments made by this section shall
apply to individuals who begin work for the employer after the date of
the enactment of this Act, in taxable years ending after such date.

SEC. 205. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

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

``SEC. 3511. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

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

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

``(a) In General.--For purposes of this title, the term `certified
professional employer organization' means a person who has been
certified by the Secretary for purposes of section 3511 as meeting the
requirements of subsection (b).
``(b) General Requirements.--A person meets the requirements of
this subsection if such person--
``(1) demonstrates that such person (and any owner,
officer, and such other persons as may be specified in
regulations) meets such requirements as the Secretary shall
establish with respect to tax status, background, experience,
business location, and annual financial audits,
``(2) computes its taxable income using an accrual method
of accounting unless the Secretary approves another method,
``(3) agrees that it will satisfy the bond and independent
financial review requirements of subsection (c) on an ongoing
basis,
``(4) agrees that it will satisfy such reporting
obligations as may be imposed by the Secretary,
``(5) agrees to verify on such periodic basis as the
Secretary may prescribe that it continues to meet the
requirements of this subsection, and
``(6) agrees to notify the Secretary in writing within such
time as the Secretary may prescribe of any change that
materially affects whether it continues to meet the
requirements of this subsection.
``(c) Bond and Independent Financial Review Requirements.--
``(1) In general.--An organization meets the requirements
of this paragraph if such organization--
``(A) meets the bond requirements of paragraph (2),
and
``(B) meets the independent financial review
requirements of paragraph (3).
``(2) Bond.--
``(A) In general.--A certified professional
employer organization meets the requirements of this
paragraph if the organization has posted a bond for the
payment of taxes under subtitle C (in a form acceptable
to the Secretary) in an amount at least equal to the
amount specified in subparagraph (B).
``(B) Amount of bond.--For the period April 1 of
any calendar year through March 31 of the following
calendar year, the amount of the bond required is equal
to the greater of--
``(i) 5 percent of the organization's
liability under section 3511 for taxes imposed
by subtitle C during the preceding calendar
year (but not to exceed $1,000,000), or
``(ii) $50,000.
``(3) Independent financial review requirements.--A
certified professional employer organization meets the
requirements of this paragraph if such organization--
``(A) has, as of the most recent review date,
caused to be prepared and provided to the Secretary (in
such manner as the Secretary may prescribe) an opinion
of an independent certified public accountant that the
certified professional employer organization's
financial statements are presented fairly in accordance
with generally accepted accounting principles, and
``(B) provides, not later than the last day of the
second month beginning after the end of each calendar
quarter, to the Secretary from an independent certified
public accountant an assertion regarding Federal
employment tax payments and an examination level
attestation on such assertion.
Such assertion shall state that the organization has withheld
and made deposits of all taxes imposed by chapters 21, 22, and
24 of the Internal Revenue Code in accordance with regulations
imposed by the Secretary for such calendar quarter and such
examination level attestation shall state that such assertion
is fairly stated, in all material respects.
``(4) Controlled group rules.--For purposes of the
requirements of paragraphs (2) and (3), all professional
employer organizations that are members of a controlled group
within the meaning of sections 414(b) and (c) shall be treated
as a single organization.
``(5) Failure to file assertion and attestation.--If the
certified professional employer organization fails to file the
assertion and attestation required by paragraph (3) with
respect to any calendar quarter, then the requirements of
paragraph (3) with respect to such failure shall be treated as
not satisfied for the period beginning on the due date for such
attestation.
``(6) Review date.--For purposes of paragraph (3)(A), the
review date shall be 6 months after the completion of the
organization's fiscal year.
``(d) Suspension and Revocation Authority.--The Secretary may
suspend or revoke a certification of any person under subsection (b)
for purposes of section 3511 if the Secretary determines that such
person is not satisfying the representations or requirements of
subsections (b) or (c), or fails to satisfy applicable accounting,
reporting, payment, or deposit requirements.
``(e) Work Site Employee.--For purposes of this title--
``(1) In general.--The term `work site employee' means,
with respect to a certified professional employer organization,
an individual who--
``(A) performs services for a customer pursuant to
a contract which is between such customer and the
certified professional employer organization and which
meets the requirements of paragraph (2), and
``(B) performs services at a work site meeting the
requirements of paragraph (3).
``(2) Service contract requirements.--A contract meets the
requirements of this paragraph with respect to an individual
performing services for a customer if such contract is in
writing and provides that the certified professional employer
organization shall--
``(A) assume responsibility for payment of wages to
such individual, without regard to the receipt or
adequacy of payment from the customer for such
services,
``(B) assume responsibility for reporting,
withholding, and paying any applicable taxes under
subtitle C, with respect to such individual's wages,
without regard to the receipt or adequacy of payment
from the customer for such services,
``(C) assume responsibility for any employee
benefits which the service contract may require the
organization to provide, without regard to the receipt
or adequacy of payment from the customer for such
services,
``(D) assume responsibility for hiring, firing, and
recruiting workers in addition to the customer's
responsibility for hiring, firing and recruiting
workers,
``(E) maintain employee records relating to such
individual, and
``(F) agree to be treated as a certified
professional employer organization for purposes of
section 3511 with respect to such individual.
``(3) Work site coverage requirement.--The requirements of
this paragraph are met with respect to an individual if at
least 85 percent of the individuals performing services for the
customer at the work site where such individual performs
services are subject to 1 or more contracts with the certified
professional employer organization which meet the requirements
of paragraph (2) (but not taking into account those individuals
who are excluded employees within the meaning of section
414(q)(5)).
``(f) Determination of Employment Status.--Except to the extent
necessary for purposes of section 3511, nothing in this section shall
be construed to affect the determination of who is an employee or
employer for purposes of this title.
``(g) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section.''.
(c) Conforming Amendments.--
(1) Section 3302 is amended by adding at the end the
following new subsection:
``(h) Treatment of Certified Professional Employer Organizations.--
If a certified professional employer organization (as defined in
section 7705), or a customer of such organization, makes a contribution
to the State's unemployment fund with respect to a work site employee,
such organization shall be eligible for the credits available under
this section with respect to such contribution.''.
(2) Section 3303(a) is amended--
(A) by striking the period at the end of paragraph
(3) and inserting ``; and'' and by inserting after
paragraph (3) the following new paragraph:
``(4) if the taxpayer is a certified professional employer
organization (as defined in section 7705) that is treated as
the employer under section 3511, such certified professional
employer organization is permitted to collect and remit, in
accordance with paragraphs (1), (2), and (3), contributions
during the taxable year to the State unemployment fund with
respect to a work site employee.'', and
(B) in the last sentence--
(i) by striking ``paragraphs (1), (2), and
(3)'' and inserting ``paragraphs (1), (2), (3),
and (4)'', and
(ii) by striking ``paragraph (1), (2), or
(3)'' and inserting ``paragraph (1), (2), (3),
or (4)''.
(3) Section 6053(c) (relating to reporting of tips) is
amended by adding at the end the following new paragraph:
``(8) Certified professional employer organizations.--For
purposes of any report required by this subsection, in the case
of a certified professional employer organization that is
treated under section 3511 as the employer of a work site
employee, the customer with respect to whom a work site
employee performs services shall be the employer for purposes
of reporting under this section and the certified professional
employer organization shall furnish to the customer any
information necessary to complete such reporting no later than
such time as the Secretary shall prescribe.''.
(d) Clerical Amendments.--
(1) The table of sections for chapter 25 is amended by
adding at the end the following new item:

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

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

PART II--SUBCHAPTER S PROVISIONS

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

(a) In General.--Section 1362(d)(3) is amended by striking
subparagraphs (B), (C), (D), (E), and (F) and inserting the following
new subparagraph:
``(B) Passive investment income defined.--
``(i) In general.--Except as otherwise
provided in this subparagraph, the term
`passive investment income' means gross
receipts derived from royalties, rents,
dividends, interest, and annuities.
``(ii) Exception for interest on notes from
sales of inventory.--The term `passive
investment income' shall not include interest
on any obligation acquired in the ordinary
course of the corporation's trade or business
from its sale of property described in section
1221(a)(1).
``(iii) Treatment of certain lending or
finance companies.--If the S corporation meets
the requirements of section 542(c)(6) for the
taxable year, the term `passive investment
income' shall not include gross receipts for
the taxable year which are derived directly
from the active and regular conduct of a
lending or finance business (as defined in
section 542(d)(1)).
``(iv) Treatment of certain dividends.--If
an S corporation holds stock in a C corporation
meeting the requirements of section 1504(a)(2),
the term `passive investment income' shall not
include dividends from such C corporation to
the extent such dividends are attributable to
the earnings and profits of such C corporation
derived from the active conduct of a trade or
business.
``(v) Exception for banks, etc.--In the
case of a bank (as defined in section 581) or a
depository institution holding company (as
defined in section 3(w)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(w)(1)),
the term `passive investment income' shall not
include--
``(I) interest income earned by
such bank or company, or
``(II) dividends on assets required
to be held by such bank or company,
including stock in the Federal Reserve
Bank, the Federal Home Loan Bank, or
the Federal Agricultural Mortgage Bank
or participation certificates issued by
a Federal Intermediate Credit Bank.''.
(b) Conforming Amendment.--Clause (i) of section 1042(c)(4)(A) is
amended by striking ``section 1362(d)(3)(C)'' and inserting ``section
1362(d)(3)(B)''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.

SEC. 212. TREATMENT OF BANK DIRECTOR SHARES.

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

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

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

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

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

(a) In General.--Subparagraph (C) of section 1361(b)(3) (relating
to treatment of terminations of qualified subchapter S subsidiary
status) is amended--
(1) by striking ``For purposes of this title,'' and
inserting the following:
``(i) In general.--For purposes of this
title,'', and
(2) by inserting at the end the following new clause:
``(ii) Termination by reason of sale of
stock.--If the failure to meet the requirements
of subparagraph (B) is by reason of the sale of
stock of a corporation which is a qualified
subchapter S subsidiary, the sale of such stock
shall be treated as if--
``(I) the sale were a sale of an
undivided interest in the assets of
such corporation (based on the
percentage of the corporation's stock
sold), and
``(II) the sale were followed by an
acquisition by such corporation of all
of its assets (and the assumption by
such corporation of all of its
liabilities) in a transaction to which
section 351 applies.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2006 .

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

In the case of a corporation which is--
(1) described in section 1311(a)(1) of the Small Business
Job Protection Act of 1996, and
(2) not described in section 1311(a)(2) of such Act,
the amount of such corporation's accumulated earnings and profits (for
the first taxable year beginning after the date of the enactment of
this Act) shall be reduced by an amount equal to the portion (if any)
of such accumulated earnings and profits which were accumulated in any
taxable year beginning before January 1, 1983, for which such
corporation was an electing small business corporation under subchapter
S of the Internal Revenue Code of 1986.

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

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

Subtitle B--Revenue Provisions

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

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

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

(a) In General.--Section 7874(b) (relating to inverted corporations
treated as domestic corporations) is amended to read as follows:
``(b) Inverted Corporations Treated as Domestic Corporations.--
``(1) In general.--Notwithstanding section 7701(a)(4), a
foreign corporation shall be treated for purposes of this title
as a domestic corporation if such corporation would be a
surrogate foreign corporation if subsection (a)(2) were applied
by substituting `80 percent' for `60 percent'.
``(2) Special rule for certain transactions occurring after
march 20, 2002.--
``(A) In general.--If--
``(i) paragraph (1) does not apply to a
foreign corporation, but
``(ii) paragraph (1) would apply to such
corporation if, in addition to the substitution
under paragraph (1), subsection (a)(2) were
applied by substituting `March 20, 2002' for
`March 4, 2003' each place it appears,
then paragraph (1) shall apply to such corporation but
only with respect to taxable years of such corporation
beginning after December 31, 2006.
``(B) Special rules.--Subject to such rules as the
Secretary may prescribe, in the case of a corporation
to which paragraph (1) applies by reason of this
paragraph--
``(i) the corporation shall be treated, as
of the close of its last taxable year beginning
before January 1, 2007, as having transferred
all of its assets, liabilities, and earnings
and profits to a domestic corporation in a
transaction with respect to which no tax is
imposed under this title,
``(ii) the bases of the assets transferred
in the transaction to the domestic corporation
shall be the same as the bases of the assets in
the hands of the foreign corporation, subject
to any adjustments under this title for built-
in losses,
``(iii) the basis of the stock of any
shareholder in the domestic corporation shall
be the same as the basis of the stock of the
shareholder in the foreign corporation for
which it is treated as exchanged, and
``(iv) the transfer of any earnings and
profits by reason of clause (i) shall be
disregarded in determining any deemed dividend
or foreign tax creditable to the domestic
corporation with respect to such transfer.
``(C) Regulations.--The Secretary may prescribe
such regulations as may be necessary or appropriate to
carry out this paragraph, including regulations to
prevent the avoidance of the purposes of this
paragraph.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2006.

SEC. 223. DENIAL OF DEDUCTION FOR PUNITIVE DAMAGES.

(a) Disallowance of Deduction.--
(1) In general.--Section 162(g) (relating to treble damage
payments under the antitrust laws) is amended--
(A) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively,
(B) by striking ``If'' and inserting:
``(1) Treble damages.--If'', and
(C) by adding at the end the following new
paragraph:
``(2) Punitive damages.--No deduction shall be allowed
under this chapter for any amount paid or incurred for punitive
damages in connection with any judgment in, or settlement of,
any action. This paragraph shall not apply to punitive damages
described in section 104(c).''.
(2) Conforming amendment.--The heading for section 162(g)
is amended by inserting ``Or Punitive Damages'' after ``Laws''.
(b) Inclusion in Income of Punitive Damages Paid by Insurer or
Otherwise.--
(1) In general.--Part II of subchapter B of chapter 1
(relating to items specifically included in gross income) is
amended by adding at the end the following new section:

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

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

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

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

(a) In General.--Subsection (f) of section 162 (relating to trade
or business expenses) is amended to read as follows:
``(f) Fines, Penalties, and Other Amounts.--
``(1) In general.--Except as provided in paragraph (2), no
deduction otherwise allowable shall be allowed under this
chapter for any amount paid or incurred (whether by suit,
agreement, or otherwise) to, or at the direction of, a
government or entity described in paragraph (4) in relation to
the violation of any law or the investigation or inquiry by
such government or entity into the potential violation of any
law.
``(2) Exception for amounts constituting restitution or
paid to come into compliance with law.--Paragraph (1) shall not
apply to any amount which--
``(A) the taxpayer establishes--
``(i) constitutes restitution (including
remediation of property) for damage or harm
caused by or which may be caused by the
violation of any law or the potential violation
of any law, or
``(ii) is paid to come into compliance with
any law which was violated or involved in the
investigation or inquiry, and
``(B) is identified as restitution or as an amount
paid to come into compliance with the law, as the case
may be, in the court order or settlement agreement.
A taxpayer shall not meet the requirements of subparagraph (A)
solely by reason an identification under subparagraph (B). This
paragraph shall not apply to any amount paid or incurred as
reimbursement to the government or entity for the costs of any
investigation or litigation.
``(3) Exception for amounts paid or incurred as the result
of certain court orders.--Paragraph (1) shall not apply to any
amount paid or incurred by order of a court in a suit in which
no government or entity described in paragraph (4) is a party.
``(4) Certain nongovernmental regulatory entities.--An
entity is described in this paragraph if it is--
``(A) a nongovernmental entity which exercises
self-regulatory powers (including imposing sanctions)
in connection with a qualified board or exchange (as
defined in section 1256(g)(7)), or
``(B) to the extent provided in regulations, a
nongovernmental entity which exercises self-regulatory
powers (including imposing sanctions) as part of
performing an essential governmental function.
``(5) Exception for taxes due.--Paragraph (1) shall not
apply to any amount paid or incurred as taxes due.''.
(b) Reporting of Deductible Amounts.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 is amended by inserting after section 6050V the
following new section:

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

``(a) Requirement of Reporting.--
``(1) In general.--The appropriate official of any
government or entity which is described in section 162(f)(4)
which is involved in a suit or agreement described in paragraph
(2) shall make a return in such form as determined by the
Secretary setting forth--
``(A) the amount required to be paid as a result of
the suit or agreement to which paragraph (1) of section
162(f) applies,
``(B) any amount required to be paid as a result of
the suit or agreement which constitutes restitution or
remediation of property, and
``(C) any amount required to be paid as a result of
the suit or agreement for the purpose of coming into
compliance with any law which was violated or involved
in the investigation or inquiry.
``(2) Suit or agreement described.--
``(A) In general.--A suit or agreement is described
in this paragraph if--
``(i) it is--
``(I) a suit with respect to a
violation of any law over which the
government or entity has authority and
with respect to which there has been a
court order, or
``(II) an agreement which is
entered into with respect to a
violation of any law over which the
government or entity has authority, or
with respect to an investigation or
inquiry by the government or entity
into the potential violation of any law
over which such government or entity
has authority, and
``(ii) the aggregate amount involved in all
court orders and agreements with respect to the
violation, investigation, or inquiry is $600 or
more.
``(B) Adjustment of reporting threshold.--The
Secretary may adjust the $600 amount in subparagraph
(A)(ii) as necessary in order to ensure the efficient
administration of the internal revenue laws.
``(3) Time of filing.--The return required under this
subsection shall be filed not later than--
``(A) 30 days after the date on which a court order
is issued with respect to the suit or the date the
agreement is entered into, as the case may be, or
``(B) the date specified Secretary.
``(b) Statements To Be Furnished to Individuals Involved in the
Settlement.--Every person required to make a return under subsection
(a) shall furnish to each person who is a party to the suit or
agreement a written statement showing--
``(1) the name of the government or entity, and
``(2) the information supplied to the Secretary under
subsection (a)(1).
The written statement required under the preceding sentence shall be
furnished to the person at the same time the government or entity
provides the Secretary with the information required under subsection
(a).
``(c) Appropriate Official Defined.--For purposes of this section,
the term `appropriate official' means the officer or employee having
control of the suit, investigation, or inquiry or the person
appropriately designated for purposes of this section.''.
(2) Conforming amendment.--The table of sections for
subpart B of part III of subchapter A of chapter 61 is amended
by inserting after the item relating to section 6050V the
following new item:

``Sec. 6050W. Information with respect to certain fines, penalties, and
other amounts.''.
(c) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred on or after the date of the enactment
of this Act, except that such amendments shall not apply to amounts
paid or incurred under any binding order or agreement entered into
before such date. Such exception shall not apply to an order or
agreement requiring court approval unless the approval was obtained
before such date.

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

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

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

``(a) General Rules.--For purposes of this subtitle--
``(1) Mark to market.--Except as provided in subsections
(d) and (f), all property of a covered expatriate to whom this
section applies shall be treated as sold on the day before the
expatriation date for its fair market value.
``(2) Recognition of gain or loss.--In the case of any sale
under paragraph (1)--
``(A) notwithstanding any other provision of this
title, any gain arising from such sale shall be taken
into account for the taxable year of the sale, and
``(B) any loss arising from such sale shall be
taken into account for the taxable year of the sale to
the extent otherwise provided by this title, except
that section 1091 shall not apply to any such loss.
Proper adjustment shall be made in the amount of any gain or
loss subsequently realized for gain or loss taken into account
under the preceding sentence.
``(3) Exclusion for certain gain.--
``(A) In general.--The amount which, but for this
paragraph, would be includible in the gross income of
any individual by reason of this section shall be
reduced (but not below zero) by $600,000. For purposes
of this paragraph, allocable expatriation gain taken
into account under subsection (f)(2) shall be treated
in the same manner as an amount required to be
includible in gross income.
``(B) Cost-of-living adjustment.--
``(i) In general.--In the case of an
expatriation date occurring in any calendar
year after 2007, the $600,000 amount under
subparagraph (A) shall be increased by an
amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for such calendar year,
determined by substituting `calendar
year 2006' for `calendar year 1992' in
subparagraph (B) thereof.
``(ii) Rounding rules.--If any amount after
adjustment under clause (i) is not a multiple
of $1,000, such amount shall be rounded to the
next lower multiple of $1,000.
``(4) Election to continue to be taxed as united states
citizen.--
``(A) In general.--If a covered expatriate elects
the application of this paragraph--
``(i) this section (other than this
paragraph and subsection (i)) shall not apply
to the expatriate, but
``(ii) in the case of property to which
this section would apply but for such election,
the expatriate shall be subject to tax under
this title in the same manner as if the
individual were a United States citizen.
``(B) Requirements.--Subparagraph (A) shall not
apply to an individual unless the individual--
``(i) provides security for payment of tax
in such form and manner, and in such amount, as
the Secretary may require,
``(ii) consents to the waiver of any right
of the individual under any treaty of the
United States which would preclude assessment
or collection of any tax which may be imposed
by reason of this paragraph, and
``(iii) complies with such other
requirements as the Secretary may prescribe.
``(C) Election.--An election under subparagraph (A)
shall apply to all property to which this section would
apply but for the election and, once made, shall be
irrevocable. Such election shall also apply to property
the basis of which is determined in whole or in part by
reference to the property with respect to which the
election was made.
``(b) Election To Defer Tax.--
``(1) In general.--If the taxpayer elects the application
of this subsection with respect to any property treated as sold
by reason of subsection (a), the payment of the additional tax
attributable to such property shall be postponed until the due
date of the return for the taxable year in which such property
is disposed of (or, in the case of property disposed of in a
transaction in which gain is not recognized in whole or in
part, until such other date as the Secretary may prescribe).
``(2) Determination of tax with respect to property.--For
purposes of paragraph (1), the additional tax attributable to
any property is an amount which bears the same ratio to the
additional tax imposed by this chapter for the taxable year
solely by reason of subsection (a) as the gain taken into
account under subsection (a) with respect to such property
bears to the total gain taken into account under subsection (a)
with respect to all property to which subsection (a) applies.
``(3) Termination of postponement.--No tax may be postponed
under this subsection later than the due date for the return of
tax imposed by this chapter for the taxable year which includes
the date of death of the expatriate (or, if earlier, the time
that the security provided with respect to the property fails
to meet the requirements of paragraph (4), unless the taxpayer
corrects such failure within the time specified by the
Secretary).
``(4) Security.--
``(A) In general.--No election may be made under
paragraph (1) with respect to any property unless
adequate security is provided to the Secretary with
respect to such property.
``(B) Adequate security.--For purposes of
subparagraph (A), security with respect to any property
shall be treated as adequate security if--
``(i) it is a bond in an amount equal to
the deferred tax amount under paragraph (2) for
the property, or
``(ii) the taxpayer otherwise establishes
to the satisfaction of the Secretary that the
security is adequate.
``(5) Waiver of certain rights.--No election may be made
under paragraph (1) unless the taxpayer consents to the waiver
of any right under any treaty of the United States which would
preclude assessment or collection of any tax imposed by reason
of this section.
``(6) Elections.--An election under paragraph (1) shall
only apply to property described in the election and, once
made, is irrevocable. An election may be made under paragraph
(1) with respect to an interest in a trust with respect to
which gain is required to be recognized under subsection
(f)(1).
``(7) Interest.--For purposes of section 6601--
``(A) the last date for the payment of tax shall be
determined without regard to the election under this
subsection, and
``(B) section 6621(a)(2) shall be applied by
substituting `5 percentage points' for `3 percentage
points' in subparagraph (B) thereof.
``(c) Covered Expatriate.--For purposes of this section--
``(1) In general.--Except as provided in paragraph (2), the
term `covered expatriate' means an expatriate.
``(2) Exceptions.--An individual shall not be treated as a
covered expatriate if--
``(A) the individual--
``(i) became at birth a citizen of the
United States and a citizen of another country
and, as of the expatriation date, continues to
be a citizen of, and is taxed as a resident of,
such other country, and
``(ii) has not been a resident of the
United States (as defined in section
7701(b)(1)(A)(ii)) during the 5 taxable years
ending with the taxable year during which the
expatriation date occurs, or
``(B)(i) the individual's relinquishment of United
States citizenship occurs before such individual
attains age 18\1/2\, and
``(ii) the individual has been a resident of the
United States (as so defined) for not more than 5
taxable years before the date of relinquishment.
``(d) Exempt Property; Special Rules for Pension Plans.--
``(1) Exempt property.--This section shall not apply to the
following:
``(A) United states real property interests.--Any
United States real property interest (as defined in
section 897(c)(1)), other than stock of a United States
real property holding corporation which does not, on
the day before the expatriation date, meet the
requirements of section 897(c)(2).
``(B) Specified property.--Any property or interest
in property not described in subparagraph (A) which the
Secretary specifies in regulations.
``(2) Special rules for certain retirement plans.--
``(A) In general.--If a covered expatriate holds on
the day before the expatriation date any interest in a
retirement plan to which this paragraph applies--
``(i) such interest shall not be treated as
sold for purposes of subsection (a)(1), but
``(ii) an amount equal to the present value
of the expatriate's nonforfeitable accrued
benefit shall be treated as having been
received by such individual on such date as a
distribution under the plan.
``(B) Treatment of subsequent distributions.--In
the case of any distribution on or after the
expatriation date to or on behalf of the covered
expatriate from a plan from which the expatriate was
treated as receiving a distribution under subparagraph
(A), the amount otherwise includible in gross income by
reason of the subsequent distribution shall be reduced
by the excess of the amount includible in gross income
under subparagraph (A) over any portion of such amount
to which this subparagraph previously applied.
``(C) Treatment of subsequent distributions by
plan.--For purposes of this title, a retirement plan to
which this paragraph applies, and any person acting on
the plan's behalf, shall treat any subsequent
distribution described in subparagraph (B) in the same
manner as such distribution would be treated without
regard to this paragraph.
``(D) Applicable plans.--This paragraph shall apply
to--
``(i) any qualified retirement plan (as
defined in section 4974(c)),
``(ii) an eligible deferred compensation
plan (as defined in section 457(b)) of an
eligible employer described in section
457(e)(1)(A), and
``(iii) to the extent provided in
regulations, any foreign pension plan or
similar retirement arrangements or programs.
``(e) Definitions.--For purposes of this section--
``(1) Expatriate.--The term `expatriate' means--
``(A) any United States citizen who relinquishes
citizenship, and
``(B) any long-term resident of the United States
who--
``(i) ceases to be a lawful permanent
resident of the United States (within the
meaning of section 7701(b)(6)), or
``(ii) commences to be treated as a
resident of a foreign country under the
provisions of a tax treaty between the United
States and the foreign country and who does not
waive the benefits of such treaty applicable to
residents of the foreign country.
``(2) Expatriation date.--The term `expatriation date'
means--
``(A) the date an individual relinquishes United
States citizenship, or
``(B) in the case of a long-term resident of the
United States, the date of the event described in
clause (i) or (ii) of paragraph (1)(B).
``(3) Relinquishment of citizenship.--A citizen shall be
treated as relinquishing United States citizenship on the
earliest of--
``(A) the date the individual renounces such
individual's United States nationality before a
diplomatic or consular officer of the United States
pursuant to paragraph (5) of section 349(a) of the
Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
``(B) the date the individual furnishes to the
United States Department of State a signed statement of
voluntary relinquishment of United States nationality
confirming the performance of an act of expatriation
specified in paragraph (1), (2), (3), or (4) of section
349(a) of the Immigration and Nationality Act (8 U.S.C.
1481(a)(1)-(4)),
``(C) the date the United States Department of
State issues to the individual a certificate of loss of
nationality, or
``(D) the date a court of the United States cancels
a naturalized citizen's certificate of naturalization.
Subparagraph (A) or (B) shall not apply to any individual
unless the renunciation or voluntary relinquishment is
subsequently approved by the issuance to the individual of a
certificate of loss of nationality by the United States
Department of State.
``(4) Long-term resident.--The term `long-term resident'
has the meaning given to such term by section 877(e)(2).
``(f) Special Rules Applicable to Beneficiaries' Interests in
Trust.--
``(1) In general.--Except as provided in paragraph (2), if
an individual is determined under paragraph (3) to hold an
interest in a trust on the day before the expatriation date--
``(A) the individual shall not be treated as having
sold such interest,
``(B) such interest shall be treated as a separate
share in the trust, and
``(C)(i) such separate share shall be treated as a
separate trust consisting of the assets allocable to
such share,
``(ii) the separate trust shall be treated as
having sold its assets on the day before the
expatriation date for their fair market value and as
having distributed all of its assets to the individual
as of such time, and
``(iii) the individual shall be treated as having
recontributed the assets to the separate trust.
Subsection (a)(2) shall apply to any income, gain, or loss of
the individual arising from a distribution described in
subparagraph (C)(ii). In determining the amount of such
distribution, proper adjustments shall be made for liabilities
of the trust allocable to an individual's share in the trust.
``(2) Special rules for interests in qualified trusts.--
``(A) In general.--If the trust interest described
in paragraph (1) is an interest in a qualified trust--
``(i) paragraph (1) and subsection (a)
shall not apply, and
``(ii) in addition to any other tax imposed
by this title, there is hereby imposed on each
distribution with respect to such interest a
tax in the amount determined under subparagraph
(B).
``(B) Amount of tax.--The amount of tax under
subparagraph (A)(ii) shall be equal to the lesser of--
``(i) the highest rate of tax imposed by
section 1(e) for the taxable year which
includes the day before the expatriation date,
multiplied by the amount of the distribution,
or
``(ii) the balance in the deferred tax
account immediately before the distribution
determined without regard to any increases
under subparagraph (C)(ii) after the 30th day
preceding the distribution.
``(C) Deferred tax account.--For purposes of
subparagraph (B)(ii)--
``(i) Opening balance.--The opening balance
in a deferred tax account with respect to any
trust interest is an amount equal to the tax
which would have been imposed on the allocable
expatriation gain with respect to the trust
interest if such gain had been included in
gross income under subsection (a).
``(ii) Increase for interest.--The balance
in the deferred tax account shall be increased
by the amount of interest determined (on the
balance in the account at the time the interest
accrues), for periods after the 90th day after
the expatriation date, by using the rates and
method applicable under section 6621 for
underpayments of tax for such periods, except
that section 6621(a)(2) shall be applied by
substituting `5 percentage points' for `3
percentage points' in subparagraph (B) thereof.
``(iii) Decrease for taxes previously
paid.--The balance in the tax deferred account
shall be reduced--
``(I) by the amount of taxes
imposed by subparagraph (A) on any
distribution to the person holding the
trust interest, and
``(II) in the case of a person
holding a nonvested interest, to the
extent provided in regulations, by the
amount of taxes imposed by subparagraph
(A) on distributions from the trust
with respect to nonvested interests not
held by such person.
``(D) Allocable expatriation gain.--For purposes of
this paragraph, the allocable expatriation gain with
respect to any beneficiary's interest in a trust is the
amount of gain which would be allocable to such
beneficiary's vested and nonvested interests in the
trust if the beneficiary held directly all assets
allocable to such interests.
``(E) Tax deducted and withheld.--
``(i) In general.--The tax imposed by
subparagraph (A)(ii) shall be deducted and
withheld by the trustees from the distribution
to which it relates.
``(ii) Exception where failure to waive
treaty rights.--If an amount may not be
deducted and withheld under clause (i) by
reason of the distributee failing to waive any
treaty right with respect to such
distribution--
``(I) the tax imposed by
subparagraph (A)(ii) shall be imposed
on the trust and each trustee shall be
personally liable for the amount of
such tax, and
``(II) any other beneficiary of the
trust shall be entitled to recover from
the distributee the amount of such tax
imposed on the other beneficiary.
``(F) Disposition.--If a trust ceases to be a
qualified trust at any time, a covered expatriate
disposes of an interest in a qualified trust, or a
covered expatriate holding an interest in a qualified
trust dies, then, in lieu of the tax imposed by
subparagraph (A)(ii), there is hereby imposed a tax
equal to the lesser of--
``(i) the tax determined under paragraph
(1) as if the day before the expatriation date
were the date of such cessation, disposition,
or death, whichever is applicable, or
``(ii) the balance in the tax deferred
account immediately before such date.
Such tax shall be imposed on the trust and each trustee
shall be personally liable for the amount of such tax
and any other beneficiary of the trust shall be
entitled to recover from the covered expatriate or the
estate the amount of such tax imposed on the other
beneficiary.
``(G) Definitions and special rules.--For purposes
of this paragraph--
``(i) Qualified trust.--The term `qualified
trust' means a trust which is described in
section 7701(a)(30)(E).
``(ii) Vested interest.--The term `vested
interest' means any interest which, as of the
day before the expatriation date, is vested in
the beneficiary.
``(iii) Nonvested interest.--The term
`nonvested interest' means, with respect to any
beneficiary, any interest in a trust which is
not a vested interest. Such interest shall be
determined by assuming the maximum exercise of
discretion in favor of the beneficiary and the
occurrence of all contingencies in favor of the
beneficiary.
``(iv) Adjustments.--The Secretary may
provide for such adjustments to the bases of
assets in a trust or a deferred tax account,
and the timing of such adjustments, in order to
ensure that gain is taxed only once.
``(v) Coordination with retirement plan
rules.--This subsection shall not apply to an
interest in a trust which is part of a
retirement plan to which subsection (d)(2)
applies.
``(3) Determination of beneficiaries' interest in trust.--
``(A) Determinations under paragraph (1).--For
purposes of paragraph (1), a beneficiary's interest in
a trust shall be based upon all relevant facts and
circumstances, including the terms of the trust
instrument and any letter of wishes or similar
document, historical patterns of trust distributions,
and the existence of and functions performed by a trust
protector or any similar adviser.
``(B) Other determinations.--For purposes of this
section--
``(i) Constructive ownership.--If a
beneficiary of a trust is a corporation,
partnership, trust, or estate, the
shareholders, partners, or beneficiaries shall
be deemed to be the trust beneficiaries for
purposes of this section.
``(ii) Taxpayer return position.--A
taxpayer shall clearly indicate on its income
tax return--
``(I) the methodology used to
determine that taxpayer's trust
interest under this section, and
``(II) if the taxpayer knows (or
has reason to know) that any other
beneficiary of such trust is using a
different methodology to determine such
beneficiary's trust interest under this
section.
``(g) Termination of Deferrals, Etc.--In the case of any covered
expatriate, notwithstanding any other provision of this title--
``(1) any period during which recognition of income or gain
is deferred shall terminate on the day before the expatriation
date, and
``(2) any extension of time for payment of tax shall cease
to apply on the day before the expatriation date and the unpaid
portion of such tax shall be due and payable at the time and in
the manner prescribed by the Secretary.
``(h) Imposition of Tentative Tax.--
``(1) In general.--If an individual is required to include
any amount in gross income under subsection (a) for any taxable
year, there is hereby imposed, immediately before the
expatriation date, a tax in an amount equal to the amount of
tax which would be imposed if the taxable year were a short
taxable year ending on the expatriation date.
``(2) Due date.--The due date for any tax imposed by
paragraph (1) shall be the 90th day after the expatriation
date.
``(3) Treatment of tax.--Any tax paid under paragraph (1)
shall be treated as a payment of the tax imposed by this
chapter for the taxable year to which subsection (a) applies.
``(4) Deferral of tax.--The provisions of subsection (b)
shall apply to the tax imposed by this subsection to the extent
attributable to gain includible in gross income by reason of
this section.
``(i) Special Liens for Deferred Tax Amounts.--
``(1) Imposition of lien.--
``(A) In general.--If a covered expatriate makes an
election under subsection (a)(4) or (b) which results
in the deferral of any tax imposed by reason of
subsection (a), the deferred amount (including any
interest, additional amount, addition to tax,
assessable penalty, and costs attributable to the
deferred amount) shall be a lien in favor of the United
States on all property of the expatriate located in the
United States (without regard to whether this section
applies to the property).
``(B) Deferred amount.--For purposes of this
subsection, the deferred amount is the amount of the
increase in the covered expatriate's income tax which,
but for the election under subsection (a)(4) or (b),
would have occurred by reason of this section for the
taxable year including the expatriation date.
``(2) Period of lien.--The lien imposed by this subsection
shall arise on the expatriation date and continue until--
``(A) the liability for tax by reason of this
section is satisfied or has become unenforceable by
reason of lapse of time, or
``(B) it is established to the satisfaction of the
Secretary that no further tax liability may arise by
reason of this section.
``(3) Certain rules apply.--The rules set forth in
paragraphs (1), (3), and (4) of section 6324A(d) shall apply
with respect to the lien imposed by this subsection as if it
were a lien imposed by section 6324A.
``(j) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section.''.
(b) Inclusion in Income of Gifts and Bequests Received by United
States Citizens and Residents From Expatriates.--Section 102 (relating
to gifts, etc. not included in gross income) is amended by adding at
the end the following new subsection:
``(d) Gifts and Inheritances From Covered Expatriates.--
``(1) Treatment of gifts and inheritances.--
``(A) In general.--Subsection (a) shall not exclude
from gross income the value of any property acquired by
gift, bequest, devise, or inheritance from a covered
expatriate after the expatriation date.
``(B) Determination of basis.--Notwithstanding
sections 1015 or 1022, the basis of any property
described in subparagraph (A) in the hands of the donee
or the person acquiring such property from the decedent
shall be equal to the fair market value of the property
at the time of the gift, bequest, devise, or
inheritance.
``(2) Exceptions for transfers otherwise subject to estate
or gift tax.--Paragraph (1) shall not apply to any property if
either--
``(A) the gift, bequest, devise, or inheritance
is--
``(i) shown on a timely filed return of tax
imposed by chapter 12 as a taxable gift by the
covered expatriate, or
``(ii) included in the gross estate of the
covered expatriate for purposes of chapter 11
and shown on a timely filed return of tax
imposed by chapter 11 of the estate of the
covered expatriate, or
``(B) no such return was timely filed but no such
return would have been required to be filed even if the
covered expatriate were a citizen or long-term resident
of the United States.
``(3) Definitions.--For purposes of this subsection, any
term used in this subsection which is also used in section 877A
shall have the same meaning as when used in section 877A.''.
(c) Definition of Termination of United States Citizenship.--
Section 7701(a) is amended by adding at the end the following new
paragraph:
``(50) Termination of united states citizenship.--
``(A) In general.--An individual shall not cease to
be treated as a United States citizen before the date
on which the individual's citizenship is treated as
relinquished under section 877A(e)(3).
``(B) Dual citizens.--Under regulations prescribed
by the Secretary, subparagraph (A) shall not apply to
an individual who became at birth a citizen of the
United States and a citizen of another country.''.
(d) Ineligibility for Visa or Admission to United States.--
(1) In general.--Section 212(a)(10)(E) of the Immigration
and Nationality Act (8 U.S.C. 1182(a)(10)(E)) is amended to
read as follows:
``(E) Former citizens not in compliance with
expatriation revenue provisions.--Any alien who is a
former citizen of the United States who relinquishes
United States citizenship (within the meaning of
section 877A(e)(3) of the Internal Revenue Code of
1986) and who is not in compliance with section 877A of
such Code (relating to expatriation) is
inadmissible.''.
(2) Availability of information.--
(A) In general.--Section 6103(l) (relating to
disclosure of returns and return information for
purposes other than tax administration) is amended by
adding at the end the following new paragraph:
``(21) Disclosure to deny visa or admission to certain
expatriates.--Upon written request of the Attorney General or
the Attorney General's delegate, the Secretary shall disclose
whether an individual is in compliance with section 877A (and
if not in compliance, any items of noncompliance) to officers
and employees of the Federal agency responsible for
administering section 212(a)(10)(E) of the Immigration and
Nationality Act solely for the purpose of, and to the extent
necessary in, administering such section 212(a)(10)(E).''.
(B) Safeguards.--Section 6103(p)(4) (relating to
safeguards) is amended by striking ``or (20)'' each
place it appears and inserting ``(20), or (21)''.
(3) Effective dates.--The amendments made by this
subsection shall apply to individuals who relinquish United
States citizenship on or after the date of the enactment of
this Act.
(e) Conforming Amendments.--
(1) Section 877 is amended by adding at the end the
following new subsection:
``(h) Application.--This section shall not apply to an expatriate
(as defined in section 877A(e)) whose expatriation date (as so defined)
occurs on or after the date of the enactment of this subsection.''.
(2) Section 2107 is amended by adding at the end the
following new subsection:
``(f) Application.--This section shall not apply to any expatriate
subject to section 877A.''.
(3) Section 2501(a)(3) is amended by adding at the end the
following new subparagraph:
``(C) Application.--This paragraph shall not apply
to any expatriate subject to section 877A.''.
(4) Section 6039G(a) is amended by inserting ``or 877A''
after ``section 877(b)''.
(5) The second sentence of section 6039G(d) is amended by
inserting ``or who relinquishes United States citizenship
(within the meaning of section 877A(e)(3))'' after ``section
877(a))''.
(f) Clerical Amendment.--The table of sections for subpart A of
part II of subchapter N of chapter 1 is amended by inserting after the
item relating to section 877 the following new item:

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

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

(a) In General.--Section 409A(a) of the Internal Revenue Code of
1986 (relating to inclusion of gross income under nonqualified deferred
compensation plans) is amended--
(1) by striking ``and (4)'' in subclause (I) of paragraph
(1)(A)(i) and inserting ``(4), and (5)'', and
(2) by adding at the end the following new paragraph:
``(5) Annual limitation on aggregate deferred amounts.--
``(A) Limitation.--The requirements of this
paragraph are met if the plan provides that the
aggregate amount of compensation which is deferred for
any taxable year with respect to a participant under
the plan may not exceed the applicable dollar amount
for the taxable year.
``(B) Inclusion of future earnings.--If an amount
is includible under paragraph (1) in the gross income
of a participant for any taxable year by reason of any
failure to meet the requirements of this paragraph, any
income (whether actual or notional) for any subsequent
taxable year shall be included in gross income under
paragraph (1)(A) in such subsequent taxable year to the
extent such income--
``(i) is attributable to compensation (or
income attributable to such compensation)
required to be included in gross income by
reason of such failure (including by reason of
this subparagraph), and
``(ii) is not subject to a substantial risk
of forfeiture and has not been previously
included in gross income.
``(C) Aggregation rule.--For purposes of this
paragraph, all nonqualified deferred compensation plans
maintained by all employers treated as a single
employer under subsection (d)(6) shall be treated as 1
plan.
``(D) Applicable dollar amount.--For purposes of
this paragraph--
``(i) In general.--The term `applicable
dollar amount' means, with respect to any
participant, the lesser of--
``(I) the average annual
compensation which was payable during
the base period to the participant by
the employer maintaining the
nonqualified deferred compensation plan
(or any predecessor of the employer)
and which was includible in the
participant's gross income for taxable
years in the base period, or
``(II) $1,000,000.
``(ii) Base period.--
``(I) In general.--The term `base
period' means, with respect to any
computation year, the 5-taxable year
period ending with the taxable year
preceding the computation year.
``(II) Elections made before
computation year.--If, before the
beginning of the computation year, an
election described in paragraph (4)(B)
is made by the participant to have
compensation for services performed in
the computation year deferred under a
nonqualified deferred compensation
plan, the base period shall be the 5-
taxable year period ending with the
taxable year preceding the taxable year
in which the election is made.
``(III) Computation year.--For
purposes of this clause, the term
`computation year' means any taxable
year of the participant for which the
limitation under subparagraph (A) is
being determined.
``(IV) Special rule for employees
of less than 5 years.--If a participant
did not perform services for the
employer maintaining the nonqualified
deferred compensation plan (or any
predecessor of the employer) during the
entire 5-taxable year period referred
to in subparagraph (A) or (B), only the
portion of such period during which the
participant performed such services
shall be taken into account.''.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2006,
except that--
(A) the amendments shall only apply to amounts
deferred after December 31, 2006 (and to earnings on
such amounts), and
(B) taxable years beginning on or before December
31, 2006, shall be taken into account in determining
the average annual compensation of a participant during
any base period for purposes of section 409A(a)(5)(D)
of the Internal Revenue Code of 1986 (as added by such
amendments).
(2) Guidance relating to certain existing arrangements.--
Not later than 60 days after the date of the enactment of this
Act, the Secretary of the Treasury shall issue guidance
providing a limited period during which a nonqualified deferred
compensation plan adopted before December 31, 2006, may,
without violating the requirements of section 409A(a) of such
Code, be amended--
(A) to provide that a participant may, no later
than December 31, 2007, cancel or modify an outstanding
deferral election with regard to all or a portion of
amounts deferred after December 31, 2006, to the extent
necessary for the plan to meet the requirements of
section 409A(a)(5) of such Code (as added by the
amendments made by this section), but only if amounts
subject to the cancellation or modification are, to the
extent not previously included in gross income,
includible in income of the participant when no longer
subject to substantial risk of forfeiture, and
(B) to conform to the requirements of section
409A(a)(5) of such Code (as added by the amendments
made by this section) with regard to amounts deferred
after December 31, 2006.

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

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

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

(a) Determination of Penalty.--
(1) In general.--Notwithstanding any other provision of
law, in the case of an applicable taxpayer--
(A) the determination as to whether any interest or
applicable penalty is to be imposed with respect to any
arrangement described in paragraph (2), or to any
underpayment of Federal income tax attributable to
items arising in connection with any such arrangement,
shall be made without regard to the rules of
subsections (b), (c), and (d) of section 6664 of the
Internal Revenue Code of 1986, and
(B) if any such interest or applicable penalty is
imposed, the amount of such interest or penalty shall
be equal to twice that determined without regard to
this section.
(2) Applicable taxpayer.--For purposes of this subsection--
(A) In general.--The term ``applicable taxpayer''
means a taxpayer which--
(i) has underreported its United States
income tax liability with respect to any item
which directly or indirectly involves--
(I) any financial arrangement which
in any manner relies on the use of
offshore payment mechanisms (including
credit, debit, or charge cards) issued
by banks or other entities in foreign
jurisdictions, or
(II) any offshore financial
arrangement (including any arrangement
with foreign banks, financial
institutions, corporations,
partnerships, trusts, or other
entities), and
(ii) has neither signed a closing agreement
pursuant to the Voluntary Offshore Compliance
Initiative established by the Department of the
Treasury under Revenue Procedure 2003-11 nor
voluntarily disclosed its participation in such
arrangement by notifying the Internal Revenue
Service of such arrangement prior to the issue
being raised by the Internal Revenue Service
during an examination.
(B) Authority to waive.--The Secretary of the
Treasury or the Secretary's delegate may waive the
application of paragraph (1) to any taxpayer if the
Secretary or the Secretary's delegate determines that
the use of such offshore payment mechanisms is
incidental to the transaction and, in addition, in the
case of a trade or business, such use is conducted in
the ordinary course of the type of trade or business of
the taxpayer.
(C) Issues raised.--For purposes of subparagraph
(A)(ii), an item shall be treated as an issue raised
during an examination if the individual examining the
return--
(i) communicates to the taxpayer knowledge
about the specific item, or
(ii) has made a request to the taxpayer for
information and the taxpayer could not make a
complete response to that request without
giving the examiner knowledge of the specific
item.
(b) Applicable Penalty.--For purposes of this section, the term
``applicable penalty'' means any penalty, addition to tax, or fine
imposed under chapter 68 of the Internal Revenue Code of 1986.
(c) Effective Date.--The provisions of this section shall apply to
interest, penalties, additions to tax, and fines with respect to any
taxable year if, as of the date of the enactment of this Act, the
assessment of any tax, penalty, or interest with respect to such
taxable year is not prevented by the operation of any law or rule of
law.

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

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

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

(a) In General.--Section 1275(d) (relating to regulation authority)
is amended--
(1) by striking ``The Secretary'' and inserting the
following:
``(1) In general.--The Secretary'', and
(2) by adding at the end the following new paragraph:
``(2) Treatment of contingent payment convertible debt.--
``(A) In general.--In the case of a debt instrument
which--
``(i) is convertible into stock of the
issuing corporation, into stock or debt of a
related party (within the meaning of section
267(b) or 707(b)(1)), or into cash or other
property in an amount equal to the approximate
value of such stock or debt, and
``(ii) provides for contingent payments,
any regulations which require original issue discount
to be determined by reference to the comparable yield
of a noncontingent fixed-rate debt instrument shall be
applied as if the regulations require that such
comparable yield be determined by reference to a
noncontingent fixed-rate debt instrument which is
convertible into stock.
``(B) Special rule.--For purposes of subparagraph
(A), the comparable yield shall be determined without
taking into account the yield resulting from the
conversion of a debt instrument into stock.''.
(b) Cross Reference.--Section 163(e)(6) (relating to cross
references) is amended by adding at the end the following:
``For the treatment of contingent payment
convertible debt, see section 1275(d)(2).''.
(c) Effective Date.--The amendments made by this section shall
apply to debt instruments issued on or after the date of the enactment
of this Act.

SEC. 231. EXTENSION OF IRS USER FEES.

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

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

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

SEC. 233. MODIFICATIONS TO WHISTLEBLOWER REFORMS.

(a) Modification of Tax Threshold for Awards.--Subparagraph (B) of
section 7623(b)(5), as added by the Tax Relief and Health Care Act of
2006, is amended by striking ``$2,000,000'' and inserting ``$20,000''.
(b) Whistleblower Office.--
(1) In general.--Section 7623 is amended by adding at the
end the following new subsections:
``(c) Whistleblower Office.--
``(1) In general.--There is established in the Internal
Revenue Service an office to be known as the `Whistleblower
Office' which--
``(A) shall at all times operate at the direction
of the Commissioner and coordinate and consult with
other divisions in the Internal Revenue Service as
directed by the Commissioner,
``(B) shall analyze information received from any
individual described in subsection (b) and either
investigate the matter itself or assign it to the
appropriate Internal Revenue Service office,
``(C) shall monitor any action taken with respect
to such matter,
``(D) shall inform such individual that it has
accepted the individual's information for further
review,
``(E) may require such individual and any legal
representative of such individual to not disclose any
information so provided,
``(F) in its sole discretion, may ask for
additional assistance from such individual or any legal
representative of such individual, and
``(G) shall determine the amount to be awarded to
such individual under subsection (b).
``(2) Funding for office.--There is authorized to be
appropriated $10,000,000 for each fiscal year for the
Whistleblower Office. These funds shall be used to maintain the
Whistleblower Office and also to reimburse other Internal
Revenue Service offices for related costs, such as costs of
investigation and collection.
``(3) Request for assistance.--
``(A) In general.--Any assistance requested under
paragraph (1)(F) shall be under the direction and
control of the Whistleblower Office or the office
assigned to investigate the matter under subparagraph
(A). No individual or legal representative whose
assistance is so requested may by reason of such
request represent himself or herself as an employee of
the Federal Government.
``(B) Funding of assistance.--From the amounts
available for expenditure under subsection (b), the
Whistleblower Office may, with the agreement of the
individual described in subsection (b), reimburse the
costs incurred by any legal representative of such
individual in providing assistance described in
subparagraph (A).
``(d) Reports.--The Secretary shall each year conduct a study and
report to Congress on the use of this section, including--
``(1) an analysis of the use of this section during the
preceding year and the results of such use, and
``(2) any legislative or administrative recommendations
regarding the provisions of this section and its
application.''.
(2) Conforming amendment.--Section 406 of division A of the
Tax Relief and Health Care Act of 2006 is amended by striking
subsections (b) and (c).
(3) Report on implementation.--Not later than 6 months
after the date of the enactment of this Act, the Secretary of
the Treasury shall submit to Congress a report on the
establishment and operation of the Whistleblower Office under
section 7623(c) of the Internal Revenue Code of 1986.
(c) Publicity of Award Appeals.--Paragraph (4) of section 7623(b),
as added by the Tax Relief and Health Care Act of 2006, is amended to
read as follows:
``(4) Appeal of award determination.--
``(A) In general.--Any determination regarding an
award under paragraph (1), (2), or (3) may, within 30
days of such determination, be appealed to the Tax
Court (and the Tax Court shall have jurisdiction with
respect to such matter).
``(B) Publicity of appeals.--Notwithstanding
sections 7458 and 7461, the Tax Court may, in order to
preserve the anonymity, privacy, or confidentiality of
any person under this subsection, provide by rules
adopted under section 7453 that portions of filings,
hearings, testimony, evidence, and reports in
connection with proceedings under this subsection may
be closed to the public or to inspection by the
public.''.
(d) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to information
provided on or after the date of the enactment of this Act.
(2) Publicity of award appeals.--The amendment made by
subsection (c) shall take effect as if included in the
amendments made by section 406 of the Tax Relief and Health
Care Act of 2006.

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

(a) In General.--Paragraph (3) of section 162(m) is amended to read
as follows:
``(3) Covered employee.--For purposes of this subsection,
the term `covered employee' means, with respect to any taxpayer
for any taxable year, an individual who--
``(A) was the chief executive officer of the
taxpayer, or an individual acting in such a capacity,
at any time during the taxable year,
``(B) is 1 of the 4 highest compensated officers of
the taxpayer for the taxable year (other than the
individual described in subparagraph (A)), or
``(C) was a covered employee of the taxpayer (or
any predecessor) for any preceding taxable year
beginning after December 31, 2006.
In the case of an individual who was a covered employee for any
taxable year beginning after December 31, 2006, the term
`covered employee' shall include a beneficiary of such employee
with respect to any remuneration for services performed by such
employee as a covered employee (whether or not such services
are performed during the taxable year in which the remuneration
is paid).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2006.

Subtitle C--General Provisions

SEC. 241. ENHANCED COMPLIANCE ASSISTANCE FOR SMALL BUSINESSES.

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

SEC. 242. SMALL BUSINESS CHILD CARE GRANT PROGRAM.

(a) Establishment.--The Secretary of Health and Human Services
(referred to in this section as the ``Secretary'') shall establish a
program to award grants to States, on a competitive basis, to assist
States in providing funds to encourage the establishment and operation
of employer-operated child care programs.
(b) Application.--To be eligible to receive a grant under this
section, a State shall prepare and submit to the Secretary an
application at such time, in such manner, and containing such
information as the Secretary may require, including an assurance that
the funds required under subsection (e) will be provided.
(c) Amount and Period of Grant.--The Secretary shall determine the
amount of a grant to a State under this section based on the population
of the State as compared to the population of all States receiving
grants under this section. The Secretary shall make the grant for a
period of 3 years.
(d) Use of Funds.--
(1) In general.--A State shall use amounts provided under a
grant awarded under this section to provide assistance to small
businesses (or consortia formed in accordance with paragraph
(3)) located in the State to enable the small businesses (or
consortia) to establish and operate child care programs. Such
assistance may include--
(A) technical assistance in the establishment of a
child care program;
(B) assistance for the startup costs related to a
child care program;
(C) assistance for the training of child care
providers;
(D) scholarships for low-income wage earners;
(E) the provision of services to care for sick
children or to provide care to school-aged children;
(F) the entering into of contracts with local
resource and referral organizations or local health
departments;
(G) assistance for care for children with
disabilities;
(H) payment of expenses for renovation or operation
of a child care facility; or
(I) assistance for any other activity determined
appropriate by the State.
(2) Application.--In order for a small business or
consortium to be eligible to receive assistance from a State
under this section, the small business involved shall prepare
and submit to the State an application at such time, in such
manner, and containing such information as the State may
require.
(3) Preference.--
(A) In general.--In providing assistance under this
section, a State shall give priority to an applicant
that desires to form a consortium to provide child care
in a geographic area within the State where such care
is not generally available or accessible.
(B) Consortium.--For purposes of subparagraph (A),
a consortium shall be made up of 2 or more entities
that shall include small businesses and that may
include large businesses, nonprofit agencies or
organizations, local governments, or other appropriate
entities.
(4) Limitations.--With respect to grant funds received
under this section, a State may not provide in excess of
$500,000 in assistance from such funds to any single applicant.
(e) Matching Requirement.--To be eligible to receive a grant under
this section, a State shall provide assurances to the Secretary that,
with respect to the costs to be incurred by a covered entity receiving
assistance in carrying out activities under this section, the covered
entity will make available (directly or through donations from public
or private entities) non-Federal contributions to such costs in an
amount equal to--
(1) for the first fiscal year in which the covered entity
receives such assistance, not less than 50 percent of such
costs ($1 for each $1 of assistance provided to the covered
entity under the grant);
(2) for the second fiscal year in which the covered entity
receives such assistance, not less than 66\2/3\ percent of such
costs ($2 for each $1 of assistance provided to the covered
entity under the grant); and
(3) for the third fiscal year in which the covered entity
receives such assistance, not less than 75 percent of such
costs ($3 for each $1 of assistance provided to the covered
entity under the grant).
(f) Requirements of Providers.--To be eligible to receive
assistance under a grant awarded under this section, a child care
provider--
(1) who receives assistance from a State shall comply with
all applicable State and local licensing and regulatory
requirements and all applicable health and safety standards in
effect in the State; and
(2) who receives assistance from an Indian tribe or tribal
organization shall comply with all applicable regulatory
standards.
(g) State-Level Activities.--A State may not retain more than 3
percent of the amount described in subsection (c) for State
administration and other State-level activities.
(h) Administration.--
(1) State responsibility.--A State shall have
responsibility for administering a grant awarded for the State
under this section and for monitoring covered entities that
receive assistance under such grant.
(2) Audits.--A State shall require each covered entity
receiving assistance under the grant awarded under this section
to conduct an annual audit with respect to the activities of
the covered entity. Such audits shall be submitted to the
State.
(3) Misuse of funds.--
(A) Repayment.--If the State determines, through an
audit or otherwise, that a covered entity receiving
assistance under a grant awarded under this section has
misused the assistance, the State shall notify the
Secretary of the misuse. The Secretary, upon such a
notification, may seek from such a covered entity the
repayment of an amount equal to the amount of any such
misused assistance plus interest.
(B) Appeals process.--The Secretary shall by
regulation provide for an appeals process with respect
to repayments under this paragraph.
(i) Reporting Requirements.--
(1) 2-year study.--
(A) In general.--Not later than 2 years after the
date on which the Secretary first awards grants under
this section, the Secretary shall conduct a study to
determine--
(i) the capacity of covered entities to
meet the child care needs of communities within
States;
(ii) the kinds of consortia that are being
formed with respect to child care at the local
level to carry out programs funded under this
section; and
(iii) who is using the programs funded
under this section and the income levels of
such individuals.
(B) Report.--Not later than 28 months after the
date on which the Secretary first awards grants under
this section, the Secretary shall prepare and submit to
the appropriate committees of Congress a report on the
results of the study conducted in accordance with
subparagraph (A).
(2) 4-year study.--
(A) In general.--Not later than 4 years after the
date on which the Secretary first awards grants under
this section, the Secretary shall conduct a study to
determine the number of child care facilities that are
funded through covered entities that received
assistance through a grant awarded under this section
and that remain in operation, and the extent to which
such facilities are meeting the child care needs of the
individuals served by such facilities.
(B) Report.--Not later than 52 months after the
date on which the Secretary first awards grants under
this section, the Secretary shall prepare and submit to
the appropriate committees of Congress a report on the
results of the study conducted in accordance with
subparagraph (A).
(j) Definitions.--In this section:
(1) Covered entity.--The term ``covered entity'' means a
small business or a consortium formed in accordance with
subsection (d)(3).
(2) Indian community.--The term ``Indian community'' means
a community served by an Indian tribe or tribal organization.
(3) Indian tribe; tribal organization.--The terms ``Indian
tribe'' and ``tribal organization'' have the meanings given the
terms in section 658P of the Child Care and Development Block
Grant Act of 1990 (42 U.S.C. 9858n).
(4) Small business.--The term ``small business'' means an
employer who employed an average of at least 2 but not more
than 50 employees on the business days during the preceding
calendar year.
(5) State.--The term ``State'' has the meaning given the
term in section 658P of the Child Care and Development Block
Grant Act of 1990 (42 U.S.C. 9858n).
(k) Application to Indian Tribes and Tribal Organizations.--In this
section:
(1) In general.--Except as provided in subsection (f)(1),
and in paragraphs (2) and (3), the term ``State'' includes an
Indian tribe or tribal organization.
(2) Geographic references.--The term ``State'' includes an
Indian community in subsections (c) (the second and third place
the term appears), (d)(1) (the second place the term appears),
(d)(3)(A) (the second place the term appears), and
(i)(1)(A)(i).
(3) State-level activities.--The term ``State-level
activities'' includes activities at the tribal level.
(l) Authorization of Appropriations.--
(1) In general.--There is authorized to be appropriated to
carry out this section, $50,000,000 for the period of fiscal
years 2008 through 2012.
(2) Studies and administration.--With respect to the total
amount appropriated for such period in accordance with this
subsection, not more than $2,500,000 of that amount may be used
for expenditures related to conducting studies required under,
and the administration of, this section.
(m) Termination of Program.--The program established under
subsection (a) shall terminate on September 30, 2012.

SEC. 243. STUDY OF UNIVERSAL USE OF ADVANCE PAYMENT OF EARNED INCOME
CREDIT.

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

SEC. 244. SENSE OF THE SENATE CONCERNING PERSONAL SAVINGS.

(a) Findings.--The Senate finds that--
(1) the personal saving rate in the United States is at its
lowest point since the Great Depression, with the rate having
fallen into negative territory;
(2) the United States ranks at the bottom of the Group of
Twenty (G-20) nations in terms of net national saving rate;
(3) approximately half of all the working people of the
United States work for an employer that does not offer any kind
of retirement plan;
(4) existing savings policies enacted by Congress provide
limited incentives to save for low- and moderate-income
families; and
(5) the Social Security program was enacted to serve as the
safest component of a retirement system that also includes
employer-sponsored retirement plans and personal savings.
(b) Sense of the Senate.--It is the sense of the Senate that--
(1) Congress should enact policies that promote savings
vehicles for retirement that are simple, easily accessible and
provide adequate financial security for all the people of the
United States;
(2) it is important to begin retirement saving as early as
possible to take full advantage of the power of compound
interest; and
(3) regularly contributing money to a financially-sound
investment account is one important method for helping to
achieve one's retirement goals.

SEC. 245. RENEWAL GRANTS FOR WOMEN'S BUSINESS CENTERS.

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

SEC. 246. REPORTS ON ACQUISITIONS OF ARTICLES, MATERIALS, AND SUPPLIES
MANUFACTURED OUTSIDE THE UNITED STATES.

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

SEC. 247. SENSE OF THE SENATE REGARDING REPEAL OF 1993 INCOME TAX
INCREASE ON SOCIAL SECURITY BENEFITS.

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

SEC. 248. SENSE OF THE SENATE REGARDING PERMANENT TAX INCENTIVES TO
MAKE EDUCATION MORE AFFORDABLE AND MORE ACCESSIBLE FOR
AMERICAN FAMILIES.

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

SEC. 249. RESPONSIBLE GOVERNMENT CONTRACTOR REQUIREMENTS.

Section 274A(e) of the Immigration and Nationality Act (8 U.S.C.
1324a(e)) is amended by adding at the end the following new paragraph:
``(10) Prohibition on award of government contracts,
grants, and agreements.--
``(A) Employers with no contracts, grants, or
agreements.--
``(i) In general.--Subject to clause (iii)
and subparagraph (C), if an employer who does
not hold a Federal contract, grant, or
cooperative agreement is determined to have
violated this section, the employer shall be
debarred from the receipt of a Federal
contract, grant, or cooperative agreement for a
period of 7 years.
``(ii) Placement on excluded list.--The
Secretary of Homeland Security or the Attorney
General shall advise the Administrator of
General Services of the debarment of an
employer under clause (i) and the Administrator
of General Services shall list the employer on
the List of Parties Excluded from Federal
Procurement and Nonprocurement Programs for a
period of 7 years.
``(iii) Waiver.--
``(I) Authority.--The Administrator
of General Services, in consultation
with the Secretary of Homeland Security
and the Attorney General, may waive
operation of clause (i) or may limit
the duration or scope of a debarment
under clause (i) if such waiver or
limitation is necessary to national
defense or in the interest of national
security.
``(II) Notification to congress.--
If the Administrator grants a waiver or
limitation described in subclause (I),
the Administrator shall submit to each
member of the Committee on the
Judiciary of the Senate and of the
Committee on the Judiciary of the House
of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial
review.--The decision of whether to
debar or take alternative action under
this clause shall not be judicially
reviewed.
``(B) Employers with contracts, grants, or
agreements.--
``(i) In general.--Subject to clause (iii)
and subclause (C), an employer who holds a
Federal contract, grant, or cooperative
agreement and is determined to have violated
this section shall be debarred from the receipt
of new Federal contracts, grants, or
cooperative agreements for a period of 10
years.
``(ii) Notice to agencies.--Prior to
debarring the employer under clause (i), the
Secretary of Homeland Security, in cooperation
with the Administrator of General Services,
shall advise any agency or department holding a
contract, grant, or cooperative agreement with
the employer of the Government's intention to
debar the employer from the receipt of new
Federal contracts, grants, or cooperative
agreements for a period of 10 years.
``(iii) Waiver.--
``(I) Authority.--After
consideration of the views of any
agency or department that holds a
contract, grant, or cooperative
agreement with the employer, the
Administrator of General Services, in
consultation with the Secretary of
Homeland Security and the Attorney
General, may waive operation of clause
(i) or may limit the duration or scope
of the debarment under clause (i) if
such waiver or limitation is necessary
to the national defense or in the
interest of national security.
``(II) Notification to congress.--
If the Administrator grants a waiver or
limitation described in subclause (I),
the Administrator shall submit to each
member of the Committee on the
Judiciary of the Senate and of the
Committee on the Judiciary of the House
of Representatives immediate notice of
such waiver or limitation.
``(III) Prohibition on judicial
review.--The decision of whether to
debar or take alternate action under
this clause shall not be judicially
reviewed.
``(C) Exemption from penalty for employers
participating in the basic pilot program.--In the case
of imposition on an employer of a debarment from the
receipt of a Federal contract, grant, or cooperative
agreement under subparagraph (A) or (B), that penalty
shall be waived if the employer establishes that the
employer was voluntarily participating in the basic
pilot program under section 403(a) of the Illegal
Immigration Reform and Immigrant Responsibility Act of
1996 (8 U.S.C. 1324a note) at the time of the
violations of this section that resulted in the
debarment.''.

Attest:

Secretary.
110th CONGRESS

1st Session

H. R. 2

_______________________________________________________________________

AMENDMENT