Clerk session vote number: 261
Description: A bill to amend the Internal Revenue Code of 1986 to reduce individual income tax rates, to provide marriage penalty relief, to reduce taxes on savings and investments, to provide estate and gift tax relief, to provide incentives for education savings and health care, and for other purposes.
Bill summary: Taxpayer Refund and Relief Act of 1999 -
Title I: Broad-Based and Family Tax Relief
Subtitle A: Reduction in Individual Income Taxes
- Amends the Internal Revenue Code (IRC) to reduce the income tax rates.
Subtitle B: Family Tax Relief
- Phases-in a standard deduction on a joint (married) return equal to twice the deduction of a single (not married) return.
(Sec. 112) Applies the exclusion for foster care payments to payments by qualified placement agencies.
(Sec. 113) Increases the maximum
credit for special needs adoptions and deems taxpayers making a special needs adoption to have incurred $10,000 in expenses.
(Sec. 114) Increases the maximum dependent care credit percentage. Indexes the maximum amount of eligible expenses.
(Sec. 115) Increases, by $2,000, the beginning point of the phase-out of the earned income credit on a joint return.
Subtitle C: Repeal of Alternative Minimum Tax on Individuals
- Phases-in a repeal of the alternative minimum tax for individuals.
Title II: Relief from Taxation on Savings and Investments
Subtitle A: Capital Gains Tax Relief
- Reduces the individual capital gains tax rate.
(Sec. 202) Indexes certain assets acquired after December 31, 1999, for purposes of determining gain.
(Sec. 203) Applies the capital gains tax rates to capital gains of designated settlement funds.
(Sec. 204) Provides, with respect to exclusion of gain from the sale of a principal residence, for the suspension of the five-year ownership and use requirement during the time that a member (or spouse) of the uniformed services or Foreign Service is on qualified official extended duty (as defined by this Act).
(Sec. 205) Excludes from the meaning of capital assets (for capital gains and losses purposes): (1) any commodities derivative financial instrument held by a commodities derivatives dealer, unless it is established to the Secretary of the Treasury's satisfaction that such instrument has no connection to the activities of such dealer as a dealer; (2) any hedging transaction clearly identified as such before the close of the day on which it was acquired, originated, or entered into (or such other time as the Secretary may by regulations prescribe); or (3) supplies of a type regularly used or consumed by the taxpayer in the ordinary course of a trade or business of the taxpayer.
(Sec. 206) Revises provisions concerning the worthless securities of financial institutions.
Subtitle B: Individual Retirement Arrangements
- Increases the contributions permitted for both traditional IRAs and Roth IRAs.
(Sec. 213) Amends the Code and ERISA (the Employee Retirement Income Security Act of 1974) to permit employees to make IRA contributions under a qualified employer plan.
(Sec. 214) Increases the IRA maximum contribution limit for individuals who are age 50 and older.
Title III: Alternative Minimum Tax Reform
- Permits a corporation to increase the use of minimum tax credits.
(Sec. 302) Repeals the 90 percent limitation on the utilization of the foreign tax credit.
Title IV: Education Savings Incentives
- Renames education individual retirement accounts education savings accounts. Increases to $2,000 the maximum annual contribution allowed to such accounts. Permits tax-free expenditures from such accounts for elementary and secondary education expenses required for attendance at a public, private, or religious school, or for homeschooling that meets State requirements. Waives certain age limitations in cases of children with special needs. Permits corporations to contribute to such accounts.
(Sec. 402) Collegiate Learning and Student Savings (CLASS) Act - Permits private educational institutions to maintain qualified tuition programs which are comparable to qualified State tuition programs. Excludes qualified distributions from such accounts from gross income.
(Sec. 403) Excludes from gross income certain amounts received under the National Health Corps Scholarship Program, the Armed Forces Health Professions Scholarship and Financial Assistance Program, the National Institutes of Health Undergraduate Scholarship Program, or any similar State program.
(Sec. 404) Extends the exclusion for employer provided educational assistance until December 31, 2003.
(Sec. 405) Increases the amount by which certain governmental bonds used to finance public school capital expenditures may be exempted from specified arbitrage bond provisions.
(Sec. 406) Modifies arbitrage rebate rules applicable to public school construction bonds.
(Sec. 407) Repeals the 60-month limitation period on the allowance of the interest deduction on loans for higher education expenses. Increases the income limitation for such deduction.
(Sec. 408) Eliminates the two percent floor on miscellaneous itemized deductions for the qualified professional development expenses of elementary and secondary school teachers.
Title V: Health Care Provisions
- Phases-in a 100 percent deduction (for both itemizers and nonitemizers) for the health and long-term care insurance costs of individuals not participating in employer-subsidized health plans.
(Sec. 502) Permits offering long-term care insurance under cafeteria plans and flexible spending arrangements.
(Sec. 503) Permits a taxpayer an additional exemption for certain elderly family members who need long-term care and who reside with the taxpayer.
(Sec. 504) Expands the time frame for human clinical trials qualifying for the orphan drug credit.
(Sec. 505) Adds to the list of taxable vaccines any conjugate vaccine of streptococcus pneumoniae.
(Sec. 506) Provides a deduction for certain former prescription drugs for medicare beneficiaries.
Title VI: Estate Tax Relief
Subtitle A: Repeal of Estate, Gift, and Generation-Skipping Taxes; Repeal of Step Up in Basis At Death
- Repeals the estate tax, gift tax, and the tax on generation-skipping transfers, effective January 1, 2009.
(Sec. 602) Terminates, effective January 1, 2009, the current provisions providing for determining the basis of property the acquired from a decedent and sets forth new provisions for determining the basis of certain property acquired from a decedent dying after December 31, 2008.
Subtitle B: Reductions of Estate and Gift Tax Rates Prior to Repeal
- Sets forth additional estate and gift tax reductions applicable to the period prior to repeal.
Subtitle C: Unified Credit Replaced Unified Exemption Amount
- Replaces the unified credit with a unified exemption amount.
Subtitle D: Modifications of Generation-Skipping Tax
- Amends provisions concerning the special rules for allocation of the generation-skipping tax (GST) exemption to provide, as a general rule, that: (1) if any individual makes an indirect skip during such individual's lifetime, any unused portion of such individual's GST exemption shall be allocated to the property transferred to the extent necessary to make the inclusion ratio for such property zero; and (2) if the amount of the indirect skip exceeds such unused portion, the entire unused portion shall be allocated to the property transferred.
Subtitle E: Conservation Easements
- Modifies distance requirements with respect to qualified conservation easements.
Title VII: Tax Relief for Distressed Communities and Industries
Subtitle A: American Community Renewal Act of 1999
- Authorizes the Secretary of Housing and Urban Development to designate (upon local or State nomination) up to 20 renewal communities, of which at least four shall be in rural areas.
Requires for nomination purposes that: (1) the area be experiencing high rates of poverty and unemployment and general distress; and (2) State and local governments enter into written contracts with community organizations to promote specified economic growth and employment activities.
Excludes from gross income capital gains on the sale or exchange of a qualified community asset (stock, business property, or partnership interest) held for more than five years.
Allows a specified deduction for amounts paid into a family development account on behalf of a renewal community resident. Excludes from gross income account distributions used for qualified family development expenses (postsecondary education, first-home purchase, business capitalization, medical, and rollovers). Provides a penalty (with exceptions) in addition to inclusion as gross income for nonqualifying distributions.
Authorizes: (1) designation of earned income tax credit payments for family development account deposit; (2) a commercial building revitalization tax deduction; (3) increased first year expensing for renewal community businesses; (4) extension of environmental remediation cost expensing and the work opportunity credit for renewal communities; and (5) similar tax treatment of renewal communities and enterprise zones for specified youth residence requirements.
Permits a deduction for contributions to a family development account whether or not a taxpayer itemizes.
(Sec. 705) Makes conforming amendments to provisions respecting: (1) tax on excess contributions and prohibited transactions; (2) trust and annuity information; (3) tax exemption applications; and (4) the commercial revitalization credit.
Subtitle B: Farming Incentive
- Disregards any option to accelerate the receipt of any payment under a production flexibility contract which is payable under the Federal Agriculture Improvement and Reform Act of 1996, as in effect on the date of the enactment of this Act, in determining the taxable year for which such payment is properly includible in gross income for purposes of the IRC.
Subtitle C: Oil and Gas Incentives
- Permits a five-year net operating loss carryback for losses attributable to operating mineral interests of independent oil and gas producers.
(Sec. 722) Permits the deduction of delay rental payments.
(Sec. 723) Permits the deduction of incurred geological and geophysical costs.
(Sec. 724) Suspends, between December 31, 1998 and December 31, 2004, the limit on percentage depletion to no more than 65 percent of the taxpayer's taxable income.
(Sec. 725) Revises the refinery limitation on claiming independent producer status from an actual daily production to average annual daily production.
Subtitle D: Timber Incentive
- Increases the maximum permitted amortization of reforestation expenditures.
(Sec. 732) Revises provisions concerning gain or loss on the disposal of timber.
Subtitle E: Steel Industry Incentive
- Increases, for steel companies, the credit allowed against the regular tax for prior year minimum tax liability.
Title VIII: Relief for Small Businesses
- Provides for the deduction of 100 Percent of the health insurance costs of self-employed individuals.
(Sec. 802) Increases to $30,000 the amount which may be expensed as section 179 property.
(Sec. 803) Makes the 6.2 percent Federal Unemployment Tax Act rate effective through calendar year 2004 (currently, 2007) and the 6.0 percent rate effective through calendar year 2005 (currently, 2008).
(Sec. 804) Increases the deduction for meal expenses.
(Sec. 805) Coordinates income averaging for farmers and commercial fishermen with the alternative minimum tax.
(Sec. 806) Permits eligible farmers, fishermen, and ranchers to establish Farm, Fish, and Ranch Risk Management accounts.
(Sec. 807) Provides that, for purposes of applying the passive income test to a bank or a bank holding company, interest income and dividends received on assets required to conduct a banking business are not to be treated as passive income.
(Sec. 808) Provides that qualifying director shares are not treated as a second class of stock.
Title IX: International Tax Relief
- Permits, for interest allocation rule purposes, treating each electing worldwide affiliated group an affiliated group, subject to exceptions.
(Sec. 902) Revises provisions concerning the of application of look-thru rules to dividends from noncontrolled section 902 corporations to provide, in general, that any dividend from a noncontrolled section 902 corporation with respect to the taxpayer shall be treated as income in a separate category in proportion to the ratio of: (1) the portion of earnings and profits attributable to income in such category; to (2) the total amount of earnings and profits.
(Sec. 903) Excludes from the definition of "foreign base company oil related income" the pipeline transportation of oil or gas within such foreign country.
(Sec. 904) Excludes from the definition of "foreign base company services income" income derived in connection with the performance of services which are related to the transmission of high voltage electricity.
(Sec. 905) Defines overall domestic loss and sets forth provisions for determining taxable income for any taxpayer sustaining such a loss.
(Sec. 906) Repeals the special rule for military property with respect to exempt foreign trade income.
(Sec. 907) Exempts from taxation certain regulated investment company dividends received by nonresident aliens. Treats certain regulated investment company stock owned by nonresident noncitizens as non-U.S. property for estate tax purposes.
(Sec. 908) Repeals section 907 (Special Rules In Case of Foreign Oil and Gas Income) of the IRC.
(Sec. 909) Treats advance pricing agreements as confidential taxpayer information.
(Sec. 910) Phases in an increase in the dollar limitation on the section 911 (Citizens or Residents of the United States Living Abroad) exclusion.
(Sec. 911) Exempts from the 7.5-percent excise tax air transportation rights (frequent flyer miles/rights) sold which are credited to accounts of persons having a mailing address outside the United States.
Title X: Provisions Relating to Tax-Exempt Organizations
- Exempts an organization from income tax if it is created by a State to provide property and casualty insurance coverage for property for which such coverage is otherwise unavailable.
(Sec. 1002) Amends the Tax Reform Act of 1984 to revise the special arbitrage rule.
(Sec. 1003) Requires the Secretary of the Treasury to establish a procedure for exemption from the self-dealing tax.
(Sec. 1004) Revises provisions concerning: (1) declaratory judgments relating to tax-exempt organizations; and (2) the special rules for certain amounts of unrelated business taxable income received from controlled entities.
(Sec. 1006) Excludes from gross income mileage reimbursements to charitable volunteers.
(Sec. 1007) Allows a limited deduction for specified sanctioned Alaskan whaling activities.
(Sec. 1008) removes the separate percentage limitation on grass roots lobbying expenditures.
(Sec. 1009) Permits specified tax-free withdrawals from IRAs for charitable purposes.
Title XI: Real Estate Provisions
Subtitle A: Improvements in Low-Income Housing Credit
- Amends the Code, with respect to the low-income housing credit, to revise the formula for the State housing credit ceiling. Replaces the set multiplicand of $1.25 (to be multiplied by the State population) with a graduated applicable multiplicand rising from $1.35 for calendar year 2000 to $1.75 for calendar year 2004 and thereafter, and a maximum product of $2 million. Provides for cost-of-living adjustments to the State ceiling.
(Sec. 1102) Revises the housing priority selection criteria a housing credit agency must use to develop a qualified plan for allocating housing credit dollar amounts among projects. Requires such criteria to include: (1) whether the project would use existing housing as part of a community revitalization plan; (2) tenant populations of individuals with children; and (3) projects intended for eventual tenant ownership. Drops from such criteria participation of local tax-exempt organizations. Requires a qualified allocation plan to give preference in making allocations to projects located in qualified census tracts whose development contributes to a concerted community revitalization plan.
(Sec. 1103) Requires housing credit agencies to: (1) provide for a comprehensive market study (by a disinterested party, at the developer's expense) of the housing needs of low-income individuals in the area to be served by the project before the credit allocation is made; and (2) make public a written explanation for any allocation of a housing credit dollar amount not made in accordance with the agency's established priorities and selection criteria.
(Sec. 1104) Revises special rules for the determination of the adjusted basis of buildings eligible for the low-income housing credit. Requires adjusted basis to include property used throughout the taxable year in providing any community service facility designed to serve primarily individuals (even if they are not tenants) whose income is 60 percent or less of area median income.
Declares that assistance under the Native American Housing Assistance and Self-Determination Act of 1996 shall be disregarded in determining whether a building is federally subsidized for purposes of the low-income housing credit.
(Sec. 1105) Revises the definition of a qualified building (placed in service not later than the second calendar year following a housing credit dollar amount allocation) with respect to which the amount of a low-income housing credit may exceed the credit amount allocated to the building. Sets an alternative date for valuation of the taxpayer's actual basis in the project of which the building is a part (where the actual basis is more than ten percent of the taxpayer's reasonably expected basis). Allows the valuation of the actual basis to be as of the later of the date which is six months after the date that the allocation was made or (as currently) the close of the calendar year in which the allocation is made. Revises the formula for determination of the amount of State housing credit ceiling returned in a calendar year to include the dollar amount previously allocated to a project which fails to meet the ten percent test on a date after the close of the calendar year in which the allocation was made.
Revises special rules for the increased basis of a building located in certain high cost areas to redefine a qualified census tract to include, as an alternative to existing criteria, a tract with a poverty rate of at least 25 percent.
(Sec. 1106) Revises the formula for determining unused housing credit carryovers allocated among certain States.
Subtitle B: Provisions Relating to Real Estate Investment Trusts
- Part I: Treatment of Income and Services Provided by Taxable REIT Subsidiaries - Excludes taxable REIT subsidiaries (TRSs) from the five and ten percent asset tests.
(Sec. 1112) Allows TRSs to provide non-customary tenant services.
(Sec. 1113) Allows a REIT to establish a TRS (as defined).
(Sec. 1114) Includes in the definition of "disqualified interest" (Sec. 163 of the IRC) any interest paid or accrued by a TRS to the REIT.
(Sec. 1115) Imposes a 100 percent tax on any interest payments by a TRS to the REIT in excess of the commercially reasonable interest rate.
Part II: Health Care REITs - Includes within the definition of the term "foreclosure property" any qualified health care property acquired by a REIT as the result of the termination of a lease of such property.
Part III: Conformity With Regulated Investment Company Rules - Changes the distribution requirement from 95 percent to 90 percent.
Part IV: Clarification of Exception From Impermissible Tenant Service Income - Provides, with respect to the definition of an independent contractor, that in the event that any class of stock of is regularly traded on an established securities market, only owners who own, directly or indirectly, more than five percent of such class of stock shall be taken into account as owning any of the stock of such class for purposes of applying the 35 percent limitation.
Part V: Modification of Earnings and Profits Rules - Provides rules for determining whether a Regulated Investment Company (RIC) has earnings and profits form a non-RIC year.
Subtitle C: Modification of At-Risk Rules for Publicly Traded Nonrecourse Debt
- Revises, with respect to real property, provisions concerning the treatment under the at-risk rules of publicly traded nonrecourse debt.
Subtitle D: Treatment of Certain Contributions To Capital of Retailers
- Defines the term "contribution to the capital of the taxpayer" to include any amount of money or other property received by the taxpayer if: (1) the taxpayer has entered into an agreement to operate a qualified retail business at a particular location for at least 15 years; (2) immediately after the receipt of such money or other property, the taxpayer owns the land and the structure to be used by the taxpayer in carrying on a qualified retail business at such location, or the taxpayer uses such amount to acquire ownership of at least such land and structure; (3) such amount meets the requirements of the expenditure rule; and (4) the contributor of such amount does not hold a beneficial interest in any property located on the premises of such qualified retail business other than de minimis amounts of property associated with the operation of property adjacent to such premises. Defines the terms "expenditure rule" and "qualified retail business."
Subtitle E: Private Activity Bond Volume Cap
- Provides for an accelerated phase-in of specified increases in the volume cap on private activity bonds.
Subtitle F: Deduction for Renovating Historic Homes
- Allows a limited deduction for qualified rehabilitation expenditures to qualified historic homes.
Title XII: Provisions Relating to Pensions
Subtitle A: Expanding Coverage
- Increases the $90,000 limit on defined benefit plans to $160,000. Changes the age from which such limit will be reduced from the social security retirement age to 62 and the age from which the limit will be increased from the social security retirement age to 65. Increases the $30,000 limit for defined benefit contribution plans to $40,000. Increases the $150,000 compensation limit to $200,000. Increases the elective deferral limit to $15,000.
(Sec. 1202) Eliminates certain current rules concerning plan loans made to an owner-employee.
(Sec. 1203) Revises the definition of a top-heavy plan and a key employee for purposes of the special rules for top-heavy plans. Takes into account: (1) matching contributions for minimum contribution requirements; and (2) distributions during the last year before the determination date.
(Sec. 1204) Provides that elective deferral contributions are not subject to deduction limits.
(Sec. 1205) Repeals specified coordination requirements under the Code for deferred compensation plans of State and local governments and tax-exempt organizations.
(Sec. 1206) Eliminates user fee requirements for requests to the IRS concerning the status of pension plans.
(Sec. 1207) Revises the definition of compensation, for purposes of the deduction rules, to include salary reduction amounts treated as a participant's compensation.
(Sec. 1208) Provides for optional treatment of elective deferrals as plus contributions. Defines such contributions.
(Sec. 1209) Amends the Employee Retirement Income Security Act (ERISA) of 1974 to provide that, during the first five years of a new single-employer plan of a small employer (100 or fewer employees), the flat rate Pension Benefit Guaranty Corporation (PGBC) premium will be five dollars per plan participant. Provides for a reduced additional PGBC variable premium for new employers.
Subtitle B: Enhancing Fairness for Women
- Amends the Code to allow eligible participants age 50 or over to make additional elective deferrals (catch-up contributions) in any plan year according to a schedule of percentage increments (from ten percent to 50 percent) between 2001 and 2005 and thereafter.
(Sec. 1222) Increases from 25 percent to 100 percent of compensation (up to $30,000) the maximum allowable annual addition to a participant's plan account.
(Sec. 1223) Provides for faster vesting of certain employer matching contributions.
(Sec. 1224) Directs the Secretary of the Treasury (Secretary) to simplify and finalize the regulations relating to specified minimum distribution requirements, and modify them to: (1) reflect current life expectancy; and (2) revise the required distribution methods so that, under reasonable assumptions, the amount of the required minimum distribution does not decrease over a participant's life expectancy.
(Sec. 1225) Amends the Code to provide for distribution or payment (division of benefits) from an eligible deferred compensation plan upon divorce.
(Sec. 1226) Directs the Secretary to revise the hardship distribution regulations to provide that six months is the period an employee is prohibited from making elective and employee contributions in order for a distribution to be deemed necessary to satisfy financial need (safe harbor relief for hardship withdrawals from cash or deferred arrangements).
Subtitle C: Increasing Portability for Participants
- Permits rollovers from and to various types of plans under the IRC.
(Sec. 1232) Permits individual retirement plan (IRA) rollovers only if certain conditions are met.
(Sec. 1233) Permits rollover of after-tax contributions in an exempt trust under specified conditions.
(Sec. 1234) Sets forth a hardship exception to the 60-day rule.
(Sec. 1235) Sets forth requirements for treatment of forms of distribution available under transferor and transferee plans, under the IRC and ERISA.
(Sec. 1236) Revises restrictions on distributions, including the same desk exception.
(Sec. 1237) Authorizes trustee-to-trustee transfers to purchase permissive service credit with respect to governmental defined benefit plans.
(Sec. 1238) Allows employers to disregard rollovers for purposes of cash-out amounts, under retirement plan provisions of the Code and ERISA.
(Sec. 1239) Revises minimum distribution and inclusion requirements for section 457 plans.
Subtitle D: Strengthening Pension Security and Enforcement
- Amends the IRC and ERISA to revise the percentage of current liability funding limit.
(Sec. 1242) Revises maximum contribution deduction rules and applies them to all defined benefit plans under the IRC.
(Sec. 1243) Amends ERISA to revise requirements relating to missing participants. Directs the PBGC to prescribe rules relating to missing participants for multiemployer plans covered by the PBGC that terminate. Allows the administrator of a plan not otherwise subject to such PBGC regulation to elect to transfer a missing participant's benefits to the PBGC upon termination of the plan, under specified conditions.
(Sec. 1244) Amends the IRC to allow an employer, in determining the amount of nondeductible contributions for any taxable year, to elect not to take into account any contributions to a defined benefit plan except to the extent that they exceed the full-funding limitation.
(Sec. 1245) Imposes an excise tax on a plan failing to provide required notice of a significant reduction in the rate of future benefit accrual.
(Sec. 1246) Amends the Taxpayer Relief Act of 1997 with respect to certain limitations on investment in employer securities and employer real property by cash or deferred arrangements. Exempts from such limitations any elective deferral invested in assets consisting of qualifying employer securities, qualifying employer real property, or both, if such assets were acquired before January 1, 1999.
(Sec. 1247)Makes certain compensation limitations for defined benefit plans inapplicable to governmental and multiemployer plans.
Subtitle E: Reducing Regulatory Burdens
- Amends the Code and ERISA to revise requirements relating to timing of plan valuations.
(Sec. 1252) Amends IRC requirements for applicable dividends to allow dividends of employee stock ownership plans to be reinvested without loss of dividend deduction.
(Sec. 1253) Repeals a transition rule relating to certain highly compensated employees under the Tax Reform Act of 1986.
(Sec. 1254) Directs the Secretary to modify certain regulations with respect to certain plan participation by employees of tax-exempt entities under the IRC.
(Sec. 1255) Excludes qualified retirement planning services from gross income (as a fringe benefit).
(Sec. 1256) Directs the Secretary to modify the annual return filing requirements for one-participant retirement plans (covering only the employer and spouse where the employer owns the entire business, or only one or more partners and spouses in a business partnership) to ensure that any plans with assets of $250,000 or less as of the close of the plan year need not file a return for that year.
(Sec. 1257) Directs the Secretary of the Treasury to continue to update and improve the Employee Plans Compliance Resolution System (or any successor program), giving special attention to certain tasks.
(Sec. 1258) Amends ERISA, with respect to limitations on the guarantee of single-employer plan benefits, to rename a "substantial owner" a "majority owner," who owns either the entire interest in an unincorporated trade or business, or: (1) 50 percent or more (currently more than ten percent) of either the capital interest or the profits interest in a partnership; or (2) 50 percent or more (currently more than ten percent) in value of either the voting stock of a corporation or all its stock. Revises the formula for the amount of benefits guaranteed for a majority owner of a plan which is in effect for less than 60 months when the plan terminates. Prescribes priorities for the allocation of assets to benefits when the assets available for the initial allocation are insufficient to satisfy in full the accrued benefits of all the individuals derived from their contributions.
(Sec. 1259) Amends the Code to repeal the restriction to situations where vouchers are not available of the exclusion from gross income of cash reimbursements as a qualified transportation fringe.
(Sec.1260) Repeals the Secretary is mandate, with respect to the nondiscrimination test for matching contributions and employee contributions, to prescribe regulations to prevent the multiple use of the alternative limitation for any highly compensated employee.
(Sec. 1261) Directs the Secretary to provide that a plan shall be deemed to satisfy nondiscrimination requirements if it satisfies the facts and circumstances test as in effect before January 1, 1994, but only if: (1) it satisfies conditions prescribed by the Secretary to appropriately limit the availability of such test; and (2) it is submitted to the Secretary for a determination of whether it satisfies such test.
Revises minimum coverage requirements to allow a plan that otherwise fails to meet such requirements to constitute a qualified plan if it meets certain requirements that were in effect immediately before enactment of the Tax Reform Act of 1986. (Such requirements stated that the plan must at least benefit employees qualifying under a classification set up by the employer and found by the Secretary not to be discriminatory in favor of employees who are officers, shareholders, or highly compensated.)
Directs the Secretary to modify certain existing regulations with respect to employers operating separate lines of business to expand the ability of a pension plan to demonstrate compliance with the line of business requirements based upon the facts and circumstances surrounding the design and operation of the plan, even though the plan is unable to satisfy the mechanical tests currently used to determine compliance.
(Sec.1262) Amends the Taxpayer Relief Act of 1997 to extend to international organizations the moratorium on application of certain nondiscrimination rules applicable to State and local governmental plans.
Subtitle F: Plan Amendments
- Prescribes application requirements for plan or contract amendments.
Title XIII: Miscellaneous Provisions
Subtitle A: Provisions Primarily Affecting Individuals
- Amends provisions of the Taxpayer Relief Act of 1997 to extend the same public safety officer survivor tax benefits to survivors of officers killed in the line of duty before December 31, 1996, as are available to the survivors of officers killed after such date.
(Sec. 1302) Extends the District of Columbia (DC) homebuyer credit by one year and increases the phase-out range.
(Sec. 1303) Excludes from gross income amounts and lands received by Holocaust victims and their heirs.
Subtitle B: Provisions Primarily Affecting Businesses
- Includes income from publicly traded partnerships as qualifying income of regulated investment companies. Excludes distributions from the source-based inclusion limitation applicable to other partnerships.
(Sec. 1312) Applies specified passive activity provisions for publicly traded partnerships to regulated investment companies.
(Sec. 1313) Makes certain large electric trucks, vans and buses eligible for the $50,000 deduction clean-fuel property deduction, but not the $4,000 electric vehicle credit.
(Sec. 1314) Modifies the special rules concerning nuclear decommissioning costs.
(Sec. 1315) Repeals certain provisions concerning the filing of consolidated returns by insurance companies.
(Sec. 1316) Provides that, for specified purposes of the active business definition, all members of a corporation's separate affiliated group shall be treated as one corporation.
(Sec. 1317) Modifies, for lending or finance companies, the exemption from the personal holding company tax.
(Sec. 1318) Revises the definition of qualified contamination site for purposes of expensing environmental remediation costs.
Subtitle C: Provisions Relating to Excise Taxes
- Combines the Hazardous Substance Superfund and the Leaking Underground Storage Tank Trust Fund (LUST) into the Environmental Remediation Trust Fund (established by this Act).
(Sec. 1322) Repeals the: (1) LUST taxes on fuel used in trains; and (2) 4.3-cents-per-gallon General Fund excise tax on diesel fuel used by railroads and on fuels used by barges operating on designated inland waterways.
(Sec. 1323) Repeals the excise tax on fishing tackle boxes.
(Sec. 1324) Revises the excise tax on arrow components.
(Sec. 1325) Exempts small seaplanes from the air passenger excise taxes.
(Sec. 1326) Modifies the definition of a rural airport for purposes of the air passenger tax.
Subtitle D: Other Provisions
- Provides for the treatment of a qualified highway infrastructure project bond as an exempt private activity bond.
(Sec. 1332) Permits, in general, an electing Alaska Native Settlement Trust to exclude contributions, during the year of contribution, from the gross income of a beneficiary.
(Sec. 1333) Doubles the Joint Committee on Taxation reporting threshold for refunds and credits.
(Sec. 1334) Establishes a limited credit for "qualified medical innovation expenses." Defines such expenses as amounts paid by a taxpayer to any qualified academic institution for clinical testing research activities.
(Sec. 1335) Provides that the patronage dividends of cooperatives shall not be reduced by stock dividends to the extent the stock dividends are in addition to amounts otherwise payable.
Subtitle E: Tax Court Provisions
- Authorizes the Tax Court to charge a filing fee of up to $60 in all cases commenced by petition.
(Sec. 1342) Authorizes the Tax Court to make the $30 practice fee available to pro se taxpayers.
(Sec. 1343) Permits the Tax Court to apply the doctrine of equitable recoupment to the same extent that it is available in civil tax cases.
Title XIV: Extensions of Expiring Provisions
- Extends, for five years, the: (1) research credit; (2) subpart F (Controlled Foreign Corporations) exemption for active income financing; (3) taxable income limit on percentage depletion for marginal oil and gas wells; and (4) work opportunity credit and the welfare-to-work credit. Redefines "qualified facility" for purposes the credit for producing electricity from certain renewable sources and adds poultry waste to the definition of "qualified energy sources."
Title XV: Revenue Offsets
- Amends provisions involving returns relating to the cancellation of indebtedness by certain entities to include within the definition of "applicable financial entity" any organization a significant trade or business of which is the lending of money.
(Sec. 1502) Directs the Secretary to establish a program requiring the payment of user fees for requests to the IRS for ruling letters, opinion letters, determination letters, and other similar requests. Terminates fees October 1, 2007.
(Sec. 1503) Modifies rules relating to the exemption of certain ten or more employer plans from welfare benefit fund provisions.
(Sec. 1504) Increases the withholding rate for nonperiodic distributions from 10 to 15 percent.
(Sec. 1505) Makes a controlled entity ineligible to be a REIT. Defines "controlled entity."
(Sec. 1506) Treats a gain as an ordinary gain to the extent such gain exceeds the net underlying long-term capital gain where the taxpayer has gain from a constructive ownership transaction with respect to any financial position and such gain otherwise would be treated as a long-term capital gain. Provides that, to the extent such gain is treated as a long-term capital gain after the application of the previous sentence, the determination of the applicable capital gain rate (or rates) shall be determined on the basis of the respective rate (or rates) that would have been applicable to the net underlying long-term capital gain. Sets forth definitions and exceptions.
(Sec. 1507) Prohibits transfers of excess pension assets to retiree health account made after September 30, 2009, (currently, after December 31, 2000) from being treated as qualified transfers.
(Sec. 1508) Prohibits, in general, the use of the installment method of accounting for accrual method dispositions.
(Sec. 1509) Revises special rules which allow users of the accrual method not to accrue payments for personal services which (on the basis of experience) will not be collected, to limit such services to those performed in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting.
(Sec. 1510) Disallows a deduction for the transfer of a charitable contribution to or for the use of a State or charitable tax-exempt organization or trust if in connection with such transfer: (1) the organization directly or indirectly pays, or has previously paid, any premium on any personal benefit contract (life insurance, annuity, or endowment contract, also known as charitable split-dollar life insurance) with respect to the transferor; or (2) there is an understanding (side agreement) that any person will directly or indirectly pay any premium on such contract with respect to such transferor. Imposes on such organization an excise tax equal to the premiums paid by it on the personal benefit contract.
Provides that certain persons shall not be treated as indirect beneficiaries: (1) in certain cases in which a charitable organization purchases an annuity contract to fund an obligation to pay a charitable gift annuity; or (2) solely by reason of being a noncharitable recipient of an annuity or unitrust amount paid by a charitable remainder trust that holds a life insurance, annuity or endowment contract.
(Sec. 1511) Prohibits from taking into account any dividend received from a closely held real estate investment trust by any person owning 10 percent or more of the stock or beneficial interests in the trust in computing annualized income installments in a manner similar to the manner under which partnership income inclusions are taken into account.
(Sec. 1512) Revises the anti-abuse rules related to assumption of liability.
(Sec. 1513) Provides that, as a general rule, a transfer of an interest in intangible property shall be treated (under provisions concerning the transfer of property to a corporation controlled by the transferor) as a transfer of property even if the transfer is of less than all of the substantial rights of the transferor in the property.
(Sec. 1514) Sets forth rules concerning distributions to a corporate partner of stock in another corporation.
(Sec. 1515) Requires any employee stock ownership plan holding employer securities consisting of stock in an S corporation to provide that no portion of the assets of the plan attributable to (or allocable in lieu of) such employer securities may, during a nonallocation year, accrue (or be allocated directly or indirectly under any qualified plan of the employer) for the benefit of any disqualified individual.
Title XVI: Compliance With Budget Act
- States that: (1) all provisions (except as provided in clause (2)) of, and amendments made by, this Act which are in effect on September 30, 2009, shall cease to apply as of the close of September 30, 2009; and (2) the amendments made by sections 101, 111, 121, 201, 211, 214, and 1221 shall not apply after December 31, 2008.
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Bill titles: To amend the Internal Revenue Code of 1986 to reduce individual income tax rates, to provide marriage penalty relief, to reduce taxes on savings and investments, to provide estate and gift tax relief, to provide incentives for education savings and health care, and for other purposes.
Links for more info on the vote: congress.gov