H.R. 2264 (103rd): Omnibus Budget Reconciliation Act of 1993

The text of the bill below is as of Aug 6, 1993 (Passed Congress/Enrolled Bill).

Source: GPO

H.R.2264

One Hundred Third Congress

of the

United States of America

AT THE FIRST SESSION

Begun and held at the City of Washington on Tuesday,

the fifth day of January, one thousand nine hundred and ninety-three

An Act

To provide for reconciliation pursuant to section 7 of the concurrent resolution

on the budget for fiscal year 1994.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Omnibus Budget Reconciliation Act of 1993’.

SEC. 2. TABLE OF CONTENTS.

    The table of contents is as follows:

TITLE I--AGRICULTURE AND RELATED PROVISIONS

TITLE II--ARMED SERVICES PROVISIONS

TITLE III--BANKING AND HOUSING PROVISIONS

TITLE IV--STUDENT LOANS AND ERISA PROVISIONS

TITLE V--TRANSPORTATION AND PUBLIC WORKS PROVISIONS

TITLE VI--COMMUNICATIONS LICENSING AND SPECTRUM ALLOCATION PROVISIONS

TITLE VII--NUCLEAR REGULATORY COMMISSION PROVISIONS

TITLE VIII--PATENT AND TRADEMARK OFFICE PROVISIONS

TITLE IX--MERCHANT MARINE PROVISIONS

TITLE X--NATURAL RESOURCES PROVISIONS

TITLE XI--CIVIL SERVICE AND POST OFFICE PROVISIONS

TITLE XII--VETERANS’ AFFAIRS PROVISIONS

TITLE XIII--REVENUE, HEALTH CARE, HUMAN RESOURCES, INCOME SECURITY, CUSTOMS AND TRADE PROVISIONS, FOOD STAMP PROGRAM, AND TIMBER SALE PROVISIONS

TITLE XIV--BUDGET PROCESS PROVISIONS

TITLE I--AGRICULTURAL PROGRAMS

SEC. 1001. SHORT TITLE AND TABLE OF CONTENTS.

    (a) SHORT TITLE- This title may be cited as the ‘Agricultural Reconciliation Act of 1993’.

    (b) TABLE OF CONTENTS- The table of contents of this title is as follows:

      Sec. 1001. Short title and table of contents.

Subtitle A--Commodity Programs

      Sec. 1101. Upland cotton program.

      Sec. 1102. Wheat program.

      Sec. 1103. Feed grain program.

      Sec. 1104. Rice program.

      Sec. 1105. Dairy program.

      Sec. 1106. Tobacco program.

      Sec. 1107. Sugar program.

      Sec. 1108. Oilseeds program.

      Sec. 1109. Peanut program.

      Sec. 1110. Honey program.

      Sec. 1111. Wool and mohair program.

Subtitle B--Rural Electrification

      Sec. 1201. Refinancing and prepayment of FFB loans.

Subtitle C--Agricultural Trade

      Sec. 1301. Acreage reduction requirements.

      Sec. 1302. Market promotion program.

Subtitle D--Miscellaneous

      Sec. 1401. Admission, entrance, and recreation fees.

      Sec. 1402. Environmental conservation acreage reserve program amendments.

      Sec. 1403. Federal crop insurance.

Subtitle A--Commodity Programs

SEC. 1101. UPLAND COTTON PROGRAM.

    (a) IN GENERAL- Section 103B of the Agricultural Act of 1949 (7 U.S.C. 1444-2) is amended--

      (1) in the section heading, by striking ‘1995’ and inserting ‘1997’;

      (2) in subsections (a)(1), (b)(1), (c)(1)(A), (c)(1)(B)(ii), and (o), by striking ‘1995’ each place it appears and inserting ‘1997’;

      (3) in subparagraphs (B)(i), (D)(i), (E)(i), and (F)(i) of subsection (a)(5), by striking ‘1996’ each place it appears and inserting ‘1998’;

      (4) in subsection (c)(1)(D)--

        (A) in the subparagraph heading, by striking ‘50/92 PROGRAM’ and inserting ‘50/85 PROGRAM’;

        (B) by inserting after ‘8 percent’ both places it appears the following: ‘for each of the 1991 through 1993 crops, and 15 percent for each of the 1994 through 1997 crops (except as provided in clause (v)(II)),’; and

        (C) in clause (v)--

          (i) by striking ‘(v) PREVENTED PLANTING- If’ and inserting the following:

          ‘(v) PREVENTED PLANTING AND REDUCED YIELDS-

            ‘(I) 1991 THROUGH 1993 CROPS- In the case of each of the 1991 through 1993 crops of upland cotton, if’; and

          (ii) by adding at the end the following new subclause:

            ‘(II) 1994 THROUGH 1997 CROPS- In the case of each of the 1994 through 1997 crops of upland cotton, producers on a farm shall be eligible to receive deficiency payments as provided in clause (iii) if an acreage limitation program under subsection (e) is in effect for the crop and--

‘(aa) the producers have been determined by the Secretary (in accordance with section 503(c)) to be prevented from planting the crop or have incurred a reduced yield for the crop (due to a natural disaster) and the producers elect to devote a portion of the maximum payment acres for upland cotton (as calculated under subparagraph (C)(ii)) equal to more than 8 percent of the upland cotton acreage, to conservation uses; or

‘(bb) the producers elect to devote a portion of the maximum payment acres for upland cotton (as calculated under subparagraph (C)(ii)) equal to more than 8 percent of the upland cotton acreage, to alternative crops as provided in subparagraph (E).’; and

      (5) in subsection (e)(1)(D), by inserting after ‘30 percent’ the following: ‘for each of the 1991 through 1994 crops, 29 1/2 percent for each of the 1995 and 1996 crops, and 29 percent for the 1997 crop’.

    (b) PROVISIONS NECESSARY TO THE OPERATION OF THE PROGRAM-

      (1) DEFICIENCY AND LAND DIVERSION PAYMENTS- Section 114 of the Agricultural Act of 1949 (7 U.S.C. 1445j) is amended by striking ‘1995’ each place it appears in subsections (a)(1) and (c) and inserting ‘1997’.

      (2) ACREAGE BASE AND YIELD SYSTEM- Title V of such Act (7 U.S.C. 1461 et seq.) is amended--

        (A) in section 503 (7 U.S.C. 1463)--

          (i) in subsection (c)(3)--

            (I) by striking ‘0/92 or 50/92’; and

            (II) by striking ‘1995’ and inserting ‘1997’; and

          (ii) in subsection (h)(2)(A), by striking ‘1995’ each place it appears and inserting ‘1997’;

        (B) in paragraphs (1) and (2) of section 505(b) (7 U.S.C. 1465(b)), by striking ‘1995’ each place it appears and inserting ‘1997’; and

        (C) in section 509 (7 U.S.C. 1469), by striking ‘1995’ and inserting ‘1997’.

      (3) PAYMENT LIMITATIONS- The Food Security Act of 1985 (Public Law 99-198; 99 Stat. 1354) is amended--

        (A) in paragraphs (1)(A), (1)(B), and (2)(A) of section 1001 (7 U.S.C. 1308), by striking ‘1995’ each place it appears and inserting ‘1997’; and

        (B) in section 1001C(a) (7 U.S.C. 1308-3(a)), by striking ‘1995’ both places it appears and inserting ‘1997’.

SEC. 1102. WHEAT PROGRAM.

    Section 107B(c)(1)(E) of the Agricultural Act of 1949 (7 U.S.C. 1445b-3a(c)(1)(E)) is amended--

      (1) in the subparagraph heading, by striking ‘0/92 PROGRAM’ and inserting ‘0/85 PROGRAM’;

      (2) in clause (i), by inserting after ‘8 percent’ both places it appears the following: ‘for each of the 1991 through 1993 crops, and 15 percent for each of the 1994 through 1997 crops (except as provided in clause (vii)),’; and

      (3) by adding at the end of the subparagraph the following new clause:

          ‘(vii) EXCEPTIONS TO 0/85- In the case of each of the 1994 through 1997 crops of wheat, producers on a farm shall be eligible to receive deficiency payments as provided in clause (ii) if an acreage limitation program under subsection (e) is in effect for the crop and--

            ‘(I)(aa) the producers have been determined by the Secretary (in accordance with section 503(c)) to be prevented from planting the crop or have incurred a reduced yield for the crop (due to a natural disaster); and

            ‘(bb) the producers elect to devote a portion of the maximum payment acres for wheat (as calculated under subparagraph (C)(ii)) equal to more than 8 percent of the wheat acreage, to conservation uses; or

            ‘(II) the producers elect to devote a portion of the maximum payment acres for wheat (as calculated under subparagraph (C)(ii)) equal to more than 8 percent of the wheat acreage, to alternative crops as provided in subparagraph (F).’.

SEC. 1103. FEED GRAIN PROGRAM.

    Section 105B(c)(1)(E) of the Agricultural Act of 1949 (7 U.S.C. 1444f(c)(1)(E)) is amended--

      (1) in the subparagraph heading, by striking ‘0/92 PROGRAM’ and inserting ‘0/85 PROGRAM’;

      (2) in clause (i), by inserting after ‘8 percent’ both places it appears the following: ‘for each of the 1991 through 1993 crops, and 15 percent for each of the 1994 through 1997 crops (except as provided in clause (vii)),’; and

      (3) by adding at the end of the subparagraph the following new clause:

          ‘(vii) EXCEPTIONS TO 0/85- In the case of each of the 1994 through 1997 crops of feed grains, producers on a farm shall be eligible to receive deficiency payments as provided in clause (ii) if an acreage limitation program under subsection (e) is in effect for the crop and--

            ‘(I)(aa) the producers have been determined by the Secretary (in accordance with section 503(c)) to be prevented from planting the crop or have incurred a reduced yield for the crop (due to a natural disaster); and

            ‘(bb) the producers elect to devote a portion of the maximum payment acres for feed grains (as calculated under subparagraph (C)(ii)) equal to more than 8 percent of the feed grain acreage, to conservation uses; or

            ‘(II) the producers elect to devote a portion of the maximum payment acres for feed grains (as calculated under subparagraph (C)(ii)) equal to more than 8 percent of the feed grain acreage, to alternative crops as provided in subparagraph (F).’.

SEC. 1104. RICE PROGRAM.

    Section 101B(c)(1)(D) of the Agricultural Act of 1949 (7 U.S.C. 1441-2(c)(1)(D)) is amended--

      (1) in the subparagraph heading, by striking ‘50/92 PROGRAM’ and inserting ‘50/85 PROGRAM’;

      (2) in clause (i), by inserting after ‘8 percent’ both places it appears the following: ‘for each of the 1991 through 1993 crops, and 15 percent for each of the 1994 through 1997 crops (except as provided in clause (v)(II)),’; and

      (3) in clause (v)--

        (A) by striking ‘(v) PREVENTED PLANTING- If’ and inserting the following:

          ‘(v) PREVENTED PLANTING AND REDUCED YIELDS-

            ‘(I) 1991 THROUGH 1993 CROPS- In the case of each of the 1991 through 1993 crops of rice, if’; and

        (B) by adding at the end the following new subclause:

            ‘(II) 1994 THROUGH 1997 CROPS- In the case of each of the 1994 through 1997 crops of rice, producers on a farm shall be eligible to receive deficiency payments as provided in clause (iii) if an acreage limitation program under subsection (e) is in effect for the crop and--

‘(aa) the producers have been determined by the Secretary (in accordance with section 503(c)) to be prevented from planting the crop or have incurred a reduced yield for the crop (due to a natural disaster) and the producers elect to devote a portion of the maximum payment acres for rice (as calculated under subparagraph (C)(ii)) equal to more than 8 percent of the rice acreage, to conservation uses; or

‘(bb) the producers elect to devote a portion of the maximum payment acres for rice (as calculated under subparagraph (C)(ii)) equal to more than 8 percent of the rice acreage, to alternative crops as provided in subparagraph (E).’.

SEC. 1105. DAIRY PROGRAM.

    (a) IN GENERAL- Section 204 of the Agricultural Act of 1949 (7 U.S.C. 1446e) is amended--

      (1) in the section heading, by striking ‘1995’ and inserting ‘1996’;

      (2) in subsections (a), (b), (d)(1)(A), (d)(2)(A), (d)(3), (g)(1), and (k), by striking ‘1995’ each place it appears and inserting ‘1996’;

      (3) in subsection (c)(3)--

        (A) in the first sentence of subparagraph (A), by striking ‘The Secretary’ and inserting ‘Subject to subparagraph (B), the Secretary’;

        (B) by redesignating subparagraph (B) as subparagraph (C); and

        (C) by inserting after subparagraph (A) the following new subparagraph:

        ‘(B) GUIDELINES- In the case of purchases of butter and nonfat dry milk that are made by the Secretary under this section on or after the date of enactment of the Omnibus Budget Reconciliation Act of 1993, in allocating the rate of price support between the purchase prices of butter and nonfat dry milk under this paragraph, the Secretary may not--

          ‘(i) offer to purchase butter for more than $0.65 per pound; or

          ‘(ii) offer to purchase nonfat dry milk for less than $1.034 per pound.’;

      (4) in subsection (h)(2)--

        (A) by striking ‘and’ at the end of subparagraph (A);

        (B) by striking the period at the end of subparagraph (B) and inserting ‘; and’; and

        (C) by adding at the end the following new subparagraph:

        ‘(C) during each of calendar years 1996 and 1997, 10 cents per hundredweight of milk marketed, which rate shall be adjusted on or before May 1 of the respective calendar year in the manner provided in subparagraph (B).’; and

      (5) in subsection (g)(2), by striking ‘1994’ and inserting ‘1996’.

    (b) PROVISIONS NECESSARY TO THE OPERATION OF THE PROGRAM- Section 101(b) of the Agriculture and Food Act of 1981 (7 U.S.C. 608c note) is amended by striking ‘1995’ and inserting ‘1996’.

    (c) REDUCTION IN PRICE RECEIVED-

      (1) DEFINITIONS- As used in this subsection:

        (A) BOVINE GROWTH HORMONE- The term ‘bovine growth hormone’ means a synthetic growth hormone produced through the process of recombinant DNA techniques that is intended for use in bovine animals.

        (B) DATE OF APPROVAL- The term ‘date of approval’ means the date the Food and Drug Administration, pursuant to authority under section 512 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360b), first approves an application with respect to the use of bovine growth hormone.

      (2) REDUCTION IN PRICE RECEIVED- In order to offset the economic effects of the sale of bovine growth hormone, the Secretary of Agriculture shall decrease the amount of the reduction in price received by producers specified in subparagraph (B) or (C) (as appropriate) of section 204(h)(2) of the Agricultural Act of 1949 (7 U.S.C. 1446e(h)(2)) by 10 percent during the period beginning on the date of approval and ending 90 days after the date of approval and, during the period, it shall be unlawful for a person to sell bovine growth hormone for commercial agricultural purposes.

SEC. 1106. TOBACCO PROGRAM.

    (a) DOMESTIC MARKETING ASSESSMENT- Part I of subtitle B of title III of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1311 et seq.) is amended by adding at the end the following new section:

‘SEC. 320C. DOMESTIC MARKETING ASSESSMENT.

    ‘(a) CERTIFICATION- A domestic manufacturer of cigarettes shall certify to the Secretary, for each calendar year, the percentage of the quantity of tobacco used by the manufacturer to produce cigarettes during the year that is produced in the United States.

    ‘(b) PENALTIES-

      ‘(1) IN GENERAL- Subject to subsection (f), a domestic manufacturer of cigarettes that has failed, as determined by the Secretary after notice and opportunity for a hearing, to use in the manufacture of cigarettes during a calendar year a quantity of tobacco grown in the United States that is at least 75 percent of the total quantity of tobacco used by the manufacturer, or to comply with subsection (a), shall be subject to the requirements of subsections (c), (d), and (e).

      ‘(2) FAILURE TO CERTIFY- For purposes of this section, if a manufacturer fails to comply with subsection (a), the manufacturer shall be presumed to have used only imported tobacco in the manufacture of cigarettes produced by the manufacturer.

      ‘(3) REPORTS AND RECORDS-

        ‘(A) IN GENERAL- The Secretary shall require manufacturers of domestic cigarettes to make such reports and maintain such records as are necessary to carry out this section. If the reports and records are insufficient, the Secretary may request other persons to provide supplemental information.

        ‘(B) EXAMINATIONS- For the purpose of ascertaining the correctness of any report or record required under this section, or of obtaining further information required under this section, the Secretary and the Office of Inspector General may examine such records, books, and other materials as the Secretary has reason to believe may be relevant. In the case of a manufacturer of domestic cigarettes, the Secretary may charge a fee to the manufacturer to cover the reasonable costs of any such examination.

        ‘(C) PENALTIES- Any person who fails to provide information required under this paragraph or who provides false information under this paragraph shall be subject to section 1001 of title 18, United States Code.

        ‘(D) CONFIDENTIALITY- Section 320A(c) shall apply to information submitted by manufacturers of domestic cigarettes and other persons under this paragraph.

        ‘(E) DISCLOSURE- Notwithstanding any other provision of law, information on the percentage or quantity of domestic or imported tobacco in cigarettes or on the volume of cigarette production that is submitted under this section shall be exempt from disclosure under section 552 of title 5, United States Code.

    ‘(c) DOMESTIC MARKETING ASSESSMENT-

      ‘(1) IN GENERAL- A domestic manufacturer of cigarettes described in subsection (b) shall remit to the Commodity Credit Corporation a nonrefundable marketing assessment in accordance with this subsection.

      ‘(2) AMOUNT- The amount of an assessment imposed on a manufacturer under this subsection shall be determined by multiplying--

        ‘(A) the quantity by which the quantity of imported tobacco used by the manufacturer to produce cigarettes during a preceding calendar year exceeds 25 percent of the quantity of all tobacco used by the manufacturer to produce cigarettes during the preceding calendar year; by

        ‘(B) the difference between--

          ‘(i) 1/2 of the sum of--

            ‘(I) the average price per pound received by domestic producers for Burley tobacco during the preceding calendar year; and

            ‘(II) the average price per pound received by domestic producers for Flue-cured tobacco during the preceding calendar year; and

          ‘(ii) the average price per pound of unmanufactured imported tobacco during the preceding calendar year, as determined by the Secretary.

      ‘(3) COLLECTION- An assessment imposed under this subsection shall be--

        ‘(A) collected by the Secretary and transmitted to the Commodity Credit Corporation; and

        ‘(B) enforced in the same manner as provided in section 320B.

    ‘(d) PURCHASE OF BURLEY TOBACCO-

      ‘(1) IN GENERAL- A domestic manufacturer of cigarettes described in subsection (b) shall purchase from the inventories of the producer-owned cooperative marketing associations for Burley tobacco described in section 320B(a)(2), at the applicable list price published by the association, the quantity of tobacco described in paragraph (2).

      ‘(2) QUANTITY- Subject to paragraph (3), the quantity of Burley tobacco required to be purchased by a manufacturer during a calendar year under this subsection shall equal 1/2 of the quantity of imported tobacco used by the manufacturer to produce cigarettes during the preceding calendar year that exceeds 25 percent of the quantity of all tobacco used by the manufacturer to produce cigarettes during the preceding calendar year.

      ‘(3) LIMITATION- If the total quantity of Burley tobacco required to be purchased by all manufacturers under paragraph (2) would reduce the inventories of the producer-owned cooperative marketing associations for Burley tobacco to less than the reserve stock level for Burley tobacco, the Secretary shall reduce the quantity of tobacco required to be purchased by manufacturers under paragraph (2), on a pro rata basis, to ensure that the inventories will not be less than the reserve stock level for Burley tobacco.

      ‘(4) NONCOMPLIANCE- If a manufacturer fails to purchase from the inventories of the producer-owned cooperative marketing associations the quantity of Burley tobacco required under this subsection, the manufacturer shall be subject to a penalty of 75 percent of the average market price (calculated to the nearest whole cent) for Burley tobacco for the immediately preceding year on the quantity of tobacco as to which the failure occurs.

      ‘(5) PURCHASE REQUIREMENTS- Tobacco purchased by a manufacturer under this subsection shall not be included in determining the quantity of tobacco purchased by the manufacturer under section 320B.

    ‘(e) PURCHASE OF FLUE-CURED TOBACCO-

      ‘(1) IN GENERAL- A domestic manufacturer of cigarettes described in subsection (b) shall purchase from the inventories of the producer-owned cooperative marketing association for Flue-cured tobacco described in section 320B(a)(2), at the applicable list price published by the association, the quantity of tobacco described in paragraph (2).

      ‘(2) QUANTITY- Subject to paragraph (3), the quantity of Flue-cured tobacco required to be purchased by a manufacturer during a calendar year under this subsection shall equal 1/2 of the quantity of imported tobacco used by the manufacturer to produce cigarettes during the preceding calendar year that exceeds 25 percent of the quantity of all tobacco used by the manufacturer to produce cigarettes during the preceding calendar year.

      ‘(3) LIMITATION- If the total quantity of Flue-cured tobacco required to be purchased by all manufacturers under paragraph (2) would reduce the inventories of the producer-owned cooperative marketing association for Flue-cured tobacco to less than the reserve stock level for Flue-cured tobacco, the Secretary shall reduce the quantity of tobacco required to be purchased by manufacturers under paragraph (2), on a pro rata basis, to ensure that the inventories will not be less than the reserve stock level for Flue-cured tobacco.

      ‘(4) NONCOMPLIANCE- If a manufacturer fails to purchase from the inventories of the producer-owned cooperative marketing association the quantity of Flue-cured tobacco required under this subsection, the manufacturer shall be subject to a penalty of 75 percent of the average market price (calculated to the nearest whole cent) for Flue-cured tobacco for the immediately preceding year on the quantity of tobacco as to which the failure occurs.

      ‘(5) PURCHASE REQUIREMENTS- Tobacco purchased by a manufacturer under this subsection shall not be included in determining the quantity of tobacco purchased by the manufacturer under section 320B.

    ‘(f) CROP LOSSES DUE TO DISASTERS-

      ‘(1) IN GENERAL- If the Secretary, in consultation with producer-owned cooperative marketing associations, determines that because of drought, insect or disease infestation, or other natural disaster, or other condition beyond the control of producers, the total quantity of a crop of domestic Burley tobacco or Flue-cured tobacco that is harvested and suitable for marketing is substantially less than the expected yield for the crop, and that pool inventories for the kind of tobacco involved have been depleted, effective for the calendar year following the year in which the crop loss occurs, the Secretary may reduce the minimum percentage of domestic tobacco specified in subsection (a) to a percentage below 75 percent, as determined by the Secretary, that reflects the reduced availability of domestic supplies of the kind of tobacco involved.

      ‘(2) DETERMINATION OF EXPECTED YIELD- For purposes of paragraph (1), the Secretary shall determine the expected yield for a crop of Burley tobacco or Flue-cured tobacco by taking into consideration--

        ‘(A) the total acreage planted to the crop (including acreage that the producers were prevented from planting because of a condition referred to in paragraph (1)); and

        ‘(B) normal farm yields established for the crop.

      ‘(3) DEADLINE FOR DETERMINATIONS- The Secretary shall make determinations under paragraph (1) about crop losses and announce the reduced percentage of the domestic tobacco pool not later than November 30 of the year in which the applicable crop of Burley tobacco or Flue-cured tobacco is harvested.’.

    (b) BUDGET DEFICIT ASSESSMENT-

      (1) IN GENERAL- Section 106 of the Agricultural Act of 1949 (7 U.S.C. 1445) is amended by adding at the end the following new subsection:

    ‘(h)(1) Effective only for each of the 1994 through 1998 crops of tobacco, an importer of tobacco that is produced outside the United States shall remit to the Commodity Credit Corporation a nonrefundable marketing assessment in an amount equal to the product obtained by multiplying--

      ‘(A) the number of pounds of tobacco that is imported by the importer; by

      ‘(B) the sum of--

        ‘(i) the per pound marketing assessment imposed on purchasers of domestic Burley tobacco pursuant to subsection (g); and

        ‘(ii) the per pound marketing assessment imposed on purchasers of domestic Flue-cured tobacco pursuant to subsection (g).

    ‘(2) An assessment imposed under this subsection shall be paid by the importer.

    ‘(3)(A) The importer shall remit the assessment at such time and in such manner as may be prescribed by the Secretary.

    ‘(B) If the importer fails to comply with subparagraph (A), the importer shall be liable, in addition, for a marketing penalty at a rate equal to 37.5 percent of the sum of the average market price (calculated to the nearest whole cent) of Flue-cured and Burley tobacco for the immediately preceding year on the quantity of tobacco as to which the failure occurs.

    ‘(C) This subsection shall be enforced in the same manner as subparagraphs (B) and (C) of paragraph (1), and paragraphs (2) and (3), of section 106A(h).

    ‘(4) Any penalty collected by the Secretary under this subsection shall be deposited for use by the Commodity Credit Corporation.’.

      (2) IMPORTER ASSESSMENTS FOR NO NET COST TOBACCO FUND- Section 106A of such Act (7 U.S.C. 1445-1) is amended--

        (A) in subsection (c), by inserting ‘and importers’ after ‘purchasers’;

        (B) in subsection (d)(1)(A)--

          (i) by striking ‘and’ at the end of clause (i); and

          (ii) by inserting after clause (ii) the following new clause:

          ‘(iii) each importer of Flue-cured or Burley tobacco shall pay to the appropriate association, for deposit in the Fund of the association, an assessment, in an amount that is equal to the product obtained by multiplying--

            ‘(I) the number of pounds of tobacco that is imported by the importer; by

            ‘(II) the sum of the amount of per pound producer contributions and purchaser assessments that are payable by domestic producers and purchasers of Flue-cured and Burley tobacco under clauses (i) and (ii); and’;

        (C) in subsection (d)(2)--

          (i) by inserting ‘or importer’ after ‘or purchaser’;

          (ii) by striking ‘and’ at the end of subparagraph (B);

          (iii) by inserting ‘and’ at the end of subparagraph (C); and

          (iv) by adding at the end the following new subparagraph:

        ‘(D) if the tobacco involved is imported by an importer, from the importer.’; and

        (D) in subsection (h)(1)--

          (i) by redesignating subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively; and

          (ii) by inserting after subparagraph (A) the following new subparagraph:

    ‘(B) Each importer who fails to pay to the association an assessment as required by subsection (d)(2) at such time and in such manner as may be prescribed by the Secretary, shall be liable, in addition to any amount due, for a marketing penalty at a rate equal to 75 percent of the average market price (calculated to the nearest whole cent) for the respective kind of tobacco for the immediately preceding year on the quantity of tobacco as to which the failure occurs.’.

      (3) IMPORTER ASSESSMENTS TO NO NET COST TOBACCO ACCOUNT- Section 106B of such Act (7 U.S.C. 1445-2) is amended--

        (A) in subsection (c)(1), by striking ‘producers and purchasers’ and inserting ‘producers, purchasers, and importers’;

        (B) in subsection (d)(1)--

          (i) by designating the first and second sentences as subparagraphs (A) and (B), respectively; and

          (ii) by adding at the end the following new subparagraph:

    ‘(C) The Secretary shall also require (in lieu of any requirement under section 106A(d)(1)) that each importer of Flue-cured and Burley tobacco shall pay to the Corporation, for deposit in the Account of the association, an assessment, as determined under paragraph (2) and collected under paragraph (3), with respect to purchases of all such kinds of tobacco imported by the importer.’;

        (C) in subsection (d)(2), by adding at the end the following new subparagraph:

    ‘(C) The amount of the assessment to be paid by importers shall be an amount that is equal to the product obtained by multiplying--

      ‘(i) the number of pounds of tobacco that is imported by the importer; by

      ‘(ii) the sum of the amount of per pound producer and purchaser assessments that are payable by domestic producers and purchasers of the respective kind of tobacco under this paragraph.’;

        (D) in subsection (d)(3), by adding at the end the following new subparagraph:

    ‘(D) If Flue-cured or Burley tobacco is imported by an importer, any importer assessment required by subsection (d) shall be collected from the importer.’; and

        (E) in subsection (j)(1)--

          (i) by redesignating subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively; and

          (ii) by inserting after subparagraph (A) the following new subparagraph:

    ‘(B) Each importer who fails to pay to the Corporation an assessment as required by subsection (d) at such time and in such manner as may be prescribed by the Secretary, shall be liable, in addition to any amount due, to a marketing penalty at a rate equal to 75 percent of the average market price (calculated to the nearest whole cent) for the respective kind of tobacco for the immediately preceding year on the quantity of tobacco as to which the failure occurs.’.

    (c) FEES FOR INSPECTING IMPORTED TOBACCO- The second sentence of section 213(d) of the Tobacco Adjustment Act of 1983 (7 U.S.C. 511r(d)) is amended by inserting before the period at the end the following: ‘, and which shall be comparable to fees and charges fixed and collected for services provided in connection with tobacco produced in the United States’.

    (d) EXTENSION OF QUOTA REDUCTION FLOORS-

      (1) BURLEY TOBACCO- Section 319(c)(3)(C)(ii) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314e(c)(3)(C)(ii)) is amended--

        (A) by striking ‘1993’ and inserting ‘1996’; and

        (B) by inserting before the period at the end the following: ‘, except that, in the case of each of the 1995 and 1996 crops of Burley tobacco, the Secretary may waive the requirements of this clause if the Secretary determines that the requirements would likely result in inventories of the producer-owned cooperative marketing associations for Burley tobacco described in section 320B(a)(2) to exceed 150 percent of the reserve stock level for Burley tobacco’.

      (2) FLUE-CURED TOBACCO- Section 317(a)(1)(C)(ii) of such Act (7 U.S.C. 1314c(a)(1)(C)(ii)) is amended--

        (A) by striking ‘1993’ and inserting ‘1996’; and

        (B) by inserting before the period at the end the following: ‘, except that, in the case of each of the 1995 and 1996 crops of Flue-cured tobacco, the Secretary may waive the requirements of this clause if the Secretary determines that the requirements would likely result in inventories of the producer-owned cooperative marketing association for Flue-cured tobacco described in section 320B(a)(2) to exceed 150 percent of the reserve stock level for Flue-cured tobacco’.

SEC. 1107. SUGAR PROGRAM.

    (a) IN GENERAL- Section 206 of the Agricultural Act of 1949 (7 U.S.C. 1446g) is amended--

      (1) in the section heading, by striking ‘1995’ and inserting ‘1997’;

      (2) in subsections (a), (c), (d)(1), and (j), by striking ‘1995’ each place it appears and inserting ‘1997’; and

      (3) in subsection (i)--

        (A) in paragraph (1), by striking ‘equal to’ and all that follows through the period at the end and inserting the following: ‘equal to--

        ‘(A) in the case of marketings during each of fiscal years 1992 through 1994, 1.0 percent of the loan level established under subsection (b) per pound of raw cane sugar (but not more than .18 cents per pound of raw cane sugar), processed by the processor from domestically produced sugarcane or sugarcane molasses, that has been marketed (including the transfer or delivery of the sugar to a refinery for further processing or marketing); and

        ‘(B) in the case of marketings during each of fiscal years 1995 through 1998, 1.1 percent of the loan level established under subsection (b) per pound of raw cane sugar (but not more than .198 cents per pound of raw cane sugar), processed by the processor from domestically produced sugarcane or sugarcane molasses, that has been marketed (including the transfer or delivery of the sugar to a refinery for further processing or marketing).’;

        (B) in paragraph (2), by striking ‘equal to’ and all that follows through the period at the end and inserting the following: ‘equal to--

        ‘(A) in the case of marketings during each of fiscal years 1992 through 1994, 1.0722 percent of the loan level established under subsection (b) per pound of beet sugar (but not more than .193 cents per pound of beet sugar), processed by the processor from domestically produced sugar beets or sugar beet molasses, that has been marketed; and

        ‘(B) in the case of marketings during each of fiscal years 1995 through 1998, 1.1794 percent of the loan level established under subsection (b) per pound of beet sugar (but not more than .2123 cents per pound of beet sugar), processed by the processor from domestically produced sugar beets or sugar beet molasses, that has been marketed.’; and

        (C) by adding at the end the following new paragraph:

      ‘(6) EXCESS MARKETINGS- In addition to the assessment required under paragraph (1) or (2), a processor who knowingly markets sugar in excess of the allocated allotment of the processor under section 359d of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359dd) shall pay an assessment in an amount that is double the applicable assessment required under paragraph (1) or (2) per pound of sugar marketed.’.

    (b) PROVISIONS NECESSARY TO THE OPERATION OF THE PROGRAM- Section 359b of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359bb) is amended--

      (1) in subsection (a)(1), by striking ‘1996’ and inserting ‘1998’; and

      (2) in subsection (d)--

        (A) by striking paragraph (1) and inserting the following new paragraph:

      ‘(1) IN GENERAL- During any fiscal year or portion thereof for which marketing allotments have been established, no processor of sugar beets or sugarcane shall market a quantity of sugar in excess of the allocation established for such processor, except to enable another processor to fulfill an allocation established for such other processor or to facilitate the exportation of such sugar.’; and

        (B) in paragraph (3), by inserting ‘knowingly’ after ‘who’ each place it appears.

SEC. 1108. OILSEEDS PROGRAM.

    Section 205 of the Agricultural Act of 1949 (7 U.S.C. 1446f) is amended--

      (1) in subsection (c)--

        (A) in paragraph (1), by inserting after ‘$5.02 per bushel’ the following: ‘for each of the 1991 through 1993 crops and $4.92 per bushel for each of the 1994 through 1997 crops’; and

        (B) in paragraph (2), by inserting after ‘$0.089 per pound’ the following: ‘for each of the 1991 through 1993 crops and $0.087 per pound for each of the 1994 through 1997 crops’;

      (2) in subsection (h), by striking ‘mature on the last day of the 9th month following the month the application for the loan is made.’ and inserting the following: ‘mature--

      ‘(1) in the case of each of the 1991 through 1993 crops, on the last day of the 9th month following the month the application for the loan is made; and

      ‘(2) in the case of each of the 1994 through 1997 crops, on the last day of the 9th month following the month the application for the loan is made, except that the loan may not mature later than the last day of the fiscal year in which the application is made.’; and

      (3) in subsection (m), by adding at the end the following new paragraph:

      ‘(3) APPLICABILITY- This subsection shall apply only to each of the 1991 through 1993 crops of oilseeds.’.

SEC. 1109. PEANUT PROGRAM.

    (a) IN GENERAL- Section 108B of the Agricultural Act of 1949 (7 U.S.C. 1445c-3) is amended--

      (1) in the section heading, by striking ‘1995’ and inserting ‘1997’;

      (2) in subsections (a)(1), (a)(2), (b)(1), (g)(1), and (h), by striking ‘1995’ each place it appears and inserting ‘1997’; and

      (3) in subsection (g)--

        (A) in paragraph (1), by inserting after ‘1 percent’ both places it appears the following: ‘for each of the 1991 through 1993 crops, 1.1 percent for each of the 1994 and 1995 crops, 1.15 percent for the 1996 crop, and 1.2 percent for the 1997 crop,’; and

        (B) in paragraph (2)(A), by striking clauses (i) and (ii) and inserting the following new clauses:

          ‘(i) collect from the producer a marketing assessment equal to the quantity of peanuts acquired multiplied by--

            ‘(I) in the case of each of the 1991 through 1993 crops, .5 percent of the applicable national average support rate;

            ‘(II) in the case of each of the 1994 and 1995 crops, .55 percent of the applicable national average support rate;

            ‘(III) in the case of the 1996 crop, .6 percent of the applicable national average support rate; and

            ‘(IV) in the case of the 1997 crop, .65 percent of the applicable national average support rate;

          ‘(ii) pay, in addition to the amount collected under clause (i), a marketing assessment in an amount equal to the quantity of peanuts acquired multiplied by--

            ‘(I) in the case of each of the 1991 through 1993 crops, .5 percent of the applicable national average support rate; and

            ‘(II) in the case of each of the 1994 through 1997 crops, .55 percent of the applicable national average support rate; and’.

    (b) ASSESSMENT UNDER PEANUT MARKETING AGREEMENT- Section 8b(b)(1) of the Agricultural Adjustment Act (7 U.S.C. 608b(b)(1)), reenacted with amendments by the Agricultural Marketing Agreement Act of 1937, is amended--

      (1) by striking ‘and’ at the end of subparagraph (A);

      (2) by striking the period at the end of subparagraph (B) and inserting ‘; and’; and

      (3) by adding at the end the following new subparagraph:

      ‘(C) any assessment (except with respect to any assessment for the indemnification of losses on rejected peanuts) imposed under the agreement shall--

        ‘(i) apply to peanut handlers (as defined by the Secretary) who have not entered into such an agreement with the Secretary in addition to those handlers who have entered into the agreement; and

        ‘(ii) be paid to the Secretary.’.

    (c) PROVISIONS NECESSARY TO THE OPERATION OF THE PROGRAM- Part VI of subtitle B of title III of the Agricultural Adjustment Act of 1938 is amended--

      (1) in section 358-1 (7 U.S.C. 1358-1)--

        (A) in the section heading, by striking ‘1995’ and inserting ‘1997’; and

        (B) in subsections (a)(1), (b)(1)(A), (b)(1)(B), (b)(2)(A), (b)(2)(C), (b)(3)(A), and (f), by striking ‘1995’ each place it appears and inserting ‘1997’; and

      (2) in section 358e (7 U.S.C. 1359a)--

        (A) in the section heading, by striking ‘1995’ and inserting ‘1997’; and

        (B) in subsection (i), by striking ‘1995’ and inserting ‘1997’.

SEC. 1110. HONEY PROGRAM.

    Section 207 of the Agricultural Act of 1949 (7 U.S.C. 1446h) is amended--

      (1) by striking ‘1995’ each place it appears in subsections (a), (c)(1), and (j) and inserting ‘1998’;

      (2) in subsection (a), by striking ‘than 53.8 cents per pound.’ and inserting ‘than--

      ‘(1) 53.8 cents per pound for each of the 1991 through 1993 crop years;

      ‘(2) 50 cents per pound for each of the 1994 and 1995 crop years;

      ‘(3) 49 cents per pound for the 1996 crop year;

      ‘(4) 48 cents per pound for the 1997 crop year; and

      ‘(5) 47 cents per pound for the 1998 crop year.’;

      (3) in subsection (e)(1)--

        (A) by striking ‘and’ at the end of subparagraph (C); and

        (B) by striking subparagraph (D) and inserting the following new subparagraphs:

        ‘(D) $125,000 in the 1994 crop year;

        ‘(E) $100,000 in the 1995 crop year;

        ‘(F) $75,000 in the 1996 crop year; and

        ‘(G) $50,000 in each of the 1997 and 1998 crop years.’; and

      (4) in subsection (i)(1), by striking ‘1995’ and inserting ‘1993’.

SEC. 1111. WOOL AND MOHAIR PROGRAM.

    The National Wool Act of 1954 (7 U.S.C. 1781 et seq.) is amended--

      (1) in section 703 (7 U.S.C. 1782), by striking ‘1995’ both places it appears in subsections (a) and (b)(2) and inserting ‘1997’;

      (2) in section 704 (7 U.S.C. 1783)--

        (A) in subsection (b)(1)--

          (i) by striking ‘and’ at the end of subparagraph (C); and

          (ii) by striking subparagraph (D) and inserting the following new subparagraphs:

        ‘(D) $125,000 for the 1994 marketing year;

        ‘(E) $100,000 for the 1995 marketing year;

        ‘(F) $75,000 for the 1996 marketing year; and

        ‘(G) $50,000 for the 1997 marketing year.’; and

        (B) in subsection (c), by striking ‘through 1995’ and inserting ‘and 1992’; and

      (3) in section 706 (7 U.S.C. 1785), by inserting after the second sentence the following new sentence: ‘In determining the net sales proceeds and national payment rates for shorn wool and shorn mohair, the Secretary shall not deduct marketing charges for commissions, coring, or grading.’.

Subtitle B--Rural Electrification

SEC. 1201. REFINANCING AND PREPAYMENT OF FFB LOANS.

    (a) IN GENERAL- Title III of the Rural Electrification Act of 1936 (7 U.S.C. 931 et seq.) is amended by inserting after section 306B (7 U.S.C. 936b) the following new section:

‘SEC. 306C. REFINANCING AND PREPAYMENT OF FFB LOANS.

    ‘(a) IN GENERAL- A borrower of a loan made by the Federal Financing Bank and guaranteed under section 306 may, at the option of the borrower, refinance or prepay the loan or an advance on the loan, or any portion of the loan or advance.

    ‘(b) PENALTY-

      ‘(1) DETERMINATION OF PENALTY- A penalty shall be assessed against a borrower that refinances or prepays a loan or loan advance, or any portion of a loan or advance, under this section. Except as provided in paragraph (2), the penalty shall be equal to the lesser of--

        ‘(A) the difference between the outstanding principal balance of the loan being refinanced and the present value of the loan discounted at a rate equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the loan being refinanced or prepaid;

        ‘(B) 100 percent of the amount of interest for 1 year on the outstanding principal balance of the loan or loan advance, or any portion of the loan or advance, being refinanced, multiplied by the ratio that--

          ‘(i) the number of quarterly payment dates between the date of the refinancing or prepayment and the maturity date for the loan advance; bears to

          ‘(ii) the number of quarterly payment dates between the first quarterly payment date that occurs 12 years after the end of the year in which the amount being refinanced was advanced and the maturity date of the loan advance; and

        ‘(C)(i) the present value of 100 percent of the amount of interest for 1 year on the outstanding principal balance of the loan or loan advance, or any portion of the loan or advance, being refinanced or prepaid; plus

        ‘(ii) for the interval between the date of the refinancing or prepayment and the first quarterly payment date that occurs 12 years after the end of the year in which the amount being refinanced or prepaid was advanced, the present value of the difference between--

          ‘(I) each payment scheduled for the interval on the loan amount being refinanced or prepaid; and

          ‘(II) the payment amounts that would be required during the interval on the amounts being refinanced or prepaid if the interest rate on the loan were equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the loan being refinanced or prepaid.

      ‘(2) LIMITATION-

        ‘(A) IN GENERAL- Except as provided in subparagraph (B), the penalty provided by paragraph (1)(A) shall be required for refinancing or prepayment under this section.

        ‘(B) EXCEPTION- In the case of a loan advanced under an agreement that permits the refinancing or prepayment of the loan advance based on the payment of 1 year of interest on the outstanding principal balance of the loan advance, a borrower may, in lieu of the penalty required by paragraph (1)(A), pay a penalty as provided by--

          ‘(i) paragraph (1)(B), if the loan advance has reached the 12-year maturity required under the loan agreement for the refinancing or prepayment; or

          ‘(ii) paragraph (1)(C), if the loan advance has not reached the 12-year maturity required under the loan agreement for the refinancing or prepayment.

      ‘(3) FINANCING OF PENALTY-

        ‘(A) IN GENERAL- In the case of a refinancing under this section, a borrower may, at the option of the borrower, meet the penalty requirements of paragraph (1) by--

          ‘(i) making a payment in the amount of the required penalty at the time of the refinancing; or

          ‘(ii) increasing the outstanding principal balance of the loan advance guaranteed by the Administrator that is being refinanced under this section by the amount of the penalty.

        ‘(B) INCREASED PRINCIPAL- If a borrower meets the penalty requirements of paragraph (1) by increasing the outstanding principal balance of the loan advance that is being refinanced, the borrower shall make a payment at the time of the refinancing equal to 2.5 percent of the amount of the penalty that is added to the outstanding principal balance of the loan.

    ‘(c) LOAN TERMS AND CONDITIONS AFTER REFINANCING-

      ‘(1) IN GENERAL- On the payment of a penalty as provided by subsection (b), the loan or loan advance, or any portion of the loan or advance, shall be refinanced at the interest rate described in paragraph (2) for a term selected by the borrower pursuant to paragraph (3), except that this paragraph shall not apply if the loan advance, or any portion of the advance, is prepaid by the borrower.

      ‘(2) INTEREST RATE- The interest rate on a loan refinanced under this section shall be determined to be equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to a term selected by the borrower pursuant to paragraph (3).

      ‘(3) LOAN TERM- Subject to paragraph (4), the borrower of a loan that is refinanced under this section--

        ‘(A) shall select the term for which an interest rate shall be determined pursuant to paragraph (2); and

        ‘(B) at the end of the term (and any succeeding term selected by the borrower under this paragraph), may renew the loan for another term selected by the borrower.

      ‘(4) MAXIMUM TERM- The borrower may not select a term pursuant to paragraph (3) that ends after the maturity date set for the loan before the refinancing of the loan under this section.

      ‘(5) EXISTING LOANS- In the case of the refinancing of a loan of a borrower pursuant to this section and the inclusion of a penalty in the outstanding principal balance of the refinanced loan pursuant to subsection (b)(3)--

        ‘(A) the refinancing and inclusion of the penalty shall not be subject to appropriations or limited by the amount provided during a fiscal year for new loans, loan guarantees, or other credit activity;

        ‘(B) the request of the borrower for the refinancing under this section may not be denied or delayed; and

        ‘(C) the borrower may not be limited in the selection of any refinancing or prepayment option provided by this section to the borrower.’.

    (b) REGULATIONS- Not later than 45 days after the date of enactment of this section, the Administrator of the Rural Electrification Administration shall issue interim final regulations to carry out the amendment made by subsection (a).

Subtitle C--Agricultural Trade

SEC. 1301. ACREAGE REDUCTION REQUIREMENTS.

    (a) IN GENERAL- Section 1104 of the Omnibus Budget Reconciliation Act of 1990 (7 U.S.C. 1445b-3a note) is amended--

      (1) in subsection (a), by striking paragraph (2) and inserting the following new paragraph:

      ‘(2) corn under which the acreage planted to corn for harvest on a farm would be limited to the corn crop acreage base for the farm for the crop reduced by not less than 7 1/2 percent.’; and

      (2) in subsection (b)(2), by striking ‘grain sorghum, and barley,’.

    (b) READJUSTMENT OF SUPPORT LEVELS- Section 1302 of such Act (7 U.S.C. 1421 note) is amended--

      (1) in subsection (b)--

        (A) by striking paragraph (1); and

        (B) by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively;

      (2) in subsection (c), by striking ‘and other programs’; and

      (3) in subsection (d)--

        (A) in paragraph (1)--

          (i) by striking subparagraph (A); and

          (ii) by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively;

        (B) in paragraph (2), by striking ‘(A), (B), and (C)’ and inserting ‘(A) and (B)’; and

        (C) in paragraph (3)--

          (i) by striking ‘measures specified in subparagraph (A) of paragraph (1) and’; and

          (ii) by striking ‘(B) or (C)’ and inserting ‘(A) or (B)’.

SEC. 1302. MARKET PROMOTION PROGRAM.

    (a) REDUCTION OF FUNDING LEVEL- Section 211(c)(1) of the Agricultural Trade Act of 1978 (7 U.S.C. 5641(c)(1)) is amended by striking ‘through 1995’ and inserting ‘through 1993, and not less than $110,000,000 for each of the fiscal years 1994 through 1997,’.

    (b) SECRETARIAL ACTIONS TO ACHIEVE SAVINGS- In order to enable the Secretary of Agriculture to achieve the savings required in the market promotion program established by section 203 of the Agricultural Trade Act of 1978 (7 U.S.C. 5623) as a result of the amendments made by this section:

      (1) UNFAIR TRADE PRACTICES- Paragraph (2) of section 203(c) of such Act is amended to read as follows:

      ‘(2) UNFAIR TRADE PRACTICES-

        ‘(A) REQUIREMENT- Except as provided in subparagraph (B), the Secretary shall provide assistance under this section only to counter or offset the adverse effects of a subsidy, import quota, or other unfair trade practice of a foreign country.

        ‘(B) EXCEPTION- The Secretary shall waive the requirements of this paragraph in the case of activities conducted by small entities operating through the regional State-related organizations.’.

      (2) GUIDELINES- The Secretary of Agriculture should implement changes in the market promotion program established by section 203 of such Act, beginning with fiscal year 1994, in order to improve the effectiveness of the program and to meet the following objectives:

        (A) PRIORITY- In providing assistance for branded promotion, the Secretary should give priority to small-sized entities.

        (B) GRADUATION- The Secretary should not provide assistance under the program to promote a specific branded product in a single market for more than 5 years unless the Secretary determines that further assistance is necessary in order to meet the objectives of the program.

        (C) CONTRIBUTION LEVEL-

          (i) IN GENERAL- The Secretary should require a minimum contribution level of 10 percent from an eligible trade organization that receives assistance for nonbranded promotion.

          (ii) INCREASES IN CONTRIBUTION LEVEL- The Secretary may increase the contribution level in any subsequent year that an eligible trade organization receives assistance for nonbranded promotion.

        (D) ADDITIONALITY- The Secretary should require each participant in the program to certify that any Federal funds received supplement, but do not supplant, private or third party participant funds or other contributions to program activities.

        (E) INDEPENDENT AUDITS- If as a result of an evaluation or audit of activities of a participant under the program, the Secretary determines that a further review is justified in order to ensure compliance with the requirements of the program, the Secretary should require the participant to contract for an independent audit of the program activities, including activities of any subcontractor.

      (3) TOBACCO- No funds made available under the market promotion program may be used for activities to develop, maintain, or expand foreign markets for tobacco.

    (c) REGULATIONS- Not later than 90 days after the date of enactment of this Act, the Secretary of Agriculture shall issue regulations to implement this section and the amendments made by this section.

Subtitle D--Miscellaneous

SEC. 1401. ADMISSION, ENTRANCE, AND RECREATION FEES.

    (a) DEFINITIONS- As used in this section:

      (1) AREA OF CONCENTRATED PUBLIC USE- The term ‘area of concentrated public use’ means an area administered by the Secretary that meets each of the following criteria:

        (A) The area is managed primarily for outdoor recreation purposes.

        (B) Facilities and services necessary to accommodate heavy public use are provided in the area.

        (C) The area contains at least 1 major recreation attraction.

        (D) Public access to the area is provided in such a manner that admission fees can be efficiently collected at 1 or more centralized locations.

      (2) BOAT LAUNCHING FACILITY- The term ‘boat launching facility’ includes any boat launching facility, regardless of whether specialized facilities or services, such as mechanical or hydraulic boat lifts or facilities, are provided.

      (3) CAMPGROUND- The term ‘campground’ means any campground where a majority of the following amenities are provided, as determined by the Secretary:

        (A) Tent or trailer spaces.

        (B) Drinking water.

        (C) An access road.

        (D) Refuse containers.

        (E) Toilet facilities.

        (F) The personal collection of recreation use fees by an employee or agent of the Secretary.

        (G) Reasonable visitor protection.

        (H) If campfires are permitted in the campground, simple devices for containing the fires.

      (4) SECRETARY- The term ‘Secretary’ means the Secretary of Agriculture.

    (b) AUTHORITY TO IMPOSE FEES- The Secretary may charge--

      (1) admission or entrance fees at national monuments, national volcanic monuments, national scenic areas, and areas of concentrated public use administered by the Secretary; and

      (2) recreation use fees at lands administered by the Secretary in connection with the use of specialized outdoor recreation sites, equipment, services, and facilities, including visitors’ centers, picnic tables, boat launching facilities, and campgrounds.

    (c) AMOUNT OF FEES- The amount of the admission, entrance, and recreation fees authorized to be imposed under this section shall be determined by the Secretary.

SEC. 1402. ENVIRONMENTAL CONSERVATION ACREAGE RESERVE PROGRAM AMENDMENTS.

    (a) ENVIRONMENTAL CONSERVATION ACREAGE RESERVE PROGRAM- Section 1230(b) of the Food Security Act of 1985 (16 U.S.C. 3830(b)) is amended by striking ‘to place in’ and all that follows through ‘acres’.

    (b) CONSERVATION RESERVE PROGRAM- Section 1231(d) of such Act (16 U.S.C. 3831(d)) is amended--

      (1) by striking ‘may’ and inserting ‘shall’;

      (2) by striking ‘the amount of acres specified in section 1230(b)’ and inserting ‘a total of 38,000,000 acres during the 1986 through 1995 calendar years’; and

      (3) by striking ‘each of calendar years 1994 and 1995’ and inserting ‘the 1995 calendar year’.

    (c) WETLANDS RESERVE PROGRAM- Section 1237 of such Act (16 U.S.C. 3837) is amended--

      (1) by striking subsection (b) and inserting the following new subsection:

    ‘(b) MINIMUM ENROLLMENT- The Secretary shall enroll into the wetlands reserve program--

      ‘(1) a total of not less than 330,000 acres by the end of the 1995 calendar year; and

      ‘(2) a total of not less than 975,000 acres during the 1991 through 2000 calendar years.’; and

      (2) in subsection (c), by striking ‘1995’ and inserting ‘2000’.

SEC. 1403. FEDERAL CROP INSURANCE.

    (a) ACTUARIAL SOUNDNESS- Section 506 of the Federal Crop Insurance Act (7 U.S.C. 1506) is amended by adding at the end the following new subsection:

    ‘(n) ACTUARIAL SOUNDNESS- The Corporation shall take such actions as are necessary to improve the actuarial soundness of Federal multiperil crop insurance coverage made available under this title to achieve, on and after October 1, 1995, an overall projected loss ratio of not greater than 1.1, including--

      ‘(1) instituting appropriate requirements for documentation of the actual production history of insured producers to establish recorded or appraised yields for Federal crop insurance coverage that more accurately reflect the associated actuarial risk, except that the Corporation may not carry out this paragraph in a manner that would prevent beginning farmers from obtaining adequate Federal crop insurance, as determined by the Corporation;

      ‘(2) establishing in counties, to the extent practicable, a crop insurance option based on area yields in a manner that allows an insured producer to qualify for an indemnity if a loss has occurred in a specified area in which the farm of the insured producer is located;

      ‘(3) establishing a database that contains the social security account and employee identification numbers of participating producers and using the numbers to identify insured producers who are high risk for actuarial purposes and insured producers who have not documented at least 4 years of production history, to assess the performance of insurance providers, and for other purposes permitted by law; and

      ‘(4) taking any other measures authorized by law to improve the actuarial soundness of the Federal crop insurance program while maintaining fairness and effective coverage for agricultural producers.’.

    (b) CONFORMING AMENDMENTS-

      (1) REINSURANCE- Section 508(h) of such Act (7 U.S.C. 1508(h)) is amended by striking the fifth sentence and inserting the following new sentence: ‘The Corporation shall also pay operating and administrative costs to insurers of policies on which the Corporation provides reinsurance in an amount determined by the Corporation.’.

      (2) AREA YIELD PLAN- Section 508 of such Act (7 U.S.C. 1508) is amended by adding at the end the following new subsection:

    ‘(n) AREA YIELD PLAN-

      ‘(1) IN GENERAL- Notwithstanding any other provision of this title, the Corporation may offer, only as an option to individual crop insurance coverage available under this Act, a crop insurance plan based on an area yield that allows an insured producer to qualify for an indemnity if a loss has occurred in an area, as specified by the Corporation, in which the farm of the producer is located.

      ‘(2) LEVEL OF COVERAGE- Under a plan offered under paragraph (1), an insured producer shall be allowed to select the level of production at which an indemnity will be paid consistent with terms and conditions established by the Corporation.’.

      (3) YIELD COVERAGE- Section 508A of such Act (7 U.S.C. 1508a) is amended--

        (A) in subsection (a)(1), by striking ‘may’ and inserting ‘shall’; and

        (B) in subsection (b)--

          (i) in paragraph (1)(A)--

            (I) by striking ‘A crop insurance contract’ and all that follows through ‘producer--’ and inserting ‘Under regulations issued by the Corporation, a crop insurance contract offered under this title to an eligible insured producer of a commodity with respect to which the Corporation provides crop insurance coverage shall make available to the producer either--’;

            (II) by striking ‘or’ at the end of clause (i);

            (III) in clause (ii)--

(aa) by striking ‘5’ and inserting ‘4 building to 10’; and

(bb) by striking the period at the end and inserting ‘; or’; and

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

          ‘(iii) yield coverage based on--

            ‘(I) not less than 65 percent of the transitional yield of the producer (adjusted to reflect actual experience), as specified in regulations issued by the Corporation based on production history requirements; or

            ‘(II) the area yield under section 508(n) for the crop established under the program for the commodity involved.’;

          (ii) in paragraph (1)(B)--

            (I) by striking ‘two’ and inserting ‘3’; and

            (II) by inserting after ‘subparagraph (A)’ the following: ‘, where available (as determined by the Corporation),’;

          (iii) in paragraph (2)--

            (I) by striking ‘5’ and inserting ‘4 building to 10’; and

            (II) by inserting after ‘previous crops,’ the following: ‘not less than 65 percent of the transitional yield of the producer (adjusted to reflect actual experience), or the area yield,’; and

          (iv) in paragraph (3)(A)(i), by inserting after ‘farm program yield’ the following: ‘, not less than 65 percent of the transitional yield of the producer (adjusted to reflect actual experience), as specified in regulations issued by the Corporation based on production history requirements, or the area yield under section 508(n), whichever is applicable,’.

    (c) EFFECTIVE DATE-

      (1) IN GENERAL- Except as provided in paragraph (2), this section and the amendments made by this section shall become effective on October 1, 1993.

      (2) REGULATIONS- Not later than 30 days after the date of enactment of this Act, the Secretary of Agriculture shall publish, for public comment, proposed regulations to implement the amendments made by this section.

TITLE II--ARMED SERVICES PROVISIONS

SEC. 2001. LIMITATION ON COST-OF-LIVING ADJUSTMENTS FOR MILITARY RETIREES.

    Section 1401a(b) of title 10, United States Code, is amended--

      (1) in paragraph (2), by striking out ‘The Secretary’ and inserting in lieu thereof ‘Except as provided in paragraph (6), the Secretary’; and

      (2) by adding at the end the following new paragraph:

      ‘(6) SPECIAL RULES FOR PARAGRAPH (2) FOR FISCAL YEARS 1994 THROUGH 1998-

        ‘(A) FISCAL YEAR 1994- In the case of an increase in the retired pay of a member or former member referred to in paragraph (2) that, pursuant to paragraph (1), becomes effective on December 1, 1993, the initial month for which such increase is payable as part of such retired pay shall (notwithstanding such December 1 effective date) be March 1994.

        ‘(B) FISCAL YEARS 1995 THROUGH 1998- In the case of an increase in retired pay of a member or former member referred to in paragraph (2) that, pursuant to paragraph (1), becomes effective on December 1 of 1994, 1995, 1996, or 1997, the initial month for which such increase is payable as part of such retired pay shall (notwithstanding such December 1 effective date) be September of the following year.

        ‘(C) INAPPLICABILITY TO DISABILITY RETIREES- Subparagraphs (A) and (B) do not apply with respect to the retired pay of a member retired under chapter 61 of this title.’.

TITLE III--BANKING AND HOUSING PROVISIONS

SEC. 3001. NATIONAL DEPOSITOR PREFERENCE.

    (a) IN GENERAL- Section 11(d)(11) of the Federal Deposit Insurance Act (12 U.S.C. 1821(d)(11)) is amended to read as follows:

      ‘(11) DEPOSITOR PREFERENCE-

        ‘(A) IN GENERAL- Subject to section 5(e)(2)(C), amounts realized from the liquidation or other resolution of any insured depository institution by any receiver appointed for such institution shall be distributed to pay claims (other than secured claims to the extent of any such security) in the following order of priority:

          ‘(i) Administrative expenses of the receiver.

          ‘(ii) Any deposit liability of the institution.

          ‘(iii) Any other general or senior liability of the institution (which is not a liability described in clause (iv) or (v)).

          ‘(iv) Any obligation subordinated to depositors or general creditors (which is not an obligation described in clause (v)).

          ‘(v) Any obligation to shareholders or members arising as a result of their status as shareholders or members (including any depository institution holding company or any shareholder or creditor of such company).

        ‘(B) EFFECT ON STATE LAW-

          ‘(i) IN GENERAL- The provisions of subparagraph (A) shall not supersede the law of any State except to the extent such law is inconsistent with the provisions of such subparagraph, and then only to the extent of the inconsistency.

          ‘(ii) PROCEDURE FOR DETERMINATION OF INCONSISTENCY- Upon the Corporation’s own motion or upon the request of any person with a claim described in subparagraph (A) or any State which is submitted to the Corporation in accordance with procedures which the Corporation shall prescribe, the Corporation shall determine whether any provision of the law of any State is inconsistent with any provision of subparagraph (A) and the extent of any such inconsistency.

          ‘(iii) JUDICIAL REVIEW- The final determination of the Corporation under clause (ii) shall be subject to judicial review under chapter 7 of title 5, United States Code.

        ‘(C) ACCOUNTING REPORT- Any distribution by the Corporation in connection with any claim described in subparagraph (A)(v) shall be accompanied by the accounting report required under paragraph (15)(B).’.

    (b) TECHNICAL AND CONFORMING AMENDMENTS-

      (1) Section 11(c)(13) of the Federal Deposit Insurance Act (12 U.S.C. 1821(c)(13)) is amended--

        (A) in subparagraph (A), by striking ‘subject to subparagraph (B),’;

        (B) by inserting ‘and’ after the semicolon at the end of subparagraph (A);

        (C) by striking subparagraph (B); and

        (D) by redesignating subparagraph (C) as subparagraph (B).

      (2) Section 11(g)(4) of the Federal Deposit Insurance Act (12 U.S.C. 1921(g)(4)) is amended by striking ‘If the Corporation’ and inserting ‘Subject to subsection (d)(11), if the Corporation’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply with respect to insured depository institutions for which a receiver is appointed after the date of the enactment of this Act.

SEC. 3002. TRANSFER OF FEDERAL RESERVE SURPLUSES.

    (a) IN GENERAL- The 1st undesignated paragraph of section 7 of the Federal Reserve Act (12 U.S.C. 289) is amended to read as follows:

    ‘(a) DIVIDENDS AND SURPLUS FUNDS OF RESERVE BANKS-

      ‘(1) STOCKHOLDER DIVIDENDS-

        ‘(A) IN GENERAL- After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders of the bank shall be entitled to receive an annual dividend of 6 percent on paid-in capital stock.

        ‘(B) DIVIDEND CUMULATIVE- The entitlement to dividends under subparagraph shall be cumulative.

      ‘(2) DEPOSIT OF NET EARNINGS IN SURPLUS FUND- That portion of net earnings of each Federal reserve bank which remains after dividend claims under subparagraph (A) have been fully met shall be deposited in the surplus fund of the bank.

      ‘(3) PAYMENT TO TREASURY- During fiscal years 1997 and 1998, any amount in the surplus fund of any Federal reserve bank in excess of the amount equal to 3 percent of the total paid-in capital and surplus of the member banks of such bank shall be transferred to the Board for transfer to the Secretary of the Treasury for deposit in the general fund of the Treasury.’.

    (b) ADDITIONAL TRANSFERS FOR FISCAL YEARS 1997 AND 1998-

      (1) IN GENERAL- In addition to the amounts required to be transferred from the surplus funds of the Federal reserve banks pursuant to section 7(a)(3) of the Federal Reserve Act, the Federal reserve banks shall transfer from such surplus funds to the Board of Governors of the Federal Reserve System for transfer to the Secretary of the Treasury for deposit in the general fund of the Treasury, a total amount of $106,000,000 in fiscal year 1997 and a total amount of $107,000,000 in fiscal year 1998.

      (2) ALLOCATION BY FED- Of the total amount required to be paid by the Federal reserve banks under paragraph (1) for fiscal year 1997 or 1998, the Board of Governors of the Federal Reserve System shall determine the amount each such bank shall pay in such fiscal year.

      (3) REPLENISHMENT OF SURPLUS FUND PROHIBITED- No Federal reserve bank may replenish such bank’s surplus fund by the amount of any transfer by such bank under paragraph (1) during fiscal years 1997 and 1998.

    (c) TECHNICAL AND CONFORMING AMENDMENTS-

      (1) The penultimate undesignated paragraph of section 7 of the Federal Reserve Act (12 U.S.C. 290) is amended by striking ‘The net earnings derived’ and inserting ‘(b) USE OF EARNINGS TRANSFERRED TO THE TREASURY- The net earnings derived’.

      (2) The last undesignated paragraph of section 7 of the Federal Reserve Act (12 U.S.C. 531) is amended by striking ‘Federal reserve banks’ and inserting ‘(c) EXEMPTION FROM TAXATION- Federal reserve banks’.

SEC. 3003. USE OF RETURN DATA FOR INCOME VERIFICATION UNDER CERTAIN HOUSING ASSISTANCE PROGRAMS.

    Section 904 of the Stewart B. McKinney Homeless Assistance Amendments Act of 1988 (42 U.S.C. 3544) is amended as follows:

      (1) DEFINITION- In subsection (a), by adding at the end the following:

      ‘(4) PROGRAM OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT- The term ‘program of the Department of Housing and Urban Development’ includes Indian housing programs assisted under title II of the United States Housing Act of 1937.’.

      (2) CONSENT FORMS- In subsection (b)--

        (A) in paragraph (1), by striking ‘and’ at the end;

        (B) in paragraph (2), by striking the period at the end and inserting ‘; and’;

        (C) by inserting after paragraph (2) the following new paragraph:

      ‘(3) sign a consent form approved by the Secretary authorizing the Secretary to request the Commissioner of Social Security and the Secretary of the Treasury to release information pursuant to section 6103(l)(7)(D)(ix) of the Internal Revenue Code of 1986 with respect to such applicant or participant for the sole purpose of the Secretary verifying income information pertinent to the applicant’s or participant’s eligibility or level of benefits.’; and

        (D) in the last sentence, by striking ‘This’ and inserting the following: ‘Except as provided in this subsection, this’.

      (3) APPLICANT, PARTICIPANT, AND PUBLIC HOUSING AGENCY PROTECTIONS- In subsection (c)(2)--

        (A) in subparagraph (A)--

          (i) in the matter preceding clause (i)--

            (I) by inserting after ‘compensation law’ the following: ‘or pursuant to section 6103(l)(7)(D)(ix) of the Internal Revenue Code of 1986 from the Commissioner of Social Security or the Secretary of the Treasury’; and

            (II) by inserting ‘(in the case of information obtained pursuant to such section 303(i))’ before ‘representatives’; and

          (ii) in clause (ii), by inserting ‘or public housing agency’ after ‘owner’ each place it appears; and

        (B) in subparagraph (B), by inserting after ‘wages’ each place it appears the following: ‘, other earnings or income,’.

      (4) PENALTY- In subsection (c)(3)--

        (A) in subparagraph (A), by inserting ‘or section 6103(l)(7)(D)(ix) of the Internal Revenue Code of 1986 without consent pursuant to subsection (b) of this section or’ after ‘Social Security Act’; and

        (B) in the first sentence of subparagraph (B)--

          (i) by striking clause (i) and inserting the following: ‘(i) a negligent or knowing disclosure of information referred to in this section, section 303(i) of the Social Security Act, or section 6103(l)(7)(D)(ix) of the Internal Revenue Code of 1986 about such person by an officer or employee of any public housing agency or owner (or employee thereof), which disclosure is not authorized by this section, such section 303(i), such section 6103(l)(7)(D)(ix), or any regulation implementing this section, such section 303(i), or such section 6103(l)(7)(D)(ix), or for which consent, pursuant to subsection (b) of this section, has not been granted, or’; and

          (ii) in clause (ii), by inserting ‘such section 6103(l)(7)(D)(ix),’ after ‘303(i),’.

      (5) CONFORMING AMENDMENT- The heading of subsection (c) of section 904 of the Stewart B. McKinney Homeless Assistance Amendments Act of 1988 is amended by striking ‘STATE EMPLOYMENT’.

SEC. 3004. GNMA REMIC GUARANTEE FEES.

    Section 306(g)(3) of the National Housing Act (12 U.S.C. 1721(g)(3)) is amended by adding at the end the following new subparagraph:

    ‘(E)(i) Notwithstanding subparagraphs (A) through (D), fees charged for the guarantee of, or commitment to guarantee, multiclass securities backed by a trust or pool of securities or notes guaranteed by the Association under this subsection, and other related fees shall be charged by the Association in an amount the Association deems appropriate. The Association shall take such action as may be necessary to reasonably assure that such portion of the benefit, resulting from the Association’s multiclass securities program, as the Association determines is appropriate accrues to mortgagors who execute eligible mortgages after the date of the enactment of this subparagraph.

    ‘(ii) The Association shall provide for the initial implementation of the program for which fees are charged under the first sentence of clause (i) by notice published in the Federal Register. The notice shall be effective upon publication and shall provide an opportunity for public comment. Not later than 12 months after publication of the notice, the Association shall issue regulations for such program based on the notice, comments received, and the experience of the Association in carrying out the program during such period.

    ‘(iii) The Association shall consult with persons or entities in such manner as the Association deems appropriate to ensure the efficient commencement and operation of the multiclass securities program.

    ‘(iv) No State or local law, and no Federal law (except Federal law enacted expressly in limitation of this clause after the effective date of this subparagraph) shall preclude or limit the exercise by the Association of its power to contract with persons or entities, and its rights to enforce such contracts, for the purpose of ensuring the efficient commencement and continued operation of the multiclass securities program.’.

SEC. 3005. MUTUAL MORTGAGE INSURANCE FUND PREMIUMS.

    To improve the actuarial soundness of the Mutual Mortgage Insurance Fund under the National Housing Act, the Secretary of Housing and Urban Development shall increase the rate at which the Secretary earns the single premium payment collected at the time of insurance of a mortgage that is an obligation of such Fund (with respect to the rate in effect on the date of the enactment of this Act). In establishing such increased rate, the Secretary shall consider any current audit findings and reserve analyses and information regarding the expected average duration of mortgages that are obligations of such Fund and may consider any other information that the Secretary determines to be appropriate.

TITLE IV--STUDENT LOAN AND ERISA PROVISIONS

SEC. 4001. TABLE OF CONTENTS.

    The table of contents for this title is as follows:

TITLE IV--STUDENT LOAN AND ERISA PROVISIONS

      Sec. 4001. Table of contents.

Subtitle A--Direct Student Loan Provisions

      Sec. 4011. Short title; references.

Chapter 1--Federal Direct Student Loan Program

      Sec. 4021. Federal direct student loan program.

Chapter 2--Conforming Amendments to the Higher Education Act of 1965

      Sec. 4041. Preserving loan access.

      Sec. 4042. Guaranty agency reserves.

      Sec. 4043. Terms of loans.

      Sec. 4044. Assignment of loans.

      Sec. 4045. Termination of guaranty agency agreements; assumption of guaranty agency functions by the Secretary.

      Sec. 4046. Consolidation loans.

      Sec. 4047. Consolidation of programs.

Subtitle B--Additional Savings from the Student Loan Programs

      Sec. 4101. Reduction of borrower interest rates.

      Sec. 4102. Reduction in loan fees paid by students.

      Sec. 4103. Loan fees from lenders.

      Sec. 4104. Offset fee.

      Sec. 4105. Elimination of tax exempt floor.

      Sec. 4106. Reduction in interest rate for consolidation loans; rebate fee.

      Sec. 4107. Reinsurance fees and administrative cost allowance.

      Sec. 4108. Risk sharing.

      Sec. 4109. Plus loan disbursements.

      Sec. 4110. Secretary’s equitable share.

      Sec. 4111. Reduction in the special allowance payment.

      Sec. 4112. Supplemental preclaims assistance.

Subtitle C--Cost Sharing by States

      Sec. 4201. Cost sharing by States.

Subtitle D--Group Health Plans

      Sec. 4301. Standards for group health plan coverage.

Subtitle A--Direct Student Loan Provisions

SEC. 4011. SHORT TITLE; REFERENCES.

    (a) SHORT TITLE- This subtitle may be cited as the ‘Student Loan Reform Act of 1993’.

    (b) REFERENCES- References in this subtitle and subtitles B and C to ‘the Act’ are references to the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).

CHAPTER 1--FEDERAL DIRECT STUDENT LOAN PROGRAM

SEC. 4021. FEDERAL DIRECT STUDENT LOAN PROGRAM.

    Part D of title IV (20 U.S.C. 1087a) is amended to read as follows:

‘PART D--FEDERAL DIRECT STUDENT LOAN PROGRAM

‘SEC. 451. PROGRAM AUTHORITY.

    There are hereby made available, in accordance with the provisions of this part, such sums as may be necessary to make loans to all eligible students (and the eligible parents of such students) in attendance at participating institutions of higher education selected by the Secretary, to enable such students to pursue their courses of study at such institutions during the period beginning July 1, 1994. Such loans shall be made by participating institutions, or consortia thereof, that have agreements with the Secretary to originate loans, or by alternative originators designated by the Secretary to make loans for students in attendance at participating institutions (and their parents).

‘SEC. 452. FUNDS FOR ORIGINATION OF DIRECT STUDENT LOANS.

    ‘(a) IN GENERAL- The Secretary shall provide, on the basis of the need and the eligibility of students at each participating institution, and parents of such students, for such loans, funds for student and parent loans under this part--

      ‘(1) directly to an institution of higher education that has an agreement with the Secretary under section 454(a) to participate in the direct student loan programs under this part and that also has an agreement with the Secretary under section 454(b) to originate loans under this part; or

      ‘(2) through an alternative originator designated by the Secretary to students (and parents of students) attending institutions of higher education that have an agreement with the Secretary under section 454(a) but that do not have an agreement with the Secretary under section 454(b).

    ‘(b) FEES FOR ORIGINATION SERVICES-

      ‘(1) FEES FOR INSTITUTIONS- The Secretary shall pay fees to institutions of higher education (or a consortium of such institutions) with agreements under section 454(b), in an amount established by the Secretary, to assist in meeting the costs of loan origination. Such fees--

        ‘(A) shall be paid by the Secretary based on all the loans made under this part to a particular borrower in the same academic year;

        ‘(B) shall be subject to a sliding scale that decreases the per borrower amount of such fees as the number of borrowers increases; and

        ‘(C)(i) for academic year 1994-1995, shall not exceed a program-wide average of $10 per borrower for all the loans made under this part to such borrower in the same academic year; and

        ‘(ii) for succeeding academic years, shall not exceed such average fee as the Secretary shall establish pursuant to regulations.

      ‘(2) FEES FOR ALTERNATIVE ORIGINATORS- The Secretary shall pay fees for loan origination services to alternative originators of loans made under this part in an amount established by the Secretary in accordance with the terms of the contract described in section 456(b) between the Secretary and each such alternative originator.

    ‘(c) NO ENTITLEMENT TO PARTICIPATE OR ORIGINATE- No institution of higher education shall have a right to participate in the programs authorized by this part, to originate loans, or to perform any program function under this part. Nothing in this subsection shall be construed so as to limit the entitlement of an eligible student attending a participating institution (or the eligible parent of such student) to borrow under this part.

    ‘(d) DELIVERY OF LOAN FUNDS- Loan funds shall be paid and delivered to an institution by the Secretary prior to the beginning of the payment period established by the Secretary in a manner that is consistent with payment and delivery of basic grants under subpart 1 of part A of this title.

‘SEC. 453. SELECTION OF INSTITUTIONS FOR PARTICIPATION AND ORIGINATION.

    ‘(a) PHASE-IN OF PROGRAM-

      ‘(1) GENERAL AUTHORITY- The Secretary shall enter into agreements pursuant to section 454(a) with institutions of higher education to participate in the direct student loan program under this part, and agreements pursuant to section 454(b) with institutions of higher education, or consortia thereof, to originate loans in such program, for academic years beginning on or after July 1, 1994. Alternative origination services, through which an entity other than the participating institution at which the student is in attendance originates the loan, shall be provided by the Secretary, through 1 or more contracts under section 456(b) or such other means as the Secretary may provide, for students attending participating institutions that do not originate direct student loans under this part. Such agreements for the academic year 1994-1995 shall, to the extent feasible, be entered into not later than January 1, 1994.

      ‘(2) TRANSITION PROVISIONS- In order to ensure an expeditious but orderly transition from the loan programs under part B of this title to the direct student loan program under this part, the Secretary shall, in the exercise of the Secretary’s discretion, determine the number of institutions with which the Secretary shall enter into agreements under subsections (a) and (b) of section 454 for any academic year, except that the Secretary shall exercise such discretion so as to achieve the following goals:

        ‘(A) for academic year 1994-1995, loans made under this part shall represent 5 percent of the new student loan volume for such year;

        ‘(B) for academic year 1995-1996, loans made under this part shall represent 40 percent of the new student loan volume for such year;

        ‘(C) for academic years 1996-1997 and 1997-1998, loans made under this part shall represent 50 percent of the new student loan volume for such years; and

        ‘(D) for the academic year that begins in fiscal year 1998, loans made under this part shall represent 60 percent of the new student loan volume for such year.

      ‘(3) EXCEPTION- The Secretary may exceed the percentage goals described in subparagraphs (C) or (D) of paragraph (2) if the Secretary determines that a higher percentage is warranted by the number of institutions of higher education that desire to participate in the program under this part and that meet the eligibility requirements for such participation.

      ‘(4) NEW STUDENT LOAN VOLUME- For the purpose of this subsection, the term ‘new student loan volume’ means the estimated sum of all loans (other than consolidation loans) that will be made, insured or guaranteed under this part and part B in the year for which the determination is made. The Secretary shall base the estimate described in the preceding sentence on the most recent program data available.

    ‘(b) SELECTION CRITERIA-

      ‘(1) APPLICATION- Each institution of higher education desiring to participate in the direct student loan program under this part shall submit an application satisfactory to the Secretary containing such information and assurances as the Secretary may require.

      ‘(2) SELECTION PROCEDURE- The Secretary shall select institutions for participation in the direct student loan program under this part, and shall enter into agreements with such institutions under section 454(a), from among those institutions that submit the applications described in paragraph (1), and meet such other eligibility requirements as the Secretary shall prescribe, by, to the extent possible--

        ‘(A)(i) categorizing such institutions according to anticipated loan volume, length of academic program, control of the institution, highest degree offered, size of student enrollment, geographic location, annual loan volume, and default experience; and

        ‘(ii) beginning in academic year 1995-1996 selecting institutions that are reasonably representative of each of the categories described pursuant to clause (i); and

        ‘(B) if the Secretary determines it necessary to carry out the purposes of this part, selecting additional institutions.

    ‘(c) SELECTION CRITERIA FOR ORIGINATION-

      ‘(1) IN GENERAL- The Secretary may enter into a supplemental agreement with an institution (or a consortium of such institutions) that--

        ‘(A) has an agreement under subsection 454(a);

        ‘(B) desires to originate loans under this part; and

        ‘(C) meets the criteria described in paragraph (2).

      ‘(2) TRANSITION SELECTION CRITERIA- For academic year 1994-1995, the Secretary may approve an institution to originate loans only if such institution--

        ‘(A) made loans under part E of this title in academic year 1993-1994 and did not exceed the applicable maximum default rate under section 462(g) for the most recent fiscal year for which data are available;

        ‘(B) is not on the reimbursement system of payment for any of the programs under subpart 1 or 3 of part A, part C, or part E of this title;

        ‘(C) is not overdue on program or financial reports or audits required under this title;

        ‘(D) is not subject to an emergency action, or a limitation, suspension, or termination under section 428(b)(1)(T), 432(h), or 487(c);

        ‘(E) in the opinion of the Secretary, has not had significant deficiencies identified by a State postsecondary review entity under subpart 1 of part H of this title;

        ‘(F) in the opinion of the Secretary, has not had severe performance deficiencies for any of the programs under this title, including such deficiencies demonstrated by audits or program reviews submitted or conducted during the 5 calendar years immediately preceding the date of application;

        ‘(G) provides an assurance that such institution has no delinquent outstanding debts to the Federal Government, unless such debts are being repaid under or in accordance with a repayment arrangement satisfactory to the Federal Government, or the Secretary in the Secretary’s discretion determines that the existence or amount of such debts has not been finally determined by the cognizant Federal agency; and

        ‘(H) meets such other criteria as the Secretary may establish to protect the financial interest of the United States and to promote the purposes of this part.

      ‘(3) REGULATIONS GOVERNING APPROVAL AFTER TRANSITION- For academic year 1995-1996 and subsequent academic years, the Secretary shall promulgate and publish in the Federal Register regulations governing the approval of institutions to originate loans under this part in accordance with section 457(a)(2).

    ‘(d) ELIGIBLE INSTITUTIONS- The Secretary may not select an institution of higher education for participation under this section unless such institution is an eligible institution under section 435(a).

    ‘(e) CONSORTIA- Subject to such requirements as the Secretary may prescribe, eligible institutions of higher education (as determined under subsection (d)) with agreements under section 454(a) may apply to the Secretary as consortia to originate loans under this part for students in attendance at such institutions. Each such institution shall be required to meet the requirements of subsection (c) with respect to loan origination.

‘SEC. 454. AGREEMENTS WITH INSTITUTIONS.

    ‘(a) PARTICIPATION AGREEMENTS- An agreement with any institution of higher education for participation in the direct student loan program under this part shall--

      ‘(1) provide for the establishment and maintenance of a direct student loan program at the institution under which the institution will--

        ‘(A) identify eligible students who seek student financial assistance at such institution in accordance with section 484;

        ‘(B) estimate the need of each such student as required by part F of this title for an academic year, except that, any loan obtained by a student under this part with the same terms as loans made under section 428H (except as otherwise provided in this part), or a loan obtained by a parent under this part with the same terms as loans made under section 428B (except as otherwise provided in this part), or obtained under any State-sponsored or private loan program, may be used to offset the expected family contribution of the student for that year;

        ‘(C) provide a statement that certifies the eligibility of any student to receive a loan under this part that is not in excess of the annual or aggregate limit applicable to such loan, except that the institution may, in exceptional circumstances identified by the Secretary, refuse to certify a statement that permits a student to receive a loan under this part, or certify a loan amount that is less than the student’s determination of need (as determined under part F of this title), if the reason for such action is documented and provided in written form to such student;

        ‘(D) set forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of section 428G; and

        ‘(E) provide timely and accurate information--

          ‘(i) concerning the status of student borrowers (and students on whose behalf parents borrow under this part) while such students are in attendance at the institution and concerning any new information of which the institution becomes aware for such students (or their parents) after such borrowers leave the institution, to the Secretary for the servicing and collecting of loans made under this part; and

          ‘(ii) if the institution does not have an agreement with the Secretary under subsection (b), concerning student eligibility and need, as determined under subparagraphs (A) and (B), to the Secretary as needed for the alternative origination of loans to eligible students and parents in accordance with this part;

      ‘(2) provide assurances that the institution will comply with requirements established by the Secretary relating to student loan information with respect to loans made under this part;

      ‘(3) provide that the institution accepts responsibility and financial liability stemming from its failure to perform its functions pursuant to the agreement;

      ‘(4) provide that students at the institution and their parents (with respect to such students) will be eligible to participate in the programs under part B of this title at the discretion of the Secretary for the period during which such institution participates in the direct student loan program under this part, except that a student or parent may not receive loans under both this part and part B for the same period of enrollment;

      ‘(5) provide for the implementation of a quality assurance system, as established by the Secretary and developed in consultation with institutions of higher education, to ensure that the institution is complying with program requirements and meeting program objectives;

      ‘(6) provide that the institution will not charge any fees of any kind, however described, to student or parent borrowers for origination activities or the provision of any information necessary for a student or parent to receive a loan under this part, or any benefits associated with such loan; and

      ‘(7) include such other provisions as the Secretary determines are necessary to protect the interests of the United States and to promote the purposes of this part.

    ‘(b) ORIGINATION- An agreement with any institution of higher education, or consortia thereof, for the origination of loans under this part shall--

      ‘(1) supplement the agreement entered into in accordance with subsection (a);

      ‘(2) include provisions established by the Secretary that are similar to the participation agreement provisions described in paragraphs (1)(E)(ii), (2), (3), (4), (5), (6), and (7) of subsection (a), as modified to relate to the origination of loans by the institution or consortium;

      ‘(3) provide that the institution or consortium will originate loans to eligible students and parents in accordance with this part; and

      ‘(4) provide that the note or evidence of obligation on the loan shall be the property of the Secretary.

    ‘(c) WITHDRAWAL AND TERMINATION PROCEDURES- The Secretary shall establish procedures by which institutions or consortia may withdraw or be terminated from the program under this part.

‘SEC. 455. TERMS AND CONDITIONS OF LOANS.

    ‘(a) IN GENERAL-

      ‘(1) PARALLEL TERMS, CONDITIONS, BENEFITS, AND AMOUNTS- Unless otherwise specified in this part, loans made to borrowers under this part shall have the same terms, conditions, and benefits, and be available in the same amounts, as loans made to borrowers under sections 428, 428B, and 428H of this title.

      ‘(2) DESIGNATION OF LOANS- Loans made to borrowers under this part that, except as otherwise specified in this part, have the same terms, conditions, and benefits as loans made to borrowers under--

        ‘(A) section 428 shall be known as ‘Federal Direct Stafford Loans’;

        ‘(B) section 428B shall be known as ‘Federal Direct PLUS Loans’; and

        ‘(C) section 428H shall be known as ‘Federal Direct Unsubsidized Stafford Loans’.

    ‘(b) INTEREST RATE-

      ‘(1) RATES FOR FDSL AND FDUSL- For Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans for which the first disbursement is made on or after July 1, 1994, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to--

        ‘(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus

        ‘(B) 3.1 percent,

      except that such rate shall not exceed 8.25 percent.

      ‘(2) IN SCHOOL AND GRACE PERIOD RULES- (A) Notwithstanding the provisions of paragraph (1), but subject to paragraph (3), with respect to any Federal Direct Stafford Loan or Federal Direct Unsubsidized Stafford Loan for which the first disbursement is made on or after July 1, 1995, the applicable rate of interest for interest which accrues--

        ‘(i) prior to the beginning of the repayment period of the loan; or

        ‘(ii) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in section 428(b)(1)(M) or 427(a)(2)(C),

      shall not exceed the rate determined under subparagraph (B).

      ‘(B) For the purpose of subparagraph (A), the rate determined under this subparagraph shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to--

        ‘(i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction prior to such June 1; plus

        ‘(ii) 2.5 percent,

      except that such rate shall not exceed 8.25 percent.

      ‘(3) OUT-YEAR RULE- Notwithstanding paragraphs (1) and (2), for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans made on or after July 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to--

        ‘(A) the bond equivalent rate of the security with a comparable maturity as established by the Secretary; plus

        ‘(B) 1.0 percent,

      except that such rate shall not exceed 8.25 percent.

      ‘(4) RATES FOR FDPLUS- (A) For Federal Direct PLUS Loans for which the first disbursement is made on or after July 1, 1994, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to--

        ‘(i) the bond equivalent rate of 52-week Treasury bills auctioned at final auction held prior to such June 1; plus

        ‘(ii) 3.1 percent,

      except that such rate shall not exceed 9 percent.

      ‘(B) For Federal Direct PLUS loans made on or after July 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to--

        ‘(i) the bond equivalent rate of the security with a comparable maturity as established by the Secretary; plus

        ‘(ii) 2.1 percent,

      except that such rate shall not exceed 9 percent.

      ‘(5) PUBLICATION- The Secretary shall determine the applicable rates of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.

    ‘(c) LOAN FEE- The Secretary shall charge the borrower of a loan made under this part an origination fee of 4.0 percent of the principal amount of loan.

    ‘(d) REPAYMENT PLANS-

      ‘(1) DESIGN AND SELECTION- Consistent with criteria established by the Secretary, the Secretary shall offer a borrower of a loan made under this part a variety of plans for repayment of such loan, including principal and interest on the loan. The borrower shall be entitled to accelerate, without penalty, repayment on the borrower’s loans under this part. The borrower may choose--

        ‘(A) a standard repayment plan, with a fixed annual repayment amount paid over a fixed period of time, consistent with subsection (a)(1) of this section;

        ‘(B) an extended repayment plan, with a fixed annual repayment amount paid over an extended period of time, except that the borrower shall annually repay a minimum amount determined by the Secretary in accordance with section 428(b)(1)(L);

        ‘(C) a graduated repayment plan, with annual repayment amounts established at 2 or more graduated levels and paid over a fixed or extended period of time, except that the borrower’s scheduled payments shall not be less than 50 percent, nor more than 150 percent, of what the amortized payment on the amount owed would be if the loan were repaid under the standard repayment plan; and

        ‘(D) an income contingent repayment plan, with varying annual repayment amounts based on the income of the borrower, paid over an extended period of time prescribed by the Secretary, not to exceed 25 years, except that the plan described in this subparagraph shall not be available to the borrower of a Federal Direct PLUS loan.

      ‘(2) SELECTION BY SECRETARY- If a borrower of a loan made under this part does not select a repayment plan described in paragraph (1), the Secretary may provide the borrower with a repayment plan described in subparagraph (A), (B), or (C) of paragraph (1).

      ‘(3) CHANGES IN SELECTIONS- The borrower of a loan made under this part may change the borrower’s selection of a repayment plan under paragraph (1), or the Secretary’s selection of a plan for the borrower under paragraph (2), as the case may be, under such terms and conditions as may be established by the Secretary.

      ‘(4) ALTERNATIVE REPAYMENT PLANS- The Secretary may provide, on a case by case basis, an alternative repayment plan to a borrower of a loan made under this part who demonstrates to the satisfaction of the Secretary that the terms and conditions of the repayment plans available under paragraph (1) are not adequate to accommodate the borrower’s exceptional circumstances. In designing such alternative repayment plans, the Secretary shall ensure that such plans do not exceed the cost to the Federal Government, as determined on the basis of the present value of future payments by such borrowers, of loans made using the plans available under paragraph (1).

      ‘(5) REPAYMENT AFTER DEFAULT- The Secretary may require any borrower who has defaulted on a loan made under this part to--

        ‘(A) pay all reasonable collection costs associated with such loan; and

        ‘(B) repay the loan pursuant to an income contingent repayment plan.

    ‘(e) INCOME CONTINGENT REPAYMENT-

      ‘(1) INFORMATION AND PROCEDURES- The Secretary may obtain such information as is reasonably necessary regarding the income of a borrower (and the borrower’s spouse, if applicable) of a loan made under this part that is, or may be, repaid pursuant to income contingent repayment, for the purpose of determining the annual repayment obligation of the borrower. Returns and return information (as defined in section 6103 of the Internal Revenue Code of 1986) may be obtained under the preceding sentence only to the extent authorized by section 6103(l)(13) of such Code. The Secretary shall establish procedures for determining the borrower’s repayment obligation on that loan for such year, and such other procedures as are necessary to implement effectively income contingent repayment.

      ‘(2) REPAYMENT BASED ON ADJUSTED GROSS INCOME- A repayment schedule for a loan made under this part and repaid pursuant to income contingent repayment shall be based on the adjusted gross income (as defined in section 62 of the Internal Revenue Code of 1986) of the borrower or, if the borrower is married and files a Federal income tax return jointly with the borrower’s spouse, on the adjusted gross income of the borrower and the borrower’s spouse.

      ‘(3) ADDITIONAL DOCUMENTS- A borrower who chooses, or is required, to repay a loan made under this part pursuant to income contingent repayment, and for whom adjusted gross income is unavailable or does not reasonably reflect the borrower’s current income, shall provide to the Secretary other documentation of income satisfactory to the Secretary, which documentation the Secretary may use to determine an appropriate repayment schedule.

      ‘(4) REPAYMENT SCHEDULES- Income contingent repayment schedules shall be established by regulations promulgated by the Secretary and shall require payments that vary in relation to the appropriate portion of the annual income of the borrower (and the borrower’s spouse, if applicable) as determined by the Secretary.

      ‘(5) CALCULATION OF BALANCE DUE- The balance due on a loan made under this part that is repaid pursuant to income contingent repayment shall equal the unpaid principal amount of the loan, any accrued interest, and any fees, such as late charges, assessed on such loan. The Secretary may promulgate regulations limiting the amount of interest that may be capitalized on such loan, and the timing of any such capitalization.

      ‘(6) NOTIFICATION TO BORROWERS- The Secretary shall establish procedures under which a borrower of a loan made under this part who chooses or is required to repay such loan pursuant to income contingent repayment is notified of the terms and conditions of such plan, including notification of such borrower--

        ‘(A) that the Internal Revenue Service will disclose to the Secretary tax return information as authorized under section 6103(l)(13) of the Internal Revenue Code of 1986; and

        ‘(B) that if a borrower considers that special circumstances, such as a loss of employment by the borrower or the borrower’s spouse, warrant an adjustment in the borrower’s loan repayment as determined using the information described in subparagraph (A), or the alternative documentation described in paragraph (3), the borrower may contact the Secretary, who shall determine whether such adjustment is appropriate, in accordance with criteria established by the Secretary.

    ‘(f) DEFERMENT-

      ‘(1) EFFECT ON PRINCIPAL AND INTEREST- A borrower of a loan made under this part who meets the requirements described in paragraph (2) shall be eligible for a deferment, during which periodic installments of principal need not be paid, and interest--

        ‘(A) shall not accrue, in the case of a--

          ‘(i) Federal Direct Stafford Loan; or

          ‘(ii) a Federal Direct Consolidation Loan that consolidated only Federal Direct Stafford Loans, or a combination of such loans and Federal Stafford Loans for which the student borrower received an interest subsidy under section 428; or

        ‘(B) shall accrue and be capitalized or paid by the borrower, in the case of a Federal Direct PLUS Loan, a Federal Direct Unsubsidized Stafford Loan, or a Federal Direct Consolidation Loan not described in subparagraph (A)(ii).

      ‘(2) ELIGIBILITY- A borrower of a loan made under this part shall be eligible for a deferment during any period--

        ‘(A) during which the borrower--

          ‘(i) is carrying at least one-half the normal full-time work load for the course of study that the borrower is pursuing, as determined by the eligible institution (as such term is defined in section 435(a)) the borrower is attending; or

          ‘(ii) is pursuing a course of study pursuant to a graduate fellowship program approved by the Secretary, or pursuant to a rehabilitation training program for individuals with disabilities approved by the Secretary,

        except that no borrower shall be eligible for a deferment under this subparagraph, or a loan made under this part (other than a Federal Direct PLUS Loan or a Federal Direct Consolidation Loan), while serving in a medical internship or residency program;

        ‘(B) not in excess of 3 years during which the borrower is seeking and unable to find full-time employment;

        ‘(C) not in excess of 3 years during which the Secretary determines, in accordance with regulations prescribed under section 435(o), that the borrower has experienced or will experience an economic hardship.

    ‘(g) FEDERAL DIRECT CONSOLIDATION LOANS- A borrower of a loan made under this part may consolidate such loan with the loans described in section 428C(a)(4) only under such terms and conditions as the Secretary shall establish pursuant to section 457(a)(1) or regulations promulgated under this part. Loans made under this subsection shall be known as ‘Federal Direct Consolidation Loans’.

    ‘(h) BORROWER DEFENSES- Notwithstanding any other provision of State or Federal law, the Secretary shall specify in regulations (except as authorized under section 457(a)(1)) which acts or omissions of an institution of higher education a borrower may assert as a defense to repayment of a loan made under this part, except that in no event may a borrower recover from the Secretary, in any action arising from or relating to a loan made under this part, an amount in excess of the amount such borrower has repaid on such loan.

    ‘(i) LOAN APPLICATION AND PROMISSORY NOTE- The common financial reporting form required in section 483(a)(1) shall constitute the application for loans made under this part (other than a Federal Direct PLUS loan). The Secretary shall develop, print, and distribute to participating institutions a standard promissory note and loan disclosure form.

    ‘(j) LOAN DISBURSEMENT-

      ‘(1) IN GENERAL- Proceeds of loans to students under this part shall be applied to the student’s account for tuition and fees, and, in the case of institutionally owned housing, to room and board. Loan proceeds that remain after the application of the previous sentence shall be delivered to the borrower by check or other means that is payable to and requires the endorsement or other certification by such borrower.

      ‘(2) PAYMENT PERIODS- The Secretary shall establish periods for the payments described in paragraph (1) in a manner consistent with payment of basic grants under subpart 1 of part A of this title.

    ‘(k) FISCAL CONTROL AND FUND ACCOUNTABILITY-

      ‘(1) IN GENERAL- (A) An institution shall maintain financial records in a manner consistent with records maintained for other programs under this title.

      ‘(B) Except as otherwise required by regulations of the Secretary, or in a notice under section 457(a)(1), an institution may maintain loan funds under this part in the same account as other Federal student financial assistance.

      ‘(2) PAYMENTS AND REFUNDS- Payments and refunds shall be reconciled in a manner consistent with the manner set forth for the submission of a payment summary report required of institutions participating in the program under subpart 1 of part A, except that nothing in this paragraph shall prevent such reconciliations on a monthly basis.

      ‘(3) TRANSACTION HISTORIES- All transaction histories under this part shall be maintained using the same system designated by the Secretary for the provision of basic grants under subpart 1 of part A of this title.

‘SEC. 456. CONTRACTS.

    ‘(a) CONTRACTS FOR SUPPLIES AND SERVICES-

      ‘(1) IN GENERAL- The Secretary shall, to the extent practicable, award contracts for origination, servicing, and collection described in subsection (b). In awarding such contracts, the Secretary shall ensure that such services and supplies are provided at competitive prices.

      ‘(2) ENTITIES- The entities with which the Secretary may enter into contracts shall include only entities which the Secretary determines are qualified to provide such services and supplies and will comply with the procedures applicable to the award of such contracts. In the case of awarding contracts for the origination, servicing, and collection of loans under this part, the Secretary shall enter into contracts only with entities that have extensive and relevant experience and demonstrated effectiveness. The entities with which the Secretary may enter into such contracts shall include, where practicable, agencies with agreements with the Secretary under sections 428(b) and (c), if such agencies meet the qualifications as determined by the Secretary under this subsection and if those agencies have such experience and demonstrated effectiveness. In awarding contracts to such State agencies, the Secretary shall, to the extent practicable and consistent with the purposes of this part, give special consideration to State agencies with a history of high quality performance to perform services for institutions of higher education within their State.

      ‘(3) RULE OF CONSTRUCTION- Nothing in this section shall be construed as a limitation of the authority of any State agency to enter into an agreement for the purposes of this section as a member of a consortium of State agencies.

    ‘(b) CONTRACTS FOR ORIGINATION, SERVICING, AND DATA SYSTEMS- The Secretary may enter into contracts for--

      ‘(1) the alternative origination of loans to students attending institutions of higher education with agreements to participate in the program under this part (or their parents), if such institutions do not have agreements with the Secretary under section 454(b);

      ‘(2) the servicing and collection of loans made under this part;

      ‘(3) the establishment and operation of 1 or more data systems for the maintenance of records on all loans made under this part;

      ‘(4) services to assist in the orderly transition from the loan programs under part B to the direct student loan program under this part; and

      ‘(5) such other aspects of the direct student loan program as the Secretary determines are necessary to ensure the successful operation of the program.

‘SEC. 457. REGULATORY ACTIVITIES.

    ‘(a) NOTICE IN LIEU OF REGULATIONS FOR FIRST YEAR OF PROGRAM-

      ‘(1) NOTICE IN LIEU OF REGULATIONS FOR FIRST YEAR OF PROGRAM- The Secretary shall publish in the Federal Register whatever standards, criteria, and procedures, consistent with the provisions of this part, the Secretary, in consultation with members of the higher education community, determines are reasonable and necessary to the successful implementation of the first year of the direct student loan program authorized by this part. Section 431 of the General Education Provisions Act shall not apply to the publication of such standards, criteria, and procedures.

      ‘(2) NEGOTIATED RULEMAKING- Beginning with academic year 1995-1996, all standards, criteria, procedures, and regulations implementing this part as amended by the Student Loan Reform Act of 1993 shall, to the extent practicable, be subject to negotiated rulemaking, including all such standards, criteria, procedures, and regulations promulgated from the date of enactment of such Act.

    ‘(b) CLOSING DATE FOR APPLICATIONS FROM INSTITUTIONS- The Secretary shall establish a date not later than October 1, 1993, as the closing date for receiving applications from institutions of higher education desiring to participate in the first year of the direct loan program under this part.

    ‘(c) PUBLICATION OF LIST OF PARTICIPATING INSTITUTIONS- Not later than January 1, 1994, the Secretary shall publish in the Federal Register a list of the institutions of higher education selected to participate in the first year of the direct loan program under this part.

‘SEC. 458. FUNDS FOR ADMINISTRATIVE EXPENSES.

    ‘(a) IN GENERAL- Each fiscal year, there shall be available to the Secretary of Education from funds available pursuant to section 422(g) and from funds not otherwise appropriated, funds to be obligated for administrative costs under this part, including the costs of the transition from the loan programs under part B to the direct student loan programs under this part (including the costs of annually assessing the program under this part and the progress of the transition) and transition support (including administrative costs) for the expenses of guaranty agencies in servicing outstanding loans in their portfolios and in guaranteeing new loans, not to exceed (from such funds not otherwise appropriated) $260,000,000 in fiscal year 1994, $345,000,000 in fiscal year 1995, $550,000,000 in fiscal year 1996, $595,000,000 in fiscal year 1997, and $750,000,000 in fiscal year 1998. If in any fiscal year the Secretary determines that additional funds for administrative expenses are needed as a result of such transition or the expansion of the direct student loan programs under this part, the Secretary is authorized to use funds available under this section for a subsequent fiscal year for such expenses, except that the total expenditures by the Secretary (from such funds not otherwise appropriated) shall not exceed $2,500,000,000 in fiscal years 1994 through 1998. The Secretary is also authorized to carry over funds available under this section to a subsequent fiscal year.

    ‘(b) AVAILABILITY- Funds made available under subsection (a) shall remain available until expended.

    ‘(c) BUDGET JUSTIFICATION- No funds may be expended under this section unless the Secretary includes in the Department of Education’s annual budget justification to Congress a detailed description of the specific activities for which the funds made available by this section have been used in the prior and current years (if applicable), the activities and costs planned for the budget year, and the projection of activities and costs for each remaining year for which administrative expenses under this section are made available.

    ‘(d) NOTIFICATION- In the event the Secretary finds it necessary to use the authority provided to the Secretary under subsection (a) to draw funds for administrative expenses from a future year’s funds, no funds may be expended under this section unless the Secretary immediately notifies the Committees on Appropriations of the Senate and of the House of Representatives, and the Labor and Human Resources Committee of the Senate and the Education and Labor Committee of the House of Representatives, of such action and explain the reasons for such action.’.

CHAPTER 2--CONFORMING AMENDMENTS TO THE HIGHER EDUCATION ACT OF 1965

SEC. 4041. PRESERVING LOAN ACCESS.

    (a) ADVANCES TO GUARANTY AGENCIES FOR LENDER-OF-LAST-RESORT SERVICES-

      (1) AMENDMENT- Section 428(j) of the Act (20 U.S.C. 1078(j)) is amended by striking paragraph (3) and inserting the following:

      ‘(3) ADVANCES TO GUARANTY AGENCIES FOR LENDER-OF-LAST-RESORT SERVICES DURING TRANSITION TO DIRECT LENDING- (A) In order to ensure the availability of loan capital during the transition from the Federal Family Education Loan Program under this part to the Federal Direct Student Loan Program under part D of this title, the Secretary is authorized to provide a guaranty agency with additional advance funds in accordance with section 422(c)(7), with such restrictions on the use of such funds as are determined appropriate by the Secretary, in order to ensure that the guaranty agency will make loans as the lender-of-last-resort. Such agency shall make such loans in accordance with this subsection and the requirements of the Secretary.

      ‘(B) Notwithstanding any other provision in this part, a guaranty agency serving as a lender-of-last-resort under this paragraph shall be paid a fee, established by the Secretary, for making such loans in lieu of interest and special allowance subsidies, and shall be required to assign such loans to the Secretary on demand. Upon such assignment, the portion of the advance represented by the loans assigned shall be considered repaid by such guaranty agency.’.

      (2) CONFORMING AMENDMENTS-

        (A) ADVANCES TO GUARANTEE AGENCIES- Section 422(c)(7) of the Act (20 U.S.C. 1072(c)(7)) is amended by striking all beginning with ‘to a guaranty agency’ through the period and inserting ‘to a guaranty agency--

        ‘(A) in accordance with section 428(j), in order to ensure that the guaranty agency shall make loans as the lender-of-last-resort during the transition from the Federal Family Education Loan Program under this part to the Federal Direct Student Loan Program under part D of this title; or

        ‘(B) if the Secretary is seeking to terminate the guaranty agency’s agreement, or assuming the guaranty agency’s functions, in accordance with section 428(c)(10)(F)(v), in order to assist the agency in meeting its immediate cash needs, ensure the uninterrupted payment of claims, or ensure that the guaranty agency shall make loans as described in subparagraph (A);’.

        (B) RULES AND OPERATING PROCEDURES- Section 428(j)(2) of the Act (20 U.S.C. 1078(j)(2)) is amended--

          (i) in subparagraph (A), by inserting before the semicolon at the end the following: ‘and ensure a response within 60 days after the student’s original complete application is filed under this subsection’;

          (ii) by redesignating subparagraphs (B) through (D) as subparagraphs (C) through (E), respectively; and

          (iii) by inserting after subparagraph (A) the following new subparagraph:

        ‘(B) consistent with standards established by the Secretary, students applying for loans under this subsection shall not be subject to additional eligibility requirements or requests for additional information beyond what is required under this title in order to receive a loan under this part from an eligible lender, nor be required to receive more than two rejections from eligible lenders in order to obtain a loan under this subsection;’.

    (b) LENDER REFERRAL SERVICES- Section 428(e) of the Act (20 U.S.C. 1078(e)) is amended--

      (1) in paragraph (1)--

        (A) by amending the paragraph heading to read as follows: ‘IN GENERAL; AGREEMENTS WITH GUARANTY AGENCIES- ’;

        (B) by inserting the subparagraph designation ‘(A)’ immediately before ‘The Secretary’;

        (C) by striking ‘in any State’ and inserting ‘with which the Secretary has an agreement under subparagraph (B)’; and

        (D) by adding at the end the following new subparagraph:

      ‘(B)(i) The Secretary may enter into agreements with guaranty agencies that meet standards established by the Secretary to provide lender referral services in geographic areas specified by the Secretary. Such guaranty agencies shall be paid in accordance with paragraph (3) for such services.

      ‘(ii) The Secretary shall publish in the Federal Register whatever standards, criteria, and procedures, consistent with the provisions of this part and part D of this title, the Secretary determines are reasonable and necessary to provide lender referral services under this subsection and ensure loan access to student and parent borrowers during the transition from the loan programs under this part to the direct student loan programs under part D of this title. Section 431 of the General Education Provisions Act shall not apply to the publication of such standards, criteria, and procedures.’;

      (2) in paragraph (2)--

        (A) in the matter preceding subparagraph (A), by striking ‘in a State’ and inserting ‘with which the Secretary has an agreement under paragraph (1)(B)’;

        (B) by amending subparagraph (A) to read as follows:

        ‘(A)(i) such student is either a resident of, or is accepted for enrollment in, or is attending, an eligible institution located in a geographic area for which the Secretary (I) determines that loans are not available to all eligible students, and (II) has entered into an agreement with a guaranty agency under paragraph (1)(B) to provide lender referral services; and’;

      (3) in paragraph (3), by striking ‘The’ and inserting ‘From funds available for costs of transition under section 458 of the Act, the’; and

      (4) by striking paragraph (5).

    (c) LENDER-OF-LAST-RESORT FUNCTIONS OF STUDENT LOAN MARKETING ASSOCIATION- Subsection (q) of section 439 of the Act (20 U.S.C. 1087-2(q)) is amended to read as follows:

    ‘(q) Lender-of-Last-Resort-

      ‘(1) ACTION AT REQUEST OF SECRETARY- (A) Whenever the Secretary determines that eligible borrowers are seeking and are unable to obtain loans under this part, the Association or its designated agent shall, not later than 90 days after the date of enactment of the Student Loan Reform Act of 1993, begin making loans to such eligible borrowers in accordance with this subsection at the request of the Secretary. The Secretary may request that the Association make loans to borrowers within a geographic area or for the benefit of students attending institutions of higher education that certify, in accordance with standards established by the Secretary, that their students are seeking and unable to obtain loans.

      ‘(B) Loans made pursuant to this subsection shall be insurable by the Secretary under section 429 with a certificate of comprehensive insurance coverage provided for under section 429(b)(1) or by a guaranty agency under paragraph (2)(A) of this subsection.

      ‘(2) ISSUANCE AND COVERAGE OF LOANS- (A) Whenever the Secretary, after consultation with, and with the agreement of, representatives of the guaranty agency in a State, or an eligible lender in a State described in section 435(d)(1)(D), determines that a substantial portion of eligible borrowers in such State or within an area of such State are seeking and are unable to obtain loans under this part, the Association or its designated agent shall begin making such loans to borrowers in such State or within an area of such State in accordance with this subsection at the request of the Secretary.

      ‘(B) Loans made pursuant to this subsection shall be insurable by the agency identified in subparagraph (A) having an agreement pursuant to section 428(b). For loans insured by such agency, the agency shall provide the Association with a certificate of comprehensive insurance coverage, if the Association and the agency have mutually agreed upon a means to determine that the agency has not already guaranteed a loan under this part to a student which would cause a subsequent loan made by the Association to be in violation of any provision under this part.

      ‘(3) TERMINATION OF LENDING- The Association or its designated agent shall cease making loans under this subsection at such time as the Secretary determines that the conditions which caused the implementation of this subsection have ceased to exist.’.

SEC. 4042. GUARANTY AGENCY RESERVES.

    Section 422 of the Act (20 U.S.C. 1072) is amended by adding at the end the following new subsection:

    ‘(g) PRESERVATION AND RECOVERY OF GUARANTY AGENCY RESERVES-

      ‘(1) AUTHORITY TO RECOVER FUNDS- Notwithstanding any other provision of law, the reserve funds of the guaranty agencies, and any assets purchased with such reserve funds, regardless of who holds or controls the reserves or assets, shall be considered to be the property of the United States to be used in the operation of the program authorized by this part or the program authorized by part D of this title. However, the Secretary may not require the return of all reserve funds of a guaranty agency to the Secretary unless the Secretary determines that such return is in the best interest of the operation of the program authorized by this part or the program authorized by part D of this title, or to ensure the proper maintenance of such agency’s funds or assets or the orderly termination of the guaranty agency’s operations and the liquidation of its assets. The reserves shall be maintained by each guaranty agency to pay program expenses and contingent liabilities, as authorized by the Secretary, except that--

        ‘(A) the Secretary may direct a guaranty agency to return to the Secretary a portion of its reserve fund which the Secretary determines is unnecessary to pay the program expenses and contingent liabilities of the guaranty agency;

        ‘(B) the Secretary may direct the guaranty agency to require the return, to the guaranty agency or to the Secretary, of any reserve funds or assets held by, or under the control of, any other entity, which the Secretary determines are necessary to pay the program expenses and contingent liabilities of the guaranty agency, or which are required for the orderly termination of the guaranty agency’s operations and the liquidation of its assets;

        ‘(C) the Secretary may direct a guaranty agency, or such agency’s officers or directors, to cease any activities involving expenditure, use or transfer of the guaranty agency’s reserve funds or assets which the Secretary determines is a misapplication, misuse, or improper expenditure of such funds or assets; and

        ‘(D) any such determination under subparagraph (A) or (B) shall be based on standards prescribed by regulations that are developed through negotiated rulemaking and that include procedures for administrative due process.

      ‘(2) TERMINATION PROVISIONS IN CONTRACTS- (A) To ensure that the funds and assets of the guaranty agency are preserved, any contract with respect to the administration of a guaranty agency’s reserve funds, or the administration of any assets purchased or acquired with the reserve funds of the guaranty agency, that is entered into or extended by the guaranty agency, or any other party on behalf of or with the concurrence of the guaranty agency, after the date of enactment of this subsection shall provide that the contract is terminable by the Secretary upon 30 days notice to the contracting parties if the Secretary determines that such contract includes an impermissible transfer of the reserve funds or assets, or is otherwise inconsistent with the terms or purposes of this section.

      ‘(B) The Secretary may direct a guaranty agency to suspend or cease activities under any contract entered into by or on behalf of such agency after January 1, 1993, if the Secretary determines that the misuse or improper expenditure of such guaranty agency’s funds or assets or such contract provides unnecessary or improper benefits to such agency’s officers or directors.

      ‘(3) PENALTIES- Violation of any direction issued by the Secretary under this subsection may be subject to the penalties described in section 490 of this Act.

      ‘(4) AVAILABILITY OF FUNDS- Any funds that are returned or otherwise recovered by the Secretary pursuant to this subsection shall be available for expenditure for expenses pursuant to section 458 of this Act.’.

SEC. 4043. TERMS OF LOANS.

    (a) AMENDMENT- Section 428 of the Act (20 U.S.C. 1078) is amended--

      (1) in subsection (b)(1)(D), by striking ‘be subject to’ through the semicolon and inserting ‘be subject to income contingent repayment in accordance with subsection (m);’; and

      (2) in subsection (m)--

        (A) by amending paragraph (1) to read as follows:

      ‘(1) AUTHORITY OF SECRETARY TO REQUIRE- The Secretary shall require at least 10 percent of the borrowers who have defaulted on loans made under this part that are assigned to the Secretary under subsection (c)(8) to repay those loans under an income contingent repayment plan, the terms and conditions of which shall be established by the Secretary and the same as, or similar to, an income contingent repayment plan established for purposes of part D of this title.’; and

        (B) by striking paragraphs (2), (3), and (4) and inserting the following new paragraph:

      ‘(2) LOANS FOR WHICH INCOME CONTINGENT REPAYMENT MAY BE REQUIRED- A loan made under this part may be required to be repaid under this subsection if the note or other evidence of the loan has been assigned to the Secretary pursuant to subsection (c)(8).’.

    (b) EFFECTIVE DATE- The amendments made by this section shall take effect on July 1, 1994.

SEC. 4044. ASSIGNMENT OF LOANS.

    Section 428(c)(8) of the Act (20 U.S.C. 1078(c)(8)) is amended--

      (1) in the first sentence, by inserting the subparagraph designation ‘(A)’ before ‘If the’;

      (2) by striking the second and third sentences; and

      (3) by adding at the end the following new subparagraph:

      ‘(B) An orderly transition from the Federal Family Education Loan Program under this part to the Federal Direct Student Loan Program under part D of this title shall be deemed to be in the Federal fiscal interest, and a guaranty agency shall promptly assign loans to the Secretary under this paragraph upon the Secretary’s request.’.

SEC. 4045. TERMINATION OF GUARANTY AGENCY AGREEMENTS; ASSUMPTION OF GUARANTY AGENCY FUNCTIONS BY THE SECRETARY.

    Section 428(c)(10) of the Act is amended--

      (1) in subparagraph (C), by inserting ‘, as appropriate,’ after ‘the Secretary shall require’;

      (2) in subparagraph (D)--

        (A) by inserting the clause designation ‘(i)’ before ‘Each’;

        (B) by striking ‘Each’ and inserting ‘If the Secretary is not seeking to terminate the guaranty agency’s agreement under subparagraph (E), or assuming the guaranty agency’s functions under subparagraph (F), a’;

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

      ‘(ii) If the Secretary is seeking to terminate the guaranty agency’s agreement under subparagraph (E), or assuming the guaranty agency’s functions under subparagraph (F), a management plan described in subparagraph (C) shall include the means by which the Secretary and the guaranty agency shall work together to ensure the orderly termination of the operations, and liquidation of the assets, of the guaranty agency.’;

      (3) in subparagraph (E)--

        (A) in clause (ii), by striking ‘or’ after the semicolon;

        (B) in clause (iii), by striking the period and inserting a semicolon; and

        (C) by adding at the end the following new clauses:

        ‘(iv) the Secretary determines that such action is necessary to protect the Federal fiscal interest;

        ‘(v) the Secretary determines that such action is necessary to ensure the continued availability of loans to student or parent borrowers; or

        ‘(vi) the Secretary determines that such action is necessary to ensure an orderly transition from the loan programs under this part to the direct student loan programs under part D of this title.’;

      (4) in subparagraph (F)--

        (A) in the matter preceding clause (i), by striking ‘Except as provided in subparagraph (G), if’ and inserting ‘If’;

        (B) by amending clause (v) to read as follows:

        ‘(v) provide the guaranty agency with additional advance funds in accordance with section 422(c)(7), with such restrictions on the use of such funds as is determined appropriate by the Secretary, in order to--

          ‘(I) meet the immediate cash needs of the guaranty agency;

          ‘(II) ensure the uninterrupted payment of claims; or

          ‘(III) ensure that the guaranty agency will make loans as the lender-of-last-resort, in accordance with subsection (j);’;

        (C) in clause (vi)--

          (i) by striking ‘and to avoid’ and inserting ‘to avoid’;

          (ii) by striking the period and inserting a comma and ‘and to ensure an orderly transition from the loan programs under this part to the direct student loan programs under part D of this title.’; and

          (iii) by redesignating such clause as clause (vii); and

        (D) by inserting after clause (v) the following new clause:

        ‘(vi) use all funds and assets of the guaranty agency to assist in the activities undertaken in accordance with this subparagraph and take appropriate action to require the return, to the guaranty agency or the Secretary, of any funds or assets provided by the guaranty agency, under contract or otherwise, to any person or organization; or’;

      (5) by striking subparagraph (G);

      (6) by redesignating subparagraphs (H), (I), and (J) as subparagraphs (I), (J), and (K), respectively;

      (7) by inserting after subparagraph (F) the following new subparagraphs:

      ‘(G) Notwithstanding any other provision of Federal or State law, if the Secretary has terminated or is seeking to terminate a guaranty agency’s agreement under subparagraph (E), or has assumed a guaranty agency’s functions under subparagraph (F)--

        ‘(i) no State court may issue any order affecting the Secretary’s actions with respect to such guaranty agency;

        ‘(ii) any contract with respect to the administration of a guaranty agency’s reserve funds, or the administration of any assets purchased or acquired with the reserve funds of the guaranty agency, that is entered into or extended by the guaranty agency, or any other party on behalf of or with the concurrence of the guaranty agency, after the date of enactment of this subparagraph shall provide that the contract is terminable by the Secretary upon 30 days notice to the contracting parties if the Secretary determines that such contract includes an impermissible transfer of the reserve funds or assets, or is otherwise inconsistent with the terms or purposes of this section; and

        ‘(iii) no provision of State law shall apply to the actions of the Secretary in terminating the operations of a guaranty agency.

      ‘(H) Notwithstanding any other provision of law, the Secretary’s liability for any outstanding liabilities of a guaranty agency (other than outstanding student loan guarantees under this part), the functions of which the Secretary has assumed, shall not exceed the fair market value of the reserves of the guaranty agency, minus any necessary liquidation or other administrative costs.’; and

      (8) in subparagraph (K) (as redesignated by paragraph (5)), by striking all beginning with ‘system, together’ through the period and inserting ‘system and the progress of the transition from the loan programs under this part to the direct student loan programs under part D of this title.’.

SEC. 4046. CONSOLIDATION LOANS.

    (a) COST SAVINGS FROM CONSOLIDATION LOANS- Section 428C of the Act (20 U.S.C. 1078-3) is amended--

      (1) in subsection (a) by amending paragraph (3)(A) to read as follows:

      ‘(3) DEFINITION OF ELIGIBLE BORROWERS- (A) For the purpose of this section, the term ‘eligible borrower’ means a borrower who, at the time of application for a consolidation loan is in repayment status, or in a grace period preceding repayment, or is a delinquent or defaulted borrower who will reenter repayment through loan consolidation.’;

      (2) in subsection (b)--

        (A) in paragraph (1)--

          (i) in subparagraph (A)(ii), by inserting ‘with income-sensitive repayment terms’ after ‘obtain a consolidation loan’;

          (ii) by redesignating subparagraph (E) as subparagraph (F); and

          (iii) by inserting after subparagraph (D) the following new subparagraph:

        ‘(E) that the lender shall offer an income-sensitive repayment schedule, established by the lender in accordance with the regulations promulgated by the Secretary, to the borrower of any consolidation loan made by the lender on or after July 1, 1994; and’;

        (B) in paragraph (4), by amending subparagraph (C) to read as follows:

        ‘(C)(i) provides that periodic installments of principal need not be paid, but interest shall accrue and be paid in accordance with clause (ii), during any period for which the borrower would be eligible for a deferral under section 428(b)(1)(M), and that any such period shall not be included in determining the repayment schedule pursuant to subsection (c)(2) of this section; and

        ‘(ii) provides that interest shall accrue and be paid--

          ‘(I) by the Secretary, in the case of a consolidation loan that consolidated only Federal Stafford Loans for which the student borrower received an interest subsidy under section 428; or

          ‘(II) by the borrower, or capitalized, in the case of a consolidation loan other than a loan described in subclause (I);’; and

        (C) by adding at the end the following new paragraph:

      ‘(5) DIRECT LOANS- In the event that a borrower is unable to obtain a consolidation loan from a lender with an agreement under subsection (a)(1), or is unable to obtain a consolidation loan with income-sensitive repayment terms acceptable to the borrower from such a lender, the Secretary shall offer any such borrower who applies for it, a direct consolidation loan. Such direct consolidation loan shall, as requested by the borrower, be repaid either pursuant to income contingent repayment under part D of this title or pursuant to any other repayment provision under this section. The Secretary shall not offer such loans if, in the Secretary’s judgment, the Department of Education does not have the necessary origination and servicing arrangements in place for such loans.’; and

      (3) in subsection (c)--

        (A) in paragraph (1), by amending subparagraphs (B) and (C) to read as follows:

      ‘(B) A consolidation loan made before July 1, 1994, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the greater of--

        ‘(i) the weighted average of the interest rates on the loans consolidated, rounded to the nearest whole percent; or

        ‘(ii) 9 percent.

      ‘(C) A consolidation loan made on or after July 1, 1994, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the weighted average of the interest rates on the loans consolidated, rounded upward to the nearest whole percent.’;

        (B) in paragraph (2)--

          (i) in subparagraph (A)--

            (I) in the matter preceding clause (i), by striking ‘income sensitive repayment schedules. Such repayment terms’ and inserting ‘income-sensitive repayment schedules, established by the lender in accordance with the regulations of the Secretary. Except as required by such income-sensitive repayment schedules, or by the terms of repayment pursuant to income contingent repayment offered by the Secretary under subsection (b)(5), such repayment terms’;

            (II) by redesignating clauses (i), (ii), (iii), (iv), and (v) as clauses (ii), (iii), (iv), (v), and (vi), respectively; and

            (III) by inserting before clause (ii) (as redesignated by subclause (II)) the following new clause:

        ‘(i) is less than $7,500, then such consolidation loan shall be repaid in not more than 10 years;’;

          (ii) by striking subparagraph (B); and

          (iii) by redesignating subparagraph (C) as subparagraph (B); and

        (C) in paragraph (3)(B), by inserting ‘except as required by the terms of repayment pursuant to income contingent repayment offered by the Secretary under subsection (b)(5),’ before ‘the lender’.

    (b) COHORT DEFAULT RATE CONFORMING AMENDMENTS-

      (1) AMENDMENTS TO DEFINITION- Section 435(m)(1) of the Act (20 U.S.C. 1085) is amended--

        (A) in subparagraph (A), by inserting ‘(or on the portion of a loan made under section 428C that is used to repay any such loans)’ immediately after ‘on such loans’;

        (B) in subparagraph (C), by inserting ‘(or on the portion of a loan made under section 428C that is used to repay any such loans)’ immediately after ‘on such loans’; and

        (C) in subparagraph (D)--

          (i) by inserting ‘(or the portion of a loan made under section 428C that is used to repay a loan made under such section)’ after ‘section 428A’ the first place it appears; and

          (ii) by inserting ‘(or a loan made under section 428C a portion of which is used to repay a loan made under such section)’ after ‘section 428A’ the second place it appears.

      (2) CONFORMING AMENDMENT- Section 428C(a)(3)(B)(ii) of the Act (20 U.S.C. 1078-3(a)(3)(B)(ii)) is amended by striking the second sentence.

    (c) EFFECTIVE DATE- The amendments made by this section shall take effect on July 1, 1994, except that the amendments made by subsection (a)(2)(B) shall take effect upon enactment.

SEC. 4047. CONSOLIDATION OF PROGRAMS.

    (a) IN GENERAL- Section 428H of the Act (20 U.S.C. 1078-9) is amended--

      (1) in the matter preceding paragraph (1) of subsection (b), by inserting ‘(including graduate and professional students as defined in regulations promulgated by the Secretary)’ after ‘484’;

      (2) by amending subsection (d) to read as follows:

    ‘(d) LOAN LIMITS-

      ‘(1) IN GENERAL- Except as provided in paragraphs (2) and (3), the annual and aggregate limits for loans under this section shall be the same as those established under section 428(b)(1), less any amount received by such student pursuant to the subsidized loan program established under section 428.

      ‘(2) ANNUAL LIMITS FOR INDEPENDENT, GRADUATE, AND PROFESSIONAL STUDENTS- The maximum annual amount of loans under this section an independent student (or a student whose parents are unable to borrow under section 428B or the Federal Direct PLUS Loan Program) may borrow in any academic year or its equivalent or in any period of 7 consecutive months, whichever is longer, shall be the amount determined under paragraph (1), plus--

        ‘(A) in the case of such a student attending an eligible institution who has not completed such student’s first 2 years of undergraduate study--

          ‘(i) $4,000, if such student is enrolled in a program whose length is at least one academic year in length (as determined under section 481);

          ‘(ii) $2,500, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and

          ‘(iii) $1,500, if such student is enrolled in a program whose length is less than 2/3 , but at least 1/3 , of such an academic year;

        ‘(B) in the case of such a student attending an eligible institution who has completed the first 2 years of undergraduate study but who has not completed the remainder of a program of undergraduate study--

          ‘(i) $5,000, if such student is enrolled in a program whose length is at least one academic year in length (as determined under section 481);

          ‘(ii) $3,325, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and

          ‘(iii) $1,675, if such student is enrolled in a program whose length is less than 2/3 , but at least 1/3 , of such an academic year; and

        ‘(C) in the case of such a student who is a graduate or professional student attending an eligible institution, $10,000.

      ‘(3) AGGREGATE LIMITS FOR INDEPENDENT, GRADUATE, AND PROFESSIONAL STUDENTS- The maximum aggregate amount of loans under this section a student described in paragraph (2) may borrow shall be the amount described in paragraph (1), adjusted to reflect the increased annual limits described in paragraph (2), as prescribed by the Secretary by regulation.’; and

      (3) in subsection (e), by adding at the end the following new paragraphs:

      ‘(5) AMORTIZATION- The amount of the periodic payment and the repayment schedule for any loan made pursuant to this section shall be established by assuming an interest rate equal to the applicable rate of interest at the time the repayment of the principal amount of the loan commences. At the option of the lender, the note or other written evidence of the loan may require that--

        ‘(A) the amount of the periodic payment will be adjusted annually; or

        ‘(B) the period of repayment of principal will be lengthened or shortened,

      in order to reflect adjustments in interest rates occurring as a consequence of section 427A(c)(4).

      ‘(6) REPAYMENT PERIOD- For purposes of calculating the 10-year repayment period under section 428(b)(1)(D), such period shall commence at the time the first payment of principal is due from the borrower.’.

    (b) REPEAL- Section 428A of the Act is repealed.

    (c) TERMS, CONDITIONS AND BENEFITS- Notwithstanding the amendments made by this section, with respect to loans provided under sections 428A and 428H of the Act (as such sections existed on the date preceding the date of enactment of this Act) the terms, conditions and benefits applicable to such loans under such sections shall continue to apply to such loans after the date of enactment of this Act.

    (d) EFFECTIVE DATE- Except as otherwise provided herein, the amendments made by this section shall take effect on July 1, 1994.

Subtitle B--Additional Savings From The Student Loan Programs

SEC. 4101. REDUCTION OF BORROWER INTEREST RATES.

    Section 427A of the Act (20 U.S.C. 1077a) is amended--

      (1) in subsection (c)(4), by adding at the end the following new subparagraph:

      ‘(E) Notwithstanding subparagraphs (A) and (D) for any loan made pursuant to section 428B for which the first disbursement is made on or after July 1, 1994--

        ‘(i) subparagraph (B) shall be applied by substituting ‘3.1’ for ‘3.25’; and

        ‘(ii) the interest rate shall not exceed 9 percent.’;

      (2) by redesignating subsections (f), (g), and (h) as subsections (i), (j), and (k) respectively;

      (3) by adding after subsection (e) the following new subsections:

    ‘(f) INTEREST RATES FOR NEW LOANS AFTER JULY 1, 1994-

      ‘(1) IN GENERAL- Notwithstanding subsections (a), (b), (d), and (e) of this section, with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to section 428B or 428C) for which the first disbursement is made on or after July 1, 1994, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to--

        ‘(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus

        ‘(B) 3.10 percent,

      except that such rate shall not exceed 8.25 percent.

      ‘(2) CONSULTATION- The Secretary shall determine the applicable rate of interest under paragraph (1) after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.

    ‘(g) IN SCHOOL AND GRACE PERIOD RULES-

      ‘(1) GENERAL RULE- Notwithstanding the provisions of subsection (f), but subject to subsection (h), with respect to any loan under section 428 or 428H of this part for which the first disbursement is made on or after July 1, 1995, the applicable rate of interest for interest which accrues--

        ‘(A) prior to the beginning of the repayment period of the loan; or

        ‘(B) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in section 428(b)(1)(M) or 427(a)(2)(C),

      shall not exceed the rate determined under paragraph (2).

      ‘(2) RATE DETERMINATION- For purposes of paragraph (1), the rate determined under this paragraph shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to--

        ‘(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction prior to such June 1; plus

        ‘(B) 2.5 percent,

      except that such rate shall not exceed 8.25 percent.

      ‘(3) CONSULTATION- The Secretary shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.

    ‘(h) INTEREST RATES FOR NEW LOANS AFTER JULY 1, 1998-

      ‘(1) IN GENERAL- Notwithstanding subsections (a), (b), (d), (e), (f), and (g) of this section, with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to sections 428B and 428C) for which the first disbursement is made on or after July 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to--

        ‘(A) the bond equivalent rate of the securities with a comparable maturity as established by the Secretary; plus

        ‘(B) 1.0 percent,

      except that such rate shall not exceed 8.25 percent.

      ‘(2) INTEREST RATES FOR NEW PLUS LOANS AFTER JULY 1, 1998- Notwithstanding subsections (a), (b), (d), (e), (f), and (g), with respect to any loan made under section 428B for which the first disbursement is made on or after July 1, 1998, paragraph (1) shall be applied--

        ‘(A) by substituting ‘2.1 percent’ for ‘1.0 percent’ in subparagraph (B); and

        ‘(B) by substituting ‘9.0 percent’ for ‘8.25 percent’ in the matter following such subparagraph.

      ‘(3) CONSULTATION- The Secretary shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.’.

SEC. 4102. REDUCTION IN LOAN FEES PAID BY STUDENTS.

    (a) ORIGINATION FEES- Section 438 of the Act (20 U.S.C. 1087-1) is amended--

      (1) in the heading of subsection (c) by inserting ‘FROM STUDENTS’ after ‘ORIGINATION FEES’; and

      (2) in subsection (c)--

        (A) in paragraph (2)--

          (i) by striking ‘428A, 428B, 428C,’ and inserting ‘428C’; and

          (ii) by striking ‘5 percent’ and inserting ‘3.0 percent’; and

        (B) in paragraph (6), by striking ‘5 percent’ and inserting ‘3.0 percent’.

    (b) ORIGINATION FEE; INSURANCE PREMIUM FOR UNSUBSIDIZED LOANS- Section 428H of the Act (20 U.S.C. 1078-8) is amended--

      (1) in subsection (f)--

        (A) in the subsection heading, by striking ‘INSURANCE PREMIUM’ and inserting ‘ORIGINATION FEE’;

        (B) in the heading of paragraph (1), by striking ‘/INSURANCE PREMIUM’;

        (C) in paragraph (1)--

          (i) by striking ‘a combined origination fee and insurance premium in the amount of 6.5 percent’ and inserting ‘an origination fee in the amount of 3.0 percent’; and

          (ii) by striking the second sentence;

        (D) in paragraph (2), by striking ‘combined fee and premium’ and inserting ‘origination fee’;

        (E) in paragraph (3), by striking ‘combined origination fee and insurance premium’ and inserting ‘origination fee’;

        (F) in paragraph (4)--

          (i) in the heading, by striking ‘INSURANCE PREMIUM’ and inserting ‘ORIGINATION FEE’;

          (ii) by striking ‘combined origination fee and insurance premiums’ and inserting ‘origination fees’; and

          (iii) by striking ‘and premiums to pay’ and inserting ‘to pay’; and

        (G) in paragraph (5)--

          (i) in the heading, by inserting ‘ORIGINATION FEE AND’ before ‘INSURANCE’; and

          (ii) in the second sentence--

            (I) by striking ‘6.5 percent insurance premium’ and inserting ‘combined origination fee under this subsection and the insurance premium under subsection (h)’; and

            (II) by inserting ‘origination fee and’ before ‘insurance’; and

      (2) by adding at the end the following new subsection:

    ‘(l) INSURANCE PREMIUM- Each State or nonprofit private institution or organization having an agreement with the Secretary under section 428(b)(1) may charge a borrower under this section an insurance premium equal to not more than 1.0 percent of the principal amount of the loan, if such premium will not be used for incentive payments to lenders.’.

    (c) INSURANCE PREMIUM- Section 428(b)(1)(H) of the Act (20 U.S.C. 1078(b)(1)(H)) is amended by striking ‘3 percent’ and inserting ‘1.0 percent’.

    (d) EFFECTIVE DATE- The amendments made by this section shall take effect on July 1, 1994.

SEC. 4103. LOAN FEES FROM LENDERS.

    Section 438 of the Act (20 U.S.C 1087-1) is further amended--

      (1) by redesignating subsections (d) and (e) as subsections (e) and (f), respectively; and

      (2) by inserting after subsection (c) the following new subsection:

    ‘(d) LOAN FEES FROM LENDERS-

      ‘(1) DEDUCTION FROM INTEREST AND SPECIAL ALLOWANCE SUBSIDIES- Notwithstanding subsection (b), the Secretary shall reduce the total amount of interest and special allowance payable under section 428(a)(3)(A) and subsection (b) of this section, respectively, to any holder of a loan by a loan fee in an amount determined in accordance with paragraph (2) of this subsection. If the total amount of interest and special allowance payable under section 428(a)(3)(A) and subsection (b) of this section, respectively, is less than the amount of such loan fee, then the Secretary shall deduct such excess amount from subsequent quarters’ payments until the total amount has been deducted.

      ‘(2) AMOUNT OF LOAN FEES- With respect to any loan under this part for which the first disbursement was made on or after October 1, 1993, the amount of the loan fee which shall be deducted under paragraph (1) shall be equal to 0.50 percent of the principal amount of the loan.

      ‘(3) DISTRIBUTION OF LOAN FEES- The Secretary shall deposit all fees collected pursuant to paragraph (3) into the insurance fund established in section 431.’.

SEC. 4104. OFFSET FEE.

    Subsection (h) of section 439 of the Act (20 U.S.C. 1087-2(h)) is amended by adding at the end the following new paragraph:

      ‘(7) OFFSET FEE- (A) The Association shall pay to the Secretary, on a monthly basis, an offset fee calculated on an annual basis in an amount equal to 0.30 percent of the principal amount of each loan made, insured or guaranteed under this part that the Association holds (except for loans made pursuant to sections 428C, 439(o), or 439(q)) and that was acquired on or after the date of enactment of this paragraph.

      ‘(B) If the Secretary determines that the Association has substantially failed to comply with subsection (q), subparagraph (A) shall be applied by substituting ‘1.0 percent’ for ‘0.3 percent’.

      ‘(C) The Secretary shall deposit all fees collected pursuant to this paragraph into the insurance fund established in section 431.’.

SEC. 4105. ELIMINATION OF TAX EXEMPT FLOOR.

    Section 438(b)(2)(B) of the Act (20 U.S.C. 1087-1(b)(2)(B)) is amended by adding at the end the following new clause:

      ‘(iv) Notwithstanding clauses (i) and (ii), the quarterly rate of the special allowance for holders of loans which are financed with funds obtained by the holder from the issuance of obligations originally issued on or after October 1, 1993, the income from which is excluded from gross income under the Internal Revenue Code of 1986, shall be the quarterly rate of the special allowance established under subparagraph (A), (E), or (F), as the case may be. Such rate shall also apply to holders of loans which were made or purchased with funds obtained by the holder from collections or default reimbursements on, or interest or other income pertaining to, eligible loans made or purchased with funds described in the preceding sentence of this subparagraph or from income on the investment of such funds.’.

SEC. 4106. REDUCTION IN INTEREST RATE FOR CONSOLIDATION LOANS; REBATE FEE.

    (a) AMENDMENT- Section 428C of the Act (20 U.S.C. 1078-3) is amended by adding at the end the following new subsection:

    ‘(f) INTEREST PAYMENT REBATE FEE-

      ‘(1) IN GENERAL- For any month beginning on or after October 1, 1993, each holder of a consolidation loan under this section for which the first disbursement was made on or after October 1, 1993, shall pay to the Secretary, on a monthly basis and in such manner as the Secretary shall prescribe, a rebate fee calculated on an annual basis equal to 1.05 percent of the principal plus accrued unpaid interest on such loan.

      ‘(2) DEPOSIT- The Secretary shall deposit all fees collected pursuant to subsection (a) into the insurance fund established in section 431.’.

    (b) ENFORCEMENT- Subsection (d) of section 435 of the Act (20 U.S.C. 1085(d)) is amended--

      (1) in the matter preceding subparagraph (A) of paragraph (1), by striking ‘(5)’ and inserting ‘(6)’; and

      (2) by adding at the end the following new paragraph:

      ‘(6) REBATE FEE REQUIREMENT- To be an eligible lender under this part, an eligible lender shall pay rebate fees in accordance with section 428C(f).’.

SEC. 4107. REINSURANCE FEES AND ADMINISTRATIVE COST ALLOWANCE.

    (a) REINSURANCE FEES- Section 428(c) of the Act (20 U.S.C. 1078(c)) is amended--

      (1) by striking paragraph (9); and

      (2) by redesignating paragraph (10) as paragraph (9).

    (b) ADMINISTRATIVE COST ALLOWANCE- Section 428(f)(1) of the Act (20 U.S.C. 1078(f)(1)) is amended--

      (1) in subparagraph (A), by striking ‘The Secretary’ and inserting ‘For a fiscal year prior to fiscal year 1994, the Secretary’; and

      (2) in subparagraph (B), by inserting ‘prior to fiscal year 1994’ after ‘any fiscal year’.

    (c) EFFECTIVE DATE- The amendments made by this section shall take effect on October 1, 1993.

SEC. 4108. RISK SHARING.

    (a) GUARANTY AGENCY REINSURANCE PERCENTAGE- Section 428(c)(1) of the Act (20 U.S.C. 1078(c)(1)) is amended--

      (1) in the fourth sentence of subparagraph (A), by striking ‘100 percent’ and inserting ‘98 percent’;

      (2) in subparagraph (B)(i), by striking ‘90 percent’ and inserting ‘88 percent’;

      (3) in subparagraph (B)(ii), by striking ‘80 percent’ and inserting ‘78 percent’; and

      (4) by adding at the end the following new subparagraphs:

      ‘(E) Notwithstanding any other provisions of this section, in the case of a loan made pursuant to a lender-of-last-resort program, the Secretary shall apply the provisions of--

        ‘(i) the fourth sentence of subparagraph (A) by substituting ‘100 percent’ for ‘98 percent’;

        ‘(ii) subparagraph (B)(i) by substituting ‘100 percent’ for ‘88 percent’; and

        ‘(iii) subparagraph (B)(ii) by substituting ‘100 percent’ for ‘78 percent’.

      ‘(F) Notwithstanding any other provisions of this section, in the case of an outstanding loan transferred to a guaranty agency from another guaranty agency pursuant to a plan approved by the Secretary in response to the insolvency of the latter such guarantee agency, the Secretary shall apply the provision of--

        ‘(i) the fourth sentence of subparagraph (A) by substituting ‘100 percent’ for ‘98 percent’;

        ‘(ii) subparagraph (B)(i) by substituting ‘90 percent’ for ‘88 percent’; and

        ‘(iii) subparagraph (B)(ii) by substituting ‘80 percent’ for ‘78 percent’.’.

    (b) RISK SHARING BY THE LOAN HOLDERS- Section 428(b)(1)(G) of the Act (20 U.S.C. 1078(b)(1)(G)) is amended--

      (1) by striking ‘100 percent’ and inserting ‘98 percent’; and

      (2) by adding before the semicolon at the end the following: ‘, except that such program shall insure 100 percent of the unpaid principal of loans made with funds advanced pursuant to section 428(j) or 439(q)’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to any loan for which the first disbursement is made on or after October 1, 1993.

SEC. 4109. PLUS LOAN DISBURSEMENTS.

    (a) MULTIPLE DISBURSEMENT REQUIRED- The matter preceding paragraph (1) of section 428B(c) of the Act (20 U.S.C. 1078-2(c)) is amended by inserting ‘shall be disbursed in accordance with the requirements of section 428G and’ after ‘under this section’.

    (b) CONFORMING AMENDMENTS- Section 428G(e) of the Act (20 U.S.C. 1078-7(e) is amended--

      (1) in the subsection heading, by striking ‘PLUS, CONSOLIDATION,’ and inserting ‘CONSOLIDATION’; and

      (2) by striking ‘section 428B or 428C’ and inserting ‘section 428C’.

    (c) EFFECTIVE DATE- The amendments made by this section shall be effective with respect to loans for which the first disbursement is made on or after October 1, 1993.

SEC. 4110. SECRETARY’S EQUITABLE SHARE.

    (a) AMENDMENT- Section 428(c)(6)(A)(ii) of the Act (20 U.S.C. 1078(c)(6)(A)(ii)) is amended by striking ‘30 percent’ and inserting ‘27 percent’.

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect on October 1, 1993.

SEC. 4111. REDUCTION IN THE SPECIAL ALLOWANCE PAYMENT.

    Paragraph (2) of section 438(b) of the Act (20 U.S.C. 1087-1(b)(2)) is amended--

      (1) in subparagraph (A)--

        (A) by striking ‘and (D)’ and inserting ‘(D), (E), and (F)’; and

        (B) by striking ‘427A(e)’ and inserting ‘427A(f)’; and

      (2) by adding at the end the following new subparagraphs:

      ‘(E) In the case of any loan for which the applicable rate of interest is described in section 427A(g)(2), subparagraph (A)(iii) shall be applied by substituting ‘2.5 percent’ for ‘3.10 percent’.

      ‘(F) Subject to paragraph (4), the special allowance paid pursuant to this subsection on loans for which the applicable rate of interest is determined under section 427A(h) shall be computed (i) by determining the applicable bond equivalent rate of the security with a comparable maturity, as established by the Secretary, (ii) by subtracting the applicable interest rates on such loans from such applicable bond equivalent rate, (iii) by adding 1.0 percent to the resultant percent, and (iv) by dividing the resultant percent by 4. If such computation produces a number less than zero, such loans shall be subject to section 427A(f).’.

SEC. 4112. SUPPLEMENTAL PRECLAIMS ASSISTANCE.

    (a) AMENDMENT- Section 428(l)(2) of the Act (20 U.S.C. 1078(l)(2)) is amended by striking the second sentence and inserting the following: ‘For each loan on which such assistance is performed and for which a default claim is not presented to the guaranty agency by the lender on or before the 150th day after the loan becomes 120 days delinquent, such payment shall be equal to one percent of the total of the unpaid principal and the accrued unpaid interest of the loan.’.

    (b) EFFECTIVE DATE- The amendment made by this section shall take effect on October 1, 1993.

Subtitle C--Cost Sharing by States

SEC. 4201. COST SHARING BY STATES.

    (a) AMENDMENT- Section 428 of the Act (20 U.S.C. 1078) is amended by adding at the end the following new subsection:

    ‘(n) STATE SHARE OF DEFAULT COSTS-

      ‘(1) IN GENERAL- In the case of any State in which there are located any institutions of higher education that have a cohort default rate that exceeds 20 percent, such State shall pay to the Secretary an amount equal to--

        ‘(A) the new loan volume attributable to all institutions in the State for the current fiscal year; multiplied by

        ‘(B) the percentage specified in paragraph (2); multiplied by

        ‘(C) the quotient of--

          ‘(i) the sum of the amounts calculated under paragraph (3) for each such institution in the State; divided by

          ‘(ii) the total amount of loan volume attributable to current and former students of institutions located in that State entering repayment in the period used to calculate the cohort default rate.

      ‘(2) PERCENTAGE- For purposes of paragraph (1)(B), the percentage used shall be--

        ‘(A) 12.5 percent for fiscal year 1995;

        ‘(B) 20 percent for fiscal year 1996; and

        ‘(C) 50 percent for fiscal year 1997 and succeeding fiscal years.

      ‘(3) CALCULATION- For purposes of paragraph (1)(C)(i), the amount shall be determined by calculating for each institution the amount by which--

        ‘(A) the amount of the loans received for attendance by such institution’s current and former students who (i) enter repayment during the fiscal year used for the calculation of the cohort default rate, and (ii) default before the end of the following fiscal year; exceeds

        ‘(B) 20 percent of the loans received for attendance by all the current and former students who enter repayment during the fiscal year used for the calculation of the cohort default rate.

      ‘(4) FEE- A State may charge a fee to an institution of higher education that participates in the program under this part and is located in that State according to a fee structure, approved by the Secretary, that is based on the institution’s cohort default rate and the State’s risk of loss under this subsection. Such fee structure shall include a process by which an institution with a high cohort default rate is exempt from any fees under this paragraph if such institution demonstrates to the satisfaction of the State that exceptional mitigating circumstances, as determined by the State and approved by the Secretary, contributed to its cohort default rate.’.

    (b) EFFECTIVE DATE- The amendment made by this section shall take effect on October 1, 1994.

Subtitle D--Group Health Plans

SEC. 4301. STANDARDS FOR GROUP HEALTH PLAN COVERAGE.

    (a) IN GENERAL- Part 6 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1161 et seq.) is amended by adding at the end the following new section:

‘ADDITIONAL STANDARDS FOR GROUP HEALTH PLANS

    ‘SEC. 609. (a) GROUP HEALTH PLAN COVERAGE PURSUANT TO MEDICAL CHILD SUPPORT ORDERS-

      ‘(1) IN GENERAL- Each group health plan shall provide benefits in accordance with the applicable requirements of any qualified medical child support order.

      ‘(2) DEFINITIONS- For purposes of this subsection--

        ‘(A) QUALIFIED MEDICAL CHILD SUPPORT ORDER- The term ‘qualified medical child support order’ means a medical child support order--

          ‘(i) which creates or recognizes the existence of an alternate recipient’s right to, or assigns to an alternate recipient the right to, receive benefits for which a participant or beneficiary is eligible under a group health plan, and

          ‘(ii) with respect to which the requirements of paragraphs (3) and (4) are met.

        ‘(B) MEDICAL CHILD SUPPORT ORDER- The term ‘medical child support order’ means any judgment, decree, or order (including approval of a settlement agreement) issued by a court of competent jurisdiction which--

          ‘(i) provides for child support with respect to a child of a participant under a group health plan or provides for health benefit coverage to such a child, is made pursuant to a State domestic relations law (including a community property law), and relates to benefits under such plan, or

          ‘(ii) enforces a law relating to medical child support described in section 1908 of the Social Security Act (as added by section 13822 of the Omnibus Budget Reconciliation Act of 1993) with respect to a group health plan.

        ‘(C) ALTERNATE RECIPIENT- The term ‘alternate recipient’ means any child of a participant who is recognized under a medical child support order as having a right to enrollment under a group health plan with respect to such participant.

      ‘(3) INFORMATION TO BE INCLUDED IN QUALIFIED ORDER- A medical child support order meets the requirements of this paragraph only if such order clearly specifies--

        ‘(A) the name and the last known mailing address (if any) of the participant and the name and mailing address of each alternate recipient covered by the order,

        ‘(B) a reasonable description of the type of coverage to be provided by the plan to each such alternate recipient, or the manner in which such type of coverage is to be determined,

        ‘(C) the period to which such order applies, and

        ‘(D) each plan to which such order applies.

      ‘(4) RESTRICTION ON NEW TYPES OR FORMS OF BENEFITS- A medical child support order meets the requirements of this paragraph only if such order does not require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan, except to the extent necessary to meet the requirements of a law relating to medical child support described in section 1908 of the Social Security Act (as added by section 13822 of the Omnibus Budget Reconciliation Act of 1993).

      ‘(5) PROCEDURAL REQUIREMENTS-

        ‘(A) TIMELY NOTIFICATIONS AND DETERMINATIONS- In the case of any medical child support order received by a group health plan--

          ‘(i) the plan administrator shall promptly notify the participant and each alternate recipient of the receipt of such order and the plan’s procedures for determining whether medical child support orders are qualified medical child support orders, and

          ‘(ii) within a reasonable period after receipt of such order, the plan administrator shall determine whether such order is a qualified medical child support order and notify the participant and each alternate recipient of such determination.

        ‘(B) ESTABLISHMENT OF PROCEDURES FOR DETERMINING QUALIFIED STATUS OF ORDERS- Each group health plan shall establish reasonable procedures to determine whether medical child support orders are qualified medical child support orders and to administer the provision of benefits under such qualified orders. Such procedures--

          ‘(i) shall be in writing,

          ‘(ii) shall provide for the notification of each person specified in a medical child support order as eligible to receive benefits under the plan (at the address included in the medical child support order) of such procedures promptly upon receipt by the plan of the medical child support order, and

          ‘(iii) shall permit an alternate recipient to designate a representative for receipt of copies of notices that are sent to the alternate recipient with respect to a medical child support order.

      ‘(6) ACTIONS TAKEN BY FIDUCIARIES- If a plan fiduciary acts in accordance with part 4 of this subtitle in treating a medical child support order as being (or not being) a qualified medical child support order, then the plan’s obligation to the participant and each alternate recipient shall be discharged to the extent of any payment made pursuant to such act of the fiduciary.

      ‘(7) TREATMENT OF ALTERNATE RECIPIENTS-

        ‘(A) TREATMENT AS BENEFICIARY GENERALLY- A person who is an alternate recipient under a qualified medical child support order shall be considered a beneficiary under the plan for purposes of any provision of this Act.

        ‘(B) TREATMENT AS PARTICIPANT FOR PURPOSES OF REPORTING AND DISCLOSURE REQUIREMENTS- A person who is an alternate recipient under any medical child support order shall be considered a participant under the plan for purposes of the reporting and disclosure requirements of part 1.

      ‘(8) DIRECT PROVISION OF BENEFITS PROVIDED TO ALTERNATE RECIPIENTS- Any payment for benefits made by a group health plan pursuant to a medical child support order in reimbursement for expenses paid by an alternate recipient or an alternate recipient’s custodial parent or legal guardian shall be made to the alternate recipient or the alternate recipient’s custodial parent or legal guardian.

    ‘(b) RIGHTS OF STATES WITH RESPECT TO GROUP HEALTH PLANS WHERE PARTICIPANTS OR BENEFICIARIES THEREUNDER ARE ELIGIBLE FOR MEDICAID BENEFITS-

      ‘(1) COMPLIANCE BY PLANS WITH ASSIGNMENT OF RIGHTS- A group health plan shall provide that payment for benefits with respect to a participant under the plan will be made in accordance with any assignment of rights made by or on behalf of such participant or a beneficiary of the participant as required by a State plan for medical assistance approved under title XIX of the Social Security Act pursuant to section 1912(a)(1)(A) of such Act (as in effect on the date of the enactment of the Omnibus Budget Reconciliation Act of 1993).

      ‘(2) ENROLLMENT AND PROVISION OF BENEFITS WITHOUT REGARD TO MEDICAID ELIGIBILITY- A group health plan shall provide that, in enrolling an individual as a participant or beneficiary or in determining or making any payments for benefits of an individual as a participant or beneficiary, the fact that the individual is eligible for or is provided medical assistance under a State plan for medical assistance approved under title XIX of the Social Security Act will not be taken into account.

      ‘(3) ACQUISITION BY STATES OF RIGHTS OF THIRD PARTIES- A group health plan shall provide that, to the extent that payment has been made under a State plan for medical assistance approved under title XIX of the Social Security Act in any case in which a group health plan has a legal liability to make payment for items or services constituting such assistance, payment for benefits under the plan will be made in accordance with any State law which provides that the State has acquired the rights with respect to a participant to such payment for such items or services.

    ‘(c) GROUP HEALTH PLAN COVERAGE OF DEPENDENT CHILDREN IN CASES OF ADOPTION-

      ‘(1) COVERAGE EFFECTIVE UPON PLACEMENT FOR ADOPTION- In any case in which a group health plan provides coverage for dependent children of participants or beneficiaries, such plan shall provide benefits to dependent children placed with participants or beneficiaries for adoption under the same terms and conditions as apply in the case of dependent children who are natural children of participants or beneficiaries under the plan, irrespective of whether the adoption has become final.

      ‘(2) RESTRICTIONS BASED ON PREEXISTING CONDITIONS AT TIME OF PLACEMENT FOR ADOPTION PROHIBITED- A group health plan may not restrict coverage under the plan of any dependent child adopted by a participant or beneficiary, or placed with a participant or beneficiary for adoption, solely on the basis of a preexisting condition of such child at the time that such child would otherwise become eligible for coverage under the plan, if the adoption or placement for adoption occurs while the participant or beneficiary is eligible for coverage under the plan.

      ‘(3) DEFINITIONS- For purposes of this subsection--

        ‘(A) CHILD- The term ‘child’ means, in connection with any adoption, or placement for adoption, of the child, an individual who has not attained age 18 as of the date of such adoption or placement for adoption.

        ‘(B) PLACEMENT FOR ADOPTION- The term ‘placement’, or being ‘placed’, for adoption, in connection with any placement for adoption of a child with any person, means the assumption and retention by such person of a legal obligation for total or partial support of such child in anticipation of adoption of such child. The child’s placement with such person terminates upon the termination of such legal obligation.

    ‘(d) CONTINUED COVERAGE OF COSTS OF A PEDIATRIC VACCINE UNDER GROUP HEALTH PLANS- A group health plan may not reduce its coverage of the costs of pediatric vaccines (as defined under section 1928(h)(6) of the Social Security Act as amended by section 13830 of the Omnibus Budget Reconciliation Act of 1993) below the coverage it provided as of May 1, 1993.

    ‘(e) REGULATIONS- Any regulations prescribed under this section shall be prescribed by the Secretary of Labor, in consultation with the Secretary of Health and Human Services.’.

    (b) CONFORMING AMENDMENTS TO ERISA TO ENSURE COMPLIANCE WITH MEDICARE AND MEDICAID COVERAGE DATA BANK REQUIREMENTS-

      (1) REPORTS TO DATA BANK- Section 101 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1021) is amended--

        (A) by redesignating subsection (f) as subsection (g); and

        (B) by inserting after subsection (e) the following new subsection:

    ‘(f) INFORMATION NECESSARY TO COMPLY WITH MEDICARE AND MEDICAID COVERAGE DATA BANK REQUIREMENTS-

      ‘(1) PROVISION OF INFORMATION BY GROUP HEALTH PLAN UPON REQUEST OF EMPLOYER-

        ‘(A) IN GENERAL- An employer shall comply with the applicable requirements of section 1144 of the Social Security Act (as added by section 13581 of the Omnibus Budget Reconciliation Act of 1993). Upon the request of an employer maintaining a group health plan, any plan sponsor, plan administrator, insurer, third-party administrator, or other person who maintains under the plan the information necessary to enable the employer to comply with the applicable requirements of section 1144 of the Social Security Act shall, in such form and manner as may be prescribed in regulations of the Secretary (in consultation with the Secretary of Health and Human Services), provide such information (not inconsistent with paragraph (2))--

          ‘(i) in the case of a request by an employer described in subparagraph (B) and a plan that is not a multiemployer plan or a component of an arrangement described in subparagraph (C), to the Medicare and Medicaid Coverage Data Bank;

          ‘(ii) in the case of a plan that is a multiemployer plan or is a component of an arrangement described in subparagraph (C), to the employer or to such Data Bank, at the option of the plan; and

          ‘(iii) in any other case, to the employer or to such Data Bank, at the option of the employer.

        ‘(B) EMPLOYER DESCRIBED- An employer is described in this subparagraph for any calendar year if such employer normally employed fewer than 50 employees on a typical business day during such calendar year.

        ‘(C) ARRANGEMENT DESCRIBED- An arrangement described in this subparagraph is any arrangement in which two or more employers contribute for the purpose of providing group health plan coverage for employees.

      ‘(2) INFORMATION NOT REQUIRED TO BE PROVIDED- Any plan sponsor, plan administrator, insurer, third-party administrator, or other person described in paragraph (1)(A) (other than the employer) that maintains the information under the plan shall not provide to an employer in order to satisfy the requirements of section 1144 of the Social Security Act, and shall not provide to the Data Bank under such section, information that pertains in any way to--

        ‘(A) the health status of a participant, or of the participant’s spouse, dependent child, or other beneficiary,

        ‘(B) the cost of coverage provided to any participant or beneficiary, or

        ‘(C) any limitations on such coverage specific to any participant or beneficiary.

      ‘(3) REGULATIONS- The Secretary may, in consultation with the Secretary of Health and Human Services, prescribe such regulations as are necessary to carry out this subsection.’.

    (c) CONFORMING AMENDMENTS-

      (1) CIVIL ACTIONS- Section 502(a) of such Act (29 U.S.C. 1132(a)) is amended--

        (A) in paragraph (5), by striking ‘or’ at the end;

        (B) in paragraph (6), by striking the period and inserting a semicolon; and

        (C) by adding at the end the following new paragraphs:

      ‘(7) by a State to enforce compliance with a qualified medical child support order (as defined in section 609(a)(2)(A)); or

      ‘(8) by the Secretary, or by an employer or other person referred to in section 101(f)(1), (A) to enjoin any act or practice which violates subsection (f) of section 101, or (B) to obtain appropriate equitable relief (i) to redress such violation or (ii) to enforce such subsection.’.

      (2) CIVIL PENALTY- Section 502(c) of such Act (29 U.S.C. 1132(c)) is amended by adding at the end the following new paragraph:

    ‘(4) The Secretary may assess a civil penalty of not more than $1,000 for each violation by any person of section 101(f)(1). For purposes of this paragraph, each violation described in subparagraph (A) with respect to any single participant, and each violation described in subparagraph (B) with respect to any single participant or beneficiary, shall be treated as a separate violation. The Secretary and the Secretary of Health and Human Services shall maintain such ongoing consultation as may be necessary and appropriate to coordinate enforcement under this subsection with enforcement under section 1144(c)(8) of the Social Security Act.’.

      (3) JURISDICTION- Section 502(e)(1) of such Act (29 U.S.C. 1132(e)(1)) is amended--

        (A) in the first sentence, by striking ‘or fiduciary’ and inserting ‘fiduciary, or any person referred to in section 101(f)(1)’; and

        (B) in the second sentence, by striking ‘subsection (a)(1)(B)’ and inserting ‘paragraphs (1)(B) and (7) of subsection (a)’.

      (4) EFFECT ON OTHER LAWS- Section 514 of such Act (29 U.S.C. 1144) is amended--

        (A) in subsection (b)(7)(D), by inserting ‘, qualified medical child support orders (within the meaning of section 609(a)(2)(A)), and the provisions of law referred to in section 609(a)(2)(B)(ii) to the extent enforced by qualified medical child support orders’ before the period; and

        (B) by striking subsection (b)(8) and inserting the following:

    ‘(8) Subsection (a) of this section shall not be construed to preclude any State cause of action--

      ‘(A) with respect to which the State exercises its acquired rights under section 609(b)(3) with respect to a group health plan (as defined in section 607(1)), or

      ‘(B) for recoupment of payment with respect to items or services pursuant to a State plan for medical assistance approved under title XIX of the Social Security Act which would not have been payable if such acquired rights had been executed before payment with respect to such items or services by the group health plan.’;

      (5) CLERICAL AMENDMENTS-

        (A) The heading for part 6 of subtitle B of title I of such Act is amended to read as follows:

‘Part 6--Group Health Plans’.

        (B) The table of contents in section 1 of such Act is amended--

          (i) by striking the item relating to the heading for part 6 of subtitle B of title I and inserting the following:

‘Part 6--Group Health Plans’;

          and

          (ii) by inserting after the item relating to section 608 the following new item:

      ‘Sec. 609. Additional standards for group health plans.’.

    (d) EFFECTIVE DATE-

      (1) IN GENERAL- The amendments made by this section shall take effect on the date of the enactment of this Act.

      (2) PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1994- Any amendment to a plan required to be made by an amendment made by this section shall not be required to be made before the first plan year beginning on or after January 1, 1994, if--

        (A) during the period after the date before the date of the enactment of this Act and before such first plan year, the plan is operated in accordance with the requirements of the amendments made by this section, and

        (B) such plan amendment applies retroactively to the period after the date before the date of the enactment of this Act and before such first plan year.

      A plan shall not be treated as failing to be operated in accordance with the provisions of the plan merely because it operates in accordance with this paragraph.

Subtitle E--Fee Increase

SEC. 4401. FEE INCREASE.

    The Tea Importation Act (21 U.S.C. 41 et seq.) is amended--

      (1) by inserting the 4th undesignated paragraph under the center heading ‘FOOD AND DRUG ADMINISTRATION’ of title II of the Labor-Federal Security Appropriation Act, 1942 (21 U.S.C. 46a) as a new section 13 of the Tea Importation Act, and

      (2) by amending such new section 13 to read as follows:

    ‘SEC. 13. No tea or merchandise described as tea shall be examined for importation into the United States, or released by the Customs Service, under the Tea Importation Act unless the importer or consignee of such tea or merchandise has paid, before the examination, a fee in an amount equal to--

      ‘(1) 10 cents for each hundred weight or fraction thereof of the tea or merchandise; or

      ‘(2) the approximate cost of the examinations;

    whichever amount is less. Such fee shall be deposited into the Treasury of the United States as miscellaneous receipts.’

TITLE V--TRANSPORTATION AND PUBLIC WORKS PROVISIONS

SEC. 5001. RECREATIONAL USER FEES.

    (a) IN GENERAL- Section 210 of the Flood Control Act of 1968 (16 U.S.C. 460d-3) is amended--

      (1) by striking ‘SEC. 210. No entrance’ and inserting the following:

‘SEC. 210. RECREATIONAL USER FEES.

    ‘(a) PROHIBITION ON ADMISSIONS FEES- No entrance’;

      (2) by striking the second sentence; and

      (3) by adding at the end the following new subsection:

    ‘(b) FEES FOR USE OF DEVELOPED RECREATION SITES AND FACILITIES-

      ‘(1) ESTABLISHMENT AND COLLECTION- Notwithstanding section 4(b) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 460l-6a(b)), the Secretary of the Army is authorized, subject to paragraphs (2) and (3), to establish and collect fees for the use of developed recreation sites and facilities, including campsites, swimming beaches, and boat launching ramps but excluding a site or facility which includes only a boat launch ramp and a courtesy dock.

      ‘(2) EXEMPTION OF CERTAIN FACILITIES- The Secretary shall not establish or collect fees under this subsection for the use or provision of drinking water, wayside exhibits, roads, scenic drives, overlook sites, picnic tables, toilet facilities, surface water areas, undeveloped or lightly developed shoreland, or general visitor information.

      ‘(3) PER VEHICLE LIMIT- The fee under this subsection for use of a site or facility (other than an overnight camping site or facility or any other site or facility at which a fee is charged for use of the site or facility as of the date of the enactment of this paragraph) for persons entering the site or facility by private, noncommercial vehicle transporting not more than 8 persons (including the driver) shall not exceed $3 per day per vehicle. Such maximum amount may be adjusted annually by the Secretary for changes in the Consumer Price Index of All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.

      ‘(4) DEPOSIT INTO TREASURY ACCOUNT- All fees collected under this subsection shall be deposited into the Treasury account for the Corps of Engineers established by section 4(i) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 460l-6a(i)).’.

    (b) CONFORMING AMENDMENT FOR CAMPSITES- Section 4(b) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 460l-6a(b)) is amended by striking the next to the last sentence.

TITLE VI--COMMUNICATIONS LICENSING AND SPECTRUM ALLOCATION IMPROVEMENT

SEC. 6001. TRANSFER OF AUCTIONABLE FREQUENCIES.

    (a) AMENDMENT- The National Telecommunications and Information Administration Organization Act (47 U.S.C. 901 et seq.) is amended--

      (1) by striking the heading of part B and inserting the following:

‘PART C--SPECIAL AND TEMPORARY PROVISIONS’;

      (2) by redesignating sections 131 through 135 as sections 151 through 155, respectively; and

      (3) by inserting after part A the following new part:

‘PART B--TRANSFER OF AUCTIONABLE FREQUENCIES.

‘SEC. 111. DEFINITIONS.

    ‘As used in this part:

      ‘(1) The term ‘allocation’ means an entry in the National Table of Frequency Allocations of a given frequency band for the purpose of its use by one or more radiocommunication services.

      ‘(2) The term ‘assignment’ means an authorization given to a station licensee to use specific frequencies or channels.

      ‘(3) The term ‘the 1934 Act’ means the Communications Act of 1934 (47 U.S.C. 151 et seq.).

‘SEC. 112. NATIONAL SPECTRUM ALLOCATION PLANNING.

    ‘The Assistant Secretary and the Chairman of the Commission shall meet, at least biannually, to conduct joint spectrum planning with respect to the following issues:

      ‘(1) the extent to which licenses for spectrum use can be issued pursuant to section 309(j) of the 1934 Act to increase Federal revenues;

      ‘(2) the future spectrum requirements for public and private uses, including State and local government public safety agencies;

      ‘(3) the spectrum allocation actions necessary to accommodate those uses; and

      ‘(4) actions necessary to promote the efficient use of the spectrum, including spectrum management techniques to promote increased shared use of the spectrum that does not cause harmful interference as a means of increasing commercial access.

‘SEC. 113. IDENTIFICATION OF REALLOCABLE FREQUENCIES.

    ‘(a) IDENTIFICATION REQUIRED- The Secretary shall, within 18 months after the date of the enactment of the Omnibus Budget Reconciliation Act of 1993, prepare and submit to the President and the Congress a report identifying and recommending for reallocation bands of frequencies--

      ‘(1) that are allocated on a primary basis for Federal Government use;

      ‘(2) that are not required for the present or identifiable future needs of the Federal Government;

      ‘(3) that can feasibly be made available, as of the date of submission of the report or at any time during the next 15 years, for use under the 1934 Act (other than for Federal Government stations under section 305 of the 1934 Act);

      ‘(4) the transfer of which (from Federal Government use) will not result in costs to the Federal Government, or losses of services or benefits to the public, that are excessive in relation to the benefits to the public that may be provided by non-Federal licensees; and

      ‘(5) that are most likely to have the greatest potential for productive uses and public benefits under the 1934 Act if allocated for non-Federal use.

    ‘(b) MINIMUM AMOUNT OF SPECTRUM RECOMMENDED-

      ‘(1) IN GENERAL- In accordance with the provisions of this section, the Secretary shall recommend for reallocation, for use other than by Federal Government stations under section 305 of the 1934 Act (47 U.S.C. 305), bands of frequencies that in the aggregate span not less than 200 megahertz, that are located below 5 gigahertz, and that meet the criteria specified in paragraphs (1) through (5) of subsection (a). Such bands of frequencies shall include bands of frequencies, located below 3 gigahertz, that span in the aggregate not less than 100 megahertz.

      ‘(2) MIXED USES PERMITTED TO BE COUNTED- Bands of frequencies which a report of the Secretary under subsection (a) or (d)(1) recommends be partially retained for use by Federal Government stations, but which are also recommended to be reallocated to be made available under the 1934 Act for use by non-Federal stations, may be counted toward the minimum spectrum required by paragraph (1) of this subsection, except that--

        ‘(A) the bands of frequencies counted under this paragraph may not count toward more than one-half of the minimums required by paragraph (1) of this subsection;

        ‘(B) a band of frequencies may not be counted under this paragraph unless the assignments of the band to Federal Government stations under section 305 of the 1934 Act (47 U.S.C. 305) are limited by geographic area, by time, or by other means so as to guarantee that the potential use to be made by such Federal Government stations is substantially less (as measured by geographic area, time, or otherwise) than the potential use to be made by non-Federal stations; and

        ‘(C) the operational sharing permitted under this paragraph shall be subject to the interference regulations prescribed by the Commission pursuant to section 305(a) of the 1934 Act and to coordination procedures that the Commission and the Secretary shall jointly establish and implement to ensure against harmful interference.

    ‘(c) CRITERIA FOR IDENTIFICATION-

      ‘(1) NEEDS OF THE FEDERAL GOVERNMENT- In determining whether a band of frequencies meets the criteria specified in subsection (a)(2), the Secretary shall--

        ‘(A) consider whether the band of frequencies is used to provide a communications service that is or could be available from a commercial provider or other vendor;

        ‘(B) seek to promote--

          ‘(i) the maximum practicable reliance on commercially available substitutes;

          ‘(ii) the sharing of frequencies (as permitted under subsection (b)(2));

          ‘(iii) the development and use of new communications technologies; and

          ‘(iv) the use of nonradiating communications systems where practicable; and

        ‘(C) seek to avoid--

          ‘(i) serious degradation of Federal Government services and operations;

          ‘(ii) excessive costs to the Federal Government and users of Federal Government services; and

          ‘(iii) excessive disruption of existing use of Federal Government frequencies by amateur radio licensees.

      ‘(2) FEASIBILITY OF USE- In determining whether a frequency band meets the criteria specified in subsection (a)(3), the Secretary shall--

        ‘(A) assume that the frequency will be assigned by the Commission under section 303 of the 1934 Act (47 U.S.C. 303) within 15 years;

        ‘(B) assume reasonable rates of scientific progress and growth of demand for telecommunications services;

        ‘(C) seek to include frequencies which can be used to stimulate the development of new technologies; and

        ‘(D) consider the immediate and recurring costs to reestablish services displaced by the reallocation of spectrum.

      ‘(3) ANALYSIS OF BENEFITS- In determining whether a band of frequencies meets the criteria specified in subsection (a)(5), the Secretary shall consider--

        ‘(A) the extent to which equipment is or will be available that is capable of utilizing the band;

        ‘(B) the proximity of frequencies that are already assigned for commercial or other non-Federal use;

        ‘(C) the extent to which, in general, commercial users could share the frequency with amateur radio licensees; and

        ‘(D) the activities of foreign governments in making frequencies available for experimentation or commercial assignments in order to support their domestic manufacturers of equipment.

      ‘(4) POWER AGENCY FREQUENCIES-

        ‘(A) APPLICABILITY OF CRITERIA- The criteria specified by subsection (a) shall be deemed not to be met for any purpose under this part with regard to any frequency assignment to, or any frequency assignment used by, a Federal power agency for the purpose of withdrawing that assignment.

        ‘(B) MIXED USE ELIGIBILITY- The frequencies assigned to any Federal power agency may only be eligible for mixed use under subsection (b)(2) in geographically separate areas, but in those cases where a frequency is to be shared by an affected Federal power agency and a non-Federal user, such use by the non-Federal user shall not cause harmful interference to the affected Federal power agency or adversely affect the reliability of its power system.

        ‘(C) DEFINITION- As used in this paragraph, the term ‘Federal power agency’ means the Tennessee Valley Authority, the Bonneville Power Administration, the Western Area Power Administration, the Southwestern Power Administration, the Southeastern Power Administration, or the Alaska Power Administration.

      ‘(5) LIMITATION ON REALLOCATION- None of the frequencies recommended for reallocation in the reports required by this subsection shall have been recommended, prior to the date of enactment of the Omnibus Budget Reconciliation Act of 1993, for reallocation to non-Federal use by international agreement.

    ‘(d) PROCEDURE FOR IDENTIFICATION OF REALLOCABLE BANDS OF FREQUENCIES-

      ‘(1) SUBMISSION OF PRELIMINARY IDENTIFICATION TO CONGRESS- Within 6 months after the date of the enactment of the Omnibus Budget Reconciliation Act of 1993, the Secretary shall prepare, make publicly available, and submit to the President, the Congress, and the Commission a report which makes a preliminary identification of reallocable bands of frequencies which meet the criteria established by this section.

      ‘(2) PUBLIC COMMENT- The Secretary shall provide interested persons with the opportunity to submit, within 90 days after the date of its publication, written comment on the preliminary report required by paragraph (1). The Secretary shall immediately transmit a copy of any such comment to the Commission.

      ‘(3) COMMENT AND RECOMMENDATIONS FROM COMMISSION- The Commission shall, within 90 days after the conclusion of the period for comment provided pursuant to paragraph (2), submit to the Secretary the Commission’s analysis of such comments and the Commission’s recommendations for responses to such comments, together with such other comments and recommendations as the Commission deems appropriate.

      ‘(4) DIRECT DISCUSSIONS- The Secretary shall encourage and provide opportunity for direct discussions among commercial representatives and Federal Government users of the spectrum to aid the Secretary in determining which frequencies to recommend for reallocation. The Secretary shall provide notice to the public and the Commission of any such discussions, including the name or names of any businesses or other persons represented in such discussions. A representative of the Commission (and of the Secretary at the election of the Secretary) shall be permitted to attend any such discussions. The Secretary shall provide the public and the Commission with an opportunity to comment on the results of any such discussions prior to the submission of the final report required by subsection (a).

    ‘(e) TIMETABLE FOR REALLOCATION AND LIMITATION-

      ‘(1) TIMETABLE REQUIRED- The Secretary shall, as part of the reports required by subsections (a) and (d)(1), include a timetable that recommends effective dates by which the President shall withdraw or limit assignments of the frequencies specified in such reports.

      ‘(2) EXPEDITED REALLOCATION-

        ‘(A) REQUIRED REALLOCATION- The Secretary shall, as part of the report required by subsection (d)(1), specifically identify and recommend for immediate reallocation bands of frequencies that in the aggregate span not less than 50 megahertz, that meet the criteria described in subsection (a), and that can be made available for reallocation immediately upon issuance of the report required by subsection (d)(1). Such bands of frequencies shall include bands of frequencies, located below 3 gigahertz, that in the aggregate span not less than 25 megahertz .

        ‘(B) PERMITTED REALLOCATION- The Secretary may, as part of such report, identify and recommend bands of frequencies for immediate reallocation for a mixed use pursuant to subsection (b)(2), but such bands of frequencies may not count toward the minimums required by subparagraph (A).

      ‘(3) DELAYED EFFECTIVE DATES- In setting the recommended delayed effective dates, the Secretary shall--

        ‘(A) consider the need to reallocate bands of frequencies as early as possible, taking into account the requirements of paragraphs (1) and (2) of section 115(b);

        ‘(B) be based on the useful remaining life of equipment that has been purchased or contracted for to operate on identified frequencies;

        ‘(C) consider the need to coordinate frequency use with other nations; and

        ‘(D) take into account the relationship between the costs to the Federal Government of changing to different frequencies and the benefits that may be obtained from commercial and other non-Federal uses of the reassigned frequencies.

‘SEC. 114. WITHDRAWAL OR LIMITATION OF ASSIGNMENT TO FEDERAL GOVERNMENT STATIONS.

    ‘(a) IN GENERAL- The President shall--

      ‘(1) within 6 months after receipt of a report by the Secretary under subsection (a) or (d)(1) of section 113, withdraw the assignment to a Federal Government station of any frequency which the report recommends for immediate reallocation;

      ‘(2) within either such 6-month period, limit the assignment to a Federal Government station of any frequency which the report recommends be made immediately available for mixed use under section 113(b)(2);

      ‘(3) by the delayed effective date recommended by the Secretary under section 113(e) (except as provided in subsection (b)(4) of this section), withdraw or limit the assignment to a Federal Government station of any frequency which the report recommends be reallocated or made available for mixed use on such delayed effective date;

      ‘(4) assign or reassign other frequencies to Federal Government stations as necessary to adjust to such withdrawal or limitation of assignments; and

      ‘(5) transmit a notice and description to the Commission and each House of Congress of the actions taken under this subsection.

    ‘(b) EXCEPTIONS-

      ‘(1) AUTHORITY TO SUBSTITUTE- If the President determines that a circumstance described in paragraph (2) exists, the President--

        ‘(A) may substitute an alternative frequency or frequencies for the frequency that is subject to such determination and withdraw (or limit) the assignment of that alternative frequency in the manner required by subsection (a); and

        ‘(B) shall submit a statement of the reasons for taking the action described in subparagraph (A) to the Commission, Committee on Energy and Commerce of the House of Representatives, and the Committee on Commerce, Science, and Transportation of the Senate.

      ‘(2) GROUNDS FOR SUBSTITUTION- For purposes of paragraph (1), the following circumstances are described in this paragraph:

        ‘(A) the reassignment would seriously jeopardize the national defense interests of the United States;

        ‘(B) the frequency proposed for reassignment is uniquely suited to meeting important governmental needs;

        ‘(C) the reassignment would seriously jeopardize public health or safety;

        ‘(D) the reassignment will result in costs to the Federal Government that are excessive in relation to the benefits that may be obtained from commercial or other non-Federal uses of the reassigned frequency; or

        ‘(E) the reassignment will disrupt the existing use of a Federal Government band of frequencies by amateur radio licensees.

      ‘(3) CRITERIA FOR SUBSTITUTED FREQUENCIES- For purposes of paragraph (1), a frequency may not be substituted for a frequency identified and recommended by the report of the Secretary under section 113(a) unless the substituted frequency also meets each of the criteria specified by section 113(a).

      ‘(4) DELAYS IN IMPLEMENTATION- If the President determines that any action cannot be completed by the delayed effective date recommended by the Secretary pursuant to section 113(e), or that such an action by such date would result in a frequency being unused as a consequence of the Commission’s plan under section 115, the President may--

        ‘(A) withdraw or limit the assignment to Federal Government stations on a later date that is consistent with such plan, except that the President shall notify each committee specified in paragraph (1)(B) and the Commission of the reason that withdrawal or limitation at a later date is required; or

        ‘(B) substitute alternative frequencies pursuant to the provisions of this subsection.

‘SEC. 115. DISTRIBUTION OF FREQUENCIES BY THE COMMISSION.

    ‘(a) ALLOCATION AND ASSIGNMENT OF IMMEDIATELY AVAILABLE FREQUENCIES- With respect to the frequencies made available for immediate reallocation pursuant to section 113(e)(2), the Commission, not later than 18 months after the date of enactment of the Omnibus Budget Reconciliation Act of 1993, shall issue regulations to allocate such frequencies and shall propose regulations to assign such frequencies.

    ‘(b) ALLOCATION AND ASSIGNMENT OF REMAINING AVAILABLE FREQUENCIES- With respect to the frequencies made available for reallocation pursuant to section 113(e)(3), the Commission shall, not later than 1 year after receipt of the report required by section 113(a), prepare, submit to the President and the Congress, and implement, a plan for the allocation and assignment under the 1934 Act of such frequencies. Such plan shall--

      ‘(1) not propose the immediate allocation and assignment of all such frequencies but, taking into account the timetable recommended by the Secretary pursuant to section 113(e), shall propose--

        ‘(A) gradually to allocate and assign the frequencies remaining, after making the reservation required by subparagraph (B), over the course of 10 years beginning on the date of submission of such plan; and

        ‘(B) to reserve a significant portion of such frequencies for allocation and assignment beginning after the end of such 10-year period;

      ‘(2) contain appropriate provisions to ensure--

        ‘(A) the availability of frequencies for new technologies and services in accordance with the policies of section 7 of the 1934 Act (47 U.S.C. 157);

        ‘(B) the availability of frequencies to stimulate the development of such technologies; and

        ‘(C) the safety of life and property in accordance with the policies of section 1 of the 1934 Act (47 U.S.C. 151);

      ‘(3) address (A) the feasibility of reallocating portions of the spectrum from current commercial and other non-Federal uses to provide for more efficient use of the spectrum, and (B) innovation and marketplace developments that may affect the relative efficiencies of different spectrum allocations;

      ‘(4) not prevent the Commission from allocating frequencies, and assigning licenses to use frequencies, not included in the plan; and

      ‘(5) not preclude the Commission from making changes to the plan in future proceedings.

‘SEC. 116. AUTHORITY TO RECOVER REASSIGNED FREQUENCIES.

    ‘(a) AUTHORITY OF PRESIDENT- Subsequent to the withdrawal of assignment to Federal Government stations pursuant to section 114, the President may reclaim reassigned frequencies for reassignment to Federal Government stations in accordance with this section.

    ‘(b) PROCEDURE FOR RECLAIMING FREQUENCIES-

      ‘(1) UNALLOCATED FREQUENCIES- If the frequencies to be reclaimed have not been allocated or assigned by the Commission pursuant to the 1934 Act, the President shall follow the procedures for substitution of frequencies established by section 114(b) of this part.

      ‘(2) ALLOCATED FREQUENCIES- If the frequencies to be reclaimed have been allocated or assigned by the Commission, the President shall follow the procedures for substitution of frequencies established by section 114(b) of this part, except that the statement required by section 114(b)(1)(B) shall include--

        ‘(A) a timetable to accommodate an orderly transition for licensees to obtain new frequencies and equipment necessary for its utilization; and

        ‘(B) an estimate of the cost of displacing spectrum users licensed by the Commission.

    ‘(c) COSTS OF RECLAIMING FREQUENCIES- The Federal Government shall bear all costs of reclaiming frequencies pursuant to this section, including the cost of equipment which is rendered unusable, the cost of relocating operations to a different frequency, and any other costs that are directly attributable to the reclaiming of the frequency pursuant to this section, and there are authorized to be appropriated such sums as may be necessary to carry out the purposes of this section.

    ‘(d) EFFECTIVE DATE OF RECLAIMED FREQUENCIES- The Commission shall not withdraw licenses for any reclaimed frequencies until the end of the fiscal year following the fiscal year in which a statement under section 114(b)(1)(B) pertaining to such frequencies is received by the Commission.

    ‘(e) EFFECT ON OTHER LAW- Nothing in this section shall be construed to limit or otherwise affect the authority of the President under section 706 of the 1934 Act (47 U.S.C. 606).

‘SEC. 117. EXISTING ALLOCATION AND TRANSFER AUTHORITY RETAINED.

    ‘(a) ADDITIONAL REALLOCATION- Nothing in this part prevents or limits additional reallocation of spectrum from the Federal Government to other users.

    ‘(b) IMPLEMENTATION OF NEW TECHNOLOGIES AND SERVICES- Notwithstanding any other provision of this part--

      ‘(1) the Secretary may, consistent with section 104(e) of this Act, at any time allow frequencies allocated on a primary basis for Federal Government use to be used by non-Federal licensees on a mixed-use basis for the purpose of facilitating the prompt implementation of new technologies or services and for other purposes; and

      ‘(2) the Commission shall make any allocation and licensing decisions with respect to such frequencies in a timely manner and in no event later than the date required by section 7 of the 1934 Act.’.

    (b) CONFORMING AMENDMENT TO ENSURE COLLECTION OF FCC FEES- Section 104 of the National Telecommunications and Information Administration Organization Act (47 U.S.C. 903) is amended by adding at the end the following new subsection:

    ‘(e) PROOF OF COMPLIANCE WITH FCC LICENSING REQUIREMENTS-

      ‘(1) AMENDMENT TO MANUAL REQUIRED- Within 90 days after the date of enactment of this subsection, the Secretary and the NTIA shall amend the spectrum management document described in subsection (a) to require that--

        ‘(A) no person or entity (other than an agency or instrumentality of the United States) shall be permitted, after 1 year after such date of enactment, to operate a radio station utilizing a frequency that is authorized for the use of government stations pursuant to section 103(b)(2)(A) of this Act for any non-government application unless such person or entity has submitted to the NTIA proof, in a form prescribed by such manual, that such person or entity has obtained a license from the Commission; and

        ‘(B) no person or entity (other than an agency or instrumentality of the United States) shall be permitted, after 1 year after such date of enactment, to utilize a radio station belonging to the United States for any non-government application unless such person or entity has submitted to the NTIA proof, in a form prescribed by such manual, that such person or entity has obtained a license from the Commission.

      ‘(2) RETENTION OF FORMS- The NTIA shall maintain on file the proofs submitted under paragraph (1), or facsimiles thereof.

      ‘(3) CERTIFICATION- Within 1 year after the date of enactment of this subsection, the Secretary and the NTIA shall certify to the Committee on Energy and Commerce of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate that--

        ‘(A) the amendments required by paragraph (1) have been accomplished; and

        ‘(B) the requirements of subparagraphs (A) and (B) of such paragraph are being enforced.’.

SEC. 6002. AUTHORITY TO USE COMPETITIVE BIDDING.

    (a) USE OF COMPETITIVE BIDDING- Section 309 of the Communications Act of 1934 (47 U.S.C. 309) is amended by adding at the end the following new subsection:

    ‘(j) USE OF COMPETITIVE BIDDING-

      ‘(1) GENERAL AUTHORITY- If mutually exclusive applications are accepted for filing for any initial license or construction permit which will involve a use of the electromagnetic spectrum described in paragraph (2), then the Commission shall have the authority, subject to paragraph (10), to grant such license or permit to a qualified applicant through the use of a system of competitive bidding that meets the requirements of this subsection.

      ‘(2) USES TO WHICH BIDDING MAY APPLY- A use of the electromagnetic spectrum is described in this paragraph if the Commission determines that--

        ‘(A) the principal use of such spectrum will involve, or is reasonably likely to involve, the licensee receiving compensation from subscribers in return for which the licensee--

          ‘(i) enables those subscribers to receive communications signals that are transmitted utilizing frequencies on which the licensee is licensed to operate; or

          ‘(ii) enables those subscribers to transmit directly communications signals utilizing frequencies on which the licensee is licensed to operate; and

        ‘(B) a system of competitive bidding will promote the objectives described in paragraph (3).

      ‘(3) DESIGN OF SYSTEMS OF COMPETITIVE BIDDING- For each class of licenses or permits that the Commission grants through the use of a competitive bidding system, the Commission shall, by regulation, establish a competitive bidding methodology. The Commission shall seek to design and test multiple alternative methodologies under appropriate circumstances. In identifying classes of licenses and permits to be issued by competitive bidding, in specifying eligibility and other characteristics of such licenses and permits, and in designing the methodologies for use under this subsection, the Commission shall include safeguards to protect the public interest in the use of the spectrum and shall seek to promote the purposes specified in section 1 of this Act and the following objectives:

        ‘(A) the development and rapid deployment of new technologies, products, and services for the benefit of the public, including those residing in rural areas, without administrative or judicial delays;

        ‘(B) promoting economic opportunity and competition and ensuring that new and innovative technologies are readily accessible to the American people by avoiding excessive concentration of licenses and by disseminating licenses among a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by members of minority groups and women;

        ‘(C) recovery for the public of a portion of the value of the public spectrum resource made available for commercial use and avoidance of unjust enrichment through the methods employed to award uses of that resource; and

        ‘(D) efficient and intensive use of the electromagnetic spectrum.

      ‘(4) CONTENTS OF REGULATIONS- In prescribing regulations pursuant to paragraph (3), the Commission shall--

        ‘(A) consider alternative payment schedules and methods of calculation, including lump sums or guaranteed installment payments, with or without royalty payments, or other schedules or methods that promote the objectives described in paragraph (3)(B), and combinations of such schedules and methods;

        ‘(B) include performance requirements, such as appropriate deadlines and penalties for performance failures, to ensure prompt delivery of service to rural areas, to prevent stockpiling or warehousing of spectrum by licensees or permittees, and to promote investment in and rapid deployment of new technologies and services;

        ‘(C) consistent with the public interest, convenience, and necessity, the purposes of this Act, and the characteristics of the proposed service, prescribe area designations and bandwidth assignments that promote (i) an equitable distribution of licenses and services among geographic areas, (ii) economic opportunity for a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by members of minority groups and women, and (iii) investment in and rapid deployment of new technologies and services;

        ‘(D) ensure that small businesses, rural telephone companies, and businesses owned by members of minority groups and women are given the opportunity to participate in the provision of spectrum-based services, and, for such purposes, consider the use of tax certificates, bidding preferences, and other procedures; and

        ‘(E) require such transfer disclosures and antitrafficking restrictions and payment schedules as may be necessary to prevent unjust enrichment as a result of the methods employed to issue licenses and permits.

      ‘(5) BIDDER AND LICENSEE QUALIFICATION- No person shall be permitted to participate in a system of competitive bidding pursuant to this subsection unless such bidder submits such information and assurances as the Commission may require to demonstrate that such bidder’s application is acceptable for filing. No license shall be granted to an applicant selected pursuant to this subsection unless the Commission determines that the applicant is qualified pursuant to subsection (a) and sections 308(b) and 310. Consistent with the objectives described in paragraph (3), the Commission shall, by regulation, prescribe expedited procedures consistent with the procedures authorized by subsection (i)(2) for the resolution of any substantial and material issues of fact concerning qualifications.

      ‘(6) RULES OF CONSTRUCTION- Nothing in this subsection, or in the use of competitive bidding, shall--

        ‘(A) alter spectrum allocation criteria and procedures established by the other provisions of this Act;

        ‘(B) limit or otherwise affect the requirements of subsection (h) of this section, section 301, 304, 307, 310, or 706, or any other provision of this Act (other than subsections (d)(2) and (e) of this section);

        ‘(C) diminish the authority of the Commission under the other provisions of this Act to regulate or reclaim spectrum licenses;

        ‘(D) be construed to convey any rights, including any expectation of renewal of a license, that differ from the rights that apply to other licenses within the same service that were not issued pursuant to this subsection;

        ‘(E) be construed to relieve the Commission of the obligation in the public interest to continue to use engineering solutions, negotiation, threshold qualifications, service regulations, and other means in order to avoid mutual exclusivity in application and licensing proceedings;

        ‘(F) be construed to prohibit the Commission from issuing nationwide, regional, or local licenses or permits;

        ‘(G) be construed to prevent the Commission from awarding licenses to those persons who make significant contributions to the development of a new telecommunications service or technology; or

        ‘(H) be construed to relieve any applicant for a license or permit of the obligation to pay charges imposed pursuant to section 8 of this Act.

      ‘(7) CONSIDERATION OF REVENUES IN PUBLIC INTEREST DETERMINATIONS-

        ‘(A) CONSIDERATION PROHIBITED- In making a decision pursuant to section 303(c) to assign a band of frequencies to a use for which licenses or permits will be issued pursuant to this subsection, and in prescribing regulations pursuant to paragraph (4)(C) of this subsection, the Commission may not base a finding of public interest, convenience, and necessity on the expectation of Federal revenues from the use of a system of competitive bidding under this subsection.

        ‘(B) CONSIDERATION LIMITED- In prescribing regulations pursuant to paragraph (4)(A) of this subsection, the Commission may not base a finding of public interest, convenience, and necessity solely or predominantly on the expectation of Federal revenues from the use of a system of competitive bidding under this subsection.

        ‘(C) CONSIDERATION OF DEMAND FOR SPECTRUM NOT AFFECTED- Nothing in this paragraph shall be construed to prevent the Commission from continuing to consider consumer demand for spectrum-based services.

      ‘(8) TREATMENT OF REVENUES-

        ‘(A) GENERAL RULE- Except as provided in subparagraph (B), all proceeds from the use of a competitive bidding system under this subsection shall be deposited in the Treasury in accordance with chapter 33 of title 31, United States Code.

        ‘(B) RETENTION OF REVENUES- Notwithstanding subparagraph (A), the salaries and expenses account of the Commission shall retain as an offsetting collection such sums as may be necessary from such proceeds for the costs of developing and implementing the program required by this subsection. Such offsetting collections shall be available for obligation subject to the terms and conditions of the receiving appropriations account, and shall be deposited in such accounts on a quarterly basis. Any funds appropriated to the Commission for fiscal years 1994 through 1998 for the purpose of assigning licenses using random selection under subsection (i) shall be used by the Commission to implement this subsection.

      ‘(9) USE OF FORMER GOVERNMENT SPECTRUM- The Commission shall, not later than 5 years after the date of enactment of this subsection, issue licenses and permits pursuant to this subsection for the use of bands of frequencies that--

        ‘(A) in the aggregate span not less than 10 megahertz; and

        ‘(B) have been reassigned from Government use pursuant to part B of the National Telecommunications and Information Administration Organization Act.

      ‘(10) AUTHORITY CONTINGENT ON AVAILABILITY OF ADDITIONAL SPECTRUM-

        ‘(A) INITIAL CONDITIONS- The Commission’s authority to issue licenses or permits under this subsection shall not take effect unless--

          ‘(i) the Secretary of Commerce has submitted to the Commission the report required by section 113(d)(1) of the National Telecommunications and Information Administration Organization Act;

          ‘(ii) such report recommends for immediate reallocation bands of frequencies that, in the aggregate, span not less than 50 megahertz;

          ‘(iii) such bands of frequencies meet the criteria required by section 113(a) of such Act; and

          ‘(iv) the Commission has completed the rulemaking required by section 332(c)(1)(D) of this Act.

        ‘(B) SUBSEQUENT CONDITIONS- The Commission’s authority to issue licenses or permits under this subsection on and after 2 years after the date of the enactment of this subsection shall cease to be effective if--

          ‘(i) the Secretary of Commerce has failed to submit the report required by section 113(a) of the National Telecommunications and Information Administration Organization Act;

          ‘(ii) the President has failed to withdraw and limit assignments of frequencies as required by paragraphs (1) and (2) of section 114(a) of such Act;

          ‘(iii) the Commission has failed to issue the regulations required by section 115(a) of such Act;

          ‘(iv) the Commission has failed to complete and submit to Congress, not later than 18 months after the date of enactment of this subsection, a study of current and future spectrum needs of State and local government public safety agencies through the year 2010, and a specific plan to ensure that adequate frequencies are made available to public safety licensees; or

          ‘(v) the Commission has failed under section 332(c)(3) to grant or deny within the time required by such section any petition that a State has filed within 90 days after the date of enactment of this subsection;

        until such failure has been corrected.

      ‘(11) TERMINATION- The authority of the Commission to grant a license or permit under this subsection shall expire September 30, 1998.

      ‘(12) EVALUATION- Not later than September 30, 1997, the Commission shall conduct a public inquiry and submit to the Congress a report--

        ‘(A) containing a statement of the revenues obtained, and a projection of the future revenues, from the use of competitive bidding systems under this subsection;

        ‘(B) describing the methodologies established by the Commission pursuant to paragraphs (3) and (4);

        ‘(C) comparing the relative advantages and disadvantages of such methodologies in terms of attaining the objectives described in such paragraphs;

        ‘(D) evaluating whether and to what extent--

          ‘(i) competitive bidding significantly improved the efficiency and effectiveness of the process for granting radio spectrum licenses;

          ‘(ii) competitive bidding facilitated the introduction of new spectrum-based technologies and the entry of new companies into the telecommunications market;

          ‘(iii) competitive bidding methodologies have secured prompt delivery of service to rural areas and have adequately addressed the needs of rural spectrum users; and

          ‘(iv) small businesses, rural telephone companies, and businesses owned by members of minority groups and women were able to participate successfully in the competitive bidding process; and

        ‘(E) recommending any statutory changes that are needed to improve the competitive bidding process.’.

    (b) CONFORMING AMENDMENTS-

      (1) LIMITATIONS ON LOTTERIES- Section 309 of the Communications Act of 1934 (47 U.S.C. 309) is further amended--

        (A) by striking subsection (i)(1) and inserting the following:

    ‘(i) RANDOM SELECTION-

      ‘(1) GENERAL AUTHORITY- If--

        ‘(A) there is more than one application for any initial license or construction permit which will involve a use of the electromagnetic spectrum; and

        ‘(B) the Commission has determined that the use is not described in subsection (j)(2)(A);

      then the Commission shall have the authority to grant such license or permit to a qualified applicant through the use of a system of random selection.’; and

        (B) in paragraph (4), by adding at the end the following new subparagraph:

    ‘(C) Not later than 180 days after the date of enactment of this subparagraph, the Commission shall prescribe such transfer disclosures and antitrafficking restrictions and payment schedules as are necessary to prevent the unjust enrichment of recipients of licenses or permits as a result of the methods employed to issue licenses under this subsection.’.

      (2) REGULATORY TREATMENT TO ENHANCE AUCTION VALUE OF SPECTRUM LICENSES-

        (A) AMENDMENT- Section 332 of the Communications Act of 1934 (47 U.S.C. 332) is amended--

          (i) by striking ‘PRIVATE LAND’ from the heading of the section;

          (ii) by striking ‘land’ each place it appears in subsections (a) and (b); and

          (iii) by striking subsection (c) and inserting the following:

    ‘(c) REGULATORY TREATMENT OF MOBILE SERVICES-

      ‘(1) COMMON CARRIER TREATMENT OF COMMERCIAL MOBILE SERVICES- (A) A person engaged in the provision of a service that is a commercial mobile service shall, insofar as such person is so engaged, be treated as a common carrier for purposes of this Act, except for such provisions of title II as the Commission may specify by regulation as inapplicable to that service or person. In prescribing or amending any such regulation, the Commission may not specify any provision of section 201, 202, or 208, and may specify any other provision only if the Commission determines that--

        ‘(i) enforcement of such provision is not necessary in order to ensure that the charges, practices, classifications, or regulations for or in connection with that service are just and reasonable and are not unjustly or unreasonably discriminatory;

        ‘(ii) enforcement of such provision is not necessary for the protection of consumers; and

        ‘(iii) specifying such provision is consistent with the public interest.

      ‘(B) Upon reasonable request of any person providing commercial mobile service, the Commission shall order a common carrier to establish physical connections with such service pursuant to the provisions of section 201 of this Act. Except to the extent that the Commission is required to respond to such a request, this subparagraph shall not be construed as a limitation or expansion of the Commission’s authority to order interconnection pursuant to this Act.

      ‘(C) The Commission shall review competitive market conditions with respect to commercial mobile services and shall include in its annual report an analysis of those conditions. Such analysis shall include an identification of the number of competitors in various commercial mobile services, an analysis of whether or not there is effective competition, an analysis of whether any of such competitors have a dominant share of the market for such services, and a statement of whether additional providers or classes of providers in those services would be likely to enhance competition. As a part of making a determination with respect to the public interest under subparagraph (A)(iii), the Commission shall consider whether the proposed regulation (or amendment thereof) will promote competitive market conditions, including the extent to which such regulation (or amendment) will enhance competition among providers of commercial mobile services. If the Commission determines that such regulation (or amendment) will promote competition among providers of commercial mobile services, such determination may be the basis for a Commission finding that such regulation (or amendment) is in the public interest.

      ‘(D) The Commission shall, not later than 180 days after the date of enactment of this subparagraph, complete a rulemaking required to implement this paragraph with respect to the licensing of personal communications services, including making any determinations required by subparagraph (C).

      ‘(2) NON-COMMON CARRIER TREATMENT OF PRIVATE MOBILE SERVICES- A person engaged in the provision of a service that is a private mobile service shall not, insofar as such person is so engaged, be treated as a common carrier for any purpose under this Act. A common carrier (other than a person that was treated as a provider of a private land mobile service prior to the enactment of the Omnibus Budget Reconciliation Act of 1993) shall not provide any dispatch service on any frequency allocated for common carrier service, except to the extent such dispatch service is provided on stations licensed in the domestic public land mobile radio service before January 1, 1982. The Commission may by regulation terminate, in whole or in part, the prohibition contained in the preceding sentence if the Commission determines that such termination will serve the public interest.

      ‘(3) STATE PREEMPTION- (A) Notwithstanding sections 2(b) and 221(b), no State or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service or any private mobile service, except that this paragraph shall not prohibit a State from regulating the other terms and conditions of commercial mobile services. Nothing in this subparagraph shall exempt providers of commercial mobile services (where such services are a substitute for land line telephone exchange service for a substantial portion of the communications within such State) from requirements imposed by a State commission on all providers of telecommunications services necessary to ensure the universal availability of telecommunications service at affordable rates. Notwithstanding the first sentence of this subparagraph, a State may petition the Commission for authority to regulate the rates for any commercial mobile service and the Commission shall grant such petition if such State demonstrates that--

        ‘(i) market conditions with respect to such services fail to protect subscribers adequately from unjust and unreasonable rates or rates that are unjustly or unreasonably discriminatory; or

        ‘(ii) such market conditions exist and such service is a replacement for land line telephone exchange service for a substantial portion of the telephone land line exchange service within such State.

      The Commission shall provide reasonable opportunity for public comment in response to such petition, and shall, within 9 months after the date of its submission, grant or deny such petition. If the Commission grants such petition, the Commission shall authorize the State to exercise under State law such authority over rates, for such periods of time, as the Commission deems necessary to ensure that such rates are just and reasonable and not unjustly or unreasonably discriminatory.

      ‘(B) If a State has in effect on June 1, 1993, any regulation concerning the rates for any commercial mobile service offered in such State on such date, such State may, no later than 1 year after the date of enactment of the Omnibus Budget Reconciliation Act of 1993, petition the Commission requesting that the State be authorized to continue exercising authority over such rates. If a State files such a petition, the State’s existing regulation shall, notwithstanding subparagraph (A), remain in effect until the Commission completes all action (including any reconsideration) on such petition. The Commission shall review such petition in accordance with the procedures established in such subparagraph, shall complete all action (including any reconsideration) within 12 months after such petition is filed, and shall grant such petition if the State satisfies the showing required under subparagraph (A)(i) or (A)(ii). If the Commission grants such petition, the Commission shall authorize the State to exercise under State law such authority over rates, for such period of time, as the Commission deems necessary to ensure that such rates are just and reasonable and not unjustly or unreasonably discriminatory. After a reasonable period of time, as determined by the Commission, has elapsed from the issuance of an order under subparagraph (A) or this subparagraph, any interested party may petition the Commission for an order that the exercise of authority by a State pursuant to such subparagraph is no longer necessary to ensure that the rates for commercial mobile services are just and reasonable and not unjustly or unreasonably discriminatory. The Commission shall provide reasonable opportunity for public comment in response to such petition, and shall, within 9 months after the date of its submission, grant or deny such petition in whole or in part.

      ‘(4) REGULATORY TREATMENT OF COMMUNICATIONS SATELLITE CORPORATION- Nothing in this subsection shall be construed to alter or affect the regulatory treatment required by title IV of the Communications Satellite Act of 1962 of the corporation authorized by title III of such Act.

      ‘(5) SPACE SEGMENT CAPACITY- Nothing in this section shall prohibit the Commission from continuing to determine whether the provision of space segment capacity by satellite systems to providers of commercial mobile services shall be treated as common carriage.

      ‘(6) FOREIGN OWNERSHIP- The Commission, upon a petition for waiver filed within 6 months after the date of enactment of the Omnibus Budget Reconciliation Act of 1993, may waive the application of section 310(b) to any foreign ownership that lawfully existed before May 24, 1993, of any provider of a private land mobile service that will be treated as a common carrier as a result of the enactment of the Omnibus Budget Reconciliation Act of 1993, but only upon the following conditions:

        ‘(A) The extent of foreign ownership interest shall not be increased above the extent which existed on May 24, 1993.

        ‘(B) Such waiver shall not permit the subsequent transfer of ownership to any other person in violation of section 310(b).

    ‘(d) DEFINITIONS- For purposes of this section--

      ‘(1) the term ‘commercial mobile service’ means any mobile service (as defined in section 3(n)) that is provided for profit and makes interconnected service available (A) to the public or (B) to such classes of eligible users as to be effectively available to a substantial portion of the public, as specified by regulation by the Commission;

      ‘(2) the term ‘interconnected service’ means service that is interconnected with the public switched network (as such terms are defined by regulation by the Commission) or service for which a request for interconnection is pending pursuant to subsection (c)(1)(B); and

      ‘(3) the term ‘private mobile service’ means any mobile service (as defined in section 3(n)) that is not a commercial mobile service or the functional equivalent of a commercial mobile service, as specified by regulation by the Commission.’.

        (B) ADDITIONAL CONFORMING AMENDMENTS- (i) Section 2(b) of the Communications Act of 1934 (47 U.S.C. 152(b)) is amended by inserting ‘and section 332,’ after ‘inclusive,’.

        (ii) Section 3 of the Communications Act of 1934 (47 U.S.C. 153) is amended--

          (I) in subsection (n) by inserting ‘(1)’ after ‘and includes’, and by inserting before the period at the end the following: ‘, (2) a mobile service which provides a regularly interacting group of base, mobile, portable, and associated control and relay stations (whether licensed on an individual, cooperative, or multiple basis) for private one-way or two-way land mobile radio communications by eligible users over designated areas of operation, and (3) any service for which a license is required in a personal communications service established pursuant to the proceeding entitled ‘Amendment to the Commission’s Rules to Establish New Personal Communications Services’ (GEN Docket No. 90-314; ET Docket No. 92-100), or any successor proceeding’; and

          (II) by striking subsection (gg).

    (c) EFFECTIVE DATES-

      (1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section are effective on the date of enactment of this Act.

      (2) EFFECTIVE DATES OF MOBILE SERVICE AMENDMENTS- The amendments made by subsection (b)(2) shall be effective on the date of enactment of this Act, except that--

        (A) section 332(c)(3)(A) of the Communications Act of 1934, as amended by such subsection, shall take effect 1 year after such date of enactment; and

        (B) any private land mobile service provided by any person before such date of enactment, and any paging service utilizing frequencies allocated as of January 1, 1993, for private land mobile services, shall, except for purposes of section 332(c)(6) of such Act, be treated as a private mobile service until 3 years after such date of enactment.

    (d) DEADLINES FOR COMMISSION ACTION-

      (1) GENERAL RULEMAKING- The Federal Communications Commission shall prescribe regulations to implement section 309(j) of the Communications Act of 1934 (as added by this section) within 210 days after the date of enactment of this Act.

      (2) PCS ORDERS AND LICENSING- The Commission shall--

        (A) within 180 days after such date of enactment, issue a final report and order (i) in the matter entitled ‘Redevelopment of Spectrum to Encourage Innovation in the Use of New Telecommunications Technologies’ (ET Docket No. 92-9); and (ii) in the matter entitled ‘Amendment of the Commission’s Rules to Establish New Personal Communications Services’ (GEN Docket No. 90-314; ET Docket No. 92-100); and

        (B) within 270 days after such date of enactment, commence issuing licenses and permits in the personal communications service.

      (3) TRANSITIONAL RULEMAKING FOR MOBILE SERVICE PROVIDERS- Within 1 year after the date of enactment of this Act, the Federal Communications Commission--

        (A) shall issue such modifications or terminations of the regulations applicable (before the date of enactment of this Act) to private land mobile services as are necessary to implement the amendments made by subsection (b)(2);

        (B) in the regulations that will, after such date of enactment, apply to a service that was a private land mobile service and that becomes a commercial mobile service (as a consequence of such amendments), shall make such other modifications or terminations as may be necessary and practical to assure that licensees in such service are subjected to technical requirements that are comparable to the technical requirements that apply to licensees that are providers of substantially similar common carrier services;

        (C) shall issue such other regulations as are necessary to implement the amendments made by subsection (b)(2); and

        (D) shall include, in such regulations, modifications, and terminations, such provisions as are necessary to provide for an orderly transition.

    (e) SPECIAL RULE- The Federal Communications Commission shall not issue any license or permit pursuant to section 309(i) of the Communications Act of 1934 (47 U.S.C. 309(i)) after the date of enactment of this Act unless--

      (1) the Commission has made the determination required by paragraph (1)(B) of such section (as added by this section); or

      (2) one or more applications for such license were accepted for filing by the Commission before July 26, 1993.

SEC. 6003. ADDITIONAL COMMUNICATIONS FEES.

    (a) REGULATORY FEES-

      (1) AMENDMENT- Title I of the Communications Act of 1934 is amended by inserting after section 8 the following new section:

‘SEC. 9. REGULATORY FEES.

    ‘(a) GENERAL AUTHORITY- The Commission, in accordance with this section, shall assess and collect regulatory fees to recover the costs of the following regulatory activities of the Commission: enforcement activities, policy and rulemaking activities, user information services, and international activities.

    ‘(b) Establishment and Adjustment of Regulatory Fees-

      ‘(1) IN GENERAL- The fees assessed under subsection (a) shall--

        ‘(A) be derived by determining the full-time equivalent number of employees performing the activities described in subsection (a) within the Private Radio Bureau, Mass Media Bureau, Common Carrier Bureau, and other offices of the Commission, adjusted to take into account factors that are reasonably related to the benefits provided to the payor of the fee by the Commission’s activities, including such factors as service area coverage, shared use versus exclusive use, and other factors that the Commission determines are necessary in the public interest;

        ‘(B) be established at amounts that will result in collection, during each fiscal year, of an amount that can reasonably be expected to equal the amount appropriated for such fiscal year for the performance of the activities described in subsection (a); and

        ‘(C) until adjusted or amended by the Commission pursuant to paragraph (2) or (3), be the fees established by the Schedule of Regulatory Fees in subsection (g).

      ‘(2) MANDATORY ADJUSTMENT OF SCHEDULE- For any fiscal year after fiscal year 1994, the Commission shall, by rule, revise the Schedule of Regulatory Fees by proportionate increases or decreases to reflect, in accordance with paragraph (1)(B), changes in the amount appropriated for the performance of the activities described in subsection (a) for such fiscal year. Such proportionate increases or decreases shall--

        ‘(A) be adjusted to reflect, within the overall amounts described in appropriations Acts under the authority of paragraph (1)(A), unexpected increases or decreases in the number of licensees or units subject to payment of such fees; and

        ‘(B) be established at amounts that will result in collection of an aggregate amount of fees pursuant to this section that can reasonably be expected to equal the aggregate amount of fees that are required to be collected by appropriations Acts pursuant to paragraph (1)(B).

      Increases or decreases in fees made by adjustments pursuant to this paragraph shall not be subject to judicial review. In making adjustments pursuant to this paragraph the Commission may round such fees to the nearest $5 in the case of fees under $1,000, or to the nearest $25 in the case of fees of $1,000 or more.

      ‘(3) PERMITTED AMENDMENTS- In addition to the adjustments required by paragraph (2), the Commission shall, by regulation, amend the Schedule of Regulatory Fees if the Commission determines that the Schedule requires amendment to comply with the requirements of paragraph (1)(A). In making such amendments, the Commission shall add, delete, or reclassify services in the Schedule to reflect additions, deletions, or changes in the nature of its services as a consequence of Commission rulemaking proceedings or changes in law. Increases or decreases in fees made by amendments pursuant to this paragraph shall not be subject to judicial review.

      ‘(4) NOTICE TO CONGRESS- The Commission shall--

        ‘(A) transmit to the Congress notification of any adjustment made pursuant to paragraph (2) immediately upon the adoption of such adjustment; and

        ‘(B) transmit to the Congress notification of any amendment made pursuant to paragraph (3) not later than 90 days before the effective date of such amendment.

    ‘(c) ENFORCEMENT-

      ‘(1) PENALTIES FOR LATE PAYMENT- The Commission shall prescribe by regulation an additional charge which shall be assessed as a penalty for late payment of fees required by subsection (a) of this section. Such penalty shall be 25 percent of the amount of the fee which was not paid in a timely manner.

      ‘(2) DISMISSAL OF APPLICATIONS FOR FILINGS- The Commission may dismiss any application or other filing for failure to pay in a timely manner any fee or penalty under this section.

      ‘(3) REVOCATIONS- In addition to or in lieu of the penalties and dismissals authorized by paragraphs (1) and (2), the Commission may revoke any instrument of authorization held by any entity that has failed to make payment of a regulatory fee assessed pursuant to this section. Such revocation action may be taken by the Commission after notice of the Commission’s intent to take such action is sent to the licensee by registered mail, return receipt requested, at the licensee’s last known address. The notice will provide the licensee at least 30 days to either pay the fee or show cause why the fee does not apply to the licensee or should otherwise be waived or payment deferred. A hearing is not required under this subsection unless the licensee’s response presents a substantial and material question of fact. In any case where a hearing is conducted pursuant to this section, the hearing shall be based on written evidence only, and the burden of proceeding with the introduction of evidence and the burden of proof shall be on the licensee. Unless the licensee substantially prevails in the hearing, the Commission may assess the licensee for the costs of such hearing. Any Commission order adopted pursuant to this subsection shall determine the amount due, if any, and provide the licensee with at least 30 days to pay that amount or have its authorization revoked. No order of revocation under this subsection shall become final until the licensee has exhausted its right to judicial review of such order under section 402(b)(5) of this title.

    ‘(d) WAIVER, REDUCTION, AND DEFERMENT- The Commission may waive, reduce, or defer payment of a fee in any specific instance for good cause shown, where such action would promote the public interest.

    ‘(e) DEPOSIT OF COLLECTIONS- Moneys received from fees established under this section shall be deposited as an offsetting collection in, and credited to, the account providing appropriations to carry out the functions of the Commission.

    ‘(f) REGULATIONS-

      ‘(1) IN GENERAL- The Commission shall prescribe appropriate rules and regulations to carry out the provisions of this section. Such rules and regulations shall permit payment by installments in the case of fees in large amounts, and in the case of fees in small amounts, shall require the payment of the fee in advance for a number of years not to exceed the term of the license held by the payor.

    ‘(g) SCHEDULE- Until amended by the Commission pursuant to subsection (b), the Schedule of Regulatory Fees which the Federal Communications Commission shall, subject to subsection (a)(2), assess and collect shall be as follows:

‘Schedule of Regulatory Fees
-------------------------------------------------------------------------------------------------------------
 Bureau/Category                                                                     Annual Regulatory Fee 
-------------------------------------------------------------------------------------------------------------
   Land Mobile (above 470 MHz, Base Station and SMRS) (47 C.F.R. Part 90)              $16                   
   Microwave (47 C.F.R. Part 94)                                                       16                    
   Interactive Video Data Service (47 C.F.R. Part )                                    16                    
   Shared use services (per license unless otherwise noted)                            7                     
   Amateur vanity call-signs                                                           7                     
   Class D Daytime                                                                     250                   
   Class A Fulltime                                                                    900                   
   Class B Fulltime                                                                    500                   
   Class C Fulltime                                                                    200                   
   Construction permits                                                                100                   
   Classes C, C1, C2, B                                                                900                   
   Classes A, B1, C3                                                                   600                   
   Construction permits                                                                500                   
   Markets 1 thru 10                                                                   18,000                
   Markets 11 thru 25                                                                  16,000                
   Markets 26 thru 50                                                                  12,000                
   Markets 51 thru 100                                                                 8,000                 
   Remaining Markets                                                                   5,000                 
   Construction permits                                                                4,000                 
   Markets 1 thru 10                                                                   14,400                
   Markets 11 thru 25                                                                  12,800                
   Markets 26 thru 50                                                                  9,600                 
   Markets 51 thru 100                                                                 6,400                 
   Remaining Markets                                                                   4,000                 
   Construction permits                                                                3,200                 
   Low Power TV, TV Translator, and TV Booster (47 C.F.R. Part 74)                     135                   
   Broadcast Auxiliary (47 C.F.R. Part 74)                                             25                    
   International (HF) Broadcast (47 C.F.R. Part 73)                                    200                   
   Cable Antenna Relay Service (47 C.F.R. Part 78)                                     220                   
   Cable Television System (per 1,000 subscribers) (47 C.F.R. Part 76)                 370                   
   Cellular Radio (per 1,000 subscribers) (47 C.F.R. Part 22)                          60                    
   Personal Communications (per 1,000 subscribers) (47 C.F.R.)                         60                    
   Space Station (per operational station in geosynchronous orbit) (47 C.F.R. Part 25) 65,000                
   Space Station (per system in low-earth orbit) (47 C.F.R. Part 25)                   90,000                
   Public Mobile (per 1,000 subscribers) (47 C.F.R. Part 22)                           60                    
   Domestic Public Fixed (per call sign) (47 C.F.R. Part 21)                           55                    
   International Public Fixed (per call sign) (47 C.F.R. Part 23)                      110                   
   VSAT and equivalent C-Band antennas (per 100 antennas)                              6                     
   Mobile satellite earth stations (per 100 antennas)                                  6                     
   Less than 9 meters (per 100 antennas)                                               6                     
   Transmit/Receive and Transmit Only (per meter)                                      85                    
   Receive only (per meter)                                                            55                    
   Inter-Exchange Carrier (per 1,000 presubscribed access lines)                       60                    
   Local Exchange Carrier (per 1,000 access lines)                                     60                    
   Competitive access provider (per 1,000 subscribers)                                 60                    
   International circuits (per 100 active 64KB circuit or equivalent)                  220                   
-------------------------------------------------------------------------------------------------------------
    ‘(h) EXCEPTIONS- The charges established under this section shall not be applicable to (1) governmental entities or nonprofit entities; or (2) to amateur radio operator licenses under part 97 of the Commission’s regulations (47 C.F.R. Part 97).

    ‘(i) ACCOUNTING SYSTEM- The Commission shall develop accounting systems necessary to making the adjustments authorized by subsection (b)(3). In the Commission’s annual report, the Commission shall prepare an analysis of its progress in developing such systems and shall afford interested persons the opportunity to submit comments concerning the allocation of the costs of performing the functions described in subsection (a) among the services in the Schedule.’.

      (2) CONFORMING AMENDMENTS- Section 8 of the Communications Act of 1934 (47 U.S.C. 158) is amended--

        (A) by striking the heading of such section and inserting ‘APPLICATION FEES’;

        (B) by striking ‘charges’ each place it appears and inserting ‘application fees’;

        (C) by striking ‘charge’ each place it appears in subsection (c) and inserting ‘application fee’;

        (D) by striking out ‘Schedule of Charges’ each place it appears and inserting ‘Schedule of Application Fees’; and

        (E) in the schedule contained in subsection (g)--

          (i) by striking ‘SCHEDULE OF CHARGES’ and inserting ‘SCHEDULE OF APPLICATION FEES’;

          (ii) by striking ‘charge’ and ‘Charges’ each place they appear and inserting ‘application fee’ and ‘Application fees’, respectively; and

          (iii) by striking ‘CHARGES’ and inserting ‘APPLICATION FEES’.

    (b) USE OF REGULATORY FEES- Section 6 of the Communications Act of 1934 (47 U.S.C. 156) is amended by adding at the end the following new subsection:

    ‘(d) Of the sum appropriated in any fiscal year under this section, a portion, in an amount determined under section 9(b), shall be derived from fees authorized by section 9.’.

TITLE VII--NUCLEAR REGULATORY COMMISSION PROVISIONS

SEC. 7001. NUCLEAR REGULATORY COMMISSION ANNUAL CHARGES.

    Section 6101(a)(3) of the Omnibus Budget Reconciliation Act of 1990 (42 U.S.C. 2214(a)(3)) is amended by striking ‘September 30, 1995’ and inserting ‘September 30, 1998’.

TITLE VIII--PATENT AND TRADEMARK FEES

SEC. 8001. PATENT AND TRADEMARK FEES.

    Section 10101 of the Omnibus Budget Reconciliation Act of 1990 (35 U.S.C. 41 note) is amended--

      (1) in subsection (a) by striking ‘1995’ and inserting ‘1998’;

      (2) in subsection (b)(2) by striking ‘1995’ and inserting ‘1998’; and

      (3) in subsection (c)--

        (A) by striking ‘through 1995’ and inserting ‘through 1998’; and

        (B) by adding at the end the following:

      ‘(6) $111,000,000 in fiscal year 1996.

      ‘(7) $115,000,000 in fiscal year 1997.

      ‘(8) $119,000,000 in fiscal year 1998.’.

TITLE IX--MERCHANT MARINE PROVISIONS

SEC. 9001. EXTENSION OF VESSEL TONNAGE DUTIES.

    (a) EXTENSION OF DUTIES- Section 36 of the Act of August 5, 1909 (36 Stat. 111; 46 App. U.S.C. 121), is amended by--

      (1) striking ‘and 1995,’ each place it appears and inserting ‘1995, 1996, 1997, 1998,’;

      (2) striking ‘place,’ and inserting ‘place;’; and

      (3) striking ‘port, not, however, to include vessels in distress or not engaged in trade’ and inserting ‘port. However, neither duty shall be imposed on vessels in distress or not engaged in trade’.

    (b) CONFORMING AMENDMENT- The Act of March 8, 1910 (36 Stat. 234; 46 App. U.S.C. 132), is amended by striking ‘and 1995,’ and inserting ‘1995, 1996, 1997, and 1998,’.

    (c) TECHNICAL CORRECTION-

      (1) CORRECTION- Section 10402(a) of the Omnibus Budget Reconciliation Act of 1990 (104 Stat. 1388-398) is amended by striking ‘in the second paragraph’.

      (2) EFFECTIVE DATE- The amendment made by paragraph (1) shall be effective on and after November 5, 1990.

TITLE X--NATURAL RESOURCE PROVISIONS

Subtitle A--Recreation Use Fees

SEC. 10001. ADMISSION FEES.

    (a) ADDITIONAL AREAS- (1) The first sentence of section 4(a) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(a)) is amended by inserting after ‘National Park System’ the phrase ‘or National Conservation Areas’ and by inserting after ‘National Recreation Areas’ the following ‘, National Monuments, National Volcanic Monuments, National Scenic Areas, and no more than 21 areas of concentrated public use’.

    (2) Section 4(a) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(a)) is amended by inserting the following after the first sentence: ‘For purposes of this subsection, the term ‘area of concentrated public use’ means an area that is managed primarily for outdoor recreation purposes, contains at least one major recreation attraction, where facilities and services necessary to accommodate heavy public use are provided, and public access to the area is provided in such a manner that admission fees can be efficiently collected at one or more centralized locations.’.

    (b) GOLDEN AGE PASSPORT- The second sentence of section 4(a)(4) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(a)(4)) is amended by striking ‘without charge,’ and inserting in lieu thereof ‘for a one-time charge of $10,’.

SEC. 10002. RECREATION USER FEES.

    (a) IN GENERAL- (1) The first sentence of section 4(b) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(b)) is amended by striking out ‘toilet facilities, picnic tables, or boat ramps’ and all that follows down through the end of the sentence and inserting in lieu thereof: ‘or toilet facilities, nor shall there be any such charge solely for the use of picnic tables: Provided, That in no event shall there be a charge for the use of any campground not having a majority of the following: tent or trailer spaces, picnic tables, drinking water, access road, refuse containers, toilet facilities, personal collection of the fee by an employee or agent of the Federal agency operating the facility, reasonable visitor protection, and simple devices for containing a campfire (where campfires are permitted). For the purposes of this subsection, the term ‘specialized outdoor recreation sites’ includes, but is not limited to, campgrounds, swimming sites, boat launch facilities, and managed parking lots.’.

    (2) Section 4(b) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(b)) is amended by striking the second sentence.

    (b) COSTS OF COLLECTION- Section 4(i)(1) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(i)) is amended by inserting ‘(A)’ after ‘(1)’ and by adding the following at the end of paragraph (1):

    ‘(B) Notwithstanding subparagraph (A), in any fiscal year, the Secretary of Agriculture and the Secretary of the Interior may withhold from the special account established under subparagraph (A) such portion of all receipts collected from fees imposed under this section in such fiscal year as the Secretary of Agriculture or the Secretary of the Interior, as appropriate, determines to be equal to the fee collection costs for that fiscal year: Provided, That such costs shall not exceed 15 percent of all receipts collected from fees imposed under this section in that fiscal year. The amounts so withheld shall be retained by the Secretary of Agriculture or the Secretary of the Interior, as appropriate, and shall be available, without further appropriation, for expenditure by the Secretary concerned to cover fee collection costs in that fiscal year. The Secretary concerned shall deposit into the special account established pursuant to subparagraph (A) any amounts so retained which remain unexpended and unobligated at the end of the fiscal year. For the purposes of this subparagraph, for any fiscal year, the term ‘fee collection costs’ means those costs for personnel and infrastructure directly associated with the collection of fees imposed under this section.’.

    (c) COMMERCIAL TOUR USE FEES- Section 4 of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-6a) is amended by adding the following new subsection at the end thereof:

    ‘(n)(1) In the case of each unit of the National Park System for which an admission fee is charged under this section, the Secretary of the Interior shall establish, by October 1, 1993, a commercial tour use fee to be imposed on each vehicle entering the unit for the purpose of providing commercial tour services within the unit. Fee revenue derived from such commercial tour use fees shall be deposited into the special account established under subsection (i).

    ‘(2) The Secretary shall establish the amount of fee per entry as follows:

      ‘(A) $25 per vehicle with a passenger capacity of 25 persons or less, and

      ‘(B) $50 per vehicle with a passenger capacity of more than 25 persons.

    ‘(3) The Secretary may periodically make reasonable adjustments to the commercial tour use fee imposed under this subsection.

    ‘(4) The commercial tour use fee imposed under this subsection shall not apply to either of the following:

      ‘(A) Any vehicle transporting organized school groups or outings conducted for educational purposes by schools or other bona fide educational institutions.

      ‘(B) Any vehicle entering a park system unit pursuant to a contract issued under the Act of October 9, 1965 (16 U.S.C. 20-20g) entitled ‘An Act relating to the establishment of concession policies in the areas administered by the National Park Service and for other purposes.’.

    ‘(5)(A) The provisions of this subsection shall apply to aircraft entering the airspace of units of the National Park System identified in section 2(b) and section 3 of Public Law 100-91 for the specific purpose of providing commercial tour services within the airspace of such units.

    ‘(B) The provisions of this subsection shall also apply to aircraft entering the airspace of other units of the National Park System for the specific purpose of providing commercial tour services if the Secretary determines that the level of such services is equal to or greater than the level at those units of the National Park System specified in subparagraph (A).’.

    (d) NON-FEDERAL GOLDEN EAGLE PASSPORT SALES- Section 4(a)(1)(A) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(a)(1)(A)) is amended by inserting ‘(i)’ after ‘(A)’ and by adding at the end thereof the following new clause:

    ‘(ii) The Secretary of the Interior and the Secretary of Agriculture may authorize businesses, nonprofit entities, and other organizations to sell and collect fees for the Golden Eagle Passport subject to such terms and conditions as the Secretaries may jointly prescribe. The Secretaries shall develop detailed guidelines for promotional advertising of non-Federal Golden Eagle Passport sales and shall monitor compliance with such guidelines. The Secretaries may authorize the sellers to withhold amounts up to, but not exceeding 8 percent of the gross fees collected from the sale of such passports as reimbursement for actual expenses of the sales. Receipts from such non-Federal sales of the Golden Eagle Passport shall be deposited into the special account established in subsection (i), to be allocated between the Secretary of the Interior and the Secretary of Agriculture in the same ratio as receipts from admission into Federal fee areas administered by the Secretary of Agriculture and the Secretary of the Interior pursuant to subsection (a).’.

    (e) CONFORMING AMENDMENT- Section 4(a)(1)(A) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(a)(1)(A)) is amended by striking the third sentence in its entirety and inserting in lieu thereof ‘The annual permit shall be valid for a period of 12 months from the date the annual fee is paid.’.

SEC. 10003. COMMUNICATION SITE FEES.

    Notwithstanding any other provision of law, for fiscal year 1994, the Secretary of Agriculture and the Secretary of the Interior shall assess and collect annual charges for the utilization of existing radio, television, and commercial telephone transmission communication sites located on Federal lands administered by the Forest Service and the Bureau of Land Management at a level 10 percent above the fee assessed and collected during fiscal year 1993. For a site located after the enactment of this Act, the charges for fiscal year 1994 shall be equal in amount to the charges assessed for a comparable new site located before the enactment of this Act, plus 10 percent.

Subtitle B--Hardrock Mining Claim Maintenance Fee

SEC. 10101. FEE.

    (a) CLAIM MAINTENANCE FEE- The holder of each unpatented mining claim, mill or tunnel site located pursuant to the Mining Laws of the United States, whether located before or after the enactment of this Act, shall pay to the Secretary of the Interior, on or before August 31 of each year, for years 1994 through 1998, a claim maintenance fee of $100 per claim. Such claim maintenance fee shall be in lieu of the assessment work requirement contained in the Mining Law of 1872 (30 U.S.C. 28-28e) and the related filing requirements contained in section 314 (a) and (c) of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1744 (a) and (c)).

    (b) TIME OF PAYMENT- The claim maintenance fee payable pursuant to subsection (a) for any assessment year shall be paid before the commencement of the assessment year, except that for the initial assessment year in which the location is made, the locator shall pay the claim maintenance fee at the time the location notice is recorded with the Bureau of Land Management. The location fee imposed under section 10102 shall be payable not later than 90 days after the date of location.

    (c) OIL SHALE CLAIMS SUBJECT TO CLAIM MAINTENANCE FEES UNDER ENERGY POLICY ACT OF 1992- This section shall not apply to any oil shale claims for which a fee is required to be paid under section 2511(e)(2) of the Energy Policy Act of 1992 (Public Law 102-486; 106 Stat. 3111; 30 U.S.C. 242).

    (d) WAIVER- (1) The claim maintenance fee required under this section may be waived for a claimant who certifies in writing to the Secretary that on the date the payment was due, the claimant and all related parties--

      (A) held not more than 10 mining claims, mill sites, or tunnel sites, or any combination thereof, on public lands; and

      (B) have performed assessment work required under the Mining Law of 1872 (30 U.S.C. 28-28e) to maintain the mining claims held by the claimant and such related parties for the assessment year ending on noon of September 1 of the calendar year in which payment of the claim maintenance fee was due.

    (2) For purposes of paragraph (1), with respect to any claimant, the term ‘related party’ means--

      (A) the spouse and dependent children (as defined in section 152 of the Internal Revenue Code of 1986), of the claimant; and

      (B) a person who controls, is controlled by, or is under common control with the claimant.

    For purposes of this section, the term control includes actual control, legal control, and the power to exercise control, through or by common directors, officers, stockholders, a voting trust, or a holding company or investment company, or any other means.

SEC. 10102. LOCATION FEE.

    Notwithstanding any other provision of law, for every unpatented mining claim, mill or tunnel site located after the date of enactment of this subtitle and before September 30, 1998, pursuant to the Mining Laws of the United States, the locator shall, at the time the location notice is recorded with the Bureau of Land Management, pay to the Secretary of the Interior a location fee, in addition to the claim maintenance fee required by section 10101, of $25.00 per claim.

SEC. 10103. CO-OWNERSHIP.

    The co-ownership provisions of the Mining Law of 1872 (30 U.S.C. 28) shall remain in effect, except that in applying such provisions, the annual claim maintenance fee required under this Act shall, where applicable, replace applicable assessment requirements and expenditures.

SEC. 10104. FAILURE TO PAY.

    Failure to pay the claim maintenance fee or the location fee as required by this subtitle shall conclusively constitute a forfeiture of the unpatented mining claim, mill or tunnel site by the claimant and the claim shall be deemed null and void by operation of law.

SEC. 10105. OTHER REQUIREMENTS.

    (a) FEDERAL LAND POLICY AND MANAGEMENT ACT REQUIREMENTS- Nothing in this subtitle shall change or modify the requirements of section 314(b) of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1744(b)), or the requirements of section 314(c) of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1744(c)) related to filings required by section 314(b), and such requirements shall remain in effect with respect to claims, and mill or tunnel sites for which fees are required to be paid under this section.

    (b) REVISED STATUTES SECTION 2324- The third sentence of section 2324 of the Revised Statutes (30 U.S.C. 28) is amended by inserting after ‘On each claim located after the tenth day of May, eighteen hundred and seventy-two,’ the following: ‘that is granted a waiver under section 10101 of the Omnibus Budget Reconciliation Act of 1993,’.

    (c) FEE ADJUSTMENTS- (1) The Secretary of the Interior shall adjust the fees required by this subtitle to reflect changes in the Consumer Price Index published by the Bureau of Labor Statistics of the Department of Labor every 5 years after the date of the enactment of this Act, or more frequently if the Secretary determines an adjustment to be reasonable.

    (2) The Secretary shall provide claimants notice of any adjustment made under this subsection not later than July 1 of any year in which the adjustment is made.

    (3) A fee adjustment under this subsection shall begin to apply the first assessment year which begins after adjustment is made.

SEC. 10106. REGULATIONS.

    The Secretary of the Interior shall promulgate rules and regulations to carry out the terms and conditions of this subtitle as soon as practicable after the date of the enactment of this subtitle.

Subtitle C--Mineral Receipts

SEC. 10201. AMENDMENT TO THE MINERAL LEASING ACT.

    Section 35 of the Mineral Leasing Act (30 U.S.C. 191) is amended as follows:

      (1) Delete the last sentence and redesignate the remaining language as subsection (a).

      (2) Amend subsection (a) by inserting ‘and, subject to the provisions of subsection (b),’ between the words ‘United States;’ and ‘50 per centum’.

      (3) Add a new subsection (b) as follows:

    ‘(b)(1) In calculating the amount to be paid to States during any fiscal year under this section or under any other provision of law requiring payment to a State of any revenues derived from the leasing of any onshore lands or interest in land owned by the United States for the production of the same types of minerals leasable under this Act or of geothermal steam, 50 percent of the portion of the enacted appropriation of the Department of the Interior and any other agency during the preceding fiscal year allocable to the administration of all laws providing for the leasing of any onshore lands or interest in land owned by the United States for the production of the same types of minerals leasable under this Act or of geothermal steam, and to enforcement of such laws, shall be deducted from the receipts derived under those laws in approximately equal amounts each month (subject to paragraph (4)) prior to the division and distribution of such receipts between the States and the United States.

    ‘(2) The proportion of the deduction provided in paragraph (1) allocable to each State shall be determined by dividing the monies disbursed to the State during the preceding fiscal year derived from onshore mineral leasing referred to in paragraph (1) in that State by the total money disbursed to States during the preceding fiscal year from such onshore mineral leasing in all States.

    ‘(3) In the event the deduction apportioned to any State under this subsection exceeds 50 percent of the Secretary of the Interior’s estimate of the amounts attributable to onshore mineral leasing referred to in paragraph (1) within that State during the preceding fiscal year, the deduction from receipts received from leases in that State shall be limited to such estimated amounts and the total amount to be deducted from such onshore mineral leasing receipts shall be reduced accordingly.

    ‘(4) If the amount otherwise deductible under this subsection in any month from the portion of receipts to be distributed to a State exceeds the amount payable to the State during that month, any amount exceeding the amount payable shall be carried forward and deducted from amounts payable to the State in subsequent months. If any amount remains to be carried forward at the end of the fiscal year, such amount shall not be deducted from any disbursements in any subsequent fiscal year.

    ‘(5) All deductions to be made pursuant to this subsection shall be made in full during the fiscal year in which such deductions were incurred.’.

SEC. 10202. CONFORMING AMENDMENTS.

    (a) MINERAL LEASING ACT FOR ACQUIRED LANDS- Section 6(a) of the Mineral Leasing Act for Acquired Lands (30 U.S.C. 355) is amended by striking ‘All receipts’ at the beginning of the first sentence and inserting the following: ‘Subject to the provisions of section 35(b) of the Mineral Leasing Act (30 U.S.C. 191(b)), all receipts’.

    (b) GEOTHERMAL STEAM ACT- Section 20 of the Geothermal Steam Act (30 U.S.C. 1019) is amended by striking ‘All moneys’ at the beginning thereof and inserting ‘Subject to the provisions of section 35(b) of the Mineral Leasing Act (30 U.S.C. 191(b)), all moneys’.

TITLE XI--CIVIL SERVICE AND POST OFFICE PROVISIONS

Subtitle A--Civil Service

SEC. 11001. DELAY IN COST-OF-LIVING ADJUSTMENTS IN FEDERAL EMPLOYEE RETIREMENT BENEFITS DURING FISCAL YEARS 1994, 1995, AND 1996.

    (a) APPLICABILITY- This section shall apply with respect to any cost-of-living increase scheduled to take effect, during fiscal year 1994, 1995, or 1996, under--

      (1) section 8340(b) or 8462(b) of title 5, United States Code;

      (2) section 826 or 858 of the Foreign Service Act of 1980; or

      (3) section 291 of the Central Intelligence Agency Retirement Act (50 U.S.C. 2131), as set forth in section 802 of the CIARDS Technical Corrections Act of 1992 (Public Law 102-496; 106 Stat. 3196).

    (b) DELAY IN EFFECTIVE DATE OF ADJUSTMENTS- A cost-of-living increase described in subsection (a) shall not take effect until the first day of the third calendar month after the date such increase would otherwise take effect.

    (c) RULE OF CONSTRUCTION- Nothing in this section shall be considered to affect any determination relating to eligibility for an annuity increase or the amount of the first increase in an annuity under section 8340 (b) or (c) or section 8462 (b) or (c) of title 5, United States Code, or comparable provisions of law.

SEC. 11002. PERMANENT ELIMINATION OF THE ALTERNATIVE-FORM-OF-ANNUITY OPTION EXCEPT FOR INDIVIDUALS WITH A CRITICAL MEDICAL CONDITION.

    (a) CIVIL SERVICE RETIREMENT SYSTEM; FEDERAL EMPLOYEES’ RETIREMENT SYSTEM- Sections 8343a and 8420a of title 5, United States Code, are each amended--

      (1) in subsection (a) by striking ‘an employee or Member may,’ and inserting ‘any employee or Member who has a life-threatening affliction or other critical medical condition may,’; and

      (2) by striking subsection (f).

    (b) FOREIGN SERVICE RETIREMENT AND DISABILITY SYSTEM- Section 807(e)(1) of the Foreign Service Act of 1980 (22 U.S.C. 4047(e)(1)) is amended by striking ‘a participant may,’ and inserting ‘any participant who has a life-threatening affliction or other critical medical condition may,’.

    (c) CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM- Section 294(a) of the Central Intelligence Agency Retirement Act (50 U.S.C. 2143(a)), as set forth in section 802 of the CIARDS Technical Corrections Act of 1992 (Public Law 102-496; 106 Stat. 3196), is amended by striking ‘a participant may,’ and inserting ‘any participant who has a life-threatening affliction or other critical medical condition may,’.

    (d) EFFECTIVE DATE- The amendments made by this section shall become effective on October 1, 1994, and shall apply with respect to any annuity commencing on or after that date.

SEC. 11003. APPLICATION OF MEDICARE PART B LIMITS TO PHYSICIANS’ SERVICES FURNISHED TO FEDERAL EMPLOYEE HEALTH BENEFITS ENROLLEES AGE 65 OR OLDER.

    (a) IN GENERAL- Section 8904(b) of title 5, United States Code, is amended--

      (1) in paragraph (1) by inserting ‘(A)’ after ‘(b)(1)’ and by adding at the end the following:

    ‘(B)(i) A plan, other than a prepayment plan described in section 8903(4), may not provide benefits, in the case of any retired enrolled individual who is age 65 or older and is not entitled to Medicare supplementary medical insurance benefits under part B of title XVIII of the Social Security Act (42 U.S.C. 1395j et seq.), to pay a charge imposed for physicians’ services (as defined in section 1848(j) of such Act, 42 U.S.C. 1395w-4(j)) which are covered for purposes of benefit payments under this chapter and under such part, to the extent that such charge exceeds the fee schedule amount under section 1848(a) of such Act (42 U.S.C. 1395w-4(a)).

    ‘(ii) Physicians and suppliers who have in force participation agreements with the Secretary of Health and Human Services consistent with section 1842(h)(1) of such Act (42 U.S.C. 1395u(h)(1)), whereby the participating provider accepts Medicare benefits (including allowable deductible and coinsurance amounts) as full payment for covered items and services shall accept equivalent benefit and enrollee cost-sharing under this chapter as full payment for services described in clause (i). Physicians and suppliers who are nonparticipating physicians and suppliers for purposes of part B of title XVIII of such Act shall not impose charges that exceed the limiting charge under section 1848(g) of such Act (42 U.S.C. 1395w-4(g)) with respect to services described in clause (i) provided to enrollees described in such clause. The Office of Personnel Management shall notify a physician or supplier who is found to have violated this clause and inform them of the requirements of this clause and sanctions for such a violation. The Office of Personnel Management shall notify the Secretary of Health and Human Services if a physician or supplier is found to knowingly and willfully violate this clause on a repeated basis and the Secretary of Health and Human Services may invoke appropriate sanctions in accordance with sections 1128A(a) and 1848(g)(1) of such Act (42 U.S.C. 1320a-7a(a), 1395w-4(g)(1)) and applicable regulations.

    ‘(C) If the Secretary of Health and Human Services determines that a violation of this subsection warrants excluding a provider from participation for a specified period under title XVIII of the Social Security Act, the Office shall enforce a corresponding exclusion of such provider for purposes of this chapter.’;

      (2) in paragraph (3)(B)--

        (A) by inserting ‘(i)’ after ‘includes’; and

        (B) by inserting before the period at the end the following: ‘, and (ii) the fee schedule amounts and limiting charges for physicians’ services established under section 1848 of such Act (42 U.S.C. 1395w-4) and the identity of participating physicians and suppliers who have in force agreements with such Secretary under section 1842(h) of such Act (42 U.S.C. 1395u(h))’; and

      (3) by adding at the end the following:

    ‘(4) The Director of the Office of Personnel Management shall enter into an arrangement with the Secretary of Health and Human Services, to be effective before the first day of the fifth month that begins before each contract year, under which--

      ‘(A) physicians and suppliers (whether or not participating) under the Medicare program will be notified of the requirements of paragraph (1)(B);

      ‘(B) enforcement procedures will be in place to carry out such paragraph (including enforcement of protections against overcharging of beneficiaries); and

      ‘(C) Medicare program information described in paragraph (3)(B)(ii) will be supplied to carriers under paragraph (3)(A).’.

    (b) EFFECTIVE DATE- The amendments made by subsection (a) shall apply with respect to contract years beginning on or after January 1, 1995.

SEC. 11004. FEDERAL EMPLOYEES’ SURVIVOR ANNUITY IMPROVEMENTS.

    (a) CIVIL SERVICE RETIREMENT SYSTEM-

      (1) REDUCTION FOR SPOUSAL ANNUITY- Section 8339(j) of title 5, United States Code, is amended--

        (A) in paragraph (3)--

          (i) in the second sentence by striking ‘, within such 2-year period,’; and

          (ii) by striking the fourth sentence and inserting the following: ‘The Office shall, by regulation, provide for payment of the deposit required under this paragraph by a reduction in the annuity of the employee or Member. The reduction shall, to the extent practicable, be designed so that the present value of the future reduction is actuarially equivalent to the deposit required under this paragraph, except that the total reductions in the annuity of an employee or Member to pay deposits required by the provisions of this paragraph, paragraph (5), or subsection (k)(2) shall not exceed 25 percent of the annuity computed under subsections (a) through (i), (n), and (q), including adjustments under section 8340. The reduction, which shall be effective on the same date as the election under this paragraph, shall be permanent and unaffected by any future termination of the entitlement of the former spouse. Such reduction shall be independent of and in addition to the reduction required under the first sentence of this paragraph.’; and

        (B) in paragraph (5)(C)--

          (i) in clause (ii) by striking ‘, within 2 years after the date of the remarriage or, if later, the death or remarriage of the former spouse (or of the last such surviving former spouse),’; and

          (ii) by amending clause (iii) to read as follows:

        ‘(iii) The Office shall, by regulation, provide for payment of the deposit required under clause (ii) by a reduction in the annuity of the employee or Member. The reduction shall, to the extent practicable, be designed so that the present value of the future reduction is actuarially equivalent to the deposit required under clause (ii), except that total reductions in the annuity of an employee or Member to pay deposits required by the provisions of this paragraph or paragraph (3) shall not exceed 25 percent of the annuity computed under subsections (a) through (i), (n), and (q), including adjustments under section 8340. The reduction required by this clause, which shall be effective on the same date as the election under clause (i), shall be permanent and unaffected by any future termination of the marriage. Such reduction shall be independent of and in addition to the reduction required under clause (i).’.

      (2) REDUCTION RELATING TO FORMER SPOUSE- Section 8339(k)(2) of title 5, United States Code, is amended--

        (A) in subparagraph (B)(ii) by striking ‘Within 2 years after the date of the marriage, the’ and inserting ‘The’; and

        (B) by amending subparagraph (C) to read as follows:

      ‘(C) The Office shall, by regulation, provide for payment of the deposit required under subparagraph (B)(ii) by a reduction in the annuity of the employee or Member. The reduction shall, to the extent practicable, be designed so that the present value of the future reduction is actuarially equivalent to the deposit required under subparagraph (B)(ii), except that total reductions in the annuity of an employee or Member to pay deposits required by this subsection or subsection (j)(3) shall not exceed 25 percent of the annuity computed under subsections (a) through (i), (n), and (q), including adjustments under section 8340. The reduction required by this subparagraph, which shall be effective on the same date as the election under subparagraph (A), shall be permanent and unaffected by any future termination of the marriage. Such reduction shall be independent of and in addition to the reduction required under subparagraph (A).’.

      (3) DEPOSITS- Section 8334(h) of title 5, United States Code, is amended by striking ‘and by section 8339(j)(5)(C) and the last sentence of section 8339(k)(2) of this title’.

    (b) FEDERAL EMPLOYEES’ RETIREMENT SYSTEM- Section 8418 of title 5, United States Code, is amended--

      (1) in subsection (a)(1) by striking ‘, before the expiration of the 2-year period involved,’; and

      (2) by amending subsection (b) to read as follows:

    ‘(b) The Office shall, by regulation, provide for payment of the deposit required under subsection (a) by a reduction in the annuity of the employee or Member. The reduction shall, to the extent practicable, be designed so that the present value of the future reduction is actuarially equivalent to the deposit required under subsection (a), except that the total reductions in the annuity of an employee or Member to pay deposits required by this section shall not exceed 25 percent of the annuity computed under section 8415 or section 8452, including adjustments under section 8462. The reduction required by this subsection, which shall be effective at the same time as the election under section 8416 (b) and (c) or section 8417(b), shall be permanent and unaffected by any future termination of the marriage or the entitlement of the former spouse. Such reduction shall be independent of and in addition to the reduction required under section 8416 (b) and (c) or section 8417(b).’.

    (c) EFFECTIVE DATE-

      (1) IN GENERAL- The amendments made by this section shall take effect on the first day of the first month beginning at least 30 days after the date of the enactment of this Act and shall apply to all deposits required under section 8339(j) (3) or (5), 8339(k)(2), or 8418 of title 5, United States Code, on which no payment has been made prior to such effective date.

      (2) PARTIAL DEPOSIT- For any deposit required under section 8339(j) (3) or (5), 8339(k)(2), or 8418 of title 5, United States Code, or section 4 (b) or (c) of the Civil Service Retirement Spouse Equity Act of 1984 (5 U.S.C. 8341 note) that has been partially, but not fully, paid before the effective date of this Act, the Office shall by regulation provide for determining the remaining portion of the deposit and for payment of the remaining portion of the deposit by a prospective reduction in the annuity of the employee or Member. The reduction shall be similar to the reductions provided pursuant to the amendments made under this section.

SEC. 11005. TEMPORARY EXTENSION AND MODIFICATION OF THE METHOD FOR DETERMINING GOVERNMENT CONTRIBUTIONS UNDER FEHBP IN THE ABSENCE OF A GOVERNMENT-WIDE INDEMNITY BENEFIT PLAN.

    Public Law 101-76 (5 U.S.C. 8906 note) is amended by striking the matter after the enacting clause and before paragraph (2) of subsection (a) and inserting the following:

    ‘That (a)(1) in the administration of chapter 89 of title 5, United States Code, for each of contract years 1990 through 1998 (inclusive), in order to compute the average subscription charges under section 8906(a) of such title for such contract years, the subscription charges in effect for the indemnity benefit plan on the beginning date of each such contract year--

      ‘(A) shall be deemed to be the subscription charges which were in effect for such plan on the beginning date of the preceding contract year as adjusted under paragraph (2); or

      ‘(B) if subparagraph (A) does not apply, shall be deemed to be--

        ‘(i) the subscription charges which were deemed under this Act to have been in effect for such plan with respect to the preceding contract year as adjusted under paragraph (2), except as provided in clause (ii); or

        ‘(ii) for each of contract years 1997 and 1998, the subscription charges which would be derived by applying the terms of clause (i), reduced by 1 percent.’.

Subtitle B--Postal Service

SEC. 11101. PAYMENTS TO BE MADE BY THE UNITED STATES POSTAL SERVICE.

    (a) RELATING TO CORRECTED CALCULATIONS FOR PAST RETIREMENT COLAS- In addition to any other payments required under section 8348(m) of title 5, United States Code, or any other provision of law, the United States Postal Service shall pay into the Civil Service Retirement and Disability Fund a total of $693,000,000, of which--

      (1) at least one-third shall be paid not later than September 30, 1996;

      (2) at least two-thirds shall be paid not later than September 30, 1997; and

      (3) any remaining balance shall be paid not later than September 30, 1998.

    (b) RELATING TO CORRECTED CALCULATIONS FOR PAST HEALTH BENEFITS- In addition to any other payments required under section 8906(g)(2) of title 5, United States Code, or any other provision of law, the United States Postal Service shall pay into the Employees Health Benefits Fund a total of $348,000,000, of which--

      (1) at least one-third shall be paid not later than September 30, 1996;

      (2) at least two-thirds shall be paid not later than September 30, 1997; and

      (3) any remaining balance shall be paid not later than September 30, 1998.

TITLE XII--VETERANS’ AFFAIRS PROVISIONS

SEC. 12001. SHORT TITLE.

    This title may be cited as the ‘Veterans Reconciliation Act of 1993’.

SEC. 12002. EXTENSION OF AUTHORITY TO REQUIRE THAT CERTAIN VETERANS AGREE TO MAKE COPAYMENTS IN EXCHANGE FOR RECEIVING HEALTH-CARE BENEFITS.

    (a) HOSPITAL AND MEDICAL CARE- Section 8013(e) of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508; 38 U.S.C. 1710 note) is amended--

      (1) by striking out ‘September 30, 1992’ in the first sentence and inserting in lieu thereof ‘September 30, 1998’; and

      (2) by striking out the second sentence.

    (b) OUTPATIENT MEDICATIONS- Section 1722A(c) of title 38, United States Code, is amended--

      (1) by striking out ‘September 30, 1992’ in the first sentence and inserting in lieu thereof ‘September 30, 1998’; and

      (2) by striking out the second sentence.

SEC. 12003. EXTENSION OF AUTHORITY FOR MEDICAL CARE COST RECOVERY.

    Section 1729(a)(2)(E) of title 38, United States Code, is amended by striking out ‘before August 1, 1994,’ and inserting in lieu thereof ‘before October 1, 1998,’.

SEC. 12004. EXTENSION OF CERTAIN INCOME VERIFICATION AUTHORITY.

    Section 5317(g) of title 38, United States Code, is amended by striking out ‘September 30, 1997’ and inserting in lieu thereof ‘September 30, 1998’.

SEC. 12005. EXTENSION OF LIMITATION ON PENSION FOR CERTAIN RECIPIENTS OF MEDICAID-COVERED NURSING HOME CARE.

    Section 5503(f)(7) of title 38, United States Code, is amended by striking out ‘September 30, 1997’ and inserting in lieu thereof ‘September 30, 1998’.

SEC. 12006. EXTENSION OF PROCEDURES APPLICABLE TO LIQUIDATION SALES ON DEFAULTED HOME LOANS GUARANTEED BY THE DEPARTMENT OF VETERANS AFFAIRS.

    (a) INCLUSION OF LOSSES- Section 3732(c) of title 38, United States Code, is amended--

      (1) in paragraph (1)(C), by striking out ‘resale,’ and inserting in lieu thereof ‘resale (including losses sustained on the resale of the property),’; and

      (2) in paragraph (11), by striking out ‘shall’ and all that follows and inserting in lieu thereof ‘shall apply to loans closed before October 1, 1998.’.

    (b) EFFECTIVE DATE- The amendments made by this section shall become effective October 1, 1993.

SEC. 12007. LOAN FEES.

    (a) INCREASE IN HOME LOAN FEES- Subsection (a) of section 3729 of title 38, United States Code, is amended--

      (1) by striking out paragraph (6); and

      (2) by inserting after paragraph (3) the following:

    ‘(4) With respect to a loan closed after September 30, 1993, and before October 1, 1998, for which a fee is collected under paragraph (1), the amount of such fee, as computed under paragraph (2), shall be increased by 0.75 percent of the total loan amount other than in the case of a loan described in subparagraph (A), (D)(ii), or (E) of paragraph (2).’.

    (b) FEE FOR MULTIPLE USE OF HOUSING ASSISTANCE- Subsection (a) of such section, as amended by subsection (a) of this section, is amended by adding at the end the following:

    ‘(5)(A) Except as provided in subparagraph (B) of this paragraph, notwithstanding paragraphs (2) and (4) of this subsection, after a veteran has obtained an initial loan pursuant to section 3710 of this title, the amount of such fee with respect to any additional loan obtained under this chapter by such veteran shall be 3 percent of the total loan amount.

    ‘(B) Subparagraph (A) of this paragraph does not apply with respect to (i) a loan obtained by a veteran with a downpayment described in paragraph (2)(B), (2)(C), or (2)(D)(iii) of this subsection, and (ii) loans described in paragraph (2)(E) of this subsection.

    ‘(C) This paragraph applies with respect to a loan closed after September 30, 1993, and before October 1, 1998.’.

    (c) CONFORMING AMENDMENT- Paragraph (2) of subsection (a) of such section is amended by striking out ‘paragraph (6)’ and inserting in lieu thereof ‘paragraphs (4) and (5)’.

SEC. 12008. POLICY REGARDING COST-OF-LIVING ADJUSTMENT IN COMPENSATION RATES.

    (a) POLICY- The fiscal year 1994 cost-of-living adjustments in the rates of and limitations for compensation payable under chapter 11 of title 38, United States Code, and of dependency and indemnity compensation payable under chapter 13 of such title, except as provided in subsection (b) of this section, will be no more than a percentage equal to the percentage by which benefit amounts payable under title II of the Social Security Act (42 U.S.C. 401 et seq.) are increased effective December 1, 1993, as a result of a determination under section 215(i) of such Act (42 U.S.C. 415(i)), with all increased monthly rates and limitations (other than increased rates or limitations equal to a whole dollar amount) rounded down to the next lower dollar.

    (b) LIMITATION ON FISCAL YEAR 1994 COST-OF-LIVING ADJUSTMENT FOR CERTAIN DIC RECIPIENTS- (1) During fiscal year 1994, the amount of any increase in any of the rates of dependency and indemnity compensation in effect under section 1311(a)(3) of title 38, United States Code, will not exceed 50 percent of the new law increase, rounded down (if not an even dollar amount) to the next lower dollar.

    (2) For purposes of paragraph (1), the new law increase is the amount by which the rate of dependency and indemnity compensation provided for recipients under section 1311(a)(1) of such title is increased for fiscal year 1994.

SEC. 12009. LIMITATION REGARDING COST-OF-LIVING ADJUSTMENTS FOR MONTGOMERY GI BILL BENEFITS.

    (a) BENEFITS PAYABLE UNDER CHAPTER 30- Section 3015(g) of title 38, United States Code, is amended--

      (1) by striking out ‘(1)’ and all that follows through ‘(2)’ and by redesignating subparagraphs (A) and (B) as paragraphs (1) and (2), respectively; and

      (2) in paragraph (2), as redesignated by paragraph (1) of this subsection, by striking out ‘subparagraph (A)’ and inserting in lieu thereof ‘paragraph (1)’.

    (b) BENEFITS PAYABLE UNDER SELECTED RESERVE PROGRAM- Section 2131(b)(2) of title 10, United States Code, is amended--

      (1) by striking out ‘(A)’ the first place it appears and all that follows through ‘(B) With respect to’ and inserting in lieu thereof ‘With respect to’;

      (2) by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively; and

      (3) in subparagraph (B), as redesignated by paragraph (2) of this subsection, by striking out ‘clause (i)’ and inserting in lieu thereof ‘subparagraph (A)’.

    (c) LIMITATION- The fiscal year 1995 cost-of-living adjustments in the rates of educational assistance payable under chapter 30 of title 38, United States Code, and under chapter 106 of title 10, United States Code, shall be the percentage equal to 50 percent of the percentage by which such assistance would be increased under section 3015(g) of title 38, and under section 2131(b)(2) of title 10, United States Code, respectively, but for this section.

    (d) TECHNICAL AMENDMENTS- (1) Section 301(c) of Public Law 102-568 (106 Stat. 4326) is amended by striking out ‘Section 3015(f)’ and inserting in lieu thereof ‘Section 3015(g) (as redesignated by section 307(a)(1))’.

    (2) Section 307(a) of such Public Law (106 Stat. 4328) is amended by striking out ‘(as amended by section 301)’.

    (3) The amendments made by paragraphs (1) and (2) shall apply as if included in the enactment of Public Law 102-568.

TITLE XIII--REVENUE, HEALTH CARE, HUMAN RESOURCES, INCOME SECURITY, CUSTOMS AND TRADE, FOOD STAMP PROGRAM, AND TIMBER SALE PROVISIONS

CHAPTER 1--REVENUE PROVISIONS

SEC. 13001. SHORT TITLE; ETC.

    (a) SHORT TITLE- This chapter may be cited as the ‘Revenue Reconciliation Act of 1993’.

    (b) AMENDMENT TO 1986 CODE- Except as otherwise expressly provided, whenever in this chapter an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

    (c) SECTION 15 NOT TO APPLY- Except in the case of the amendments made by section 13221 (relating to corporate rate increase), no amendment made by this chapter shall be treated as a change in a rate of tax for purposes of section 15 of the Internal Revenue Code of 1986.

    (d) WAIVER OF ESTIMATED TAX PENALTIES- No addition to tax shall be made under section 6654 or 6655 of the Internal Revenue Code of 1986 for any period before April 16, 1994 (March 16, 1994, in the case of a corporation), with respect to any underpayment to the extent such underpayment was created or increased by any provision of this chapter.

    (e) TABLE OF CONTENTS-

CHAPTER 1--REVENUE PROVISIONS

Sec. 13001. Short title; etc.

Subchapter A--Training and Investment Incentives

Part I--Provisions Relating to Education and Training

Sec. 13101. Employer-provided educational assistance.

Sec. 13102. Targeted jobs credit.

Part II--Investment Incentives

SUBPART A--RESEARCH AND CLINICAL TESTING CREDITS

Sec. 13111. Extension of research and clinical testing credits.

Sec. 13112. Modification of fixed base percentage for startup companies.

SUBPART B--CAPITAL GAIN PROVISIONS

Sec. 13113. 50-percent exclusion for gain from certain small business stock.

Sec. 13114. Rollover of gain from sale of publicly traded securities into specialized small business investment companies.

SUBPART C--MODIFICATION TO MINIMUM TAX DEPRECIATION RULES

Sec. 13115. Modification to minimum tax depreciation rules.

SUBPART D--INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES

Sec. 13116. Increase in expense treatment for small businesses.

SUBPART E--TAX EXEMPT BONDS

Sec. 13121. High-speed intercity rail facility bonds exempt from State volume cap.

Sec. 13122. Permanent extension of qualified small issue bonds.

Part III--Expansion and Simplification of Earned Income Tax Credit

Sec. 13131. Expansion and simplification of earned income tax credit.

Part IV--Incentives for Investment in Real Estate

SUBPART A--EXTENSION OF QUALIFIED MORTGAGE BONDS AND LOW-INCOME HOUSING CREDIT

Sec. 13141. Permanent extension of qualified mortgage bonds.

Sec. 13142. Low-income housing credit.

SUBPART B--PASSIVE LOSS RULES

Sec. 13143. Application of passive loss rules to rental real estate activities.

SUBPART C--PROVISIONS RELATING TO REAL ESTATE INVESTMENTS BY PENSION FUNDS

Sec. 13144. Real estate property acquired by a qualified organization.

Sec. 13145. Repeal of special treatment of publicly treated partnerships.

Sec. 13146. Title-holding companies permitted to receive small amounts of unrelated business taxable income.

Sec. 13147. Exclusion from unrelated business tax of gains from certain property.

Sec. 13148. Exclusion from unrelated business tax of certain fees and option premiums.

Sec. 13149. Treatment of pension fund investments in real estate investment trusts.

SUBPART D--DISCHARGE OF INDEBTEDNESS

Sec. 13150. Exclusion from gross income for income from discharge of qualified real property business indebtedness.

SUBPART E--INCREASE IN RECOVERY PERIOD FOR NONRESIDENTIAL REAL PROPERTY

Sec. 13151. Increase in recovery period for nonresidential real property.

Part V--Luxury Tax

Sec. 13161. Repeal of luxury excise taxes other than on passenger vehicles.

Sec. 13162. Exemption from luxury excise tax for certain equipment installed on passenger vehicles for use by disabled individuals.

Sec. 13163. Tax on diesel fuel used in noncommercial boats.

Part VI--Other Changes

Sec. 13171. Alternative minimum tax treatment of contributions of appreciated property.

Sec. 13172. Substantiation requirement for deduction of certain charitable contributions.

Sec. 13173. Disclosure related to quid pro quo contributions.

Sec. 13174. Temporary extension of deduction for health insurance costs of self-employed individuals.

Subchapter B--Revenue Increases

Part I--Provisions Affecting Individuals

SUBPART A--RATE INCREASES

Sec. 13201. Increase in top marginal rate under section 1.

Sec. 13202. Surtax on high-income taxpayers.

Sec. 13203. Modifications to alternative minimum tax rates and exemption amounts.

Sec. 13204. Overall limitation on itemized deductions for high-income taxpayers made permanent.

Sec. 13205. Phaseout of personal exemption of high-income taxpayers made permanent.

Sec. 13206. Provisions to prevent conversion of ordinary income to capital gain.

SUBPART B--OTHER PROVISIONS

Sec. 13207. Repeal of limitation on amount of wages subject to health insurance employment tax.

Sec. 13208. Top estate and gift tax rates made permanent.

Sec. 13209. Reduction in deductible portion of business meals and entertainment.

Sec. 13210. Elimination of deduction for club membership fees.

Sec. 13211. Disallowance of deduction for certain employee remuneration in excess of $1,000,000.

Sec. 13212. Reduction in compensation taken into account in determining contributions and benefits under qualified retirement plans.

Sec. 13213. Modifications to deduction for moving expenses.

Sec. 13214. Simplification of individual estimated tax safe harbor based on last year’s tax.

Sec. 13215. Social security and tier 1 railroad retirement benefits.

Part II--Provisions Affecting Businesses

Sec. 13221. Increase in top marginal rate under section 11.

Sec. 13222. Denial of deduction for lobbying expenses.

Sec. 13223. Mark to market accounting method for securities dealers.

Sec. 13224. Clarification of treatment of certain FSLIC financial assistance.

Sec. 13225. Modification of corporate estimated tax rules.

Sec. 13226. Modifications of discharge of indebtedness provisions.

Sec. 13227. Limitation on section 936 credit.

Sec. 13228. Modification to limitation on deduction for certain interest.

Part III--Foreign Tax Provisions

SUBPART A--CURRENT TAXATION OF CERTAIN EARNINGS OF CONTROLLED FOREIGN CORPORATIONS

Sec. 13231. Earnings invested in excess passive assets.

Sec. 13232. Modification to taxation of investment in United States property.

Sec. 13233. Other modifications to subpart F.

SUBPART B--ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES

Sec. 13234. Allocation of research and experimental expenditures.

SUBPART C--OTHER PROVISIONS

Sec. 13235. Repeal of certain exceptions for working capital.

Sec. 13236. Modifications of accuracy-related penalty.

Sec. 13237. Denial of portfolio interest exemption for contingent interest.

Sec. 13238. Regulations dealing with conduit arrangements.

Sec. 13239. Treatment of export of certain softwood logs.

Part IV--Transportation Fuels Provisions

SUBPART A--TRANSPORTATION FUELS TAX

Sec. 13241. Transportation fuels tax.

SUBPART B--MODIFICATIONS TO TAX ON DIESEL FUEL

Sec. 13242. Modifications to tax on diesel fuel.

Sec. 13243. Floor stocks tax.

SUBPART C--OTHER PROVISIONS

Sec. 13244. Increased deposits into Mass Transit Account.

Sec. 13245. Floor stocks tax on aviation fuel held on October 1, 1995.

Part V--Compliance Provisions

Sec. 13251. Modifications to substantial understatement penalty.

Sec. 13252. Returns relating to the cancellation of indebtedness by certain financial entities.

Part VI--Treatment of Intangibles

Sec. 13261. Amortization of goodwill and certain other intangibles.

Sec. 13262. Treatment of certain payments to retired or deceased partner.

Part VII--Miscellaneous Provisions

Sec. 13271. Disallowance of interest on certain overpayments of tax.

Sec. 13272. Denial of deduction relating to travel expenses.

Sec. 13273. Increase in withholding from supplemental wage payments.

Subchapter C--Empowerment Zones, Enterprise Communities, Rural Development Investment Areas, Etc.

Part I--Empowerment Zones, Enterprise Communities, and Rural Development Investment Areas

Sec. 13301. Designation and treatment of empowerment zones, enterprise communities, and rural development investment areas.

Sec. 13302. Technical and conforming amendments.

Sec. 13303. Effective date.

Part II--Credit for Contributions to Certain Community Development Corporations

Sec. 13311. Credit for contributions to certain community development corporations.

Part III--Investment in Indian Reservations

Sec. 13321. Accelerated depreciation for property on Indian reservations.

Sec. 13322. Indian employment credit.

Subchapter D--Other Provisions

Part I--Disclosure Provisions

Sec. 13401. Disclosure of return information for administration of certain veterans programs.

Sec. 13402. Disclosure of return information to carry out income contingent repayment of student loans.

Sec. 13403. Use of return information for income verification under certain housing assistance programs.

Part II--Public Debt Limit

Sec. 13411. Increase in public debt limit.

Part III--Vaccine Provisions

Sec. 13421. Excise tax on certain vaccines made permanent.

Sec. 13422. Continuation coverage under group health plans of costs of pediatric vaccines.

Part IV--Disaster Relief Provisions

Sec. 13431. Modification of involuntary conversion rules for certain disaster-related conversions.

Part V--Miscellaneous Provisions

Sec. 13441. Increase in presidential election campaign check-off.

Sec. 13442 Special rule for hospital services.

Sec. 13443. Credit for portion of employer social security taxes paid with respect to employee cash tips.

Sec. 13444. Availability and use of death information.

Subchapter A--Training and Investment Incentives

PART I--PROVISIONS RELATING TO EDUCATION AND TRAINING

SEC. 13101. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE.

    (a) EXTENSION OF EXCLUSION-

      (1) IN GENERAL- Subsection (d) of section 127 (relating to educational assistance programs) is amended to read as follows:

    ‘(d) TERMINATION- This section shall not apply to taxable years beginning after December 31, 1994.’

      (2) CONFORMING AMENDMENT- Paragraph (2) of section 103(a) of the Tax Extension Act of 1991 is hereby repealed.

    (b) COORDINATION WITH SECTION 132- Paragraph (8) of section 132(i) is amended to read as follows:

      ‘(8) APPLICATION OF SECTION TO OTHERWISE TAXABLE EDUCATIONAL OR TRAINING BENEFITS- Amounts paid or expenses incurred by the employer for education or training provided to the employee which are not excludable from gross income under section 127 shall be excluded from gross income under this section if (and only if) such amounts or expenses are a working condition fringe.’

    (c) EFFECTIVE DATES-

      (1) SUBSECTION (a)- The amendments made by subsection (a) shall apply to taxable years ending after June 30, 1992.

      (2) SUBSECTION (b)- The amendment made by subsection (b) shall apply to taxable years beginning after December 31, 1988.

SEC. 13102. TARGETED JOBS CREDIT.

    (a) EXTENSION OF CREDIT- Paragraph (4) of section 51(c) (relating to termination) is amended by striking ‘June 30, 1992’ and inserting ‘December 31, 1994’.

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to individuals who begin work for the employer after June 30, 1992.

PART II--INVESTMENT INCENTIVES

Subpart A--Research and Clinical Testing Credits

SEC. 13111. EXTENSION OF RESEARCH AND CLINICAL TESTING CREDITS.

    (a) RESEARCH CREDIT-

      (1) IN GENERAL- Subsection (h) of section 41 (relating to credit for research activities) is amended--

        (A) by striking ‘June 30, 1992’ each place it appears and inserting ‘June 30, 1995’, and

        (B) by striking ‘July 1, 1992’ each place it appears and inserting ‘July 1, 1995’.

      (2) CONFORMING AMENDMENT- Subparagraph (D) of section 28(b)(1) is amended by striking ‘June 30, 1992’ and inserting ‘June 30, 1995’.

    (b) CLINICAL TESTING CREDIT- Subsection (e) of section 28 is amended by striking ‘June 30, 1992’ and inserting ‘December 31, 1994’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years ending after June 30, 1992.

SEC. 13112. MODIFICATION OF FIXED-BASE PERCENTAGE FOR STARTUP COMPANIES.

    (a) GENERAL RULE- Clause (ii) of section 41(c)(3)(B) is amended to read as follows:

          ‘(ii) FIXED-BASE PERCENTAGE- In a case to which this subparagraph applies, the fixed-base percentage is--

            ‘(I) 3 percent for each of the taxpayer’s 1st 5 taxable years beginning after December 31, 1993, for which the taxpayer has qualified research expenses,

            ‘(II) in the case of the taxpayer’s 6th such taxable year, 1/6 of the percentage which the aggregate qualified research expenses of the taxpayer for the 4th and 5th such taxable years is of the aggregate gross receipts of the taxpayer for such years,

            ‘(III) in the case of the taxpayer’s 7th such taxable year, 1/3 of the percentage which the aggregate qualified research expenses of the taxpayer for the 5th and 6th such taxable years is of the aggregate gross receipts of the taxpayer for such years,

            ‘(IV) in the case of the taxpayer’s 8th such taxable year, 1/2 of the percentage which the aggregate qualified research expenses of the taxpayer for the 5th, 6th, and 7th such taxable years is of the aggregate gross receipts of the taxpayer for such years,

            ‘(V) in the case of the taxpayer’s 9th such taxable year, 2/3 of the percentage which the aggregate qualified research expenses of the taxpayer for the 5th, 6th, 7th, and 8th such taxable years is of the aggregate gross receipts of the taxpayer for such years,

            ‘(VI) in the case of the taxpayer’s 10th such taxable year, 5/6 of the percentage which the aggregate qualified research expenses of the taxpayer for the 5th, 6th, 7th, 8th, and 9th such taxable years is of the aggregate gross receipts of the taxpayer for such years, and

            ‘(VII) for taxable years thereafter, the percentage which the aggregate qualified research expenses for any 5 taxable years selected by the taxpayer from among the 5th through the 10th such taxable years is of the aggregate gross receipts of the taxpayer for such selected years.’.

    (b) CONFORMING AMENDMENTS-

      (1) Clause (iii) of section 41(c)(3)(B) is amended by striking ‘clause (i)’ and inserting ‘clauses (i) and (ii)’.

      (2) Subparagraph (D) of section 41(c)(3) is amended by striking ‘subparagraph (A)’ and inserting ‘subparagraphs (A) and (B)(ii)’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1993.

Subpart B--Capital Gain Provisions

SEC. 13113. 50-PERCENT EXCLUSION FOR GAIN FROM CERTAIN SMALL BUSINESS STOCK.

    (a) GENERAL RULE- Part I of subchapter P of chapter 1 (relating to capital gains and losses) is amended by adding at the end thereof the following new section:

‘SEC. 1202. 50-PERCENT EXCLUSION FOR GAIN FROM CERTAIN SMALL BUSINESS STOCK.

    ‘(a) 50-PERCENT EXCLUSION- In the case of a taxpayer other than a corporation, gross income shall not include 50 percent of any gain from the sale or exchange of qualified small business stock held for more than 5 years.

    ‘(b) PER-ISSUER LIMITATION ON TAXPAYER’S ELIGIBLE GAIN-

      ‘(1) IN GENERAL- If the taxpayer has eligible gain for the taxable year from 1 or more dispositions of stock issued by any corporation, the aggregate amount of such gain from dispositions of stock issued by such corporation which may be taken into account under subsection (a) for the taxable year shall not exceed the greater of--

        ‘(A) $10,000,000 reduced by the aggregate amount of eligible gain taken into account by the taxpayer under subsection (a) for prior taxable years and attributable to dispositions of stock issued by such corporation, or

        ‘(B) 10 times the aggregate adjusted bases of qualified small business stock issued by such corporation and disposed of by the taxpayer during the taxable year.

      For purposes of subparagraph (B), the adjusted basis of any stock shall be determined without regard to any addition to basis after the date on which such stock was originally issued.

      ‘(2) ELIGIBLE GAIN- For purposes of this subsection, the term ‘eligible gain’ means any gain from the sale or exchange of qualified small business stock held for more than 5 years.

      ‘(3) TREATMENT OF MARRIED INDIVIDUALS-

        ‘(A) SEPARATE RETURNS- In the case of a separate return by a married individual, paragraph (1)(A) shall be applied by substituting ‘$5,000,000’ for ‘$10,000,000’.

        ‘(B) ALLOCATION OF EXCLUSION- In the case of any joint return, the amount of gain taken into account under subsection (a) shall be allocated equally between the spouses for purposes of applying this subsection to subsequent taxable years.

        ‘(C) MARITAL STATUS- For purposes of this subsection, marital status shall be determined under section 7703.

    ‘(c) QUALIFIED SMALL BUSINESS STOCK- For purposes of this section--

      ‘(1) IN GENERAL- Except as otherwise provided in this section, the term ‘qualified small business stock’ means any stock in a C corporation which is originally issued after the date of the enactment of the Revenue Reconciliation Act of 1993, if--

        ‘(A) as of the date of issuance, such corporation is a qualified small business, and

        ‘(B) except as provided in subsections (f) and (h), such stock is acquired by the taxpayer at its original issue (directly or through an underwriter)--

          ‘(i) in exchange for money or other property (not including stock), or

          ‘(ii) as compensation for services provided to such corporation (other than services performed as an underwriter of such stock).

      ‘(2) ACTIVE BUSINESS REQUIREMENT; ETC-

        ‘(A) IN GENERAL- Stock in a corporation shall not be treated as qualified small business stock unless, during substantially all of the taxpayer’s holding period for such stock, such corporation meets the active business requirements of subsection (e) and such corporation is a C corporation.

        ‘(B) SPECIAL RULE FOR CERTAIN SMALL BUSINESS INVESTMENT COMPANIES-

          ‘(i) WAIVER OF ACTIVE BUSINESS REQUIREMENT- Notwithstanding any provision of subsection (e), a corporation shall be treated as meeting the active business requirements of such subsection for any period during which such corporation qualifies as a specialized small business investment company.

          ‘(ii) SPECIALIZED SMALL BUSINESS INVESTMENT COMPANY- For purposes of clause (i), the term ‘specialized small business investment company’ means any eligible corporation (as defined in subsection (e)(4)) which is licensed to operate under section 301(d) of the Small Business Investment Act of 1958 (as in effect on May 13, 1993).

      ‘(3) CERTAIN PURCHASES BY CORPORATION OF ITS OWN STOCK-

        ‘(A) REDEMPTIONS FROM TAXPAYER OR RELATED PERSON- Stock acquired by the taxpayer shall not be treated as qualified small business stock if, at any time during the 4-year period beginning on the date 2 years before the issuance of such stock, the corporation issuing such stock purchased (directly or indirectly) any of its stock from the taxpayer or from a person related (within the meaning of section 267(b) or 707(b)) to the taxpayer.

        ‘(B) SIGNIFICANT REDEMPTIONS- Stock issued by a corporation shall not be treated as qualified business stock if, during the 2-year period beginning on the date 1 year before the issuance of such stock, such corporation made 1 or more purchases of its stock with an aggregate value (as of the time of the respective purchases) exceeding 5 percent of the aggregate value of all of its stock as of the beginning of such 2-year period.

        ‘(C) TREATMENT OF CERTAIN TRANSACTIONS- If any transaction is treated under section 304(a) as a distribution in redemption of the stock of any corporation, for purposes of subparagraphs (A) and (B), such corporation shall be treated as purchasing an amount of its stock equal to the amount treated as such a distribution under section 304(a).

    ‘(d) QUALIFIED SMALL BUSINESS- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘qualified small business’ means any domestic corporation which is a C corporation if--

        ‘(A) the aggregate gross assets of such corporation (or any predecessor thereof) at all times on or after the date of the enactment of the Revenue Reconciliation Act of 1993 and before the issuance did not exceed $50,000,000,

        ‘(B) the aggregate gross assets of such corporation immediately after the issuance (determined by taking into account amounts received in the issuance) do not exceed $50,000,000, and

        ‘(C) such corporation agrees to submit such reports to the Secretary and to shareholders as the Secretary may require to carry out the purposes of this section.

      ‘(2) AGGREGATE GROSS ASSETS-

        ‘(A) IN GENERAL- For purposes of paragraph (1), the term ‘aggregate gross assets’ means the amount of cash and the aggregate adjusted bases of other property held by the corporation.

        ‘(B) TREATMENT OF CONTRIBUTED PROPERTY- For purposes of subparagraph (A), the adjusted basis of any property contributed to the corporation (or other property with a basis determined in whole or in part by reference to the adjusted basis of property so contributed) shall be determined as if the basis of the property contributed to the corporation (immediately after such contribution) were equal to its fair market value as of the time of such contribution.

      ‘(3) AGGREGATION RULES-

        ‘(A) IN GENERAL- All corporations which are members of the same parent-subsidiary controlled group shall be treated as 1 corporation for purposes of this subsection.

        ‘(B) PARENT-SUBSIDIARY CONTROLLED GROUP- For purposes of subparagraph (A), the term ‘parent-subsidiary controlled group’ means any controlled group of corporations as defined in section 1563(a)(1), except that--

          ‘(i) ‘more than 50 percent’ shall be substituted for ‘at least 80 percent’ each place it appears in section 1563(a)(1), and

          ‘(ii) section 1563(a)(4) shall not apply.

    ‘(e) ACTIVE BUSINESS REQUIREMENT-

      ‘(1) IN GENERAL- For purposes of subsection (c)(2), the requirements of this subsection are met by a corporation for any period if during such period--

        ‘(A) at least 80 percent (by value) of the assets of such corporation are used by such corporation in the active conduct of 1 or more qualified trades or businesses, and

        ‘(B) such corporation is an eligible corporation.

      ‘(2) SPECIAL RULE FOR CERTAIN ACTIVITIES- For purposes of paragraph (1), if, in connection with any future qualified trade or business, a corporation is engaged in--

        ‘(A) start-up activities described in section 195(c)(1)(A),

        ‘(B) activities resulting in the payment or incurring of expenditures which may be treated as research and experimental expenditures under section 174, or

        ‘(C) activities with respect to in-house research expenses described in section 41(b)(4),

      assets used in such activities shall be treated as used in the active conduct of a qualified trade or business. Any determination under this paragraph shall be made without regard to whether a corporation has any gross income from such activities at the time of the determination.

      ‘(3) QUALIFIED TRADE OR BUSINESS- For purposes of this subsection, the term ‘qualified trade or business’ means any trade or business other than--

        ‘(A) any trade or business involving the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of 1 or more of its employees,

        ‘(B) any banking, insurance, financing, leasing, investing, or similar business,

        ‘(C) any farming business (including the business of raising or harvesting trees),

        ‘(D) any business involving the production or extraction of products of a character with respect to which a deduction is allowable under section 613 or 613A, and

        ‘(E) any business of operating a hotel, motel, restaurant, or similar business.

      ‘(4) ELIGIBLE CORPORATION- For purposes of this subsection, the term ‘eligible corporation’ means any domestic corporation; except that such term shall not include--

        ‘(A) a DISC or former DISC,

        ‘(B) a corporation with respect to which an election under section 936 is in effect or which has a direct or indirect subsidiary with respect to which such an election is in effect,

        ‘(C) a regulated investment company, real estate investment trust, or REMIC, and

        ‘(D) a cooperative.

      ‘(5) STOCK IN OTHER CORPORATIONS-

        ‘(A) LOOK-THRU IN CASE OF SUBSIDIARIES- For purposes of this subsection, stock and debt in any subsidiary corporation shall be disregarded and the parent corporation shall be deemed to own its ratable share of the subsidiary’s assets, and to conduct its ratable share of the subsidiary’s activities.

        ‘(B) PORTFOLIO STOCK OR SECURITIES- A corporation shall be treated as failing to meet the requirements of paragraph (1) for any period during which more than 10 percent of the value of its assets (in excess of liabilities) consists of stock or securities in other corporations which are not subsidiaries of such corporation (other than assets described in paragraph (6)).

        ‘(C) SUBSIDIARY- For purposes of this paragraph, a corporation shall be considered a subsidiary if the parent owns more than 50 percent of the combined voting power of all classes of stock entitled to vote, or more than 50 percent in value of all outstanding stock, of such corporation.

      ‘(6) WORKING CAPITAL- For purposes of paragraph (1)(A), any assets which--

        ‘(A) are held as a part of the reasonably required working capital needs of a qualified trade or business of the corporation, or

        ‘(B) are held for investment and are reasonably expected to be used within 2 years to finance research and experimentation in a qualified trade or business or increases in working capital needs of a qualified trade or business,

      shall be treated as used in the active conduct of a qualified trade or business. For periods after the corporation has been in existence for at least 2 years, in no event may more than 50 percent of the assets of the corporation qualify as used in the active conduct of a qualified trade or business by reason of this paragraph.

      ‘(7) MAXIMUM REAL ESTATE HOLDINGS- A corporation shall not be treated as meeting the requirements of paragraph (1) for any period during which more than 10 percent of the total value of its assets consists of real property which is not used in the active conduct of a qualified trade or business. For purposes of the preceding sentence, the ownership of, dealing in, or renting of real property shall not be treated as the active conduct of a qualified trade or business.

      ‘(8) COMPUTER SOFTWARE ROYALTIES- For purposes of paragraph (1), rights to computer software which produces active business computer software royalties (within the meaning of section 543(d)(1)) shall be treated as an asset used in the active conduct of a trade or business.

    ‘(f) STOCK ACQUIRED ON CONVERSION OF OTHER STOCK- If any stock in a corporation is acquired solely through the conversion of other stock in such corporation which is qualified small business stock in the hands of the taxpayer--

      ‘(1) the stock so acquired shall be treated as qualified small business stock in the hands of the taxpayer, and

      ‘(2) the stock so acquired shall be treated as having been held during the period during which the converted stock was held.

    ‘(g) TREATMENT OF PASS-THRU ENTITIES-

      ‘(1) IN GENERAL- If any amount included in gross income by reason of holding an interest in a pass-thru entity meets the requirements of paragraph (2)--

        ‘(A) such amount shall be treated as gain described in subsection (a), and

        ‘(B) for purposes of applying subsection (b), such amount shall be treated as gain from a disposition of stock in the corporation issuing the stock disposed of by the pass-thru entity and the taxpayer’s proportionate share of the adjusted basis of the pass-thru entity in such stock shall be taken into account.

      ‘(2) REQUIREMENTS- An amount meets the requirements of this paragraph if--

        ‘(A) such amount is attributable to gain on the sale or exchange by the pass-thru entity of stock which is qualified small business stock in the hands of such entity (determined by treating such entity as an individual) and which was held by such entity for more than 5 years, and

        ‘(B) such amount is includible in the gross income of the taxpayer by reason of the holding of an interest in such entity which was held by the taxpayer on the date on which such pass-thru entity acquired such stock and at all times thereafter before the disposition of such stock by such pass-thru entity.

      ‘(3) LIMITATION BASED ON INTEREST ORIGINALLY HELD BY TAXPAYER- Paragraph (1) shall not apply to any amount to the extent such amount exceeds the amount to which paragraph (1) would have applied if such amount were determined by reference to the interest the taxpayer held in the pass-thru entity on the date the qualified small business stock was acquired.

      ‘(4) PASS-THRU ENTITY- For purposes of this subsection, the term ‘pass-thru entity’ means--

        ‘(A) any partnership,

        ‘(B) any S corporation,

        ‘(C) any regulated investment company, and

        ‘(D) any common trust fund.

    ‘(h) CERTAIN TAX-FREE AND OTHER TRANSFERS- For purposes of this section--

      ‘(1) IN GENERAL- In the case of a transfer described in paragraph (2), the transferee shall be treated as--

        ‘(A) having acquired such stock in the same manner as the transferor, and

        ‘(B) having held such stock during any continuous period immediately preceding the transfer during which it was held (or treated as held under this subsection) by the transferor.

      ‘(2) DESCRIPTION OF TRANSFERS- A transfer is described in this subsection if such transfer is--

        ‘(A) by gift,

        ‘(B) at death, or

        ‘(C) from a partnership to a partner of stock with respect to which requirements similar to the requirements of subsection (g) are met at the time of the transfer (without regard to the 5-year holding period requirement).

      ‘(3) CERTAIN RULES MADE APPLICABLE- Rules similar to the rules of section 1244(d)(2) shall apply for purposes of this section.

      ‘(4) INCORPORATIONS AND REORGANIZATIONS INVOLVING NONQUALIFIED STOCK-

        ‘(A) IN GENERAL- In the case of a transaction described in section 351 or a reorganization described in section 368, if qualified small business stock is exchanged for other stock which would not qualify as qualified small business stock but for this subparagraph, such other stock shall be treated as qualified small business stock acquired on the date on which the exchanged stock was acquired.

        ‘(B) LIMITATION- This section shall apply to gain from the sale or exchange of stock treated as qualified small business stock by reason of subparagraph (A) only to the extent of the gain which would have been recognized at the time of the transfer described in subparagraph (A) if section 351 or 368 had not applied at such time. The preceding sentence shall not apply if the stock which is treated as qualified small business stock by reason of subparagraph (A) is issued by a corporation which (as of the time of the transfer described in subparagraph (A)) is a qualified small business.

        ‘(C) SUCCESSIVE APPLICATION- For purposes of this paragraph, stock treated as qualified small business stock under subparagraph (A) shall be so treated for subsequent transactions or reorganizations, except that the limitation of subparagraph (B) shall be applied as of the time of the first transfer to which such limitation applied (determined after the application of the second sentence of subparagraph (B)).

        ‘(D) CONTROL TEST- In the case of a transaction described in section 351, this paragraph shall apply only if, immediately after the transaction, the corporation issuing the stock owns directly or indirectly stock representing control (within the meaning of section 368(c)) of the corporation whose stock was exchanged.

    ‘(i) BASIS RULES- For purposes of this section--

      ‘(1) STOCK EXCHANGED FOR PROPERTY- In the case where the taxpayer transfers property (other than money or stock) to a corporation in exchange for stock in such corporation--

        ‘(A) such stock shall be treated as having been acquired by the taxpayer on the date of such exchange, and

        ‘(B) the basis of such stock in the hands of the taxpayer shall in no event be less than the fair market value of the property exchanged.

      ‘(2) TREATMENT OF CONTRIBUTIONS TO CAPITAL- If the adjusted basis of any qualified small business stock is adjusted by reason of any contribution to capital after the date on which such stock was originally issued, in determining the amount of the adjustment by reason of such contribution, the basis of the contributed property shall in no event be treated as less than its fair market value on the date of the contribution.

    ‘(j) TREATMENT OF CERTAIN SHORT POSITIONS-

      ‘(1) IN GENERAL- If the taxpayer has an offsetting short position with respect to any qualified small business stock, subsection (a) shall not apply to any gain from the sale or exchange of such stock unless--

        ‘(A) such stock was held by the taxpayer for more than 5 years as of the first day on which there was such a short position, and

        ‘(B) the taxpayer elects to recognize gain as if such stock were sold on such first day for its fair market value.

      ‘(2) OFFSETTING SHORT POSITION- For purposes of paragraph (1), the taxpayer shall be treated as having an offsetting short position with respect to any qualified small business stock if--

        ‘(A) the taxpayer has made a short sale of substantially identical property,

        ‘(B) the taxpayer has acquired an option to sell substantially identical property at a fixed price, or

        ‘(C) to the extent provided in regulations, the taxpayer has entered into any other transaction which substantially reduces the risk of loss from holding such qualified small business stock.

      For purposes of the preceding sentence, any reference to the taxpayer shall be treated as including a reference to any person who is related (within the meaning of section 267(b) or 707(b)) to the taxpayer.

    ‘(k) REGULATIONS- The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this section, including regulations to prevent the avoidance of the purposes of this section through split-ups, shell corporations, partnerships, or otherwise.’

    (b) ONE-HALF OF EXCLUSION TREATED AS PREFERENCE FOR MINIMUM TAX-

      (1) IN GENERAL- Subsection (a) of section 57 (relating to items of tax preference) is amended by adding at the end thereof the following new paragraph:

      ‘(8) EXCLUSION FOR GAINS ON SALE OF CERTAIN SMALL BUSINESS STOCK- An amount equal to one-half of the amount excluded from gross income for the taxable year under section 1202.’

      (2) CONFORMING AMENDMENT- Subclause (II) of section 53(d)(1)(B)(ii) is amended by striking ‘and (6)’ and inserting ‘(6), and (8)’.

    (c) PENALTY FOR FAILURE TO COMPLY WITH REPORTING REQUIREMENTS- Section 6652 is amended by inserting before the last subsection thereof the following new subsection:

    ‘(k) FAILURE TO MAKE REPORTS REQUIRED UNDER SECTION 1202- In the case of a failure to make a report required under section 1202(d)(1)(C) which contains the information required by such section on the date prescribed therefor (determined with regard to any extension of time for filing), there shall be paid (on notice and demand by the Secretary and in the same manner as tax) by the person failing to make such report, an amount equal to $50 for each report with respect to which there was such a failure. In the case of any failure due to negligence or intentional disregard, the preceding sentence shall be applied by substituting ‘$100’ for ‘$50’. In the case of a report covering periods in 2 or more years, the penalty determined under preceding provisions of this subsection shall be multiplied by the number of such years.’

    (d) CONFORMING AMENDMENTS-

      (1)(A) Section 172(d)(2) (relating to modifications with respect to net operating loss deduction) is amended to read as follows:

      ‘(2) CAPITAL GAINS AND LOSSES OF TAXPAYERS OTHER THAN CORPORATIONS- In the case of a taxpayer other than a corporation--

        ‘(A) the amount deductible on account of losses from sales or exchanges of capital assets shall not exceed the amount includable on account of gains from sales or exchanges of capital assets; and

        ‘(B) the exclusion provided by section 1202 shall not be allowed.’

      (B) Subparagraph (B) of section 172(d)(4) is amended by inserting ‘, (2)(B),’ after ‘paragraph (1)’.

      (2) Paragraph (4) of section 642(c) is amended to read as follows:

      ‘(4) ADJUSTMENTS- To the extent that the amount otherwise allowable as a deduction under this subsection consists of gain described in section 1202(a), proper adjustment shall be made for any exclusion allowable to the estate or trust under section 1202. In the case of a trust, the deduction allowed by this subsection shall be subject to section 681 (relating to unrelated business income).’

      (3) Paragraph (3) of section 643(a) is amended by adding at the end thereof the following new sentence: ‘The exclusion under section 1202 shall not be taken into account.’.

      (4) Paragraph (4) of section 691(c) is amended by striking ‘1201, and 1211’ and inserting ‘1201, 1202, and 1211’.

      (5) The second sentence of paragraph (2) of section 871(a) is amended by inserting ‘such gains and losses shall be determined without regard to section 1202 and’ after ‘except that’.

      (6) The table of sections for part I of subchapter P of chapter 1 is amended by adding after the item relating to section 1201 the following new item:

‘Sec. 1202. 50-percent exclusion for gain from certain small business stock.’

    (e) EFFECTIVE DATE- The amendments made by this section shall apply to stock issued after the date of the enactment of this Act.

SEC. 13114. ROLLOVER OF GAIN FROM SALE OF PUBLICLY TRADED SECURITIES INTO SPECIALIZED SMALL BUSINESS INVESTMENT COMPANIES.

    (a) IN GENERAL- Part III of subchapter O of chapter 1 (relating to common nontaxable exchanges) is amended by adding at the end the following new section:

‘SEC. 1044. ROLLOVER OF PUBLICLY TRADED SECURITIES GAIN INTO SPECIALIZED SMALL BUSINESS INVESTMENT COMPANIES.

    ‘(a) NONRECOGNITION OF GAIN- In the case of the sale of any publicly traded securities with respect to which the taxpayer elects the application of this section, gain from such sale shall be recognized only to the extent that the amount realized on such sale exceeds--

      ‘(1) the cost of any common stock or partnership interest in a specialized small business investment company purchased by the taxpayer during the 60-day period beginning on the date of such sale, reduced by

      ‘(2) any portion of such cost previously taken into account under this section.

    This section shall not apply to any gain which is treated as ordinary income for purposes of this subtitle.

    ‘(b) LIMITATIONS-

      ‘(1) LIMITATION ON INDIVIDUALS- In the case of an individual, the amount of gain which may be excluded under subsection (a) for any taxable year shall not exceed the lesser of--

        ‘(A) $50,000, or

        ‘(B) $500,000, reduced by the amount of gain excluded under subsection (a) for all preceding taxable years.

      ‘(2) LIMITATION ON C CORPORATIONS- In the case of a C corporation, the amount of gain which may be excluded under subsection (a) for any taxable year shall not exceed the lesser of--

        ‘(A) $250,000, or

        ‘(B) $1,000,000, reduced by the amount of gain excluded under subsection (a) for all preceding taxable years.

      ‘(3) SPECIAL RULES FOR MARRIED INDIVIDUALS- For purposes of this subsection--

        ‘(A) SEPARATE RETURNS- In the case of a separate return by a married individual, paragraph (1) shall be applied by substituting ‘$25,000’ for ‘$50,000’ and ‘$250,000’ for ‘$500,000’.

        ‘(B) ALLOCATION OF GAIN- In the case of any joint return, the amount of gain excluded under subsection (a) for any taxable year shall be allocated equally between the spouses for purposes of applying this subsection to subsequent taxable years.

        ‘(C) MARITAL STATUS- For purposes of this subsection, marital status shall be determined under section 7703.

      ‘(4) SPECIAL RULES FOR C CORPORATION- For purposes of this subsection--

        ‘(A) all corporations which are members of the same controlled group of corporations (within the meaning of section 52(a)) shall be treated as 1 taxpayer, and

        ‘(B) any gain excluded under subsection (a) by a predecessor of any C corporation shall be treated as having been excluded by such C corporation.

    ‘(c) DEFINITIONS AND SPECIAL RULES- For purposes of this section--

      ‘(1) PUBLICLY TRADED SECURITIES- The term ‘publicly traded securities’ means securities which are traded on an established securities market.

      ‘(2) PURCHASE- The term ‘purchase’ has the meaning given such term by section 1043(b)(4).

      ‘(3) SPECIALIZED SMALL BUSINESS INVESTMENT COMPANY- The term ‘specialized small business investment company’ means any partnership or corporation which is licensed by the Small Business Administration under section 301(d) of the Small Business Investment Act of 1958 (as in effect on May 13, 1993).

      ‘(4) CERTAIN ENTITIES NOT ELIGIBLE- This section shall not apply to any estate, trust, partnership, or S corporation.

    ‘(d) BASIS ADJUSTMENTS- If gain from any sale is not recognized by reason of subsection (a), such gain shall be applied to reduce (in the order acquired) the basis for determining gain or loss of any common stock or partnership interest in any specialized small business investment company which is purchased by the taxpayer during the 60-day period described in subsection (a). This subsection shall not apply for purposes of section 1202.’

    (b) CONFORMING AMENDMENT- Paragraph (24) of section 1016(a) is amended--

      (1) by striking ‘section 1043’ and inserting ‘section 1043 or 1044’, and

      (2) by striking ‘section 1043(c)’ and inserting ‘section 1043(c) or 1044(d), as the case may be’.

    (c) CLERICAL AMENDMENT- The table of sections for part III of subchapter O of chapter 1 is amended by adding at the end the following new item:

‘Sec. 1044. Rollover of publicly traded securities gain into specialized small business investment companies.’

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to sales on and after the date of the enactment of this Act, in taxable years ending on and after such date.

Subpart C--Modification to Minimum Tax Depreciation Rules

SEC. 13115. MODIFICATION TO MINIMUM TAX DEPRECIATION RULES.

    (a) ELIMINATION OF ACE DEPRECIATION ADJUSTMENT- Clause (i) of section 56(g)(4)(A) (relating to depreciation adjustments for computing adjusted current earnings) is amended by adding at the end thereof the following new sentence: ‘The preceding sentence shall not apply to any property placed in service after December 31, 1993, and the depreciation deduction with respect to such property shall be determined under the rules of subsection (a)(1)(A).’.

    (b) EFFECTIVE DATES-

      (1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to property placed in service after December 31, 1993.

      (2) COORDINATION WITH TRANSITIONAL RULES- The amendments made by this section shall not apply to any property to which paragraph (1) of section 56(a) of the Internal Revenue Code of 1986 does not apply by reason of subparagraph (C)(i) thereof.

Subpart D--Increase in Expense Treatment for Small Businesses

SEC. 13116. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.

    (a) GENERAL RULE- Paragraph (1) of section 179(b) (relating to dollar limitation) is amended by striking ‘$10,000’ and inserting ‘$17,500’.

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1992.

Subpart E--Tax Exempt Bonds

SEC. 13121. HIGH-SPEED INTERCITY RAIL FACILITY BONDS EXEMPT FROM STATE VOLUME CAP.

    (a) IN GENERAL- Paragraph (4) of section 146(g) (relating to exemption for certain bonds) is amended by adding at the end thereof the following flush sentence:

    ‘Paragraph (4) shall be applied without regard to ‘75 percent of’ if all of the property to be financed by the net proceeds of the issue is to be owned by a governmental unit (within the meaning of section 142(b)(1)).’

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to bonds issued after December 31, 1993.

SEC. 13122. PERMANENT EXTENSION OF QUALIFIED SMALL ISSUE BONDS.

    (a) IN GENERAL- Subparagraph (B) of section 144(a)(12) is amended to read as follows:

        ‘(B) BONDS ISSUED TO FINANCE MANUFACTURING FACILITIES AND FARM PROPERTY- Subparagraph (A) shall not apply to any bond issued as part of an issue 95 percent or more of the net proceeds of which are to be used to provide--

          ‘(i) any manufacturing facility, or

          ‘(ii) any land or property in accordance with section 147(c)(2).’

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to bonds issued after June 30, 1992.

    (c) TREATMENT UNDER INDUCEMENT REGULATIONS- If the 1-year period specified in Treasury Regulation Sec. 1.103-8(a)(5) (as in effect before July 1, 1993) or any successor regulation would (but for this subsection) expire after June 30, 1992, and before January 1, 1994, such period shall not expire before January 1, 1994.

PART III--EXPANSION AND SIMPLIFICATION OF EARNED INCOME TAX CREDIT

SEC. 13131. EXPANSION AND SIMPLIFICATION OF EARNED INCOME TAX CREDIT.

    (a) GENERAL RULE- Section 32 (relating to earned income credit) is amended by striking subsections (a) and (b) and inserting the following:

    ‘(a) ALLOWANCE OF CREDIT-

      ‘(1) IN GENERAL- In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the credit percentage of so much of the taxpayer’s earned income for the taxable year as does not exceed the earned income amount.

      ‘(2) LIMITATION- The amount of the credit allowable to a taxpayer under paragraph (1) for any taxable year shall not exceed the excess (if any) of--

        ‘(A) the credit percentage of the earned income amount, over

        ‘(B) the phaseout percentage of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds the phaseout amount.

    ‘(b) PERCENTAGES AND AMOUNTS- For purposes of subsection (a)--

      ‘(1) PERCENTAGES- The credit percentage and the phaseout percentage shall be determined as follows:

        ‘(A) IN GENERAL- In the case of taxable years beginning after 1995:

-----------------------------------------------------------------------------------------------------
 In the case of an eligible individual with: The credit percentage is: The phaseout percentage is: 
-----------------------------------------------------------------------------------------------------
   1 qualifying child                          34                        15.98                       
   2 or more qualifying children               40                        21.06                       
   No qualifying children                       7.65                      7.65                       
-----------------------------------------------------------------------------------------------------
        ‘(B) TRANSITIONAL PERCENTAGES FOR 1995- In the case of taxable years beginning in 1995:

-----------------------------------------------------------------------------------------------------
 In the case of an eligible individual with: The credit percentage is: The phaseout percentage is: 
-----------------------------------------------------------------------------------------------------
   1 qualifying child                          34                        15.98                       
   2 or more qualifying children               36                        20.22                       
   No qualifying children                       7.65                      7.65                       
-----------------------------------------------------------------------------------------------------
        ‘(C) TRANSITIONAL PERCENTAGES FOR 1994- In the case of a taxable year beginning in 1994:

-----------------------------------------------------------------------------------------------------
 In the case of an eligible individual with: The credit percentage is: The phaseout percentage is: 
-----------------------------------------------------------------------------------------------------
   1 qualifying child                          26.3                      15.98                       
   2 or more qualifying children               30                        17.68                       
   No qualifying children                       7.65                      7.65                       
-----------------------------------------------------------------------------------------------------
      ‘(2) AMOUNTS- The earned income amount and the phaseout amount shall be determined as follows:

        ‘(A) IN GENERAL- In the case of taxable years beginning after 1994:

----------------------------------------------------------------------------------------------------
 In the case of an eligible individual with: The earned income amount is: The phaseout amount is: 
----------------------------------------------------------------------------------------------------
   1 qualifying child                          $6,000                       $11,000                 
   2 or more qualifying children               $8,425                       $11,000                 
   No qualifying children                      $4,000                        $5,000                 
----------------------------------------------------------------------------------------------------
        ‘(B) TRANSITIONAL AMOUNTS- In the case of a taxable year beginning in 1994:

----------------------------------------------------------------------------------------------------
 In the case of an eligible individual with: The earned income amount is: The phaseout amount is: 
----------------------------------------------------------------------------------------------------
   1 qualifying child                          $7,750                       $11,000                 
   2 or more qualifying children               $8,425                       $11,000                 
   No qualifying children                      $4,000                       $5,000’.                
----------------------------------------------------------------------------------------------------
    (b) ELIGIBLE INDIVIDUAL- Subparagraph (A) of section 32(c)(1) (defining eligible individual) is amended to read as follows:

        ‘(A) IN GENERAL- The term ‘eligible individual’ means--

          ‘(i) any individual who has a qualifying child for the taxable year, or

          ‘(ii) any other individual who does not have a qualifying child for the taxable year, if--

            ‘(I) such individual’s principal place of abode is in the United States for more than one-half of such taxable year,

            ‘(II) such individual (or, if the individual is married, either the individual or the individual’s spouse) has attained age 25 but not attained age 65 before the close of the taxable year, and

            ‘(III) such individual is not a dependent for whom a deduction is allowable under section 151 to another taxpayer for any taxable year beginning in the same calendar year as such taxable year.

          For purposes of the preceding sentence, marital status shall be determined under section 7703.’

    (c) INFLATION ADJUSTMENTS- Section 32(i) (relating to inflation adjustments) is amended--

      (1) by striking paragraphs (1) and (2) and inserting the following new paragraph:

      ‘(1) IN GENERAL- In the case of any taxable year beginning after 1994, each dollar amount contained in subsection (b)(2)(A) 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 1993’ for ‘calendar year 1992’.’, and

      (2) by redesignating paragraph (3) as paragraph (2).

    (d) CONFORMING AMENDMENTS-

      (1) Subparagraph (D) of section 32(c)(3) is amended--

        (A) by striking ‘clause (i) or (ii)’ in clause (iii) and inserting ‘clause (i)’,

        (B) by striking clause (ii), and

        (C) by redesignating clause (iii) as clause (ii).

      (2) Paragraph (3) of section 162(l) is amended to read as follows:

      ‘(3) COORDINATION WITH MEDICAL DEDUCTION- Any amount paid by a taxpayer for insurance to which paragraph (1) applies shall not be taken into account in computing the amount allowable to the taxpayer as a deduction under section 213(a).’

      (3) Section 213 is amended by striking subsection (f).

      (4) Subsection (b) of section 3507 is amended by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively, and by inserting after paragraph (1) the following new paragraph:

      ‘(2) certifies that the employee has 1 or more qualifying children (within the meaning of section 32(c)(3)) for such taxable year,’.

      (5) Subparagraph (B) of section 3507(c)(2) is amended by striking clauses (i) and (ii) and inserting the following:

          ‘(i) of not more than 60 percent of the credit percentage in effect under section 32(b)(1) for an eligible individual with 1 qualifying child and with earned income not in excess of the earned income amount in effect under section 32(b)(2) for such an eligible individual, which

          ‘(ii) phases out at 60 percent of the phaseout percentage in effect under section 32(b)(1) for such an eligible individual between the phaseout amount in effect under section 32(b)(2) for such an eligible individual and the amount of earned income at which the credit under section 32(a) phases out for such an eligible individual, or’.

      (6) Section 3507 is amended by adding at the end thereof the following new subsection:

    ‘(f) INTERNAL REVENUE SERVICE NOTIFICATION- The Internal Revenue Service shall take such steps as may be appropriate to ensure that taxpayers who have 1 or more qualifying children and who receive a refund of the credit under section 32 are aware of the availability of earned income advance amounts under this section.’

    (e) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1993.

PART IV--INCENTIVES FOR INVESTMENT IN REAL ESTATE

Subpart A--Extension of Qualified Mortgage Bonds and Low-Income Housing Credit

SEC. 13141. PERMANENT EXTENSION OF QUALIFIED MORTGAGE BONDS.

    (a) IN GENERAL- Paragraph (1) of section 143(a) (defining qualified mortgage bond) is amended to read as follows:

      ‘(1) QUALIFIED MORTGAGE BOND DEFINED- For purposes of this title, the term ‘qualified mortgage bond’ means a bond which is issued as part of a qualified mortgage issue.’

    (b) MORTGAGE CREDIT CERTIFICATES- Section 25 is amended by striking subsection (h) and by redesignating subsections (i) and (j) as subsections (h) and (i), respectively.

    (c) TREATMENT OF RESALE PRICE CONTROL AND SUBSIDY LIEN PROGRAMS- Subsection (k) of section 143 is amended by adding at the end thereof the following new paragraph:

      ‘(10) TREATMENT OF RESALE PRICE CONTROL AND SUBSIDY LIEN PROGRAMS-

        ‘(A) IN GENERAL- In the case of a residence which is located in a high housing cost area (as defined in section 143(f)(5)), the interest of a governmental unit in such residence by reason of financing provided under any qualified program shall not be taken into account under this section (other than subsection (m)), and the acquisition cost of the residence which is taken into account under subsection (e) shall be such cost reduced by the amount of such financing.

        ‘(B) QUALIFIED PROGRAM- For purposes of subparagraph (A), the term ‘qualified program’ means any governmental program providing mortgage loans (other than 1st mortgage loans) or grants--

          ‘(i) which restricts (throughout the 9-year period beginning on the date the financing is provided) the resale of the residence to a purchaser qualifying under this section and to a price determined by an index that reflects less than the full amount of any appreciation in the residence’s value, or

          ‘(ii) which provides for deferred or reduced interest payments on such financing and grants the governmental unit a share in the appreciation of the residence,

        but only if such financing is not provided directly or indirectly through the use of any tax-exempt private activity bond.’

    (d) FINANCING ALLOWED FOR CONTRACT FOR DEED AGREEMENTS-

      (1) IN GENERAL- Paragraph (2) of section 143(d) (relating to exceptions to 3-year requirement) is amended--

        (A) by striking ‘and’ at the end of subparagraph (A),

        (B) by adding ‘and’ at the end of subparagraph (B), and

        (C) by inserting after subparagraph (B) the following new subparagraph:

        ‘(C) financing with respect to land described in subsection (i)(1)(C) and the construction of any residence thereon.’

      (2) EXCEPTION TO NEW MORTGAGE REQUIREMENT- Paragraph (1) of section 143(i) (relating to mortgages must be new mortgages) is amended by adding at the end thereof the following new subparagraph:

        ‘(C) EXCEPTION FOR CERTAIN CONTRACT FOR DEED AGREEMENTS-

          ‘(i) IN GENERAL- In the case of land possessed under a contract for deed by a mortgagor--

            ‘(I) whose principal residence (within the meaning of section 1034) is located on such land, and

            ‘(II) whose family income (as defined in subsection (f)(2)) is not more than 50 percent of applicable median family income (as defined in subsection (f)(4)),

          the contract for deed shall not be treated as an existing mortgage for purposes of subparagraph (A).

          ‘(ii) CONTRACT FOR DEED DEFINED- For purposes of this subparagraph, the term ‘contract for deed’ means a seller-financed contract for the conveyance of land under which--

            ‘(I) legal title does not pass to the purchaser until the consideration under the contract is fully paid to the seller, and

            ‘(II) the seller’s remedy for nonpayment is forfeiture rather than judicial or nonjudicial foreclosure.’

      (3) ACQUISITION COST INCLUDES COST OF LAND- Clause (iii) of section 143(k)(3)(B) is amended by inserting ‘(other than land described in subsection (i)(1)(C)(i))’ after ‘cost of land’.

    (e) FINANCING OF NEW 2-FAMILY RESIDENCES PERMITTED- Paragraph (7) of section 143(k) is amended by adding at the end thereof the following flush sentence:

      ‘Subparagraph (B) shall not apply to any 2-family residence if the residence is a targeted area residence and the family income of the mortgagor meets the requirement of subsection (f)(3)(B).’

    (f) EFFECTIVE DATES-

      (1) BONDS- The amendment made by subsection (a) shall apply to bonds issued after June 30, 1992.

      (2) CERTIFICATES- The amendment made by subsection (b) shall apply to elections for periods after June 30, 1992.

      (3) SUBSECTIONS (c) AND (e)- The amendments made by subsections (c) and (e) shall apply to qualified mortgage bonds issued and mortgage credit certificates provided on or after the date of enactment of this Act.

      (4) CONTRACT FOR DEED AGREEMENTS- The amendments made by subsection (d) shall apply to loans originated and credit certificates provided after the date of the enactment of this Act.

SEC. 13142. LOW-INCOME HOUSING CREDIT.

    (a) PERMANENT EXTENSION-

      (1) IN GENERAL- Section 42 (relating to low-income housing credit) is amended by striking subsection (o).

      (2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to periods ending after June 30, 1992.

    (b) MODIFICATIONS-

      (1) HOUSING CREDIT AGENCY DETERMINATION OF REASONABLENESS OF PROJECT COSTS- Subparagraph (B) of section 42(m)(2) (relating to credit allocated to building not to exceed amount necessary to assure project feasibility) is amended--

        (A) by striking ‘and’ at the end of clause (ii),

        (B) by striking the period at the end of clause (iii) and inserting ‘, and’, and

        (C) by inserting after clause (iii) the following new clause:

          ‘(iv) the reasonableness of the developmental and operational costs of the project.’

      (2) UNITS WITH CERTAIN FULL-TIME STUDENTS NOT DISQUALIFIED- Subparagraph (D) of section 42(i)(3) (defining low-income unit) is amended to read as follows:

        ‘(D) CERTAIN STUDENTS NOT TO DISQUALIFY UNIT- A unit shall not fail to be treated as a low-income unit merely because it is occupied--

          ‘(i) by an individual who is--

            ‘(I) a student and receiving assistance under title IV of the Social Security Act, or

            ‘(II) enrolled in a job training program receiving assistance under the Job Training Partnership Act or under other similar Federal, State, or local laws, or

          ‘(ii) entirely by full-time students if such students are--

            ‘(I) single parents and their children and such parents and children are not dependents (as defined in section 152) of another individual, or

            ‘(II) married and file a joint return.’

      (3) TREASURY WAIVERS OF CERTAIN DE MINIMIS ERRORS AND RECERTIFICATIONS- Subsection (g) of section 42 (relating to qualified low-income housing projects) is amended by adding at the end thereof the following new paragraph:

      ‘(8) WAIVER OF CERTAIN DE MINIMIS ERRORS AND RECERTIFICATIONS- On application by the taxpayer, the Secretary may waive--

        ‘(A) any recapture under subsection (j) in the case of any de minimis error in complying with paragraph (1), or

        ‘(B) any annual recertification of tenant income for purposes of this subsection, if the entire building is occupied by low-income tenants.’

      (4) DISCRIMINATION AGAINST TENANTS PROHIBITED- Section 42(h)(6)(B) (defining extended low-income housing commitment) is amended by redesignating clauses (iv) and (v) as clauses (v) and (vi) and by inserting after clause (iii) the following new clause:

          ‘(iv) which prohibits the refusal to lease to a holder of a voucher or certificate of eligibility under section 8 of the United States Housing Act of 1937 because of the status of the prospective tenant as such a holder,’.

      (5) HOME ASSISTANCE NOT TO RESULT IN CERTAIN BUILDINGS BEING FEDERALLY SUBSIDIZED- Paragraph (2) of section 42(i) (relating to determination of whether building is federally subsidized) is amended by adding at the end thereof the following new subparagraph:

        ‘(E) BUILDINGS RECEIVING HOME ASSISTANCE-

          ‘(i) IN GENERAL- Assistance provided under the HOME Investment Partnerships Act (as in effect on the date of the enactment of this subparagraph) with respect to any building shall not be taken into account under subparagraph (D) if 40 percent or more of the residential units in the building are occupied by individuals whose income is 50 percent or less of area median gross income. Subsection (d)(5)(C) shall not apply to any building to which the preceding sentence applies.

          ‘(ii) SPECIAL RULE FOR CERTAIN HIGH-COST HOUSING AREAS- In the case of a building located in a city described in section 142(d)(6), clause (i) shall be applied by substituting ‘25 percent’ for ‘40 percent’.’

      (6) EFFECTIVE DATES-

        (A) IN GENERAL- Except as provided in subparagraphs (B) and (C), the amendments made by this subsection shall apply to--

          (i) determinations under section 42 of the Internal Revenue Code of 1986 with respect to housing credit dollar amounts allocated from State housing credit ceilings after June 30, 1992, or

          (ii) buildings placed in service after June 30, 1992, to the extent paragraph (1) of section 42(h) of such Code does not apply to any building by reason of paragraph (4) thereof, but only with respect to bonds issued after such date.

        (B) WAIVER AUTHORITY AND PROHIBITED DISCRIMINATION- The amendments made by paragraphs (3) and (4) shall take effect on the date of the enactment of this Act.

        (C) HOME ASSISTANCE- The amendment made by paragraph (2) shall apply to periods after the date of the enactment of this Act.

    (c) ELECTION TO DETERMINE RENT LIMITATION BASED ON NUMBER OF BEDROOMS AND DEEP RENT SKEWING-

      (1) In the case of a building to which the amendments made by subsection (e)(1) or (n)(2) of section 7108 of the Revenue Reconciliation Act of 1989 did not apply, the taxpayer may elect to have such amendments apply to such building if the taxpayer has met the requirements of the procedures described in section 42(m)(1)(B)(iii) of the Internal Revenue Code of 1986.

      (2) In the case of the amendment made by such subsection (e)(1), such election shall apply only with respect to tenants first occupying any unit in the building after the date of the election.

      (3) In the case of the amendment made by such subsection (n)(2), such election shall apply only if rents of low-income tenants in such building do not increase as a result of such election.

      (4) An election under this subsection may be made only during the 180-day period beginning on the date of the enactment of this Act and, once made, shall be irrevocable.

Subpart B--Passive Loss Rules

SEC. 13143. APPLICATION OF PASSIVE LOSS RULES TO RENTAL REAL ESTATE ACTIVITIES.

    (a) RENTAL REAL ESTATE ACTIVITIES OF PERSONS IN REAL PROPERTY BUSINESS NOT AUTOMATICALLY TREATED AS PASSIVE ACTIVITIES- Subsection (c) of section 469 (defining passive activity) is amended by adding at the end thereof the following new paragraph:

      ‘(7) Special rules for taxpayers in real property business-

        ‘(A) IN GENERAL- If this paragraph applies to any taxpayer for a taxable year--

          ‘(i) paragraph (2) shall not apply to any rental real estate activity of such taxpayer for such taxable year, and

          ‘(ii) this section shall be applied as if each interest of the taxpayer in rental real estate were a separate activity.

        Notwithstanding clause (ii), a taxpayer may elect to treat all interests in rental real estate as one activity. Nothing in the preceding provisions of this subparagraph shall be construed as affecting the determination of whether the taxpayer materially participates with respect to any interest in a limited partnership as a limited partner.

        ‘(B) TAXPAYERS TO WHOM PARAGRAPH APPLIES- This paragraph shall apply to a taxpayer for a taxable year if--

          ‘(i) more than one-half of the personal services performed in trades or businesses by the taxpayer during such taxable year are performed in real property trades or businesses in which the taxpayer materially participates, and

          ‘(ii) such taxpayer performs more than 750 hours of services during the taxable year in real property trades or businesses in which the taxpayer materially participates.

        In the case of a joint return, the requirements of the preceding sentence are satisfied if and only if either spouse separately satisfies such requirements. For purposes of the preceding sentence, activities in which a spouse materially participates shall be determined under subsection (h).

        ‘(C) REAL PROPERTY TRADE OR BUSINESS- For purposes of this paragraph, the term ‘real property trade or business’ means any real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage trade or business.

        ‘(D) SPECIAL RULES FOR SUBPARAGRAPH (B)-

          ‘(i) CLOSELY HELD C CORPORATIONS- In the case of a closely held C corporation, the requirements of subparagraph (B) shall be treated as met for any taxable year if more than 50 percent of the gross receipts of such corporation for such taxable year are derived from real property trades or businesses in which the corporation materially participates.

          ‘(ii) PERSONAL SERVICES AS AN EMPLOYEE- For purposes of subparagraph (B), personal services performed as an employee shall not be treated as performed in real property trades or businesses. The preceding sentence shall not apply if such employee is a 5-percent owner (as defined in section 416(i)(1)(B)) in the employer.’

    (b) CONFORMING AMENDMENTS-

      (1) Paragraph (2) of section 469(c) is amended by striking ‘The’ and inserting ‘Except as provided in paragraph (7), the’.

      (2) Clause (iv) of section 469(i)(3)(E) is amended by inserting ‘or any loss allowable by reason of subsection (c)(7)’ after ‘loss’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1993.

Subpart C--Provisions Relating to Real Estate Investments by Pension Funds

SEC. 13144. REAL ESTATE PROPERTY ACQUIRED BY A QUALIFIED ORGANIZATION.

    (a) MODIFICATIONS OF EXCEPTIONS- Paragraph (9) of section 514(c) (relating to real property acquired by a qualified organization) is amended by adding at the end thereof the following new subparagraphs:

        ‘(G) SPECIAL RULES FOR PURPOSES OF THE EXCEPTIONS- Except as otherwise provided by regulations--

          ‘(i) SMALL LEASES DISREGARDED- For purposes of clauses (iii) and (iv) of subparagraph (B), a lease to a person described in such clause (iii) or (iv) shall be disregarded if no more than 25 percent of the leasable floor space in a building (or complex of buildings) is covered by the lease and if the lease is on commercially reasonable terms.

          ‘(ii) COMMERCIALLY REASONABLE FINANCING- Clause (v) of subparagraph (B) shall not apply if the financing is on commercially reasonable terms.

        ‘(H) QUALIFYING SALES BY FINANCIAL INSTITUTIONS-

          ‘(i) IN GENERAL- In the case of a qualifying sale by a financial institution, except as provided in regulations, clauses (i) and (ii) of subparagraph (B) shall not apply with respect to financing provided by such institution for such sale.

          ‘(ii) QUALIFYING SALE- For purposes of this clause, there is a qualifying sale by a financial institution if--

            ‘(I) a qualified organization acquires property described in clause (iii) from a financial institution and any gain recognized by the financial institution with respect to the property is ordinary income,

            ‘(II) the stated principal amount of the financing provided by the financial institution does not exceed the amount of the outstanding indebtedness (including accrued but unpaid interest) of the financial institution with respect to the property described in clause (iii) immediately before the acquisition referred to in clause (iii) or (v), whichever is applicable, and

            ‘(III) the present value (determined as of the time of the sale and by using the applicable Federal rate determined under section 1274(d)) of the maximum amount payable pursuant to the financing that is determined by reference to the revenue, income, or profits derived from the property cannot exceed 30 percent of the total purchase price of the property (including the contingent payments).

          ‘(iii) PROPERTY TO WHICH SUBPARAGRAPH APPLIES- Property is described in this clause if such property is foreclosure property, or is real property which--

            ‘(I) was acquired by the qualified organization from a financial institution which is in conservatorship or receivership, or from the conservator or receiver of such an institution, and

            ‘(II) was held by the financial institution at the time it entered into conservatorship or receivership.

          ‘(iv) FINANCIAL INSTITUTION- For purposes of this subparagraph, the term ‘financial institution’ means--

            ‘(I) any financial institution described in section 581 or 591(a),

            ‘(II) any other corporation which is a direct or indirect subsidiary of an institution referred to in subclause (I) but only if, by virtue of being affiliated with such institution, such other corporation is subject to supervision and examination by a Federal or State agency which regulates institutions referred to in subclause (I), and

            ‘(III) any person acting as a conservator or receiver of an entity referred to in subclause (I) or (II) (or any government agency or corporation succeeding to the rights or interest of such person).

          ‘(v) FORECLOSURE PROPERTY- For purposes of this subparagraph, the term ‘foreclosure property’ means any real property acquired by the financial institution as the result of having bid on such property at foreclosure, or by operation of an agreement or process of law, after there was a default (or a default was imminent) on indebtedness which such property secured.’.

    (b) CONFORMING AMENDMENT- Paragraph (9) of section 514(c) is amended--

      (1) by adding the following new sentence at the end of subparagraph (A): ‘For purposes of this paragraph, an interest in a mortgage shall in no event be treated as real property.’, and

      (2) by striking the last sentence of subparagraph (B).

    (c) EFFECTIVE DATES-

      (1) IN GENERAL- The amendments made by this section shall apply to acquisitions on or after January 1, 1994.

      (2) SMALL LEASES- The provisions of section 514(c)(9)(G)(i) of the Internal Revenue Code of 1986 shall, in addition to any leases to which the provisions apply by reason of paragraph (1), apply to leases entered into on or after January 1, 1994.

SEC. 13145. REPEAL OF SPECIAL TREATMENT OF PUBLICLY TREATED PARTNERSHIPS.

    (a) GENERAL RULE- Subsection (c) of section 512 is amended--

      (1) by striking paragraph (2),

      (2) by redesignating paragraph (3) as paragraph (2), and

      (3) by striking ‘paragraph (1) or (2)’ in paragraph (2) (as so redesignated) and inserting ‘paragraph (1)’.

    (b) EFFECTIVE DATE- The amendments made by subsection (a) shall apply to partnership years beginning on or after January 1, 1994.

SEC. 13146. TITLE-HOLDING COMPANIES PERMITTED TO RECEIVE SMALL AMOUNTS OF UNRELATED BUSINESS TAXABLE INCOME.

    (a) GENERAL RULE- Paragraph (25) of section 501(c) is amended by adding at the end thereof the following new subparagraph:

        ‘(G)(i) An organization shall not be treated as failing to be described in this paragraph merely by reason of the receipt of any otherwise disqualifying income which is incidentally derived from the holding of real property.

        ‘(ii) Clause (i) shall not apply if the amount of gross income described in such clause exceeds 10 percent of the organization’s gross income for the taxable year unless the organization establishes to the satisfaction of the Secretary that the receipt of gross income described in clause (i) in excess of such limitation was inadvertent and reasonable steps are being taken to correct the circumstances giving rise to such income.’

    (b) CONFORMING AMENDMENT- Paragraph (2) of section 501(c) is amended by adding at the end thereof the following new sentence: ‘Rules similar to the rules of subparagraph (G) of paragraph (25) shall apply for purposes of this paragraph.’

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning on or after January 1, 1994.

SEC. 13147. EXCLUSION FROM UNRELATED BUSINESS TAX OF GAINS FROM CERTAIN PROPERTY.

    (a) GENERAL RULE- Subsection (b) of section 512 (relating to modifications) is amended by adding at the end thereof the following new paragraph:

      ‘(16)(A) Notwithstanding paragraph (5)(B), there shall be excluded all gains or losses from the sale, exchange, or other disposition of any real property described in subparagraph (B) if--

        ‘(i) such property was acquired by the organization from--

          ‘(I) a financial institution described in section 581 or 591(a) which is in conservatorship or receivership, or

          ‘(II) the conservator or receiver of such an institution (or any government agency or corporation succeeding to the rights or interests of the conservator or receiver),

        ‘(ii) such property is designated by the organization within the 9-month period beginning on the date of its acquisition as property held for sale, except that not more than one-half (by value determined as of such date) of property acquired in a single transaction may be so designated,

        ‘(iii) such sale, exchange, or disposition occurs before the later of--

          ‘(I) the date which is 30 months after the date of the acquisition of such property, or

          ‘(II) the date specified by the Secretary in order to assure an orderly disposition of property held by persons described in subparagraph (A), and

        ‘(iv) while such property was held by the organization, the aggregate expenditures on improvements and development activities included in the basis of the property are (or were) not in excess of 20 percent of the net selling price of such property.

      ‘(B) Property is described in this subparagraph if it is real property which--

        ‘(i) was held by the financial institution at the time it entered into conservatorship or receivership, or

        ‘(ii) was foreclosure property (as defined in section 514(c)(9)(H)(v)) which secured indebtedness held by the financial institution at such time.

      For purposes of this subparagraph, real property includes an interest in a mortgage.’

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to property acquired on or after January 1, 1994.

SEC. 13148. EXCLUSION FROM UNRELATED BUSINESS TAX OF CERTAIN FEES AND OPTION PREMIUMS.

    (a) LOAN COMMITMENT FEES- Paragraph (1) of section 512(b) (relating to modifications) is amended by inserting ‘amounts received or accrued as consideration for entering into agreements to make loans,’ before ‘and annuities’.

    (b) OPTION PREMIUMS- The second sentence of section 512(b)(5) is amended--

      (1) by striking ‘all gains on’ and inserting ‘all gains or losses recognized, in connection with the organization’s investment activities, from’,

      (2) by striking ‘, written by the organization in connection with its investment activities,’ and

      (3) by inserting ‘or real property and all gains or losses from the forfeiture of good-faith deposits (that are consistent with established business practice) for the purchase, sale, or lease of real property in connection with the organization’s investment activities’ before the period.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to amounts received on or after January 1, 1994.

SEC. 13149. TREATMENT OF PENSION FUND INVESTMENTS IN REAL ESTATE INVESTMENT TRUSTS.

    (a) GENERAL RULE- Subsection (h) of section 856 (relating to closely held determinations) is amended by adding at the end thereof the following new paragraph:

      ‘(3) TREATMENT OF TRUSTS DESCRIBED IN SECTION 401(a)-

        ‘(A) LOOK-THRU TREATMENT-

          ‘(i) IN GENERAL- Except as provided in clause (ii), in determining whether the stock ownership requirement of section 542(a)(2) is met for purposes of paragraph (1)(A), any stock held by a qualified trust shall be treated as held directly by its beneficiaries in proportion to their actuarial interests in such trust and shall not be treated as held by such trust.

          ‘(ii) CERTAIN RELATED TRUSTS NOT ELIGIBLE- Clause (i) shall not apply to any qualified trust if one or more disqualified persons (as defined in section 4975(e)(2), without regard to subparagraphs (B) and (I) thereof) with respect to such qualified trust hold in the aggregate 5 percent or more in value of the interests in the real estate investment trust and such real estate investment trust has accumulated earnings and profits attributable to any period for which it did not qualify as a real estate investment trust.

        ‘(B) COORDINATION WITH PERSONAL HOLDING COMPANY RULES- If any entity qualifies as a real estate investment trust for any taxable year by reason of subparagraph (A), such entity shall not be treated as a personal holding company for such taxable year for purposes of part II of subchapter G of this chapter.

        ‘(C) TREATMENT FOR PURPOSES OF UNRELATED BUSINESS TAX- If any qualified trust holds more than 10 percent (by value) of the interests in any pension-held REIT at any time during a taxable year, the trust shall be treated as having for such taxable year gross income from an unrelated trade or business in an amount which bears the same ratio to the aggregate dividends paid (or treated as paid) by the REIT to the trust for the taxable year of the REIT with or within which the taxable year of the trust ends (the ‘REIT year’) as--

          ‘(i) the gross income (less direct expenses related thereto) of the REIT for the REIT year from unrelated trades or businesses (determined as if the REIT were a qualified trust), bears to

          ‘(ii) the gross income (less direct expenses related thereto) of the REIT for the REIT year.

        This subparagraph shall apply only if the ratio determined under the preceding sentence is at least 5 percent.

        ‘(D) PENSION-HELD REIT- The purposes of subparagraph (C)--

          ‘(i) IN GENERAL- A real estate investment trust is a pension-held REIT if such trust would not have qualified as a real estate investment trust but for the provisions of this paragraph and if such trust is predominantly held by qualified trusts.

          ‘(ii) PREDOMINANTLY HELD- For purposes of clause (i), a real estate investment trust is predominantly held by qualified trusts if--

            ‘(I) at least 1 qualified trust holds more than 25 percent (by value) of the interests in such real estate investment trust, or

            ‘(II) 1 or more qualified trusts (each of whom own more than 10 percent by value of the interests in such real estate investment trust) hold in the aggregate more than 50 percent (by value) of the interests in such real estate investment trust.

        ‘(E) QUALIFIED TRUST- For purposes of this paragraph, the term ‘qualified trust’ means any trust described in section 401(a) and exempt from tax under section 501(a).’

    (b) EFFECTIVE DATE- The amendment made by this section shall apply to taxable years beginning after December 31, 1993.

Subpart D--Discharge of Indebtedness

SEC. 13150. EXCLUSION FROM GROSS INCOME FOR INCOME FROM DISCHARGE OF QUALIFIED REAL PROPERTY BUSINESS INDEBTEDNESS.

    (a) IN GENERAL- Paragraph (1) of section 108(a) (relating to income from discharge of indebtedness) is amended by striking ‘or’ at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting ‘, or’, and by adding at the end the following new subparagraph:

      ‘(D) in the case of a taxpayer other than a C corporation, the indebtedness discharged is qualified real property business indebtedness.’

    (b) QUALIFIED REAL PROPERTY BUSINESS INDEBTEDNESS- Section 108 is amended by inserting after subsection (b) the following new subsection:

    ‘(c) TREATMENT OF DISCHARGE OF QUALIFIED REAL PROPERTY BUSINESS INDEBTEDNESS-

      ‘(1) BASIS REDUCTION-

        ‘(A) IN GENERAL- The amount excluded from gross income under subparagraph (D) of subsection (a)(1) shall be applied to reduce the basis of the depreciable real property of the taxpayer.

        ‘(B) CROSS REFERENCE- For provisions making the reduction described in subparagraph (A), see section 1017.

      ‘(2) LIMITATIONS-

        ‘(A) INDEBTEDNESS IN EXCESS OF VALUE- The amount excluded under subparagraph (D) of subsection (a)(1) with respect to any qualified real property business indebtedness shall not exceed the excess (if any) of--

          ‘(i) the outstanding principal amount of such indebtedness (immediately before the discharge), over

          ‘(ii) the fair market value of the real property described in paragraph (3)(A) (as of such time), reduced by the outstanding principal amount of any other qualified real property business indebtedness secured by such property (as of such time).

        ‘(B) OVERALL LIMITATION- The amount excluded under subparagraph (D) of subsection (a)(1) shall not exceed the aggregate adjusted bases of depreciable real property (determined after any reductions under subsections (b) and (g)) held by the taxpayer immediately before the discharge (other than depreciable real property acquired in contemplation of such discharge).

      ‘(3) QUALIFIED REAL PROPERTY BUSINESS INDEBTEDNESS- The term ‘qualified real property business indebtedness’ means indebtedness which--

        ‘(A) was incurred or assumed by the taxpayer in connection with real property used in a trade or business and is secured by such real property,

        ‘(B) was incurred or assumed before January 1, 1993, or if incurred or assumed on or after such date, is qualified acquisition indebtedness, and

        ‘(C) with respect to which such taxpayer makes an election to have this paragraph apply.

      Such term shall not include qualified farm indebtedness. Indebtedness under subparagraph (B) shall include indebtedness resulting from the refinancing of indebtedness under subparagraph (B) (or this sentence), but only to the extent it does not exceed the amount of the indebtedness being refinanced.

      ‘(4) QUALIFIED ACQUISITION INDEBTEDNESS- For purposes of paragraph (3)(B), the term ‘qualified acquisition indebtedness’ means, with respect to any real property described in paragraph (3)(A), indebtedness incurred or assumed to acquire, construct, reconstruct, or substantially improve such property.

      ‘(5) REGULATIONS- The Secretary shall issue such regulations as are necessary to carry out this subsection, including regulations preventing the abuse of this subsection through cross-collateralization or other means.’

    (c) TECHNICAL AMENDMENTS-

      (1) Subparagraph (A) of section 108(a)(2) is amended by striking ‘and (C)’ and inserting ‘, (C), and (D)’.

      (2) Subparagraph (B) of section 108(a)(2) is amended to read as follows:

        ‘(B) INSOLVENCY EXCLUSION TAKES PRECEDENCE OVER QUALIFIED FARM EXCLUSION AND QUALIFIED REAL PROPERTY BUSINESS EXCLUSION- Subparagraphs (C) and (D) of paragraph (1) shall not apply to a discharge to the extent the taxpayer is insolvent.’

      (3) Subsection (d) of section 108 is amended--

        (A) by striking ‘subsections (a), (b), and (g)’ in paragraphs (6) and (7)(A) and inserting ‘subsections (a), (b), (c), and (g)’,

        (B) by striking ‘SUBSECTIONS (a), (b), AND (g)’ in the subsection heading and inserting ‘CERTAIN PROVISIONS’, and

        (C) by striking ‘SUBSECTIONS (a), (b), AND (g)’ in the headings of paragraphs (6) and (7)(A) and inserting ‘CERTAIN PROVISIONS’.

      (4) Subparagraph (B) of section 108(d)(7) is amended by adding at the end thereof the following new sentence: ‘The preceding sentence shall not apply to any discharge to the extent that subsection (a)(1)(D) applies to such discharge.’

      (5) Subparagraph (A) of section 108(d)(9) is amended by inserting ‘or under paragraph (3)(B) of subsection (c)’ after ‘subsection (b)’.

      (6) Paragraph (2) of section 1017(a) is amended by striking ‘or (b)(5)’ and inserting ‘, (b)(5), or (c)(1)’.

      (7) Subparagraph (A) of section 1017(b)(3) is amended by inserting ‘or (c)(1)’ after ‘subsection (b)(5)’.

      (8) Section 1017(b)(3) is amended by adding at the end the following new subparagraph:

        ‘(F) SPECIAL RULES FOR QUALIFIED REAL PROPERTY BUSINESS INDEBTEDNESS- In the case of any amount which under section 108(c)(1) is to be applied to reduce basis--

          ‘(i) depreciable property shall only include depreciable real property for purposes of subparagraphs (A) and (C),

          ‘(ii) subparagraph (E) shall not apply, and

          ‘(iii) in the case of property taken into account under section 108(c)(2)(B), the reduction with respect to such property shall be made as of the time immediately before disposition if earlier than the time under subsection (a).’

      (9) Paragraph (1) of section 703(b) is amended by striking ‘subsection (b)(5)’ and inserting ‘subsection (b)(5) or (c)(3)’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to discharges after December 31, 1992, in taxable years ending after such date.

Subpart E--Increase in Recovery Period for Nonresidential Real Property

SEC. 13151. INCREASE IN RECOVERY PERIOD FOR NONRESIDENTIAL REAL PROPERTY.

    (a) GENERAL RULE- Paragraph (1) of section 168(c) (relating to applicable recovery period) is amended by striking the item relating to nonresidential real property and inserting the following:

‘Nonresidential real property

--39 years.’.

    (b) EFFECTIVE DATE-

      (1) IN GENERAL- Except as provided in paragraph (2), the amendment made by subsection (a) shall apply to property placed in service by the taxpayer on or after May 13, 1993.

      (2) EXCEPTION- The amendments made by this section shall not apply to property placed in service by the taxpayer before January 1, 1994, if--

        (A) the taxpayer or a qualified person entered into a binding written contract to purchase or construct such property before May 13, 1993, or

        (B) the construction of such property was commenced by or for the taxpayer or a qualified person before May 13, 1993.

      For purposes of this paragraph, the term ‘qualified person’ means any person who transfers his rights in such a contract or such property to the taxpayer but only if the property is not placed in service by such person before such rights are transferred to the taxpayer.

PART V--LUXURY TAX

SEC. 13161. REPEAL OF LUXURY EXCISE TAXES OTHER THAN ON PASSENGER VEHICLES.

    (a) IN GENERAL- Subchapter A of chapter 31 (relating to retail excise taxes) is amended to read as follows:

‘Subchapter A--Luxury Passenger Automobiles

‘Sec. 4001. Imposition of tax.

‘Sec. 4002. 1st retail sale; uses, etc. treated as sales; determination of price.

‘Sec. 4003. Special rules.

‘SEC. 4001. IMPOSITION OF TAX.

    ‘(a) IMPOSITION OF TAX- There is hereby imposed on the 1st retail sale of any passenger vehicle a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $30,000.

    ‘(b) PASSENGER VEHICLE-

      ‘(1) IN GENERAL- For purposes of this subchapter, the term ‘passenger vehicle’ means any 4-wheeled vehicle--

        ‘(A) which is manufactured primarily for use on public streets, roads, and highways, and

        ‘(B) which is rated at 6,000 pounds unloaded gross vehicle weight or less.

      ‘(2) SPECIAL RULES-

        ‘(A) TRUCKS AND VANS- In the case of a truck or van, paragraph (1)(B) shall be applied by substituting ‘gross vehicle weight’ for ‘unloaded gross vehicle weight’.

        ‘(B) LIMOUSINES- In the case of a limousine, paragraph (1) shall be applied without regard to subparagraph (B) thereof.

    ‘(c) EXCEPTIONS FOR TAXICABS, ETC- The tax imposed by this section shall not apply to the sale of any passenger vehicle for use by the purchaser exclusively in the active conduct of a trade or business of transporting persons or property for compensation or hire.

    ‘(d) EXEMPTION FOR LAW ENFORCEMENT USES, ETC- No tax shall be imposed by this section on the sale of any passenger vehicle--

      ‘(1) to the Federal Government, or a State or local government, for use exclusively in police, firefighting, search and rescue, or other law enforcement or public safety activities, or in public works activities, or

      ‘(2) to any person for use exclusively in providing emergency medical services.

    ‘(e) INFLATION ADJUSTMENT-

      ‘(1) IN GENERAL- If, for any calendar year, the excess (if any) of--

        ‘(A) $30,000, increased by the cost-of-living adjustment for the calendar year, over

        ‘(B) the dollar amount in effect under subsection (a) for the calendar year,

      is equal to or greater than $2,000, then the $30,000 amount in subsection (a) and section 4003(a) (as previously adjusted under this subsection) for any subsequent calendar year shall be increased by the amount of such excess rounded to the next lowest multiple of $2,000.

      ‘(2) COST-OF-LIVING ADJUSTMENT- For purposes of paragraph (1), the cost-of-living adjustment for any calendar year shall be the cost-of-living adjustment under section 1(f)(3) for such calendar year, determined by substituting ‘calendar year 1990’ for ‘calendar year 1992’ in subparagraph (B) thereof.

    ‘(f) TERMINATION- The tax imposed by this section shall not apply to any sale or use after December 31, 1999.

‘SEC. 4002. 1ST RETAIL SALE; USES, ETC. TREATED AS SALES; DETERMINATION OF PRICE.

    ‘(a) 1ST RETAIL SALE- For purposes of this subchapter, the term ‘1st retail sale’ means the 1st sale, for a purpose other than resale, after manufacture, production, or importation.

    ‘(b) USE TREATED AS SALE-

      ‘(1) IN GENERAL- If any person uses a passenger vehicle (including any use after importation) before the 1st retail sale of such vehicle, then such person shall be liable for tax under this subchapter in the same manner as if such vehicle were sold at retail by him.

      ‘(2) EXEMPTION FOR FURTHER MANUFACTURE- Paragraph (1) shall not apply to use of a vehicle as material in the manufacture or production of, or as a component part of, another vehicle taxable under this subchapter to be manufactured or produced by him.

      ‘(3) EXEMPTION FOR DEMONSTRATION USE- Paragraph (1) shall not apply to any use of a passenger vehicle as a demonstrator.

      ‘(4) EXCEPTION FOR USE AFTER IMPORTATION OF CERTAIN VEHICLES- Paragraph (1) shall not apply to the use of a vehicle after importation if the user or importer establishes to the satisfaction of the Secretary that the 1st use of the vehicle occurred before January 1, 1991, outside the United States.

      ‘(5) COMPUTATION OF TAX- In the case of any person made liable for tax by paragraph (1), the tax shall be computed on the price at which similar vehicles are sold at retail in the ordinary course of trade, as determined by the Secretary.

    ‘(c) LEASES CONSIDERED AS SALES- For purposes of this subchapter--

      ‘(1) IN GENERAL- Except as otherwise provided in this subsection, the lease of a vehicle (including any renewal or any extension of a lease or any subsequent lease of such vehicle) by any person shall be considered a sale of such vehicle at retail.

      ‘(2) SPECIAL RULES FOR LONG-TERM LEASES-

        ‘(A) TAX NOT IMPOSED ON SALE FOR LEASING IN A QUALIFIED LEASE- The sale of a passenger vehicle to a person engaged in a passenger vehicle leasing or rental trade or business for leasing by such person in a long-term lease shall not be treated as the 1st retail sale of such vehicle.

        ‘(B) LONG-TERM LEASE- For purposes of subparagraph (A), the term ‘long-term lease’ means any long-term lease (as defined in section 4052).

        ‘(C) SPECIAL RULES- In the case of a long-term lease of a vehicle which is treated as the 1st retail sale of such vehicle--

          ‘(i) DETERMINATION OF PRICE- The tax under this subchapter shall be computed on the lowest price for which the vehicle is sold by retailers in the ordinary course of trade.

          ‘(ii) PAYMENT OF TAX- Rules similar to the rules of section 4217(e)(2) shall apply.

          ‘(iii) NO TAX WHERE EXEMPT USE BY LESSEE- No tax shall be imposed on any lease payment under a long-term lease if the lessee’s use of the vehicle under such lease is an exempt use (as defined in section 4003(b)) of such vehicle.

    ‘(d) DETERMINATION OF PRICE-

      ‘(1) IN GENERAL- In determining price for purposes of this subchapter--

        ‘(A) there shall be included any charge incident to placing the passenger vehicle in condition ready for use,

        ‘(B) there shall be excluded--

          ‘(i) the amount of the tax imposed by this subchapter,

          ‘(ii) if stated as a separate charge, the amount of any retail sales tax imposed by any State or political subdivision thereof or the District of Columbia, whether the liability for such tax is imposed on the vendor or vendee, and

          ‘(iii) the value of any component of such passenger vehicle if--

            ‘(I) such component is furnished by the 1st user of such passenger vehicle, and

            ‘(II) such component has been used before such furnishing, and

        ‘(C) the price shall be determined without regard to any trade-in.

      ‘(2) OTHER RULES- Rules similar to the rules of paragraphs (2) and (4) of section 4052(b) shall apply for purposes of this subchapter.

‘SEC. 4003. SPECIAL RULES.

    ‘(a) SEPARATE PURCHASE OF VEHICLE AND PARTS AND ACCESSORIES THEREFOR- Under regulations prescribed by the Secretary--

      ‘(1) IN GENERAL- Except as provided in paragraph (2), if--

        ‘(A) the owner, lessee, or operator of any passenger vehicle installs (or causes to be installed) any part or accessory on such vehicle, and

        ‘(B) such installation is not later than the date 6 months after the date the vehicle was 1st placed in service,

      then there is hereby imposed on such installation a tax equal to 10 percent of the price of such part or accessory and its installation.

      ‘(2) LIMITATION- The tax imposed by paragraph (1) on the installation of any part or accessory shall not exceed 10 percent of the excess (if any) of--

        ‘(A) the sum of--

          ‘(i) the price of such part or accessory and its installation,

          ‘(ii) the aggregate price of the parts and accessories (and their installation) installed before such part or accessory, plus

          ‘(iii) the price for which the passenger vehicle was sold, over

        ‘(B) $30,000.

      ‘(3) EXCEPTIONS- Paragraph (1) shall not apply if--

        ‘(A) the part or accessory installed is a replacement part or accessory,

        ‘(B) the part or accessory is installed to enable or assist an individual with a disability to operate the vehicle, or to enter or exit the vehicle, by compensating for the effect of such disability, or

        ‘(C) the aggregate price of the parts and accessories (and their installation) described in paragraph (1) with respect to the vehicle does not exceed $200 (or such other amount or amounts as the Secretary may by regulation prescribe).

      The price of any part or accessory (and its installation) to which paragraph (1) does not apply by reason of this paragraph shall not be taken into account under paragraph (2)(A).

      ‘(4) INSTALLERS SECONDARILY LIABLE FOR TAX- The owners of the trade or business installing the parts or accessories shall be secondarily liable for the tax imposed by this subsection.

    ‘(b) IMPOSITION OF TAX ON SALES, ETC., WITHIN 2 YEARS OF VEHICLES PURCHASED TAX-FREE-

      ‘(1) IN GENERAL- If--

        ‘(A) no tax was imposed under this subchapter on the 1st retail sale of any passenger vehicle by reason of its exempt use, and

        ‘(B) within 2 years after the date of such 1st retail sale, such vehicle is resold by the purchaser or such purchaser makes a substantial nonexempt use of such vehicle,

      then such sale or use of such vehicle by such purchaser shall be treated as the 1st retail sale of such vehicle for a price equal to its fair market value at the time of such sale or use.

      ‘(2) EXEMPT USE- For purposes of this subsection, the term ‘exempt use’ means any use of a vehicle if the 1st retail sale of such vehicle is not taxable under this subchapter by reason of such use.

    ‘(c) PARTS AND ACCESSORIES SOLD WITH TAXABLE PASSENGER VEHICLE- Parts and accessories sold on, in connection with, or with the sale of any passenger vehicle shall be treated as part of the vehicle.

    ‘(d) PARTIAL PAYMENTS, ETC- In the case of a contract, sale, or arrangement described in paragraph (2), (3), or (4) of section 4216(c), rules similar to the rules of section 4217(e)(2) shall apply for purposes of this subchapter.’

    (b) TECHNICAL AMENDMENTS-

      (1) Subsection (c) of section 4221 is amended by striking ‘4002(b), 4003(c), 4004(a)’ and inserting ‘4001(d)’.

      (2) Subsection (d) of section 4222 is amended by striking ‘4002(b), 4003(c), 4004(a)’ and inserting ‘4001(d)’.

      (3) The table of subchapters for chapter 31 is amended by striking the item relating to subchapter A and inserting the following:

‘Subchapter A. Luxury passenger vehicles.’

    (c) EFFECTIVE DATE- The amendments made by this section shall take effect on January 1, 1993, except that the provisions of section 4001(e) of the Internal Revenue Code of 1986 (as amended by subsection (a)) shall take effect on the date of the enactment of this Act.

SEC. 13162. EXEMPTION FROM LUXURY EXCISE TAX FOR CERTAIN EQUIPMENT INSTALLED ON PASSENGER VEHICLES FOR USE BY DISABLED INDIVIDUALS.

    (a) IN GENERAL- Paragraph (3) of section 4004(b) (relating to separate purchase of article and parts and accessories therefor), as in effect on the day before the date of the enactment of this Act, is amended--

      (1) by striking ‘or’ at the end of subparagraph (A),

      (2) by redesignating subparagraph (B) as subparagraph (C),

      (3) by inserting after subparagraph (A) the following new subparagraph:

        ‘(B) the part or accessory is installed on a passenger vehicle to enable or assist an individual with a disability to operate the vehicle, or to enter or exit the vehicle, by compensating for the effect of such disability, or’, and

      (4) by inserting after subparagraph (C) the following flush sentence:

      ‘The price of any part or accessory (and its installation) to which paragraph (1) does not apply by reason of this paragraph shall not be taken into account under paragraph (2)(A).’

    (b) EFFECTIVE DATE- The amendments made by this section shall take effect as if included in the amendments made by section 11221(a) of the Omnibus Budget Reconciliation Act of 1990.

    (c) PERIOD FOR FILING CLAIMS- If refund or credit of any overpayment of tax resulting from the application of the amendments made by this section is prevented at any time before the close of the 1-year period beginning on the date of the enactment of this Act by the operation of any law or rule of law (including res judicata), refund or credit of such overpayment (to the extent attributable to such amendments) may, nevertheless, be made or allowed if claim therefor is filed before the close of such 1-year period.

SEC. 13163. TAX ON DIESEL FUEL USED IN NONCOMMERCIAL BOATS.

    (a) GENERAL RULE-

      (1) Paragraph (2) of section 4092(a) (defining diesel fuel) is amended by striking ‘or a diesel-powered train’ and inserting ‘, a diesel-powered train, or a diesel-powered boat’.

      (2) Paragraph (1) of section 4041(a) is amended--

        (A) by striking ‘diesel-powered highway vehicle’ each place it appears and inserting ‘diesel-powered highway vehicle or diesel-powered boat’, and

        (B) by striking ‘such vehicle’ and inserting ‘such vehicle or boat’.

      (3) Subparagraph (B) of section 4092(b)(1) is amended by striking ‘commercial and noncommercial vessels’ each place it appears and inserting ‘vessels for use in an off-highway business use (as defined in section 6421(e)(2)(B))’.

    (b) EXEMPTION FOR USE IN FISHERIES OR COMMERCIAL TRANSPORTATION- Subparagraph (B) of section 6421(e)(2) is amended to read as follows:

        ‘(B) USES IN BOATS-

          ‘(i) IN GENERAL- Except as otherwise provided in this subparagraph, the term ‘off-highway business use’ does not include any use in a motorboat.

          ‘(ii) FISHERIES AND WHALING- The term ‘off-highway business use’ shall include any use in a vessel employed in the fisheries or in the whaling business.

          ‘(iii) EXCEPTION FOR DIESEL FUEL- The term ‘off-highway business use’ shall include the use of diesel fuel in a boat in the active conduct of--

            ‘(I) a trade or business of commercial fishing or transporting persons or property for compensation or hire, and

            ‘(II) except as provided in clause (iv), any other trade or business.

          ‘(iv) NONCOMMERCIAL BOATS- In the case of a boat used predominantly in any activity which is of a type generally considered to constitute entertainment, amusement, or recreation, clause (iii)(II) shall not apply to--

            ‘(I) the taxes under sections 4041(a)(1) and 4081 for the period after December 31, 1993, and before January 1, 2000, and

            ‘(II) so much of the tax under sections 4041(a)(1) and 4081 as does not exceed 4.3 cents per gallon for the period after December 31, 1999.’

    (c) RETENTION OF TAXES IN GENERAL FUND- Subsection (b) of section 9508 (relating to transfers to Leaking Underground Storage Tank Trust Fund) is amended by adding at the end thereof the following new sentence: ‘For purposes of this subsection, there shall not be taken into account the taxes imposed by sections 4041 and 4081 on diesel fuel sold for use or used as fuel in a diesel-powered boat.’

    (d) EFFECTIVE DATE- The amendments made by this section shall take effect on January 1, 1994.

PART VI--OTHER CHANGES

SEC. 13171. ALTERNATIVE MINIMUM TAX TREATMENT OF CONTRIBUTIONS OF APPRECIATED PROPERTY.

    (a) REPEAL OF TAX PREFERENCE- Subsection (a) of section 57 (as amended by section 13113) is amended by striking paragraph (6) (relating to appreciated property charitable deduction) and by redesignating paragraphs (7) and (8) as paragraphs (6) and (7), respectively.

    (b) EFFECT ON ADJUSTED CURRENT EARNINGS- Paragraph (4) of section 56(g) is amended by adding at the end thereof the following new subparagraph:

        ‘(J) TREATMENT OF CHARITABLE CONTRIBUTIONS- Notwithstanding subparagraphs (B) and (C), no adjustment related to the earnings and profits effects of any charitable contribution shall be made in computing adjusted current earnings.’

    (c) CONFORMING AMENDMENT- Subclause (II) of section 53(d)(1)(B)(ii) (as amended by section 13113) is amended by striking ‘(5), (6), and (8)’ and inserting ‘(5), and (7)’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to contributions made after June 30, 1992, except that in the case of any contribution of capital gain property which is not tangible personal property, such amendments shall apply only if the contribution is made after December 31, 1992.

SEC. 13172. SUBSTANTIATION REQUIREMENT FOR DEDUCTION OF CERTAIN CHARITABLE CONTRIBUTIONS.

    (a) SUBSTANTIATION REQUIREMENT- Section 170(f) (providing special rules relating to the deduction of charitable contributions and gifts) is amended by adding at the end the following new paragraph:

      ‘(8) Substantiation requirement for certain contributions-

        ‘(A) GENERAL RULE- No deduction shall be allowed under subsection (a) for any contribution of $250 or more unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgment of the contribution by the donee organization that meets the requirements of subparagraph (B).

        ‘(B) CONTENT OF ACKNOWLEDGEMENT- An acknowledgement meets the requirements of this subparagraph if it includes the following information:

          ‘(i) The amount of cash and a description (but not value) of any property other than cash contributed.

          ‘(ii) Whether the donee organization provided any goods or services in consideration, in whole or in part, for any property described in clause (i).

          ‘(iii) A description and good faith estimate of the value of any goods or services referred to in clause (ii) or, if such goods or services consist solely of intangible religious benefits, a statement to that effect.

        For purposes of this subparagraph, the term ‘intangible religious benefit’ means any intangible religious benefit which is provided by an organization organized exclusively for religious purposes and which generally is not sold in a commercial transaction outside the donative context.

        ‘(C) CONTEMPORANEOUS- For purposes of subparagraph (A), an acknowledgment shall be considered to be contemporaneous if the taxpayer obtains the acknowledgment on or before the earlier of--

          ‘(i) the date on which the taxpayer files a return for the taxable year in which the contribution was made, or

          ‘(ii) the due date (including extensions) for filing such return.

        ‘(D) SUBSTANTIATION NOT REQUIRED FOR CONTRIBUTIONS REPORTED BY THE DONEE ORGANIZATION- Subparagraph (A) shall not apply to a contribution if the donee organization files a return, on such form and in accordance with such regulations as the Secretary may prescribe, which includes the information described in subparagraph (B) with respect to the contribution.

        ‘(E) REGULATIONS- The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this paragraph, including regulations that may provide that some or all of the requirements of this paragraph do not apply in appropriate cases.’

    (b) EFFECTIVE DATE- The provisions of this section shall apply to contributions made on or after January 1, 1994.

SEC. 13173. DISCLOSURE RELATED TO QUID PRO QUO CONTRIBUTIONS.

    (a) DISCLOSURE REQUIREMENT- Subchapter B of chapter 61 (relating to information and returns) is amended by redesignating section 6115 as section 6116 and by inserting after section 6114 the following new section:

‘SEC. 6115. DISCLOSURE RELATED TO QUID PRO QUO CONTRIBUTIONS.

    ‘(a) DISCLOSURE REQUIREMENT- If an organization described in section 170(c) (other than paragraph (1) thereof) receives a quid pro quo contribution in excess of $75, the organization shall, in connection with the solicitation or receipt of the contribution, provide a written statement which--

      ‘(1) informs the donor that the amount of the contribution that is deductible for Federal income tax purposes is limited to the excess of the amount of any money and the value of any property other than money contributed by the donor over the value of the goods or services provided by the organization, and

      ‘(2) provides the donor with a good faith estimate of the value of such goods or services.

    ‘(b) QUID PRO QUO CONTRIBUTION- For purposes of this section, the term ‘quid pro quo contribution’ means a payment made partly as a contribution and partly in consideration for goods or services provided to the payor by the donee organization. A quid pro quo contribution does not include any payment made to an organization, organized exclusively for religious purposes, in return for which the taxpayer receives solely an intangible religious benefit that generally is not sold in a commercial transaction outside the donative context.’

    (b) PENALTY FOR FAILURE TO DISCLOSE- Part I of subchapter B of chapter 68 (relating to assessable penalties) is amended by inserting after section 6713 the following new section:

‘SEC. 6714. FAILURE TO MEET DISCLOSURE REQUIREMENTS APPLICABLE TO QUID PRO QUO CONTRIBUTIONS.

    ‘(a) IMPOSITION OF PENALTY- If an organization fails to meet the disclosure requirement of section 6115 with respect to a quid pro quo contribution, such organization shall pay a penalty of $10 for each contribution in respect of which the organization fails to make the required disclosure, except that the total penalty imposed by this subsection with respect to a particular fundraising event or mailing shall not exceed $5,000.

    ‘(b) REASONABLE CAUSE EXCEPTION- No penalty shall be imposed under this section with respect to any failure if it is shown that such failure is due to reasonable cause.’

    (c) Clerical Amendments-

      (1) The table for subchapter B of chapter 61 is amended by striking the item relating to section 6115 and inserting the following new items:

‘Sec. 6115. Disclosure related to quid pro quo contributions.

‘Sec. 6116. Cross reference.’

      (2) The table for part I of subchapter B of chapter 68 is amended by inserting after the item for section 6713 the following new item:

‘Sec. 6714. Failure to meet disclosure requirements applicable to quid pro quo contributions.’

    (d) EFFECTIVE DATE- The provisions of this section shall apply to quid pro quo contributions made on or after January 1, 1994.

SEC. 13174. TEMPORARY EXTENSION OF DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.

    (a) IN GENERAL-

      (1) EXTENSION- Paragraph (6) of section 162(l) (relating to special rules for health insurance costs of self-employed individuals) is amended by striking ‘June 30, 1992’ and inserting ‘December 31, 1993’.

      (2) CONFORMING AMENDMENT- Paragraph (2) of section 110(a) of the Tax Extension Act of 1991 is hereby repealed.

      (3) EFFECTIVE DATE- The amendments made by this subsection shall apply to taxable years ending after June 30, 1992.

    (b) DETERMINATION OF ELIGIBILITY FOR EMPLOYER-SPONSORED HEALTH PLAN-

      (1) IN GENERAL- Paragraph (2)(B) of section 162(l) is amended to read as follows:

        ‘(B) OTHER COVERAGE- Paragraph (1) shall not apply to any taxpayer for any calendar month for which the taxpayer is eligible to participate in any subsidized health plan maintained by any employer of the taxpayer or of the spouse of the taxpayer.’

      (2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to taxable years beginning after December 31, 1992.

Subchapter B--Revenue Increases

PART I--PROVISIONS AFFECTING INDIVIDUALS

Subpart A--Rate Increases

SEC. 13201. INCREASE IN TOP MARGINAL RATE UNDER SECTION 1.

    (a) GENERAL RULE- Section 1 (relating to tax imposed) is amended by striking subsections (a) through (e) and inserting the following:

    ‘(a) MARRIED INDIVIDUALS FILING JOINT RETURNS AND SURVIVING SPOUSES- There is hereby imposed on the taxable income of--

      ‘(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and

      ‘(2) every surviving spouse (as defined in section 2(a)),

    a tax determined in accordance with the following table:

‘If taxable income is:

The tax is:

Not over $36,900


15% of taxable income.

Over $36,900 but not over $89,150


$5,535, plus 28% of the excess over $36,900.

Over $89,150 but not over $140,000


$20,165, plus 31% of the excess over $89,150.

Over $140,000


$35,928.50, plus 36% of the excess over $140,000.

    ‘(b) HEADS OF HOUSEHOLDS- There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table:

‘If taxable income is:

The tax is:

Not over $29,600


15% of taxable income.

Over $29,600 but not over $76,400


$4,440, plus 28% of the excess over $29,600.

Over $76,400 but not over $127,500


$17,544, plus 31% of the excess over $76,400.

Over $127,500


$33,385, plus 36% of the excess over $127,500.

    ‘(c) UNMARRIED INDIVIDUALS (OTHER THAN SURVIVING SPOUSES AND HEADS OF HOUSEHOLDS)- There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table:

‘If taxable income is:

The tax is:

Not over $22,100


15% of taxable income.

Over $22,100 but not over $53,500


$3,315, plus 28% of the excess over $22,100.

Over $53,500 but not over $115,000


$12,107, plus 31% of the excess over $53,500.

Over $115,000


$31,172, plus 36% of the excess over $115,000.

    ‘(d) MARRIED INDIVIDUALS FILING SEPARATE RETURNS- There is hereby imposed on the taxable income of every married individual (as defined in section 7703) who does not make a single return jointly with his spouse under section 6013, a tax determined in accordance with the following table:

‘If taxable income is:

The tax is:

Not over $18,450


15% of taxable income.

Over $18,450 but not over $44,575


$2,767.50, plus 28% of the excess over $18,450.

Over $44,575 but not over $70,000


$10,082.50, plus 31% of the excess over $44,575.

Over $70,000


$17,964.25, plus 36% of the excess over $70,000.

    ‘(e) ESTATES AND TRUSTS- There is hereby imposed on the taxable income of--

      ‘(1) every estate, and

      ‘(2) every trust,

    taxable under this subsection a tax determined in accordance with the following table:

‘If taxable income is:

The tax is:

Not over $1,500


15% of taxable income.

Over $1,500 but not over $3,500


$225, plus 28% of the excess over $1,500.

Over $3,500 but not over $5,500


$785, plus 31% of the excess over $3,500.

Over $5,500


$1,405, plus 36% of the excess over $5,500.’

    (b) CONFORMING AMENDMENTS-

      (1) Section 531 is amended by striking ‘28 percent’ and inserting ‘36 percent’.

      (2) Section 541 is amended by striking ‘28 percent’ and inserting ‘36 percent’.

      (3)(A) Subsection (f) of section 1 is amended--

        (i) by striking ‘1990’ in paragraph (1) and inserting ‘1993’, and

        (ii) by striking ‘1989’ in paragraph (3)(B) and inserting ‘1992’.

      (B) Subsection (f) of section 1 is amended by adding at the end thereof the following new paragraph:

      ‘(7) SPECIAL RULE FOR CERTAIN BRACKETS-

        ‘(A) CALENDAR YEAR 1994- In prescribing the tables under paragraph (1) which apply with respect to taxable years beginning in calendar year 1994, the Secretary shall make no adjustment to the dollar amounts at which the 36 percent rate bracket begins or at which the 39.6 percent rate begins under any table contained in subsection (a), (b), (c), (d), or (e).

        ‘(B) LATER CALENDAR YEARS- In prescribing tables under paragraph (1) which apply with respect to taxable years beginning in a calendar year after 1994, the cost-of-living adjustment used in making adjustments to the dollar amounts referred to in subparagraph (A) shall be determined under paragraph (3) by substituting ‘1993’ for ‘1992’.’

      (C) Subparagraph (C) of section 41(e)(5) is amended by striking ‘1989’ each place it appears and inserting ‘1992’.

      (D) Subparagraph (B) of section 63(c)(4) is amended by striking ‘1989’ and inserting ‘1992’.

      (E) Subparagraph (B) of section 68(b)(2) is amended by striking ‘1989’ and inserting ‘1992’.

      (F) Subparagraph (B) of section 132(f)(6) is amended by striking ‘, determined by substituting’ and all that follows down through the period at the end thereof and inserting a period.

      (G) Subparagraphs (A)(ii) and (B)(ii) of section 151(d)(4) are each amended by striking ‘1989’ and inserting ‘1992’.

      (H) Clause (ii) of section 513(h)(2)(C) is amended by striking ‘1989’ and inserting ‘1992’.

      (4) Paragraph (3) of section 453A(c) is amended by adding at the end thereof the following new sentence:

      ‘For purposes of applying the preceding sentence with respect to so much of the gain which, when recognized, will be treated as long-term capital gain, the maximum rate on net capital gain under section 1(h) or 1201 (whichever is appropriate) shall be taken into account.’

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1992.

    (d) ELECTION TO PAY ADDITIONAL 1993 TAXES IN INSTALLMENTS-

      (1) IN GENERAL- At the election of the taxpayer, the additional 1993 taxes may be paid in 3 equal installments.

      (2) DATES FOR PAYING INSTALLMENTS- In the case of any tax payable in installments by reason of paragraph (1)--

        (A) the first installment shall be paid on or before the due date for the taxpayer’s taxable year beginning in calendar year 1993,

        (B) the second installment shall be paid on or before the date 1 year after the date determined under subparagraph (A), and

        (C) the third installment shall be paid on or before the date 2 years after the date determined under subparagraph (A).

      For purposes of the preceding sentence, the term ‘due date’ means the date prescribed for filing the taxpayer’s return determined without regard to extensions.

      (3) EXTENSION WITHOUT INTEREST- For purposes of section 6601 of the Internal Revenue Code of 1986, the date prescribed for the payment of any tax payable in installments under paragraph (1) shall be determined with regard to the extension under paragraph (1).

      (4) ADDITIONAL 1993 TAXES-

        (A) IN GENERAL- For purposes of this subsection, the term ‘additional 1993 taxes’ means the excess of--

          (i) the taxpayer’s net chapter 1 liability as shown on the taxpayer’s return for the taxpayer’s taxable year beginning in calendar year 1993, over

          (ii) the amount which would have been the taxpayer’s net chapter 1 liability for such taxable year if such liability had been determined using the rates which would have been in effect under section 1 of the Internal Revenue Code of 1986 for taxable years beginning in calendar year 1993 but for the amendments made by this section and section 13202 and such liability had otherwise been determined on the basis of the amounts shown on the taxpayer’s return.

        (B) NET CHAPTER 1 LIABILITY- For purposes of subparagraph (A), the term ‘net chapter 1 liability’ means the liability for tax under chapter 1 of the Internal Revenue Code of 1986 determined--

          (i) after the application of any credit against such tax other than the credits under sections 31 and 34, and

          (ii) before crediting any payment of estimated tax for the taxable year.

      (5) ACCELERATION OF PAYMENTS- If the taxpayer does not pay any installment under this section on or before the date prescribed for its payment or if the Secretary of the Treasury or his delegate believes that the collection of any amount payable in installments under this section is in jeopardy, the Secretary shall immediately terminate the extension under paragraph (1) and the whole of the unpaid tax shall be paid on notice and demand from the Secretary.

      (6) ELECTION ON RETURN- An election under paragraph (1) shall be made on the taxpayer’s return for the taxpayer’s taxable year beginning in calendar year 1993.

      (7) EXCEPTION FOR ESTATES AND TRUSTS- This subsection shall not apply in the case of an estate or trust.

SEC. 13202. SURTAX ON HIGH-INCOME TAXPAYERS.

    (a) GENERAL RULE-

      (1) Subsection (a) of section 1 (as amended by section 13201) is amended by striking the last item in the table contained therein and inserting the following:

‘Over $140,000 but not over $250,000


$35,928.50, plus 36% of the excess over $140,000.

Over $250,000


$75,528.50, plus 39.6% of the excess over $250,000.’

      (2) Subsection (b) of section 1 (as so amended) is amended by striking the last item in the table contained therein and inserting the following:

‘Over $127,500 but not over $250,000


$33,385, plus 36% of the excess over $127,500.

Over $250,000


$77,485, plus 39.6% of the excess over $250,000.’

      (3) Subsection (c) of section 1 (as so amended) is amended by striking the last item in the table contained therein and inserting the following:

‘Over $115,000 but not over $250,000


$31,172, plus 36% of the excess over $115,000.

Over $250,000


$79,772, plus 39.6% of the excess over $250,000.’

      (4) Subsection (d) of section 1 (as so amended) is amended by striking the last item in the table contained therein and inserting the following:

‘Over $70,000 but not over $125,000


$17,964.25, plus 36% of the excess over $70,000.

Over $125,000


$37,764.25, plus 39.6% of the excess over $125,000.’

      (5) Subsection (e) of section 1 (as so amended) is amended by striking the last item in the table contained therein and inserting the following:

‘Over $5,500 but not over $7,500


$1,405, plus 36% of the excess over $5,500.

Over $7,500


$2,125, plus 39.6% of the excess over $7,500.’

    (b) TECHNICAL AMENDMENT- Sections 531 and 541 (as amended by section 13201) are each amended by striking ‘36 percent’ and inserting ‘39.6 percent’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1992.

SEC. 13203. MODIFICATIONS TO ALTERNATIVE MINIMUM TAX RATES AND EXEMPTION AMOUNTS.

    (a) INCREASE IN RATE- Paragraph (1) of section 55(b) (defining tentative minimum tax) is amended to read as follows:

      ‘(1) AMOUNT OF TENTATIVE TAX-

        ‘(A) NONCORPORATE TAXPAYERS-

          ‘(i) IN GENERAL- In the case of a taxpayer other than a corporation, the tentative minimum tax for the taxable year is the sum of--

            ‘(I) 26 percent of so much of the taxable excess as does not exceed $175,000, plus

            ‘(II) 28 percent of so much of the taxable excess as exceeds $175,000.

          The amount determined under the preceding sentence shall be reduced by the alternative minimum tax foreign tax credit for the taxable year.

          ‘(ii) TAXABLE EXCESS- For purposes of clause (i), the term ‘taxable excess’ means so much of the alternative minimum taxable income for the taxable year as exceeds the exemption amount.

          ‘(iii) MARRIED INDIVIDUAL FILING SEPARATE RETURN- In the case of a married individual filing a separate return, clause (i) shall be applied by substituting ‘$87,500’ for ‘$175,000’ each place it appears. For purposes of the preceding sentence, marital status shall be determined under section 7703.

        ‘(B) CORPORATIONS- In the case of a corporation, the tentative minimum tax for the taxable year is--

          ‘(i) 20 percent of so much of the alternative minimum taxable income for the taxable year as exceeds the exemption amount, reduced by

          ‘(ii) the alternative minimum tax foreign tax credit for the taxable year.’

    (b) INCREASE IN EXEMPTION AMOUNTS- Paragraph (1) of section 55(d) (defining exemption amount) is amended--

      (1) by striking ‘$40,000’ in subparagraph (A) and inserting ‘$45,000’,

      (2) by striking ‘$30,000’ in subparagraph (B) and inserting ‘$33,750’, and

      (3) by striking ‘$20,000’ in subparagraph (C) and inserting ‘$22,500’.

    (c) CONFORMING AMENDMENTS-

      (1) The last sentence of section 55(d)(3) is amended by striking ‘$155,000 or (ii) $20,000’ and inserting ‘$165,000 or (ii) $22,500’.

      (2)(A) Subparagraph (A) of section 897(a)(2) is amended by striking ‘the amount determined under section 55(b)(1)(A) shall not be less than 21 percent of’ and inserting ‘the taxable excess for purposes of section 55(b)(1)(A) shall not be less than’.

      (B) The heading for paragraph (2) of section 897(a) is amended by striking ‘21-PERCENT’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1992.

SEC. 13204. OVERALL LIMITATION ON ITEMIZED DEDUCTIONS FOR HIGH-INCOME TAXPAYERS MADE PERMANENT.

    Subsection (f) of section 68 (relating to overall limitation on itemized deductions) is hereby repealed.

SEC. 13205. PHASEOUT OF PERSONAL EXEMPTION OF HIGH-INCOME TAXPAYERS MADE PERMANENT.

    Section 151(d)(3) (relating to phaseout of personal exemption) is amended by striking subparagraph (E).

SEC. 13206. PROVISIONS TO PREVENT CONVERSION OF ORDINARY INCOME TO CAPITAL GAIN.

    (a) INTEREST EMBEDDED IN FINANCIAL TRANSACTIONS-

      (1) IN GENERAL- Part IV of subchapter P of chapter 1 (relating to special rules for determining capital gains and losses) is amended by adding at the end the following new section:

‘SEC. 1258. RECHARACTERIZATION OF GAIN FROM CERTAIN FINANCIAL TRANSACTIONS.

    ‘(a) GENERAL RULE- In the case of any gain--

      ‘(1) which (but for this section) would be treated as gain from the sale or exchange of a capital asset, and

      ‘(2) which is recognized on the disposition or other termination of any position which was held as part of a conversion transaction,

    such gain (to the extent such gain does not exceed the applicable imputed income amount) shall be treated as ordinary income.

    ‘(b) APPLICABLE IMPUTED INCOME AMOUNT- For purposes of subsection (a), the term ‘applicable imputed income amount’ means, with respect to any disposition or other termination referred to in subsection (a), an amount equal to--

      ‘(1) the amount of interest which would have accrued on the taxpayer’s net investment in the conversion transaction for the period ending on the date of such disposition or other termination (or, if earlier, the date on which the requirements of subsection (c) ceased to be satisfied) at a rate equal to 120 percent of the applicable rate, reduced by

      ‘(2) the amount treated as ordinary income under subsection (a) with respect to any prior disposition or other termination of a position which was held as a part of such transaction.

    The Secretary shall by regulations provide for such reductions in the applicable imputed income amount as may be appropriate by reason of amounts capitalized under section 263(g), ordinary income received, or otherwise.

    ‘(c) CONVERSION TRANSACTION- For purposes of this section, the term ‘conversion transaction’ means any transaction--

      ‘(1) substantially all of the taxpayer’s expected return from which is attributable to the time value of the taxpayer’s net investment in such transaction, and

      ‘(2) which is--

        ‘(A) the holding of any property (whether or not actively traded), and the entering into a contract to sell such property (or substantially identical property) at a price determined in accordance with such contract, but only if such property was acquired and such contract was entered into on a substantially contemporaneous basis,

        ‘(B) an applicable straddle,

        ‘(C) any other transaction which is marketed or sold as producing capital gains from a transaction described in paragraph (1), or

        ‘(D) any other transaction specified in regulations prescribed by the Secretary.

    ‘(d) DEFINITIONS AND SPECIAL RULES- For purposes of this section--

      ‘(1) APPLICABLE STRADDLE- The term ‘applicable straddle’ means any straddle (within the meaning of section 1092(c)); except that the term ‘personal property’ shall include stock.

      ‘(2) APPLICABLE RATE- The term ‘applicable rate’ means--

        ‘(A) the applicable Federal rate determined under section 1274(d) (compounded semiannually) as if the conversion transaction were a debt instrument, or

        ‘(B) if the term of the conversion transaction is indefinite, the Federal short-term rates in effect under section 6621(b) during the period of the conversion transaction (compounded daily).

      ‘(3) TREATMENT OF BUILT-IN LOSSES-

        ‘(A) IN GENERAL- If any position with a built-in loss becomes part of a conversion transaction--

          ‘(i) for purposes of applying this subtitle to such position for periods after such position becomes part of such transaction, such position shall be taken into account at its fair market value as of the time it became part of such transaction, except that

          ‘(ii) upon the disposition or other termination of such position in a transaction in which gain or loss is recognized, such built-in loss shall be recognized and shall have a character determined without regard to this section.

        ‘(B) BUILT-IN LOSS- For purposes of subparagraph (A), the term ‘built-in loss’ means the loss (if any) which would have been realized if the position had been disposed of or otherwise terminated at its fair market value as of the time such position became part of the conversion transaction.

      ‘(4) POSITION TAKEN INTO ACCOUNT AT FAIR MARKET VALUE- In determining the taxpayer’s net investment in any conversion transaction, there shall be included the fair market value of any position which becomes part of such transaction (determined as of the time such position became part of such transaction).

      ‘(5) SPECIAL RULE FOR OPTIONS DEALERS AND COMMODITIES TRADERS-

        ‘(A) IN GENERAL- Subsection (a) shall not apply to transactions --

          ‘(i) of an options dealer in the normal course of the dealer’s trade or business of dealing in options, or

          ‘(ii) of a commodities trader in the normal course of the trader’s trade or business of trading section 1256 contracts.

        ‘(B) DEFINITIONS- For purposes of this paragraph--

          ‘(i) OPTIONS DEALER- The term ‘options dealer’ has the meaning given such term by section 1256(g)(8).

          ‘(ii) COMMODITIES TRADER- The term ‘commodities trader’ means any person who is a member (or, except as otherwise provided in regulations, is entitled to trade as a member) of a domestic board of trade which is designated as a contract market by the Commodity Futures Trading Commission.

        ‘(C) LIMITED PARTNERS AND LIMITED ENTREPRENEURS- In the case of any gain from a transaction recognized by an entity which is allocable to a limited partner or limited entrepreneur (within the meaning of section 464(e)(2)), subparagraph (A) shall not apply if--

          ‘(i) substantially all of the limited partner’s (or limited entrepreneur’s) expected return from the entity is attributable to the time value of the partner’s (or entrepreneur’s) net investment in such entity,

          ‘(ii) the transaction (or the interest in the entity) was marketed or sold as producing capital gains treatment from a transaction described in subsection (c)(1), or

          ‘(iii) the transaction (or the interest in the entity) is a transaction (or interest) specified in regulations prescribed by the Secretary.’

      (2) CLERICAL AMENDMENT- The table of sections for part IV of subchapter P of chapter 1 is amended by adding at the end thereof the following new item:

‘Sec. 1258. Recharacterization of gain from certain financial transactions.’

      (3) EFFECTIVE DATE- The amendments made by this section shall apply to conversion transactions entered into after April 30, 1993.

    (b) REPEAL OF CERTAIN EXCEPTIONS TO MARKET DISCOUNT RULES-

      (1) MARKET DISCOUNT BONDS ISSUED ON OR BEFORE JULY 18, 1984- The following provisions are hereby repealed:

        (A) Section 1276(e).

        (B) Section 1277(d).

      (2) TAX-EXEMPT OBLIGATIONS-

        (A) IN GENERAL- Paragraph (1) of section 1278(a) (defining market discount bond) is amended--

          (i) by striking clause (ii) of subparagraph (B) and redesignating clauses (iii) and (iv) of such subparagraph as clauses (ii) and (iii), respectively,

          (ii) by redesignating subparagraph (C) as subparagraph (D), and

          (iii) by inserting after subparagraph (B) the following new subparagraph:

        ‘(C) SECTION 1277 NOT APPLICABLE TO TAX-EXEMPT OBLIGATIONS- For purposes of section 1277, the term ‘market discount bond’ shall not include any tax-exempt obligation (as defined in section 1275(a)(3)).’

        (B) CONFORMING AMENDMENTS-

          (i) Sections 1276(a)(4) and 1278(b)(1) are each amended by striking ‘sections 871(a)’ and inserting ‘sections 103, 871(a),’.

          (ii) Subparagraph (B) of section 1278(a)(4) is amended by inserting before the period at the end thereof the following: ‘or, in the case of a tax-exempt obligation, the aggregate amount of the original issue discount which accrued in the manner provided by section 1272(a) (determined without regard to paragraph (7) thereof) during periods before the acquisition of the bond by the taxpayer’.

      (3) EFFECTIVE DATE- The amendments made by this section shall apply to obligations purchased (within the meaning of section 1272(d)(1) of the Internal Revenue Code of 1986) after April 30, 1993.

    (c) TREATMENT OF STRIPPED PREFERRED STOCK-

      (1) IN GENERAL- Section 305 is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection:

    ‘(e) TREATMENT OF PURCHASER OF STRIPPED PREFERRED STOCK-

      ‘(1) IN GENERAL- If any person purchases after April 30, 1993, any stripped preferred stock, then such person, while holding such stock, shall include in gross income amounts equal to the amounts which would have been so includible if such stripped preferred stock were a bond issued on the purchase date and having original issue discount equal to the excess, if any, of--

        ‘(A) the redemption price for such stock, over

        ‘(B) the price at which such person purchased such stock.

      The preceding sentence shall also apply in the case of any person whose basis in such stock is determined by reference to the basis in the hands of such purchaser.

      ‘(2) BASIS ADJUSTMENTS- Appropriate adjustments to basis shall be made for amounts includible in gross income under paragraph (1).

      ‘(3) TAX TREATMENT OF PERSON STRIPPING STOCK- If any person strips the rights to 1 or more dividends from any stock described in paragraph (5)(B) and after April 30, 1993, disposes of such dividend rights, for purposes of paragraph (1), such person shall be treated as having purchased the stripped preferred stock on the date of such disposition for a purchase price equal to such person’s adjusted basis in such stripped preferred stock.

      ‘(4) AMOUNTS TREATED AS ORDINARY INCOME- Any amount included in gross income under paragraph (1) shall be treated as ordinary income.

      ‘(5) STRIPPED PREFERRED STOCK- For purposes of this subsection--

        ‘(A) IN GENERAL- The term ‘stripped preferred stock’ means any stock described in subparagraph (B) if there has been a separation in ownership between such stock and any dividend on such stock which has not become payable.

        ‘(B) DESCRIPTION OF STOCK- Stock is described in this subsection if such stock--

          ‘(i) is limited and preferred as to dividends and does not participate in corporate growth to any significant extent, and

          ‘(ii) has a fixed redemption price.

      ‘(6) PURCHASE- For purposes of this subsection, the term ‘purchase’ means--

        ‘(A) any acquisition of stock, where

        ‘(B) the basis of such stock is not determined in whole or in part by the reference to the adjusted basis of such stock in the hands of the person from whom acquired.’

      (2) COORDINATION WITH SECTION 167(e)- Paragraph (2) of section 167(e) is amended to read as follows:

      ‘(2) COORDINATION WITH OTHER PROVISIONS-

        ‘(A) SECTION 273- This subsection shall not apply to any term interest to which section 273 applies.

        ‘(B) SECTION 305(e)- This subsection shall not apply to the holder of the dividend rights which were separated from any stripped preferred stock to which section 305(e)(1) applies.’

      (3) EFFECTIVE DATE- The amendments made by this subsection shall take effect on April 30, 1993.

    (d) TREATMENT OF CAPITAL GAIN UNDER LIMITATION ON INVESTMENT INTEREST-

      (1) IN GENERAL- Subparagraph (B) of section 163(d)(4) (defining investment income) is amended to read as follows:

        ‘(B) INVESTMENT INCOME- The term ‘investment income’ means the sum of--

          ‘(i) gross income from property held for investment (other than any gain taken into account under clause (ii)(I)),

          ‘(ii) the excess (if any) of--

            ‘(I) the net gain attributable to the disposition of property held for investment, over

            ‘(II) the net capital gain determined by only taking into account gains and losses from dispositions of property held for investment, plus

          ‘(iii) so much of the net capital gain referred to in clause (ii)(II) (or, if lesser, the net gain referred to in clause (ii)(I)) as the taxpayer elects to take into account under this clause.’

      (2) COORDINATION WITH SPECIAL CAPITAL GAINS RATE- Subsection (h) of section 1 is amended by adding at the end the following new sentence:

    ‘For purposes of the preceding sentence, the net capital gain for any taxable year shall be reduced (but not below zero) by the amount which the taxpayer elects to take into account as investment income for the taxable year under section 163(d)(4)(B)(iii).’

      (3) EFFECTIVE DATE- The amendments made by this subsection shall apply to taxable years beginning after December 31, 1992.

    (e) TREATMENT OF CERTAIN APPRECIATED INVENTORY-

      (1) IN GENERAL- Paragraph (1) of section 751(d) is amended to read as follows:

      ‘(1) SUBSTANTIAL APPRECIATION-

        ‘(A) IN GENERAL- Inventory items of the partnership shall be considered to have appreciated substantially in value if their fair market value exceeds 120 percent of the adjusted basis to the partnership of such property.

        ‘(B) CERTAIN PROPERTY EXCLUDED- For purposes of subparagraph (A), there shall be excluded any inventory property if a principal purpose for acquiring such property was to avoid the provisions of this section relating to inventory items.’

      (2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to sales, exchanges, and distributions after April 30, 1993.

Subpart B--Other Provisions

SEC. 13207. REPEAL OF LIMITATION ON AMOUNT OF WAGES SUBJECT TO HEALTH INSURANCE EMPLOYMENT TAX.

    (a) HOSPITAL INSURANCE TAX-

      (1) Paragraph (1) of section 3121(a) (defining wages) is amended--

        (A) by inserting ‘in the case of the taxes imposed by sections 3101(a) and 3111(a)’ after ‘(1)’,

        (B) by striking ‘applicable contribution base (as determined under subsection (x))’ each place it appears and inserting ‘contribution and benefit base (as determined under section 230 of the Social Security Act)’, and

        (C) by striking ‘such applicable contribution base’ and inserting ‘such contribution and benefit base’.

      (2) Section 3121 is amended by striking subsection (x).

    (b) SELF-EMPLOYMENT TAX-

      (1) Subsection (b) of section 1402 is amended--

        (A) by striking ‘that part of the net’ in paragraph (1) and inserting ‘in the case of the tax imposed by section 1401(a), that part of the net’,

        (B) by striking ‘applicable contribution base (as determined under subsection (k))’ in paragraph (1) and inserting ‘contribution and benefit base (as determined under section 230 of the Social Security Act)’,

        (C) by inserting ‘and’ after ‘section 3121(b),’, and

        (D) by striking ‘and (C) includes’ and all that follows through ‘3111(b)’.

      (2) Section 1402 is amended by striking subsection (k).

    (c) RAILROAD RETIREMENT TAX-

      (1) Subparagraph (A) of section 3231(e)(2) is amended by adding at the end thereof the following new clause:

          ‘(iii) HOSPITAL INSURANCE TAXES- Clause (i) shall not apply to--

            ‘(I) so much of the rate applicable under section 3201(a) or 3221(a) as does not exceed the rate of tax in effect under section 3101(b), and

            ‘(II) so much of the rate applicable under section 3211(a)(1) as does not exceed the rate of tax in effect under section 1401(b).’

      (2) Clause (i) of section 3231(e)(2)(B) is amended to read as follows:

          ‘(i) TIER 1 TAXES- Except as provided in clause (ii), the term ‘applicable base’ means for any calendar year the contribution and benefit base determined under section 230 of the Social Security Act for such calendar year.’

    (d) TECHNICAL AMENDMENTS-

      (1) Paragraph (1) of section 6413(c) is amended by striking ‘section 3101 or section 3201’ and inserting ‘section 3101(a) or section 3201(a) (to the extent of so much of the rate applicable under section 3201(a) as does not exceed the rate of tax in effect under section 3101(a))’.

      (2) Subparagraphs (B) and (C) of section 6413(c)(2) are each amended by striking ‘section 3101’ each place it appears and inserting ‘section 3101(a)’.

      (3) Subsection (c) of section 6413 is amended by striking paragraph (3).

      (4) Sections 3122 and 3125 are each amended by striking ‘applicable contribution base limitation’ and inserting ‘contribution and benefit base limitation’.

    (e) EFFECTIVE DATE- The amendments made by this section shall apply to 1994 and later calendar years.

SEC. 13208. TOP ESTATE AND GIFT TAX RATES MADE PERMANENT.

    (a) GENERAL RULE- The table contained in paragraph (1) of section 2001(c) is amended by striking the last item and inserting the following new items:

‘Over $2,500,000 but not over $3,000,000


$1,025,800, plus 53% of the excess over $2,500,000.

Over $3,000,000


$1,290,800, plus 55% of the excess over $3,000,000.’

    (b) CONFORMING AMENDMENTS-

      (1) Subsection (c) of section 2001 is amended by striking paragraph (2) and by redesignating paragraph (3) as paragraph (2).

      (2) Paragraph (2) of section 2001(c), as redesignated by paragraph (1), is amended by striking ‘($18,340,000 in the case of decedents dying, and gifts made, after 1992)’.

      (3) The last sentence of section 2101(b) is amended by striking ‘section 2001(c)(3)’ and inserting ‘section 2001(c)(2)’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply in the case of decedents dying and gifts made after December 31, 1992.

SEC. 13209. REDUCTION IN DEDUCTIBLE PORTION OF BUSINESS MEALS AND ENTERTAINMENT.

    (a) GENERAL RULE- Paragraph (1) of section 274(n) (relating to only 80 percent of meal and entertainment expenses allowed as deduction) is amended by striking ‘80 percent’ and inserting ‘50 percent’.

    (b) CONFORMING AMENDMENT- The subsection heading for section 274(n) is amended by striking ‘80’ and inserting ‘50’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1993.

SEC. 13210. ELIMINATION OF DEDUCTION FOR CLUB MEMBERSHIP FEES.

    (a) IN GENERAL- Subsection (a) of section 274 (relating to disallowance of certain entertainment, etc., expenses) is amended by adding at the end thereof the following new paragraph:

      ‘(3) DENIAL OF DEDUCTION FOR CLUB DUES- Notwithstanding the preceding provisions of this subsection, no deduction shall be allowed under this chapter for amounts paid or incurred for membership in any club organized for business, pleasure, recreation, or other social purpose.’

    (b) EXCEPTION FOR EMPLOYEE RECREATIONAL EXPENSES NOT TO APPLY- Paragraph (4) of section 274(e) is amended by adding at the end thereof the following: ‘This paragraph shall not apply for purposes of subsection (a)(3).’

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to amounts paid or incurred after December 31, 1993.

SEC. 13211. DISALLOWANCE OF DEDUCTION FOR CERTAIN EMPLOYEE REMUNERATION IN EXCESS OF $1,000,000.

    (a) GENERAL RULE- Section 162 (relating to trade or business expenses) is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following new subsection:

    ‘(m) CERTAIN EXCESSIVE EMPLOYEE REMUNERATION-

      ‘(1) IN GENERAL- In the case of any publicly held corporation, no deduction shall be allowed under this chapter for applicable employee remuneration with respect to any covered employee to the extent that the amount of such remuneration for the taxable year with respect to such employee exceeds $1,000,000.

      ‘(2) PUBLICLY HELD CORPORATION- For purposes of this subsection, the term ‘publicly held corporation’ means any corporation issuing any class of common equity securities required to be registered under section 12 of the Securities Exchange Act of 1934.

      ‘(3) COVERED EMPLOYEE- For purposes of this subsection, the term ‘covered employee’ means any employee of the taxpayer if--

        ‘(A) as of the close of the taxable year, such employee is the chief executive officer of the taxpayer or is an individual acting in such a capacity, or

        ‘(B) the total compensation of such employee for the taxable year is required to be reported to shareholders under the Securities Exchange Act of 1934 by reason of such employee being among the 4 highest compensated officers for the taxable year (other than the chief executive officer).

      ‘(4) APPLICABLE EMPLOYEE REMUNERATION- For purposes of this subsection--

        ‘(A) IN GENERAL- Except as otherwise provided in this paragraph, the term ‘applicable employee remuneration’ means, with respect to any covered employee for any taxable year, the aggregate amount allowable as a deduction under this chapter for such taxable year (determined without regard to this subsection) for remuneration for services performed by such employee (whether or not during the taxable year).

        ‘(B) EXCEPTION FOR REMUNERATION PAYABLE ON COMMISSION BASIS- The term ‘applicable employee remuneration’ shall not include any remuneration payable on a commission basis solely on account of income generated directly by the individual performance of the individual to whom such remuneration is payable.

        ‘(C) OTHER PERFORMANCE-BASED COMPENSATION- The term ‘applicable employee remuneration’ shall not include any remuneration payable solely on account of the attainment of one or more performance goals, but only if--

          ‘(i) the performance goals are determined by a compensation committee of the board of directors of the taxpayer which is comprised solely of 2 or more outside directors,

          ‘(ii) the material terms under which the remuneration is to be paid, including the performance goals, are disclosed to shareholders and approved by a majority of the vote in a separate shareholder vote before the payment of such remuneration, and

          ‘(iii) before any payment of such remuneration, the compensation committee referred to in clause (i) certifies that the performance goals and any other material terms were in fact satisfied.

        ‘(D) EXCEPTION FOR EXISTING BINDING CONTRACTS- The term ‘applicable employee remuneration’ shall not include any remuneration payable under a written binding contract which was in effect on February 17, 1993, and which was not modified thereafter in any material respect before such remuneration is paid.

        ‘(E) REMUNERATION- For purposes of this paragraph, the term ‘remuneration’ includes any remuneration (including benefits) in any medium other than cash, but shall not include--

          ‘(i) any payment referred to in so much of section 3121(a)(5) as precedes subparagraph (E) thereof, and

          ‘(ii) any benefit provided to or on behalf of an employee if at the time such benefit is provided it is reasonable to believe that the employee will be able to exclude such benefit from gross income under this chapter.

        For purposes of clause (i), section 3121(a)(5) shall be applied without regard to section 3121(v)(1).

        ‘(F) COORDINATION WITH DISALLOWED GOLDEN PARACHUTE PAYMENTS- The dollar limitation contained in paragraph (1) shall be reduced (but not below zero) by the amount (if any) which would have been included in the applicable employee remuneration of the covered employee for the taxable year but for being disallowed under section 280G.’

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to amounts which would otherwise be deductible for taxable years beginning on or after January 1, 1994.

SEC. 13212. REDUCTION IN COMPENSATION TAKEN INTO ACCOUNT IN DETERMINING CONTRIBUTIONS AND BENEFITS UNDER QUALIFIED RETIREMENT PLANS.

    (a) QUALIFICATION REQUIREMENT-

      (1) IN GENERAL- Section 401(a)(17) is amended--

        (A) by striking ‘$200,000’ in the first sentence and inserting ‘$150,000’,

        (B) by striking the second sentence, and

        (C) by adding at the end the following new subparagraph:

        ‘(B) COST-OF-LIVING ADJUSTMENT-

          ‘(i) IN GENERAL- If, for any calendar year after 1994, the excess (if any) of--

            ‘(I) $150,000, increased by the cost-of-living adjustment for the calendar year, over

            ‘(II) the dollar amount in effect under subparagraph (A) for taxable years beginning in the calendar year,

          is equal to or greater than $10,000, then the $150,000 amount under subparagraph (A) (as previously adjusted under this subparagraph) for any taxable year beginning in any subsequent calendar year shall be increased by the amount of such excess, rounded to the next lowest multiple of $10,000.

          ‘(ii) COST-OF-LIVING ADJUSTMENT- The cost-of-living adjustment for any calendar year shall be the adjustment made under section 415(d) for such calendar year, except that the base period for purposes of section 415(d)(1)(A) shall be the calendar quarter beginning October 1, 1993.’

      (2) CONFORMING AMENDMENT- Section 401(a)(17) is amended by striking ‘(17) A trust’ and inserting:

      ‘(17) COMPENSATION LIMIT-

        ‘(A) IN GENERAL- A trust’.

    (b) SIMPLIFIED EMPLOYEE PENSIONS-

      (1) IN GENERAL- Paragraphs (3)(C) and (6)(D)(ii) of section 408(k) are each amended by striking ‘$200,000’ and inserting ‘$150,000’.

      (2) COST-OF-LIVING- Paragraph (8) of section 408(k) is amended to read as follows:

      ‘(8) COST-OF-LIVING ADJUSTMENT- The Secretary shall adjust the $300 amount in paragraph (2)(C) at the same time and in the same manner as under section 415(d) and shall adjust the $150,000 amount in paragraphs (3)(C) and (6)(D)(ii) at the same time, and by the same amount, as any adjustment under section 401(a)(17)(B).’

    (c) OTHER RELATED PROVISIONS-

      (1) IN GENERAL- Sections 404(l) and 505(b)(7) are each amended--

        (A) by striking ‘$200,000’ in the first sentence and inserting ‘$150,000’, and

        (B) by striking the second sentence and inserting ‘The Secretary shall adjust the $150,000 amount at the same time, and by the same amount, as any adjustment under section 401(a)(17)(B).’

      (2) CONFORMING AMENDMENT- The heading for section 505(b)(7) is amended by striking ‘$200,000’.

    (d) EFFECTIVE DATES-

      (1) IN GENERAL- Except as provided in this subsection, the amendments made by this section shall apply to benefits accruing in plan years beginning after December 31, 1993.

      (2) COLLECTIVELY BARGAINED PLANS- In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified before the date of the enactment of this Act, the amendments made by this section shall not apply to contributions or benefits pursuant to such agreements for plan years beginning before the earlier of--

        (A) the latest of--

          (i) January 1, 1994,

          (ii) the date on which the last of such collective bargaining agreements terminates (without regard to any extension, amendment, or modification of such agreements on or after such date of enactment), or

          (iii) in the case of a plan maintained pursuant to collective bargaining under the Railway Labor Act, the date of execution of an extension or replacement of the last of such collective bargaining agreements in effect on such date of enactment, or

        (B) January 1, 1997.

      (3) TRANSITION RULE FOR STATE AND LOCAL PLANS-

        (A) IN GENERAL- In the case of an eligible participant in a governmental plan (within the meaning of section 414(d) of the Internal Revenue Code of 1986), the dollar limitation under section 401(a)(17) of such Code shall not apply to the extent the amount of compensation which is allowed to be taken into account under the plan would be reduced below the amount which was allowed to be taken into account under the plan as in effect on July 1, 1993.

        (B) ELIGIBLE PARTICIPANT- For purposes of subparagraph (A), an eligible participant is an individual who first became a participant in the plan during a plan year beginning before the 1st plan year beginning after the earlier of--

          (i) the plan year in which the plan is amended to reflect the amendments made by this section, or

          (ii) December 31, 1995.

        (C) PLAN MUST BE AMENDED TO INCORPORATE LIMITS- This paragraph shall not apply to any eligible participant of a plan unless the plan is amended so that the plan incorporates by reference the dollar limitation under section 401(a)(17) of the Internal Revenue Code of 1986, effective with respect to noneligible participants for plan years beginning after December 31, 1995 (or earlier if the plan amendment so provides).

SEC. 13213. MODIFICATIONS TO DEDUCTION FOR MOVING EXPENSES.

    (a) DEFINITION OF DEDUCTIBLE EXPENSES-

      (1) IN GENERAL- Subsection (b) of section 217 (defining moving expenses) is amended to read as follows:

    ‘(b) DEFINITION OF MOVING EXPENSES-

      ‘(1) IN GENERAL- For purposes of this section, the term ‘moving expenses’ means only the reasonable expenses--

        ‘(A) of moving household goods and personal effects from the former residence to the new residence, and

        ‘(B) of traveling (including lodging) from the former residence to the new place of residence.

      Such term shall not include any expenses for meals.

      ‘(2) INDIVIDUALS OTHER THAN TAXPAYER- In the case of any individual other than the taxpayer, expenses referred to in paragraph (1) shall be taken into account only if such individual has both the former residence and the new residence as his principal place of abode and is a member of the taxpayer’s household.’

      (2) CONFORMING AMENDMENTS-

        (A) Section 217 is amended by striking subsection (e).

        (B) Subsection (f) of section 217 is amended to read as follows:

    ‘(f) SELF-EMPLOYED INDIVIDUAL- For purposes of this section, the term ‘self-employed individual’ means an individual who performs personal services--

      ‘(1) as the owner of the entire interest in an unincorporated trade or business, or

      ‘(2) as a partner in a partnership carrying on a trade or business.’

        (C) Paragraph (3) of section 217(g) is amended by inserting ‘and’ at the end of subparagraph (A), by striking subparagraph (B), and by redesignating subparagraph (C) as subparagraph (B).

        (D) Subsection (h) of section 217 is amended by striking paragraph (1) and redesignating the following paragraphs accordingly.

        (E) Section 1001 is amended by striking subsection (f).

        (F) Subsection (e) of section 1016 is amended to read as follows:

    ‘(e) Cross Reference-

‘For treatment of separate mineral interests as one property, see section 614.’

    (b) INCREASE IN MILEAGE REQUIREMENT- Paragraph (1) of section 217(c) is amended by striking ‘35 miles’ each place it appears and inserting ‘50 miles’.

    (c) DEDUCTION ALLOWED IN COMPUTING ADJUSTED GROSS INCOME-

      (1) IN GENERAL- Subsection (a) of section 62 (defining adjusted gross income) is amended by inserting after paragraph (14) the following new paragraph:

      ‘(15) MOVING EXPENSES- The deduction allowed by section 217.’

      (2) CONFORMING AMENDMENT- Subsection (b) of section 67 is amended by striking paragraph (6) and redesignating the following paragraphs accordingly.

    (d) EXCLUSION OF EMPLOYER REIMBURSEMENT FOR DEDUCTIBLE EXPENSES-

      (1) IN GENERAL- Subsection (a) of section 132 (relating to certain fringe benefits) is amended by striking ‘or’ at the end of paragraph (4), by striking the period at the end of paragraph (5) and inserting ‘, or’, and by adding at the end thereof the following new paragraph:

      ‘(6) qualified moving expense reimbursement.’

      (2) QUALIFIED MOVING EXPENSE REIMBURSEMENT DEFINED- Section 132 is amended by redesignating subsections (g), (h), (i), (j), (k), and (l), as subsections (h), (i), (j), (k), (l), and (m), respectively, and by inserting after subsection (f) the following new subsection:

    ‘(g) QUALIFIED MOVING EXPENSE REIMBURSEMENT- For purposes of this section, the term ‘qualified moving expense reimbursement’ means any amount received (directly or indirectly) by an individual from an employer as a payment for (or a reimbursement of) expenses which would be deductible as moving expenses under section 217 if directly paid or incurred by the individual. Such term shall not include any payment for (or reimbursement of) an expense actually deducted by the individual in a prior taxable year.’

      (3) CONFORMING AMENDMENTS-

        (A) Section 82 is amended by striking ‘There shall’ and inserting ‘Except as provided in section 132(a)(6), there shall’.

        (B) Subsection (j) of section 132 (as redesignated by paragraph (2)) is amended by striking ‘subsection (f)’ in paragraph (4)(B)(iii) thereof and inserting ‘subsection (h)’.

        (C) Subsection (l) of section 132 (as redesignated by paragraph (2)) is amended by striking ‘subsection (e)’ and inserting ‘subsections (e) and (g)’.

        (D) Section 4977(c) is amended by striking ‘section 132(g)(2)’ and inserting ‘section 132(i)(2)’.

    (e) EFFECTIVE DATE- The amendments made by this section shall apply to expenses incurred after December 31, 1993; except that the amendments made by subsection (d) shall apply to reimbursements or other payments in respect of expenses incurred after such date.

SEC. 13214. SIMPLIFICATION OF INDIVIDUAL ESTIMATED TAX SAFE HARBOR BASED ON LAST YEAR’S TAX.

    (a) IN GENERAL- Paragraph (1) of section 6654(d) (relating to amount of required estimated tax installments) is amended by striking subparagraphs (C), (D), (E), and (F) and by inserting the following new subparagraph:

        ‘(C) LIMITATION ON USE OF PRECEDING YEAR’S TAX-

          ‘(i) IN GENERAL- If the adjusted gross income shown on the return of the individual for the preceding taxable year exceeds $150,000, clause (ii) of subparagraph (B) shall be applied by substituting ‘110 percent’ for ‘100 percent’.

          ‘(ii) SEPARATE RETURNS- In the case of a married individual (within the meaning of section 7703) who files a separate return for the taxable year for which the amount of the installment is being determined, clause (i) shall be applied by substituting ‘$75,000’ for ‘$150,000’.

          ‘(iii) SPECIAL RULE- In the case of an estate or trust, adjusted gross income shall be determined as provided in section 67(e).’

    (b) CONFORMING AMENDMENTS-

      (1) Subparagraph (A) of section 6654(j)(3) is amended by striking ‘and subsection (d)(1)(C)(iii) shall not apply’.

      (2) Paragraph (4) of section 6654(l) is amended by striking ‘paragraphs (1)(C)(iv) and (2)(B)(i) of subsection (d)’ and inserting ‘subsection (d)(2)(B)(i)’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1993.

SEC. 13215. SOCIAL SECURITY AND TIER 1 RAILROAD RETIREMENT BENEFITS.

    (a) ADDITIONAL INCLUSION FOR CERTAIN TAXPAYERS-

      (1) IN GENERAL- Subsection (a) of section 86 (relating to social security and tier 1 railroad retirement benefits) is amended by adding at the end the following new paragraph:

      ‘(2) ADDITIONAL AMOUNT- In the case of a taxpayer with respect to whom the amount determined under subsection (b)(1)(A) exceeds the adjusted base amount, the amount included in gross income under this section shall be equal to the lesser of--

        ‘(A) the sum of--

          ‘(i) 85 percent of such excess, plus

          ‘(ii) the lesser of the amount determined under paragraph (1) or an amount equal to one-half of the difference between the adjusted base amount and the base amount of the taxpayer, or

        ‘(B) 85 percent of the social security benefits received during the taxable year.’

      (2) CONFORMING AMENDMENTS- Subsection (a) of section 86 is amended--

        (A) by striking ‘Gross’ and inserting:

      ‘(1) IN GENERAL- Except as provided in paragraph (2), gross’, and

        (B) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively.

    (b) ADJUSTED BASE AMOUNT- Section 86(c) (defining base amount) is amended to read as follows:

    ‘(c) BASE AMOUNT AND ADJUSTED BASE AMOUNT- For purposes of this section--

      ‘(1) BASE AMOUNT- The term ‘base amount’ means--

        ‘(A) except as otherwise provided in this paragraph, $25,000,

        ‘(B) $32,000 in the case of a joint return, and

        ‘(C) zero in the case of a taxpayer who--

          ‘(i) is married as of the close of the taxable year (within the meaning of section 7703) but does not file a joint return for such year, and

          ‘(ii) does not live apart from his spouse at all times during the taxable year.

      ‘(2) ADJUSTED BASE AMOUNT- The term ‘adjusted base amount’ means--

        ‘(A) except as otherwise provided in this paragraph, $34,000,

        ‘(B) $44,000 in the case of a joint return, and

        ‘(C) zero in the case of a taxpayer described in paragraph (1)(C).’

    (c) TRANSFERS TO THE HOSPITAL INSURANCE TRUST FUND-

      (1) IN GENERAL- Paragraph (1) of section 121(e) of the Social Security Amendments of 1983 (Public Law 92-21) is amended by--

        (A) striking ‘There’ and inserting:

        ‘(A) There’;

        (B) inserting ‘(i)’ immediately following ‘amounts equivalent to’; and

        (C) striking the period and inserting the following: ‘, less (ii) the amounts equivalent to the aggregate increase in tax liabilities under chapter 1 of the Internal Revenue Code of 1986 which is attributable to the amendments to section 86 of such Code made by section 13215 of the Revenue Reconciliation Act of 1993.

        ‘(B) There are hereby appropriated to the hospital insurance trust fund amounts equal to the increase in tax liabilities described in subparagraph (A)(ii). Such appropriated amounts shall be transferred from the general fund of the Treasury on the basis of estimates of such tax liabilities made by the Secretary of the Treasury. Transfers shall be made pursuant to a schedule made by the Secretary of the Treasury that takes into account estimated timing of collection of such liabilities.’

      (2) DEFINITION- Paragraph (3) of section 121(e) of such Act is amended by redesignating subparagraph (B) as subparagraph (C), and by inserting after subparagraph (A) the following new subparagraph:

        ‘(B) HOSPITAL INSURANCE TRUST FUND- The term ‘hospital insurance trust fund’ means the fund established pursuant to section 1817 of the Social Security Act.’.

      (3) CONFORMING AMENDMENT- Paragraph (2) of section 121(e) of such Act is amended in the first sentence by striking ‘paragraph (1)’ and inserting ‘paragraph (1)(A)’.

      (4) TECHNICAL AMENDMENTS- Paragraph (1)(A) of section 121(e) of such Act, as redesignated and amended by paragraph (1), is amended by striking ‘1954’ and inserting ‘1986’.

    (d) EFFECTIVE DATE- The amendments made by subsections (a) and (b) shall apply to taxable years beginning after December 31, 1993.

PART II--PROVISIONS AFFECTING BUSINESSES

SEC. 13221. INCREASE IN TOP MARGINAL RATE UNDER SECTION 11.

    (a) GENERAL RULE- Paragraph (1) of section 11(b) (relating to amount of tax) is amended--

      (1) by striking ‘and’ at the end of subparagraph (B),

      (2) by striking subparagraph (C) and inserting the following:

        ‘(C) 34 percent of so much of the taxable income as exceeds $75,000 but does not exceed $10,000,000, and

        ‘(D) 35 percent of so much of the taxable income as exceeds $10,000,000.’, and

      (3) by adding at the end thereof the following new sentence: ‘In the case of a corporation which has taxable income in excess of $15,000,000, the amount of the tax determined under the foregoing provisions of this paragraph shall be increased by an additional amount equal to the lesser of (i) 3 percent of such excess, or (ii) $100,000.’

    (b) CERTAIN PERSONAL SERVICE CORPORATIONS- Paragraph (2) of section 11(b) is amended by striking ‘34 percent’ and inserting ‘35 percent’.

    (c) CONFORMING AMENDMENTS-

      (1) Clause (iii) of section 852(b)(3)(D) is amended by striking ‘66 percent’ and inserting ‘65 percent’.

      (2) Subsection (a) of section 1201 is amended by striking ‘34 percent’ each place it appears and inserting ‘35 percent’.

      (3) Paragraphs (1) and (2) of section 1445(e) are each amended by striking ‘34 percent’ and inserting ‘35 percent’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning on or after January 1, 1993; except that the amendment made by subsection (c)(3) shall take effect on the date of the enactment of this Act.

SEC. 13222. DENIAL OF DEDUCTION FOR LOBBYING EXPENSES.

    (a) DISALLOWANCE OF DEDUCTION- Section 162(e) (relating to appearances, etc., with respect to legislation) is amended to read as follows:

    ‘(e) DENIAL OF DEDUCTION FOR CERTAIN LOBBYING AND POLITICAL EXPENDITURES-

      ‘(1) IN GENERAL- No deduction shall be allowed under subsection (a) for any amount paid or incurred in connection with--

        ‘(A) influencing legislation,

        ‘(B) participation in, or intervention in, any political campaign on behalf of (or in opposition to) any candidate for public office,

        ‘(C) any attempt to influence the general public, or segments thereof, with respect to elections, legislative matters, or referendums, or

        ‘(D) any direct communication with a covered executive branch official in an attempt to influence the official actions or positions of such official.

      ‘(2) EXCEPTION FOR LOCAL LEGISLATION- In the case of any legislation of any local council or similar governing body--

        ‘(A) paragraph (1)(A) shall not apply, and

        ‘(B) the deduction allowed by subsection (a) shall include all ordinary and necessary expenses (including, but not limited to, traveling expenses described in subsection (a)(2) and the cost of preparing testimony) paid or incurred during the taxable year in carrying on any trade or business--

          ‘(i) in direct connection with appearances before, submission of statements to, or sending communications to the committees, or individual members, of such council or body with respect to legislation or proposed legislation of direct interest to the taxpayer, or

          ‘(ii) in direct connection with communication of information between the taxpayer and an organization of which the taxpayer is a member with respect to any such legislation or proposed legislation which is of direct interest to the taxpayer and to such organization,

        and that portion of the dues so paid or incurred with respect to any organization of which the taxpayer is a member which is attributable to the expenses of the activities described in clauses (i) and (ii) carried on by such organization.

      ‘(3) APPLICATION TO DUES OF TAX-EXEMPT ORGANIZATIONS- No deduction shall be allowed under subsection (a) for the portion of dues or other similar amounts paid by the taxpayer to an organization which is exempt from tax under this subtitle which the organization notifies the taxpayer under section 6033(e)(1)(A)(ii) is allocable to expenditures to which paragraph (1) applies.

      ‘(4) INFLUENCING LEGISLATION- For purposes of this subsection--

        ‘(A) IN GENERAL- The term ‘influencing legislation’ means any attempt to influence any legislation through communication with any member or employee of a legislative body, or with any government official or employee who may participate in the formulation of legislation.

        ‘(B) LEGISLATION- The term ‘legislation’ has the meaning given such term by section 4911(e)(2).

      ‘(5) OTHER SPECIAL RULES-

        ‘(A) EXCEPTION FOR CERTAIN TAXPAYERS- In the case of any taxpayer engaged in the trade or business of conducting activities described in paragraph (1), paragraph (1) shall not apply to expenditures of the taxpayer in conducting such activities directly on behalf of another person (but shall apply to payments by such other person to the taxpayer for conducting such activities).

        ‘(B) DE MINIMIS EXCEPTION-

          ‘(i) IN GENERAL- Paragraph (1) shall not apply to any in-house expenditures for any taxable year if such expenditures do not exceed $2,000. In determining whether a taxpayer exceeds the $2,000 limit under this clause, there shall not be taken into account overhead costs otherwise allocable to activities described in paragraphs (1)(A) and (D).

          ‘(ii) IN-HOUSE EXPENDITURES- For purposes of clause (i), the term ‘in-house expenditures’ means expenditures described in paragraphs (1)(A) and (D) other than--

            ‘(I) payments by the taxpayer to a person engaged in the trade or business of conducting activities described in paragraph (1) for the conduct of such activities on behalf of the taxpayer, or

            ‘(II) dues or other similar amounts paid or incurred by the taxpayer which are allocable to activities described in paragraph (1).

        ‘(C) EXPENSES INCURRED IN CONNECTION WITH LOBBYING AND POLITICAL ACTIVITIES- Any amount paid or incurred for research for, or preparation, planning, or coordination of, any activity described in paragraph (1) shall be treated as paid or incurred in connection with such activity.

      ‘(6) COVERED EXECUTIVE BRANCH OFFICIAL- For purposes of this subsection, the term ‘covered executive branch official’ means--

        ‘(A) the President,

        ‘(B) the Vice President,

        ‘(C) any officer or employee of the White House Office of the Executive Office of the President, and the 2 most senior level officers of each of the other agencies in such Executive Office, and

        ‘(D)(i) any individual serving in a position in level I of the Executive Schedule under section 5312 of title 5, United States Code, (ii) any other individual designated by the President as having Cabinet level status, and (iii) any immediate deputy of an individual described in clause (i) or (ii).

      ‘(7) SPECIAL RULE FOR INDIAN TRIBAL GOVERNMENTS- For purposes of this subsection, an Indian tribal government shall be treated in the same manner as a local council or similar governing body.

      ‘(8) CROSS REFERENCE-

‘For reporting requirements and alternative taxes related to this subsection, see section 6033(e).’

    (b) DISALLOWANCE OF CHARITABLE DEDUCTION IN CERTAIN CASES- Section 170(f) (relating to disallowance of deduction in certain cases and special rules), as amended by section 13172, is amended by adding at the end the following new paragraph:

      ‘(9) DENIAL OF DEDUCTION WHERE CONTRIBUTION FOR LOBBYING ACTIVITIES- No deduction shall be allowed under this section for a contribution to an organization which conducts activities to which section 162(e)(1) applies on matters of direct financial interest to the donor’s trade or business, if a principal purpose of the contribution was to avoid Federal income tax by securing a deduction for such activities under this section which would be disallowed by reason of section 162(e) if the donor had conducted such activities directly. No deduction shall be allowed under section 162(a) for any amount for which a deduction is disallowed under the preceding sentence.’

    (c) REPORTING REQUIREMENTS- Section 6033 (relating to returns by exempt organizations) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection:

    ‘(e) SPECIAL RULES RELATING TO LOBBYING ACTIVITIES-

      ‘(1) REPORTING REQUIREMENTS-

        ‘(A) IN GENERAL- If this subsection applies to an organization for any taxable year, such organization--

          ‘(i) shall include on any return required to be filed under subsection (a) for such year information setting forth the total expenditures of the organization to which section 162(e)(1) applies and the total amount of the dues or other similar amounts paid to the organization to which such expenditures are allocable, and

          ‘(ii) except as provided in paragraphs (2)(A)(i) and (3), shall, at the time of assessment or payment of such dues or other similar amounts, provide notice to each person making such payment which contains a reasonable estimate of the portion of such dues or other similar amounts to which such expenditures are so allocable.

        ‘(B) ORGANIZATIONS TO WHICH SUBSECTION APPLIES-

          ‘(i) IN GENERAL- This subsection shall apply to any organization which is exempt from taxation under this subtitle other than an organization described in section 501(c)(3).

          ‘(ii) SPECIAL RULE FOR IN-HOUSE EXPENDITURES- This subsection shall not apply to the in-house expenditures (within the meaning of section 162(e)(5)(B)(ii)) of an organization for a taxable year if such expenditures do not exceed $2,000. In determining whether a taxpayer exceeds the $2,000 limit under this clause, there shall not be taken into account overhead costs otherwise allocable to activities described in subparagraphs (A) and (D) of section 162(e)(1).

        ‘(C) ALLOCATION- For purposes of this paragraph--

          ‘(i) IN GENERAL- Expenditures to which section 162(e)(1) applies shall be treated as paid out of dues or other similar amounts to the extent thereof.

          ‘(ii) CARRYOVER OF LOBBYING EXPENDITURES IN EXCESS OF DUES- If expenditures to which section 162(e)(1) applies exceed the dues or other similar amounts for any taxable year, such excess shall be treated as expenditures to which section 162(e)(1) applies which are paid or incurred by the organization during the following taxable year.

      ‘(2) TAX IMPOSED WHERE ORGANIZATION DOES NOT NOTIFY-

        ‘(A) IN GENERAL- If an organization--

          ‘(i) elects not to provide the notices described in paragraph (1)(A) for any taxable year, or

          ‘(ii) fails to include in such notices the amount allocable to expenditures to which section 162(e)(1) applies (determined on the basis of actual amounts rather than the reasonable estimates under paragraph (1)(A)(ii)),

        then there is hereby imposed on such organization for such taxable year a tax in an amount equal to the product of the highest rate of tax imposed by section 11 for the taxable year and the aggregate amount not included in such notices by reason of such election or failure.

        ‘(B) WAIVER WHERE FUTURE ADJUSTMENTS MADE- The Secretary may waive the tax imposed by subparagraph (A)(ii) for any taxable year if the organization agrees to adjust its estimates under paragraph (1)(A)(ii) for the following taxable year to correct any failures.

        ‘(C) TAX TREATED AS INCOME TAX- For purposes of this title, the tax imposed by subparagraph (A) shall be treated in the same manner as a tax imposed by chapter 1 (relating to income taxes).

      ‘(3) EXCEPTION WHERE DUES GENERALLY NONDEDUCTIBLE- Paragraph (1)(A) shall not apply to an organization which establishes to the satisfaction of the Secretary that substantially all of the dues or other similar amounts paid by persons to such organization are not deductible without regard to section 162(e).’

    (d) CONFORMING AMENDMENT- Section 7871(a)(6) is amended by striking subparagraph (B) and by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively.

    (e) EFFECTIVE DATE- The amendments made by this section shall apply to amounts paid or incurred after December 31, 1993.

SEC. 13223. MARK TO MARKET ACCOUNTING METHOD FOR SECURITIES DEALERS.

    (a) GENERAL RULE- Subpart D of part II of subchapter E of chapter 1 (relating to inventories) is amended by adding at the end thereof the following new section:

‘SEC. 475. MARK TO MARKET ACCOUNTING METHOD FOR DEALERS IN SECURITIES.

    ‘(a) GENERAL RULE- Notwithstanding any other provision of this subpart, the following rules shall apply to securities held by a dealer in securities:

      ‘(1) Any security which is inventory in the hands of the dealer shall be included in inventory at its fair market value.

      ‘(2) In the case of any security which is not inventory in the hands of the dealer and which is held at the close of any taxable year--

        ‘(A) the dealer shall recognize gain or loss as if such security were sold for its fair market value on the last business day of such taxable year, and

        ‘(B) any gain or loss shall be taken into account for such taxable year.

      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. The Secretary may provide by regulations for the application of this paragraph at times other than the times provided in this paragraph.

    ‘(b) EXCEPTIONS-

      ‘(1) IN GENERAL- Subsection (a) shall not apply to--

        ‘(A) any security held for investment,

        ‘(B)(i) any security described in subsection (c)(2)(C) which is acquired (including originated) by the taxpayer in the ordinary course of a trade or business of the taxpayer and which is not held for sale, and (ii) any obligation to acquire a security described in clause (i) if such obligation is entered into in the ordinary course of such trade or business and is not held for sale, and

        ‘(C) any security which is a hedge with respect to--

          ‘(i) a security to which subsection (a) does not apply, or

          ‘(ii) a position, right to income, or a liability which is not a security in the hands of the taxpayer.

      To the extent provided in regulations, subparagraph (C) shall not apply to any security held by a person in its capacity as a dealer in securities.

      ‘(2) IDENTIFICATION REQUIRED- A security shall not be treated as described in subparagraph (A), (B), or (C) of paragraph (1), as the case may be, unless such security is clearly identified in the dealer’s records as being described in such subparagraph 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).

      ‘(3) SECURITIES SUBSEQUENTLY NOT EXEMPT- If a security ceases to be described in paragraph (1) at any time after it was identified as such under paragraph (2), subsection (a) shall apply to any changes in value of the security occurring after the cessation.

      ‘(4) SPECIAL RULE FOR PROPERTY HELD FOR INVESTMENT- To the extent provided in regulations, subparagraph (A) of paragraph (1) shall not apply to any security described in subparagraph (D) or (E) of subsection (c)(2) which is held by a dealer in such securities.

    ‘(c) DEFINITIONS- For purposes of this section--

      ‘(1) DEALER IN SECURITIES DEFINED- The term ‘dealer in securities’ means a taxpayer who--

        ‘(A) regularly purchases securities from or sells securities to customers in the ordinary course of a trade or business; or

        ‘(B) regularly offers to enter into, assume, offset, assign or otherwise terminate positions in securities with customers in the ordinary course of a trade or business.

      ‘(2) SECURITY DEFINED- The term ‘security’ means any--

        ‘(A) share of stock in a corporation;

        ‘(B) partnership or beneficial ownership interest in a widely held or publicly traded partnership or trust;

        ‘(C) note, bond, debenture, or other evidence of indebtedness;

        ‘(D) interest rate, currency, or equity notional principal contract;

        ‘(E) evidence of an interest in, or a derivative financial instrument in, any security described in subparagraph (A), (B), (C), or (D), or any currency, including any option, forward contract, short position, and any similar financial instrument in such a security or currency; and

        ‘(F) position which--

          ‘(i) is not a security described in subparagraph (A), (B), (C), (D), or (E),

          ‘(ii) is a hedge with respect to such a security, and

          ‘(iii) is clearly identified in the dealer’s records as being described in this subparagraph before the close of the day on which it was acquired or entered into (or such other time as the Secretary may by regulations prescribe).

      Subparagraph (E) shall not include any contract to which section 1256(a) applies.

      ‘(3) HEDGE- The term ‘hedge’ means any position which reduces the dealer’s risk of interest rate or price changes or currency fluctuations, including any position which is reasonably expected to become a hedge within 60 days after the acquisition of the position.

    ‘(d) SPECIAL RULES- For purposes of this section--

      ‘(1) COORDINATION WITH CERTAIN RULES- The rules of sections 263(g), 263A, and 1256(a) shall not apply to securities to which subsection (a) applies, and section 1091 shall not apply (and section 1092 shall apply) to any loss recognized under subsection (a).

      ‘(2) IMPROPER IDENTIFICATION- If a taxpayer--

        ‘(A) identifies any security under subsection (b)(2) as being described in subsection (b)(1) and such security is not so described, or

        ‘(B) fails under subsection (c)(2)(F)(iii) to identify any position which is described in subsection (c)(2)(F) (without regard to clause (iii) thereof) at the time such identification is required,

      the provisions of subsection (a) shall apply to such security or position, except that any loss under this section prior to the disposition of the security or position shall be recognized only to the extent of gain previously recognized under this section (and not previously taken into account under this paragraph) with respect to such security or position.

      ‘(3) CHARACTER OF GAIN OR LOSS-

        ‘(A) IN GENERAL- Except as provided in subparagraph (B) or section 1236(b)--

          ‘(i) IN GENERAL- Any gain or loss with respect to a security under subsection (a)(2) shall be treated as ordinary income or loss.

          ‘(ii) SPECIAL RULE FOR DISPOSITIONS- If--

            ‘(I) gain or loss is recognized with respect to a security before the close of the taxable year, and

            ‘(II) subsection (a)(2) would have applied if the security were held as of the close of the taxable year,

          such gain or loss shall be treated as ordinary income or loss.

        ‘(B) EXCEPTION- Subparagraph (A) shall not apply to any gain or loss which is allocable to a period during which--

          ‘(i) the security is described in subsection (b)(1)(C) (without regard to subsection (b)(2)),

          ‘(ii) the security is held by a person other than in connection with its activities as a dealer in securities, or

          ‘(iii) the security is improperly identified (within the meaning of subparagraph (A) or (B) of paragraph (2)).

    ‘(e) REGULATORY AUTHORITY- The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including rules--

      ‘(1) to prevent the use of year-end transfers, related parties, or other arrangements to avoid the provisions of this section, and

      ‘(2) to provide for the application of this section to any security which is a hedge which cannot be identified with a specific security, position, right to income, or liability.’

    (b) CONFORMING AMENDMENTS-

      (1) Paragraph (1) of section 988(d) is amended--

        (A) by striking ‘section 1256’ and inserting ‘section 475 or 1256’, and

        (B) by striking ‘1092 and 1256’ and inserting ‘475, 1092, and 1256’.

      (2) The table of sections for subpart D of part II of subchapter E of chapter 1 is amended by adding at the end thereof the following new item:

‘Sec. 475. Mark to market accounting method for dealers in securities.’

    (c) EFFECTIVE DATE-

      (1) IN GENERAL- The amendments made by this section shall apply to all taxable years ending on or after December 31, 1993.

      (2) CHANGE IN METHOD OF ACCOUNTING- In the case of any taxpayer required by this section to change its method of accounting for any taxable year--

        (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, and

        (C) except as provided in paragraph (3), 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 ratably over the 5-taxable year period beginning with the first taxable year ending on or after December 31, 1993.

      (3) SPECIAL RULE FOR FLOOR SPECIALISTS AND MARKET MAKERS-

        (A) IN GENERAL- If--

          (i) a taxpayer (or any predecessor) used the last-in first-out (LIFO) method of accounting with respect to any qualified securities for the 5-taxable year period ending with its last taxable year ending before December 31, 1993, and

          (ii) any portion of the net amount described in paragraph (2)(C) is attributable to the use of such method of accounting,

        then paragraph (2)(C) shall be applied by taking such portion into account ratably over the 15-taxable year period beginning with the first taxable year ending on or after December 31, 1993.

        (B) QUALIFIED SECURITY- For purposes of this paragraph, the term ‘qualified security’ means any security acquired--

          (i) by a floor specialist (as defined in section 1236(d)(2) of the Internal Revenue Code of 1986) in connection with the specialist’s duties as a specialist on an exchange, but only if the security is one in which the specialist is registered with the exchange, or

          (ii) by a taxpayer who is a market maker in connection with the taxpayer’s duties as a market maker, but only if--

            (I) the security is included on the National Association of Security Dealers Automated Quotation System,

            (II) the taxpayer is registered as a market maker in such security with the National Association of Security Dealers, and

            (III) as of the last day of the taxable year preceding the taxpayer’s first taxable year ending on or after December 31, 1993, the taxpayer (or any predecessor) has been actively and regularly engaged as a market maker in such security for the 2-year period ending on such date (or, if shorter, the period beginning 61 days after the security was listed in such quotation system and ending on such date).

SEC. 13224. CLARIFICATION OF TREATMENT OF CERTAIN FSLIC FINANCIAL ASSISTANCE.

    (a) GENERAL RULE- For purposes of chapter 1 of the Internal Revenue Code of 1986--

      (1) any FSLIC assistance with respect to any loss of principal, capital, or similar amount upon the disposition of any asset shall be taken into account as compensation for such loss for purposes of section 165 of such Code, and

      (2) any FSLIC assistance with respect to any debt shall be taken into account for purposes of section 166, 585, or 593 of such Code in determining whether such debt is worthless (or the extent to which such debt is worthless) and in determining the amount of any addition to a reserve for bad debts arising from the worthlessness or partial worthlessness of such debts.

    (b) FSLIC ASSISTANCE- For purposes of this section, the term ‘FSLIC assistance’ means any assistance (or right to assistance) with respect to a domestic building and loan association (as defined in section 7701(a)(19) of such Code without regard to subparagraph (C) thereof) under section 406(f) of the National Housing Act or section 21A of the Federal Home Loan Bank Act (or under any similar provision of law).

    (c) EFFECTIVE DATE-

      (1) IN GENERAL- Except as otherwise provided in this subsection--

        (A) The provisions of this section shall apply to taxable years ending on or after March 4, 1991, but only with respect to FSLIC assistance not credited before March 4, 1991.

        (B) If any FSLIC assistance not credited before March 4, 1991, is with respect to a loss sustained or charge-off in a taxable year ending before March 4, 1991, for purposes of determining the amount of any net operating loss carryover to a taxable year ending on or after March 4, 1991, the provisions of this section shall apply to such assistance for purposes of determining the amount of the net operating loss for the taxable year in which such loss was sustained or debt written off. Except as provided in the preceding sentence, this section shall not apply to any FSLIC assistance with respect to a loss sustained or charge-off in a taxable year ending before March 4, 1991.

      (2) EXCEPTIONS- The provisions of this section shall not apply to any assistance to which the amendments made by section 1401(a)(3) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 apply.

SEC. 13225. MODIFICATION OF CORPORATE ESTIMATED TAX RULES.

    (a) INCREASE IN REQUIRED INSTALLMENT BASED ON CURRENT YEAR TAX-

      (1) IN GENERAL- Clause (i) of section 6655(d)(1)(B) (relating to amount of required installment) is amended by striking ‘91 percent’ each place it appears and inserting ‘100 percent’.

      (2) CONFORMING AMENDMENTS-

        (A) Subsection (d) of section 6655 is amended--

          (i) by striking paragraph (3), and

          (ii) by striking ‘91 PERCENT’ in the paragraph heading of paragraph (2) and inserting ‘100 PERCENT’.

        (B) Clause (ii) of section 6655(e)(2)(B) is amended by striking the table contained therein and inserting the following:

--The

‘In the case of the following

--applicable

required installments:

--percentage is:

1st

25

2nd

50

3rd

75

4th

100.’

        (C) Clause (i) of section 6655(e)(3)(A) is amended by striking ‘91 percent’ and inserting ‘100 percent’.

    (b) MODIFICATION OF PERIODS FOR APPLYING ANNUALIZATION-

      (1) Clause (i) of section 6655(e)(2)(A) is amended--

        (A) by striking ‘or for the first 5 months’ in subclause (II),

        (B) by striking ‘or for the first 8 months’ in subclause (III), and

        (C) by striking ‘or for the first 11 months’ in subclause (IV).

      (2) Paragraph (2) of section 6655(e) is amended by adding at the end thereof the following new subparagraph:

        ‘(C) ELECTION FOR DIFFERENT ANNUALIZATION PERIODS-

          ‘(i) If the taxpayer makes an election under this clause--

            ‘(I) subclause (I) of subparagraph (A)(i) shall be applied by substituting ‘2 months’ for ‘3 months’,

            ‘(II) subclause (II) of subparagraph (A)(i) shall be applied by substituting ‘4 months’ for ‘3 months’,

            ‘(III) subclause (III) of subparagraph (A)(i) shall be applied by substituting ‘7 months’ for ‘6 months’, and

            ‘(IV) subclause (IV) of subparagraph (A)(i) shall be applied by substituting ‘10 months’ for ‘9 months’.

          ‘(ii) If the taxpayer makes an election under this clause--

            ‘(I) subclause (II) of subparagraph (A)(i) shall be applied by substituting ‘5 months’ for ‘3 months’,

            ‘(II) subclause (III) of subparagraph (A)(i) shall be applied by substituting ‘8 months’ for ‘6 months’, and

            ‘(III) subclause (IV) of subparagraph (A)(i) shall be applied by substituting ‘11 months’ for ‘9 months’.

          ‘(iii) An election under clause (i) or (ii) shall apply to the taxable year for which made and such an election shall be effective only if made on or before the date required for the payment of the first required installment for such taxable year.’

      (3) The last sentence of section 6655(g)(3) is amended by striking ‘and subsection (e)(2)(A)’ and inserting ‘and, except in the case of an election under subsection (e)(2)(C), subsection (e)(2)(A)’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1993.

SEC. 13226. MODIFICATIONS OF DISCHARGE OF INDEBTEDNESS PROVISIONS.

    (a) REPEAL OF STOCK FOR DEBT EXCEPTION IN DETERMINING INCOME FROM DISCHARGE OF INDEBTEDNESS-

      (1) IN GENERAL- Subsection (e) of section 108 is amended--

        (A) by striking paragraph (10) and by redesignating paragraph (11) as paragraph (10), and

        (B) by amending paragraph (8) to read as follows:

      ‘(8) INDEBTEDNESS SATISFIED BY CORPORATION’S STOCK- For purposes of determining income of a debtor from discharge of indebtedness, if a debtor corporation transfers stock to a creditor in satisfaction of its indebtedness, such corporation shall be treated as having satisfied the indebtedness with an amount of money equal to the fair market value of the stock.’

      (2) CONFORMING AMENDMENTS-

        (A) Subparagraph (C) of section 382(l)(5) is amended to read as follows:

        ‘(C) COORDINATION WITH SECTION 108- In applying section 108(e)(8) to any case to which subparagraph (A) applies, there shall not be taken into account any indebtedness for interest described in subparagraph (B).’

        (B) Section 108(e)(6) is amended by striking ‘For’ and inserting ‘Except as provided in regulations, for’.

      (3) EFFECTIVE DATE-

        (A) IN GENERAL- Except as otherwise provided in this paragraph, the amendments made by this subsection shall apply to stock transferred after December 31, 1994, in satisfaction of any indebtedness.

        (B) EXCEPTION FOR TITLE 11 CASES- The amendments made by this subsection shall not apply to stock transferred in satisfaction of any indebtedness if such transfer is in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1986) which was filed on or before December 31, 1993.

    (b) TAX ATTRIBUTES SUBJECT TO REDUCTION-

      (1) MINIMUM TAX CREDIT- Section 108(b)(2) (relating to tax attributes affected; order of reduction) is amended by redesignating subparagraphs (C), (D), and (E) as subparagraphs (D), (E), and (F) and by adding after subparagraph (B) the following new subparagraph:

        ‘(C) MINIMUM TAX CREDIT- The amount of the minimum tax credit available under section 53(b) as of the beginning of the taxable year immediately following the taxable year of the discharge.’

      (2) PASSIVE ACTIVITY LOSSES AND CREDITS- Section 108(b)(2), as amended by paragraph (1), is amended by redesignating subparagraph (F) as subparagraph (G) and by adding after subparagraph (E) the following new subparagraph:

        ‘(F) PASSIVE ACTIVITY LOSS AND CREDIT CARRYOVERS- Any passive activity loss or credit carryover of the taxpayer under section 469(b) from the taxable year of the discharge.’

      (3) CONFORMING AMENDMENTS-

        (A) Subparagraph (B) of section 108(b)(3) is amended to read as follows:

        ‘(B) CREDIT CARRYOVER REDUCTION- The reductions described in subparagraphs (B), (C), and (G) shall be 33 1/3 cents for each dollar excluded by subsection (a). The reduction described in subparagraph (F) in any passive activity credit carryover shall be 33 1/3 cents for each dollar excluded by subsection (a).’

        (B) Subparagraph (B) of section 108(b)(4) is amended by striking ‘(C)’ in the text and heading thereof and inserting ‘(D)’.

        (C) Subparagraph (C) of section 108(b)(4) is amended by striking ‘(E)’ in the text and heading thereof and inserting ‘(G)’.

        (D) Subparagraph (B) of section 108(g)(3) is amended--

          (i) by striking ‘subparagraphs (A), (B), (C), and (E)’ and inserting ‘subparagraphs (A), (B), (C), (D), (F), and (G)’,

          (ii) by striking ‘subparagraphs (B) and (E)’ and inserting ‘subparagraphs (B), (C), and (G)’, and

          (iii) by inserting before the period at the end the following: ‘and the attribute described in subparagraph (F) of subsection (b)(2) to the extent attributable to any passive activity credit carryover’.

      (4) EFFECTIVE DATE- The amendments made by this subsection shall apply to discharges of indebtedness in taxable years beginning after December 31, 1993.

SEC. 13227. LIMITATION ON SECTION 936 CREDIT.

    (a) GENERAL RULE- Subsection (a) of section 936 (relating to Puerto Rico and possession tax credit) is amended--

      (1) by striking ‘as provided in paragraph (3)’ in paragraph (1) and inserting ‘as otherwise provided in this section’; and

      (2) by adding at the end thereof the following new paragraph:

      ‘(4) LIMITATIONS ON CREDIT FOR ACTIVE BUSINESS INCOME-

        ‘(A) IN GENERAL- The amount of the credit determined under paragraph (1) for any taxable year with respect to income referred to in subparagraph (A) thereof shall not exceed the sum of the following amounts:

          ‘(i) 60 percent of the sum of--

            ‘(I) the aggregate amount of the possession corporation’s qualified possession wages for such taxable year, plus

            ‘(II) the allocable employee fringe benefit expenses of the possession corporation for the taxable year.

          ‘(ii) The sum of--

            ‘(I) 15 percent of the depreciation allowances for the taxable year with respect to short-life qualified tangible property,

            ‘(II) 40 percent of the depreciation allowances for the taxable year with respect to medium-life qualified tangible property, and

            ‘(III) 65 percent of the depreciation allowances for the taxable year with respect to long-life qualified tangible property.

          ‘(iii) If the possession corporation does not have an election to use the method described in subsection (h)(5)(C)(ii) (relating to profit split) in effect for the taxable year, the amount of qualified possession income taxes for the taxable year allocable to nonsheltered income.

        ‘(B) ELECTION TO TAKE REDUCED CREDIT-

          ‘(i) IN GENERAL- If an election under this subparagraph applies to a possession corporation for any taxable year--

            ‘(I) subparagraph (A), and the provisions of subsection (i), shall not apply to such possession corporation for such taxable year, and

            ‘(II) the credit determined under paragraph (1) for such taxable year with respect to income referred to in subparagraph (A) thereof shall be the applicable percentage of the credit which would otherwise have been determined under such paragraph with respect to such income.

          Notwithstanding subclause (I), a possession corporation to which an election under this subparagraph applies shall be entitled to the benefits of subsection (i)(3)(B) for taxes allocable (on a pro rata basis) to taxable income the tax on which is not offset by reason of this subparagraph.

          ‘(ii) APPLICABLE PERCENTAGE- The term ‘applicable percentage’ means the percentage determined in accordance with the following table:

‘In the case of taxable

--The

years beginning in:

--percentage is:

1994

60

1995

55

1996

50

1997

45

1998 and thereafter

40.

          ‘(iii) ELECTION-

            ‘(I) IN GENERAL- An election under this subparagraph by any possession corporation may be made only for the corporation’s first taxable year beginning after December 31, 1993, for which it is a possession corporation.

            ‘(II) PERIOD OF ELECTION- An election under this subparagraph shall apply to the taxable year for which made and all subsequent taxable years unless revoked.

            ‘(III) AFFILIATED GROUPS- If, for any taxable year, an election is not in effect for any possession corporation which is a member of an affiliated group, any election under this subparagraph for any other member of such group is revoked for such taxable year and all subsequent taxable years. For purposes of this subclause, members of an affiliated group shall be determined without regard to the exceptions contained in section 1504(b) and as if the constructive ownership rules of section 1563(e) applied for purposes of section 1504(a). The Secretary may prescribe regulations to prevent the avoidance of this subclause through deconsolidation or otherwise.

        ‘(C) Cross reference-

‘For definitions and special rules applicable to this paragraph, see subsection (i).’

    (b) DEFINITIONS AND SPECIAL RULES- Section 936 is amended by adding at the end thereof the following new subsection:

    ‘(i) DEFINITIONS AND SPECIAL RULES RELATING TO LIMITATIONS OF SUBSECTION (a)(4)-

      ‘(1) QUALIFIED POSSESSION WAGES- For purposes of this section--

        ‘(A) IN GENERAL- The term ‘qualified possession wages’ means wages paid or incurred by the possession corporation during the taxable year in connection with the active conduct of a trade or business within a possession of the United States to any employee for services performed in such possession, but only if such services are performed while the principal place of employment of such employee is within such possession.

        ‘(B) LIMITATION ON AMOUNT OF WAGES TAKEN INTO ACCOUNT-

          ‘(i) IN GENERAL- The amount of wages which may be taken into account under subparagraph (A) with respect to any employee for any taxable year shall not exceed 85 percent of the contribution and benefit base determined under section 230 of the Social Security Act for the calendar year in which such taxable year begins.

          ‘(ii) TREATMENT OF PART-TIME EMPLOYEES, ETC- If--

            ‘(I) any employee is not employed by the possession corporation on a substantially full-time basis at all times during the taxable year, or

            ‘(II) the principal place of employment of any employee with the possession corporation is not within a possession at all times during the taxable year,

          the limitation applicable under clause (i) with respect to such employee shall be the appropriate portion (as determined by the Secretary) of the limitation which would otherwise be in effect under clause (i).

        ‘(C) TREATMENT OF CERTAIN EMPLOYEES- The term ‘qualified possession wages’ shall not include any wages paid to employees who are assigned by the employer to perform services for another person, unless the principal trade or business of the employer is to make employees available for temporary periods to other persons in return for compensation. All possession corporations treated as 1 corporation under paragraph (5) shall be treated as 1 employer for purposes of the preceding sentence.

        ‘(D) WAGES-

          ‘(i) IN GENERAL- Except as provided in clause (ii), the term ‘wages’ has the meaning given to such term by subsection (b) of section 3306 (determined without regard to any dollar limitation contained in such section). For purposes of the preceding sentence, such subsection (b) shall be applied as if the term ‘United States’ included all possessions of the United States.

          ‘(ii) SPECIAL RULE FOR AGRICULTURAL LABOR AND RAILWAY LABOR- In any case to which subparagraph (A) or (B) of paragraph (1) of section 51(h) applies, the term ‘wages’ has the meaning given to such term by section 51(h)(2).

      ‘(2) ALLOCABLE EMPLOYEE FRINGE BENEFIT EXPENSES-

        ‘(A) IN GENERAL- The allocable employee fringe benefit expenses of any possession corporation for any taxable year is an amount which bears the same ratio to the amount determined under subparagraph (B) for such taxable year as--

          ‘(i) the aggregate amount of the possession corporation’s qualified possession wages for such taxable year, bears to

          ‘(ii) the aggregate amount of the wages paid or incurred by such possession corporation during such taxable year.

        In no event shall the amount determined under the preceding sentence exceed 15 percent of the amount referred to in clause (i).

        ‘(B) EXPENSES TAKEN INTO ACCOUNT- For purposes of subparagraph (A), the amount determined under this subparagraph for any taxable year is the aggregate amount allowable as a deduction under this chapter to the possession corporation for such taxable year with respect to--

          ‘(i) employer contributions under a stock bonus, pension, profit-sharing, or annuity plan,

          ‘(ii) employer-provided coverage under any accident or health plan for employees, and

          ‘(iii) the cost of life or disability insurance provided to employees.

        Any amount treated as wages under paragraph (1)(D) shall not be taken into account under this subparagraph.

      ‘(3) TREATMENT OF POSSESSION TAXES-

        ‘(A) AMOUNT OF CREDIT FOR POSSESSION CORPORATIONS NOT USING PROFIT SPLIT-

          ‘(i) IN GENERAL- For purposes of subsection (a)(4)(A)(iii), the amount of the qualified possession income taxes for any taxable year allocable to nonsheltered income shall be an amount which bears the same ratio to the possession income taxes for such taxable year as--

            ‘(I) the increase in the tax liability of the possession corporation under this chapter for the taxable year by reason of subsection (a)(4)(A) (without regard to clause (iii) thereof), bears to

            ‘(II) the tax liability of the possession corporation under this chapter for the taxable year determined without regard to the credit allowable under this section.

          ‘(ii) LIMITATION ON AMOUNT OF TAXES TAKEN INTO ACCOUNT- Possession income taxes shall not be taken into account under clause (i) for any taxable year to the extent that the amount of such taxes exceeds 9 percent of the amount of the taxable income for such taxable year.

        ‘(B) DEDUCTION FOR POSSESSION CORPORATIONS USING PROFIT SPLIT- Notwithstanding subsection (c), if a possession corporation is not described in subsection (a)(4)(A)(iii) for the taxable year, such possession corporation shall be allowed a deduction for such taxable year in an amount which bears the same ratio to the possession income taxes for such taxable year as--

          ‘(i) the increase in the tax liability of the possession corporation under this chapter for the taxable year by reason of subsection (a)(4)(A), bears to

          ‘(ii) the tax liability of the possession corporation under this chapter for the taxable year determined without regard to the credit allowable under this section.

        In determining the credit under subsection (a) and in applying the preceding sentence, taxable income shall be determined without regard to the preceding sentence.

        ‘(C) POSSESSION INCOME TAXES- For purposes of this paragraph, the term ‘possession income taxes’ means any taxes of a possession of the United States which are treated as not being income, war profits, or excess profits taxes paid or accrued to a possession of the United States by reason of subsection (c).

      ‘(4) DEPRECIATION RULES- For purposes of this section--

        ‘(A) DEPRECIATION ALLOWANCES- The term ‘depreciation allowances’ means the depreciation deductions allowable under section 167 to the possession corporation.

        ‘(B) CATEGORIES OF PROPERTY-

          ‘(i) QUALIFIED TANGIBLE PROPERTY- The term ‘qualified tangible property’ means any tangible property used by the possession corporation in a possession of the United States in the active conduct of a trade or business within such possession.

          ‘(ii) SHORT-LIFE QUALIFIED TANGIBLE PROPERTY- The term ‘short-life qualified tangible property’ means any qualified tangible property to which section 168 applies and which is 3-year property or 5-year property for purposes of such section.

          ‘(iii) MEDIUM-LIFE QUALIFIED TANGIBLE PROPERTY- The term ‘medium-life qualified tangible property’ means any qualified tangible property to which section 168 applies and which is 7-year property or 10-year property for purposes of such section.

          ‘(iv) LONG-LIFE QUALIFIED TANGIBLE PROPERTY- The term ‘long-life qualified tangible property’ means any qualified tangible property to which section 168 applies and which is not described in clause (ii) or (iii).

          ‘(v) TRANSITIONAL RULE- In the case of any qualified tangible property to which section 168 (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) applies, any reference in this paragraph to section 168 shall be treated as a reference to such section as so in effect.

      ‘(5) ELECTION TO COMPUTE CREDIT ON CONSOLIDATED BASIS-

        ‘(A) IN GENERAL- Any affiliated group may elect to treat all possession corporations which would be members of such group but for section 1504(b) (3) or (4) as 1 corporation for purposes of this section. The credit determined under this section with respect to such 1 corporation shall be allocated among such possession corporations in such manner as the Secretary may prescribe.

        ‘(B) ELECTION- An election under subparagraph (A) shall apply to the taxable year for which made and all succeeding taxable years unless revoked with the consent of the Secretary.

      ‘(6) POSSESSION CORPORATION- The term ‘possession corporation’ means a domestic corporation for which the election provided in subsection (a) is in effect.’

    (c) MINIMUM TAX TREATMENT-

      (1) IN GENERAL- Subclause (I) of section 56(g)(4)(C)(ii) (relating to special rule for certain dividends) is amended by striking ‘sections 936 and 921’ and inserting ‘sections 936 (including subsections (a)(4) and (i) thereof) and 921’.

      (2) TREATMENT OF FOREIGN TAXES- Clause (iii) of section 56(g)(4)(C) is amended by adding at the end thereof the following subclauses:

            ‘(IV) SEPARATE APPLICATION OF FOREIGN TAX CREDIT LIMITATIONS- In determining the alternative minimum foreign tax credit, section 904(d) shall be applied as if dividends from a corporation eligible for the credit provided by section 936 were a separate category of income referred to in a subparagraph of section 904(d)(1).

            ‘(V) COORDINATION WITH LIMITATION ON 936 CREDIT- Any reference in this clause to a dividend received from a corporation eligible for the credit provided by section 936 shall be treated as a reference to the portion of any such dividend for which the dividends received deduction is disallowed under clause (i) after the application of clause (ii)(I).’

    (d) CONFORMING AMENDMENT- Paragraph (4) of section 904(b) is amended by inserting before the period at the end thereof the following: ‘(without regard to subsections (a)(4) and (i) thereof)’.

    (e) INCREASE IN LIMITATION ON COVER OVER- Paragraph (1) of section 7652(f) is amended to read as follows:

      ‘(1) $10.50 ($11.30 in the case of distilled spirits brought into the United States during the 5-year period beginning on October 1, 1993), or.’

    (f) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1993; except that the amendment made by subsection (e) shall take effect on October 1, 1993.

SEC. 13228. MODIFICATION TO LIMITATION ON DEDUCTION FOR CERTAIN INTEREST.

    (a) GENERAL RULE- Paragraph (3) of section 163(j) (defining disqualified interest) is amended to read as follows:

      ‘(3) DISQUALIFIED INTEREST- For purposes of this subsection, the term ‘disqualified interest’ means--

        ‘(A) any interest paid or accrued by the taxpayer (directly or indirectly) to a related person if no tax is imposed by this subtitle with respect to such interest, and

        ‘(B) any interest paid or accrued by the taxpayer with respect to any indebtedness to a person who is not a related person if--

          ‘(i) there is a disqualified guarantee of such indebtedness, and

          ‘(ii) no gross basis tax is imposed by this subtitle with respect to such interest.’

    (b) DEFINITIONS- Paragraph (6) of section 163(j) is amended by adding at the end thereof the following new subparagraphs:

        ‘(D) DISQUALIFIED GUARANTEE-

          ‘(i) IN GENERAL- Except as provided in clause (ii), the term ‘disqualified guarantee’ means any guarantee by a related person which is--

            ‘(I) an organization exempt from taxation under this subtitle, or

            ‘(II) a foreign person.

          ‘(ii) EXCEPTIONS- The term ‘disqualified guarantee’ shall not include a guarantee--

            ‘(I) in any circumstances identified by the Secretary by regulation, where the interest on the indebtedness would have been subject to a net basis tax if the interest had been paid to the guarantor, or

            ‘(II) if the taxpayer owns a controlling interest in the guarantor.

          For purposes of subclause (II), except as provided in regulations, the term ‘a controlling interest’ means direct or indirect ownership of at least 80 percent of the total voting power and value of all classes of stock of a corporation, or 80 percent of the profit and capital interests in any other entity. For purposes of the preceding sentence, the rules of paragraphs (1) and (5) of section 267(c) shall apply; except that such rules shall also apply to interest in entities other than corporations.

          ‘(iii) GUARANTEE- Except as provided in regulations, the term ‘guarantee’ includes any arrangement under which a person (directly or indirectly through an entity or otherwise) assures, on a conditional or unconditional basis, the payment of another person’s obligation under any indebtedness.

        ‘(E) GROSS BASIS AND NET BASIS TAXATION-

          ‘(i) GROSS BASIS TAX- The term ‘gross basis tax’ means any tax imposed by this subtitle which is determined by reference to the gross amount of any item of income without any reduction for any deduction allowed by this subtitle.

          ‘(ii) NET BASIS TAX- The term ‘net basis tax’ means any tax imposed by this subtitle which is not a gross basis tax.’

    (c) CONFORMING AMENDMENTS-

      (1) Subparagraph (B) of section 163(j)(5) is amended by striking ‘to a related person’.

      (2) The subsection heading for subsection (j) of section 163 is amended to read as follows:

    ‘(j) LIMITATION ON DEDUCTION FOR INTEREST ON CERTAIN INDEBTEDNESS- ’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to interest paid or accrued in taxable years beginning after December 31, 1993.

PART III--FOREIGN TAX PROVISIONS

Subpart A--Current Taxation of Certain Earnings of Controlled Foreign Corporations

SEC. 13231. EARNINGS INVESTED IN EXCESS PASSIVE ASSETS.

    (a) GENERAL RULE- Paragraph (1) of section 951(a) (relating to amounts included in gross income of United States shareholders) is amended by striking ‘and’ at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting ‘; and’, and by adding at the end thereof the following new subparagraph:

        ‘(C) the amount determined under section 956A with respect to such shareholder for such year (but only to the extent not excluded from gross income under section 959(a)(3)).’

    (b) AMOUNT OF INCLUSION- Subpart F of part III of subchapter N of chapter 1 is amended by inserting after section 956 the following new section:

‘SEC. 956A. EARNINGS INVESTED IN EXCESS PASSIVE ASSETS.

    ‘(a) GENERAL RULE- In the case of any controlled foreign corporation, the amount determined under this section with respect to any United States shareholder for any taxable year is the lesser of--

      ‘(1) the excess (if any) of--

        ‘(A) such shareholder’s pro rata share of the amount of the controlled foreign corporation’s excess passive assets for such taxable year, over

        ‘(B) the amount of earnings and profits described in section 959(c)(1)(B) with respect to such shareholder, or

      ‘(2) such shareholder’s pro rata share of the applicable earnings of such controlled foreign corporation determined after the application of section 951(a)(1)(B).

    ‘(b) APPLICABLE EARNINGS- For purposes of this section, the term ‘applicable earnings’ means, with respect to any controlled foreign corporation, the sum of--

      ‘(1) the amount referred to in section 316(a)(1) to the extent such amount was accumulated in taxable years beginning after September 30, 1993, and

      ‘(2) the amount referred to in section 316(a)(2),

    but reduced by distributions made during the taxable year and reduced by the earnings and profits described in section 959(c)(1) to the extent that the earnings and profits so described were accumulated in taxable years beginning after September 30, 1993.

    ‘(c) EXCESS PASSIVE ASSETS- For purposes of this section--

      ‘(1) IN GENERAL- The excess passive assets of any controlled foreign corporation for any taxable year is the excess (if any) of--

        ‘(A) the average of the amounts of passive assets held by such corporation as of the close of each quarter of such taxable year, over

        ‘(B) 25 percent of the average of the amounts of total assets held by such corporation as of the close of each quarter of such taxable year.

      For purposes of the preceding sentence, the amount taken into account with respect to any asset shall be its adjusted basis as determined for purposes of computing earnings and profits.

      ‘(2) PASSIVE ASSET-

        ‘(A) IN GENERAL- Except as otherwise provided in this section, the term ‘passive asset’ means any asset held by the controlled foreign corporation which produces passive income (as defined in section 1296(b)) or is held for the production of such income.

        ‘(B) COORDINATION WITH SECTION 956- The term ‘passive asset’ shall not include any United States property (as defined in section 956).

      ‘(3)CERTAIN RULES TO APPLY- For purposes of this subsection, the rules of the following provisions shall apply:

        ‘(A) Section 1296(c) (relating to look-thru rules).

        ‘(B) Section 1297(d) (relating to leasing rules).

        ‘(C) Section 1297(e) (relating to intangible property).

    ‘(d) TREATMENT OF CERTAIN GROUPS OF CONTROLLED FOREIGN CORPORATIONS-

      ‘(1) IN GENERAL- For purposes of applying subsection (c)--

        ‘(A) all controlled foreign corporations which are members of the same CFC group shall be treated as 1 controlled foreign corporation, and

        ‘(B) the amount of the excess passive assets determined with respect to such 1 corporation shall be allocated among the controlled foreign corporations which are members of such group in proportion to their respective amounts of applicable earnings.

      ‘(2) CFC GROUP- For purposes of paragraph (1), the term ‘CFC group’ means 1 or more chains of controlled foreign corporations connected through stock ownership with a top tier corporation which is a controlled foreign corporation, but only if--

        ‘(A) the top tier corporation owns directly more than 50 percent (by vote or value) of the stock of at least 1 of the other controlled foreign corporations, and

        ‘(B) more than 50 percent (by vote or value) of the stock of each of the controlled foreign corporations (other than the top tier corporation) is owned (directly or indirectly) by one or more other members of the group.

    ‘(e) SPECIAL RULE WHERE CORPORATION CEASES TO BE CONTROLLED FOREIGN CORPORATION DURING TAXABLE YEAR- If any foreign corporation ceases to be a controlled foreign corporation during any taxable year--

      ‘(1) the determination of any United States shareholder’s pro rata share shall be made on the basis of stock owned (within the meaning of section 958(a)) by such shareholder on the last day during the taxable year on which the foreign corporation is a controlled foreign corporation,

      ‘(2) the amount of such corporation’s excess passive assets for such taxable year shall be determined by only taking into account quarters ending on or before such last day, and

      ‘(3) in determining applicable earnings, the amount taken into account by reason of being described in paragraph (2) of section 316(a) shall be the portion of the amount so described which is allocable (on a pro rata basis) to the part of such year during which the corporation is a controlled foreign corporation.

    ‘(f) REGULATIONS- The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including regulations to prevent the avoidance of the provisions of this section through reorganizations or otherwise.’

    (c) PREVIOUSLY TAXED INCOME RULES-

      (1) IN GENERAL- Subsection (a) of section 959 (relating to exclusion from gross income of previously taxed earnings and profits) is amended by striking ‘or’ at the end of paragraph (1), by adding ‘or’ at the end of paragraph (2), and by inserting after paragraph (2) the following new paragraph:

      ‘(3) such amounts would, but for this subsection, be included under section 951(a)(1)(C) in the gross income of,’.

      (2) ALLOCATION RULES-

        (A) Subsection (a) of section 959 is amended by adding at the end thereof the following new sentence: ‘The rules of subsection (c) shall apply for purposes of paragraph (1) of this subsection and the rules of subsection (f) shall apply for purposes of paragraphs (2) and (3) of this subsection.’.

        (B) Section 959 is amended by adding at the end thereof the following new subsection:

    ‘(f) ALLOCATION RULES FOR CERTAIN INCLUSIONS-

      ‘(1) IN GENERAL- For purposes of this section--

        ‘(A) amounts that would be included under subparagraph (B) of section 951(a)(1) (determined without regard to this section) shall be treated as attributable first to earnings described in subsection (c)(2), and then to earnings described in subsection (c)(3), and

        ‘(B) amounts that would be included under subparagraph (C) of section 951(a)(1) (determined without regard to this section) shall be treated as attributable first to earnings described in subsection (c)(2) to the extent the earnings so described were accumulated in taxable years beginning after September 30, 1993, and then to earnings described in subsection (c)(3).

      ‘(2) TREATMENT OF DISTRIBUTIONS- In applying this section, actual distributions shall be taken into account before amounts that would be included under subparagraphs (B) and (C) of section 951(a)(1) (determined without regard to this section).’

        (C) Paragraph (1) of section 959(c) is amended to read as follows:

      ‘(1) first to the aggregate of--

        ‘(A) earnings and profits attributable to amounts included in gross income under section 951(a)(1)(B) (or which would have been included except for subsection (a)(2) of this section), and

        ‘(B) earnings and profits attributable to amounts included in gross income under section 951(a)(1)(C) (or which would have been included except for subsection (a)(3) of this section),

      with any distribution being allocated between earnings and profits described in subparagraph (A) and earnings and profits described in subparagraph (B) proportionately on the basis of the respective amounts of such earnings and profits,’.

      (3) COORDINATION WITH PFIC INCLUSIONS- Subsection (c) of section 1293 is amended by adding at the end thereof the following new sentence: ‘If the passive foreign investment company is a controlled foreign corporation (as defined in section 957(a)), the preceding sentence shall not apply to any United States shareholder (as defined in section 951(b)) in such corporation, and, in applying section 959 to any such shareholder, any inclusion under this section shall be treated as an inclusion under section 951(a)(1)(A).’.

      (4) CONFORMING AMENDMENTS-

        (A) Subsections (a) and (b) of section 959 are each amended by striking ‘earnings and profits for a taxable year’ and inserting ‘earnings and profits’.

        (B) Paragraph (2) of section 959(c) is amended to read as follows:

      ‘(2) then to earnings and profits attributable to amounts included in gross income under section 951(a)(1)(A) (but reduced by amounts not included under subparagraph (B) or (C) of section 951(a)(1) because of the exclusions in paragraphs (2) and (3) of subsection (a) of this section), and’

        (C) Subsection (b) of section 989 is amended by striking ‘section 951(a)(1)(B)’ and inserting ‘subparagraph (B) or (C) of section 951(a)(1)’.

    (d) MODIFICATIONS TO PASSIVE FOREIGN INVESTMENT COMPANY RULES-

      (1) ADJUSTED BASIS USED IN CERTAIN DETERMINATIONS- Subsection (a) of section 1296 is amended by striking the material following paragraph (2) and inserting the following:

    ‘In the case of a controlled foreign corporation (or any other foreign corporation if such corporation so elects), the determination under paragraph (2) shall be based on the adjusted bases (as determined for purposes of computing earnings and profits) of its assets in lieu of their value. Such an election, once made, may be revoked only with the consent of the Secretary.’

      (2) TREATMENT OF CERTAIN SUBPART F INCLUSIONS- Subsection (b) of section 1297 is amended by adding at the end thereof the following new paragraph:

      ‘(9) TREATMENT OF CERTAIN SUBPART F INCLUSIONS- Any amount included in gross income under subparagraph (B) or (C) of section 951(a)(1) shall be treated as a distribution received with respect to the stock.’

      (3) TREATMENT OF CERTAIN DEALERS IN SECURITIES- Subsection (b) of section 1296 is amended by adding at the end thereof the following new paragraph:

      ‘(3) TREATMENT OF CERTAIN DEALERS IN SECURITIES-

        ‘(A) IN GENERAL- In the case of any foreign corporation which is a controlled foreign corporation (as defined in section 957(a)), the term ‘passive income’ does not include any income derived in the active conduct of a securities business by such corporation if such corporation is registered as a securities broker or dealer under section 15(a) of the Securities Exchange Act of 1934 or is registered as a Government securities broker or dealer under section 15C(a) of such Act. To the extent provided in regulations, such term shall not include any income derived in the active conduct of a securities business by a controlled foreign corporation which is not so registered.

        ‘(B) APPLICATION OF LOOK-THRU RULES- For purposes of paragraph (2)(C), rules similar to the rules of subparagraph (A) of this paragraph shall apply in determining whether any income of a related person (whether or not a corporation) is passive income.

        ‘(C) LIMITATION- The preceding provisions of this paragraph shall only apply in the case of persons who are United States shareholders (as defined in section 951(b)) in the controlled foreign corporation.’

      (4) LEASING AND INTANGIBLE ASSET RULES- Section 1297 is amended by redesignating subsection (d) as subsection (f) and by inserting after subsection (c) the following new subsections:

    ‘(d) TREATMENT OF CERTAIN LEASED PROPERTY- For purposes of this part--

      ‘(1) IN GENERAL- Any tangible personal property with respect to which a foreign corporation is the lessee under a lease with a term of at least 12 months shall be treated as an asset actually held by such corporation.

      ‘(2) DETERMINATION OF ADJUSTED BASIS-

        ‘(A) IN GENERAL- The adjusted basis of any asset to which paragraph (1) applies shall be the unamortized portion (as determined under regulations prescribed by the Secretary) of the present value of the payments under the lease for the use of such property.

        ‘(B) PRESENT VALUE- For purposes of subparagraph (A), the present value of payments described in subparagraph (A) shall be determined in the manner provided in regulations prescribed by the Secretary--

          ‘(i) as of the beginning of the lease term, and

          ‘(ii) except as provided in such regulations, by using a discount rate equal to the applicable Federal rate determined under section 1274(d)--

            ‘(I) by substituting the lease term for the term of the debt instrument, and

            ‘(II) without regard to paragraph (2) or (3) thereof.

      ‘(3) EXCEPTIONS- This subsection shall not apply in any case where--

        ‘(A) the lessor is a related person (as defined in section 954(d)(3)) with respect to the foreign corporation, or

        ‘(B) a principal purpose of leasing the property was to avoid the provisions of this part or section 956A.

    ‘(e)SPECIAL RULES FOR CERTAIN INTANGIBLES-

      ‘(1) RESEARCH EXPENDITURES- The adjusted basis of the total assets of a controlled foreign corporation shall be increased by the research or experimental expenditures (within the meaning of section 174) paid or incurred by such foreign corporation during the taxable year and the preceding 2 taxable years. Any expenditure otherwise taken into account under the preceding sentence shall be reduced by the amount of any reimbursement received by the controlled foreign corporation with respect to such expenditure.

      ‘(2) CERTAIN LICENSED INTANGIBLES-

        ‘(A) IN GENERAL- In the case of any intangible property (as defined in section 936(h)(3)(B)) with respect to which a controlled foreign corporation is a licensee and which is used by such foreign corporation in the active conduct of a trade or business, the adjusted basis of the total assets of such foreign corporation shall be increased by an amount equal to 300 percent of the payments made during the taxable year by such foreign corporation for the use of such intangible property.

        ‘(B) EXCEPTIONS- Subparagraph (A) shall not apply to--

          ‘(i) any payments to a foreign person if such foreign person is a related person (as defined in section 954(d)(3)) with respect to the controlled foreign corporation, and

          ‘(ii) any payments under a license if a principal purpose of entering into such license was to avoid the provisons of this part or section 956A.

      ‘(3) CONTROLLED FOREIGN CORPORATION- For purposes of this subsection, the term ‘controlled foreign corporation’ has the meaning given such term by section 957(a).’

    (e) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years of foreign corporations beginning after September 30, 1993, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.

SEC. 13232. MODIFICATION TO TAXATION OF INVESTMENT IN UNITED STATES PROPERTY.

    (a) GENERAL RULE- Section 956 (relating to investment of earnings in United States property) is amended--

      (1) by redesignating subsections (b) and (c) as subsections (c) and (d), respectively, and

      (2) by striking subsection (a) and inserting the following:

    ‘(a) GENERAL RULE- In the case of any controlled foreign corporation, the amount determined under this section with respect to any United States shareholder for any taxable year is the lesser of--

      ‘(1) the excess (if any) of--

        ‘(A) such shareholder’s pro rata share of the average of the amounts of United States property held (directly or indirectly) by the controlled foreign corporation as of the close of each quarter of such taxable year, over

        ‘(B) the amount of earnings and profits described in section 959(c)(1)(A) with respect to such shareholder, or

      ‘(2) such shareholder’s pro rata share of the applicable earnings of such controlled foreign corporation.

    The amount taken into account under paragraph (1) with respect to any property shall be its adjusted basis as determined for purposes of computing earnings and profits, reduced by any liability to which the property is subject.

    ‘(b) SPECIAL RULES-

      ‘(1) APPLICABLE EARNINGS- For purposes of this section, the term ‘applicable earnings’ has the meaning given to such term by section 956A(b), except that the provisions of such section excluding earnings and profits accumulated in taxable years beginning before October 1, 1993, shall be disregarded.

      ‘(2) SPECIAL RULE FOR U.S. PROPERTY ACQUIRED BEFORE CORPORATION IS A CONTROLLED FOREIGN CORPORATION- In applying subsection (a) to any taxable year, there shall be disregarded any item of United States property which was acquired by the controlled foreign corporation before the first day on which such corporation was treated as a controlled foreign corporation. The aggregate amount of property disregarded under the preceding sentence shall not exceed the portion of the applicable earnings of such controlled foreign corporation which were accumulated during periods before such first day.

      ‘(3) SPECIAL RULE WHERE CORPORATION CEASES TO BE CONTROLLED FOREIGN CORPORATION- Rules similar to the rules of section 956A(e) shall apply for purposes of this section.’

    (b) REGULATORY AUTHORITY- Section 956 is amended by adding at the end thereof the following new subsection:

    ‘(e) REGULATIONS- The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including regulations to prevent the avoidance of the provisons of this section through reorganizations or otherwise.’

    (c) CONFORMING AMENDMENTS-

      (1) Subparagraph (B) of section 951(a)(1) is amended to read as follows:

        ‘(B) the amount determined under section 956 with respect to such shareholder for such year (but only to the extent not excluded from gross income under section 959(a)(2)); and’

      (2) Subsection (a) of section 951 is amended by striking paragraph (4).

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years of controlled foreign corporations beginning after September 30, 1993, and to taxable years of United States shareholders in which or with which such taxable years of controlled foreign corporations end.

SEC. 13233. OTHER MODIFICATIONS TO SUBPART F.

    (a) SAME COUNTRY EXCEPTION NOT TO APPLY TO CERTAIN DIVIDENDS-

      (1) IN GENERAL- Paragraph (3) of section 954(c) (relating to certain income received from related persons) is amended by adding at the end thereof the following new subparagraph:

        ‘(C) EXCEPTION FOR CERTAIN DIVIDENDS- Subparagraph (A)(i) shall not apply to any dividend with respect to any stock which is attributable to earnings and profits of the distributing corporation accumulated during any period during which the person receiving such dividend did not hold such stock either directly, or indirectly through a chain of one or more subsidiaries each of which meets the requirements of subparagraph (A)(i).’

      (2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to taxable years of controlled foreign corporations beginning after September 30, 1993, and to taxable years of United States shareholders in which or with which such taxable years of controlled foreign corporations end.

    (b) AMENDMENTS TO SECTION 960(b)-

      (1) IN GENERAL- Subsection (b) of section 960 is amended--

        (A) by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively, and

        (B) by striking paragraphs (1) and (2) and inserting the following new paragraphs:

      ‘(1) INCREASE IN SECTION 904 LIMITATION- In the case of any taxpayer who--

        ‘(A) either (i) chose to have the benefits of subpart A of this part for a taxable year beginning after September 30, 1993, in which he was required under section 951(a) to include any amount in his gross income, or (ii) did not pay or accrue for such taxable year any income, war profits, or excess profits taxes to any foreign country or to any possession of the United States,

        ‘(B) chooses to have the benefits of subpart A of this part for any taxable year in which he receives 1 or more distributions or amounts which are excludable from gross income under section 959(a) and which are attributable to amounts included in his gross income for taxable years referred to in subparagraph (A), and

        ‘(C) for the taxable year in which such distributions or amounts are received, pays, or is deemed to have paid, or accrues income, war profits, or excess profits taxes to a foreign country or to any possession of the United States with respect to such distributions or amounts,

      the limitation under section 904 for the taxable year in which such distributions or amounts are received shall be increased by the lesser of the amount of such taxes paid, or deemed paid, or accrued with respect to such distributions or amounts or the amount in the excess limitation account as of the beginning of such taxable year.

      ‘(2) EXCESS LIMITATION ACCOUNT-

        ‘(A) ESTABLISHMENT OF ACCOUNT- Each taxpayer meeting the requirements of paragraph (1)(A) shall establish an excess limitation account. The opening balance of such account shall be zero.

        ‘(B) INCREASES IN ACCOUNT- For each taxable year beginning after September 30, 1993, the taxpayer shall increase the amount in the excess limitation account by the excess (if any) of--

          ‘(i) the amount by which the limitation under section 904(a) for such taxable year was increased by reason of the total amount of the inclusions in gross income under section 951(a) for such taxable year, over

          ‘(ii) the amount of any income, war profits, and excess profits taxes paid, or deemed paid, or accrued to any foreign country or possession of the United States which were allowable as a credit under section 901 for such taxable year and which would not have been allowable but for the inclusions in gross income described in clause (i).

        Proper reductions in the amount added to the account under the preceding sentence for any taxable year shall be made for any increase in the credit allowable under section 901 for such taxable year by reason of a carryback if such increase would not have been allowable but for the inclusions in gross income described in clause (i).

        ‘(C) DECREASES IN ACCOUNT- For each taxable year beginning after September 30, 1993, for which the limitation under section 904 was increased under paragraph (1), the taxpayer shall reduce the amount in the excess limitation account by the amount of such increase.

      ‘(3) DISTRIBUTIONS OF INCOME PREVIOUSLY TAXED IN YEARS BEGINNING BEFORE OCTOBER 1, 1993- If the taxpayer receives a distribution or amount in a taxable year beginning after September 30, 1993, which is excluded from gross income under section 959(a) and is attributable to any amount included in gross income under section 951(a) for a taxable year beginning before October 1, 1993, the limitation under section 904 for the taxable year in which such amount or distribution is received shall be increased by the amount determined under this subsection as in effect on the day before the date of the enactment of the Revenue Reconcilation Act of 1993.’

      (2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to taxable years beginning after September 30, 1993.

Subpart B--Allocation of Research and Experimental Expenditures

SEC. 13234. ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES.

    (a) GENERAL RULE- Subparagraph (B) of section 864(f)(1) (relating to allocation of research and experimental expenditures) is amended by striking ‘64 percent’ each place it appears and inserting ‘50 percent’.

    (b) CONFORMING AMENDMENTS-

      (1) Subsection (f) of section 864 is amended by striking paragraph (5) and inserting the following new paragraphs:

      ‘(5) REGULATIONS- The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this subsection, including regulations relating to the determination of whether any expenses are attributable to activities conducted in the United States or outside the United States and regulations providing such adjustments to the provisions of this subsection as may be appropriate in the case of cost-sharing arrangements and contract research.

      ‘(6) APPLICABILITY- This subsection shall apply to the taxpayer’s first taxable year (beginning on or before August 1, 1994) following the taxpayer’s last taxable year to which Revenue Procedure 92-56 applies or would apply if the taxpayer elected the benefits of such Revenue Procedure.’

      (2) Subparagraph (D) of section 864(f)(4) is amended by striking ‘subparagraph (C)’ and inserting ‘subparagraph (B) or (C)’.

Subpart C--Other Provisions

SEC. 13235. REPEAL OF CERTAIN EXCEPTIONS FOR WORKING CAPITAL.

    (a) PROVISIONS RELATING TO OIL AND GAS INCOME-

      (1) AMENDMENTS TO SECTION 907-

        (A) Paragraph (1) of section 907(c) is amended by adding at the end thereof the following new flush sentence:

    ‘Such term does not include any dividend or interest income which is passive income (as defined in section 904(d)(2)(A)).’.

        (B) Paragraph (2) of section 907(c) is amended by adding at the end thereof the following new flush sentence:

    ‘Such term does not include any dividend or interest income which is passive income (as defined in section 904(d)(2)(A)).’.

      (2) SEPARATE APPLICATION OF FOREIGN TAX CREDIT- Clause (iii) of section 904(d)(2)(A) is amended by inserting ‘and’ at the end of subclause (II), by striking ‘, and’ at the end of subclause (III) and inserting a period, and by striking subclause (IV).

      (3) TREATMENT UNDER SUBPART F-

        (A) Paragraph (1) of section 954(g) is amended by adding at the end thereof the following new flush sentence:

    ‘Such term shall not include any foreign personal holding company income (as defined in subsection (c)).’.

        (B) Paragraph (8) of section 954(b) is amended by striking ‘(1),’.

    (b) TREATMENT OF SHIPPING INCOME- Subsection (f) of section 954 is amended by adding at the end thereof the following new sentence: ‘Except as provided in paragraph (1), such term shall not include any dividend or interest income which is foreign personal holding company income (as defined in subsection (c)).’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1992.

SEC. 13236. MODIFICATIONS OF ACCURACY-RELATED PENALTY.

    (a) THRESHOLD REQUIREMENT- Clause (ii) of section 6662(e)(1)(B) (relating to substantial valuation misstatement under chapter 1) is amended to read as follows:

          ‘(ii) the net section 482 transfer price adjustment for the taxable year exceeds the lesser of $5,000,000 or 10 percent of the taxpayer’s gross receipts.’

    (b) CERTAIN ADJUSTMENTS EXCLUDED IN DETERMINING THRESHOLD- Subparagraph (B) of section 6662(e)(3) is amended to read as follows:

        ‘(B) CERTAIN ADJUSTMENTS EXCLUDED IN DETERMINING THRESHOLD- For purposes of determining whether the threshold requirements of paragraph (1)(B)(ii) are met, the following shall be excluded:

          ‘(i) Any portion of the net increase in taxable income referred to in subparagraph (A) which is attributable to any redetermination of a price if--

            ‘(I) it is established that the taxpayer determined such price in accordance with a specific pricing method set forth in the regulations prescribed under section 482 and that the taxpayer’s use of such method was reasonable,

            ‘(II) the taxpayer has documentation (which was in existence as of the time of filing the return) which sets forth the determination of such price in accordance with such a method and which establishes that the use of such method was reasonable, and

            ‘(III) the taxpayer provides such documentation to the Secretary within 30 days of a request for such documentation.

          ‘(ii) Any portion of the net increase in taxable income referred to in subparagraph (A) which is attributable to a redetermination of price where such price was not determined in accordance with such a specific pricing method if--

            ‘(I) the taxpayer establishes that none of such pricing methods was likely to result in a price that would clearly reflect income, the taxpayer used another pricing method to determine such price, and such other pricing method was likely to result in a price that would clearly reflect income,

            ‘(II) the taxpayer has documentation (which was in existence as of the time of filing the return) which sets forth the determination of such price in accordance with such other method and which establishes that the requirements of subclause (I) were satisfied, and

            ‘(III) the taxpayer provides such documentation to the Secretary within 30 days of request for such documentation.

          ‘(iii) Any portion of such net increase which is attributable to any transaction solely between foreign corporations unless, in the case of any such corporations, the treatment of such transaction affects the determination of income from sources within the United States or taxable income effectively connected with the conduct of a trade or business within the United States.’

    (c) COORDINATION WITH REASONABLE CAUSE EXCEPTION- Paragraph (3) of section 6662(e) is amended by adding at the end thereof the following new subparagraph:

        ‘(D) COORDINATION WITH REASONABLE CAUSE EXCEPTION- For purposes of section 6664(c) the taxpayer shall not be treated as having reasonable cause for any portion of an underpayment attributable to a net section 482 transfer price adjustment unless such taxpayer meets the requirements of clause (i), (ii), or (iii) of subparagraph (B) with respect to such portion.’

    (d) CONFORMING AMENDMENT- Clause (iii) of section 6662(h)(2)(A) is amended to read as follows:

          ‘(iii) in paragraph (1)(B)(ii)--

            ‘(I) ‘$20,000,000’ for ‘$5,000,000’, and

            ‘(II) ‘20 percent’ for ‘10 percent’.’

    (e) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1993.

SEC. 13237. DENIAL OF PORTFOLIO INTEREST EXEMPTION FOR CONTINGENT INTEREST.

    (a) GENERAL RULE-

      (1) Subsection (h) of section 871 (relating to repeal of tax on interest of nonresident alien individuals received from certain portfolio debt investments) is amended by redesignating paragraphs (4), (5), and (6) as paragraphs (5), (6), and (7), respectively, and by inserting after paragraph (3) the following new paragraph:

      ‘(4) PORTFOLIO INTEREST NOT TO INCLUDE CERTAIN CONTINGENT INTEREST- For purposes of this subsection--

        ‘(A) IN GENERAL- Except as otherwise provided in this paragraph, the term ‘portfolio interest’ shall not include--

          ‘(i) any interest if the amount of such interest is determined by reference to--

            ‘(I) any receipts, sales or other cash flow of the debtor or a related person,

            ‘(II) any income or profits of the debtor or a related person,

            ‘(III) any change in value of any property of the debtor or a related person, or

            ‘(IV) any dividend, partnership distributions, or similar payments made by the debtor or a related person, or

          ‘(ii) any other type of contingent interest that is identified by the Secretary by regulation, where a denial of the portfolio interest exemption is necessary or appropriate to prevent avoidance of Federal income tax.

        ‘(B) RELATED PERSON- The term ‘related person’ means any person who is related to the debtor within the meaning of section 267(b) or 707(b)(1), or who is a party to any arrangement undertaken for a purpose of avoiding the application of this paragraph.

        ‘(C) EXCEPTIONS- Subparagraph (A)(i) shall not apply to--

          ‘(i) any amount of interest solely by reason of the fact that the timing of any interest or principal payment is subject to a contingency,

          ‘(ii) any amount of interest solely by reason of the fact that the interest is paid with respect to nonrecourse or limited recourse indebtedness,

          ‘(iii) any amount of interest all or substantially all of which is determined by reference to any other amount of interest not described in subparagraph (A) (or by reference to the principal amount of indebtedness on which such other interest is paid),

          ‘(iv) any amount of interest solely by reason of the fact that the debtor or a related person enters into a hedging transaction to reduce the risk of interest rate or currency fluctuations with respect to such interest,

          ‘(v) any amount of interest determined by reference to--

            ‘(I) changes in the value of property (including stock) that is actively traded (within the meaning of section 1092(d)) other than property described in section 897(c)(1) or (g),

            ‘(II) the yield on property described in subclause (I), other than a debt instrument that pays interest described in subparagraph (A), or stock or other property that represents a beneficial interest in the debtor or a related person, or

            ‘(III) changes in any index of the value of property described in subclause (I) or of the yield on property described in subclause (II), and

          ‘(vi) any other type of interest identified by the Secretary by regulation.

        ‘(D) EXCEPTION FOR CERTAIN EXISTING INDEBTEDNESS- Subparagraph (A) shall not apply to any interest paid or accrued with respect to any indebtedness with a fixed term--

          ‘(i) which was issued on or before April 7, 1993, or

          ‘(ii) which was issued after such date pursuant to a written binding contract in effect on such date and at all times thereafter before such indebtedness was issued.’

      (2) Subsection (c) of section 881 is amended by redesignating paragraphs (4), (5), and (6) as paragraphs (5), (6), and (7), respectively, and by inserting after paragraph (3) the following new paragraph:

      ‘(4) PORTFOLIO INTEREST NOT TO INCLUDE CERTAIN CONTINGENT INTEREST- For purposes of this subsection, the term ‘portfolio interest’ shall not include any interest which is treated as not being portfolio interest under the rules of section 871(h)(4).’

    (b) ESTATE TAX TREATMENT- Subsection (b) of section 2105 is amended--

      (1) by striking ‘this subchapter’ in the material preceding paragraph (1) and inserting ‘this subchapter, the following shall not be deemed property within the United States’, and

      (2) by striking paragraph (3) and all that follows down through the period at the end thereof and inserting the following:

      ‘(3) debt obligations, if, without regard to whether a statement meeting the requirements of section 871(h)(5) has been received, any interest thereon would be eligible for the exemption from tax under section 871(h)(1) were such interest received by the decedent at the time of his death.

    Notwithstanding the preceding sentence, if any portion of the interest on an obligation referred to in paragraph (3) would not be eligible for the exemption referred to in paragraph (3) by reason of section 871(h)(4) if the interest were received by the decedent at the time of his death, then an appropriate portion (as determined in a manner prescribed by the Secretary) of the value (as determined for purposes of this chapter) of such debt obligation shall be deemed property within the United States.’

    (c) CONFORMING AMENDMENTS-

      (1) Clause (ii) of section 871(h)(2)(B) is amended by striking ‘paragraph (4)’ and inserting ‘paragraph (5)’.

      (2) Clause (ii) of section 881(c)(2)(B) is amended by striking ‘section 871(h)(4)’ and inserting ‘section 871(h)(5)’.

      (3) Paragraph (6) of section 881(c) (as redesignated by subsection (a)) is amended by striking ‘section 871(h)(5)’ each place it appears and inserting ‘section 871(h)(6)’.

      (4) Paragraph (9) of section 1441(c) is amended by striking ‘section 871(h)(3)’ and inserting ‘section 871(h)(3) or (4)’.

      (5) Subsection (a) of section 1442 is amended--

        (A) by striking ‘871(h)(3)’ and inserting ‘871(h)(3) or (4)’, and

        (B) by striking ‘881(c)(3)’ and inserting ‘881(c)(3) or (4)’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to interest received after December 31, 1993; except that the amendments made by subsection (b) shall apply to the estates of decedents dying after December 31, 1993.

SEC. 13238. REGULATIONS DEALING WITH CONDUIT ARRANGEMENTS.

    Section 7701 is amended by redesignating subsection (l) as subsection (m) and by inserting after subsection (k) the following new subsection:

    ‘(l) REGULATIONS RELATING TO CONDUIT ARRANGEMENTS- The Secretary may prescribe regulations recharacterizing any multiple-party financing transaction as a transaction directly among any 2 or more of such parties where the Secretary determines that such recharacterization is appropriate to prevent avoidance of any tax imposed by this title.’

SEC. 13239. TREATMENT OF EXPORT OF CERTAIN SOFTWOOD LOGS.

    (a) FOREIGN SALES CORPORATIONS- Paragraph (2) of section 927(a) (relating to exclusion of certain property) is amended by striking ‘or’ at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting ‘, or’, and by adding at the end the following:

        ‘(E) any unprocessed timber which is a softwood.

      For purposes of subparagraph (E), the term ‘unprocessed timber’ means any log, cant, or similar form of timber.’

    (b) DOMESTIC INTERNATIONAL SALES CORPORATIONS- Paragraph (2) of section 993(c) (relating to exclusion of certain property) is amended--

      (1) by striking ‘or’ at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting ‘, or’, and by adding after subparagraph (D) the following new subparagraph:

        ‘(E) any unprocessed timber which is a softwood.’, and

      (2) by adding at the end the following new sentence: ‘For purposes of subparagraph (E), the term ‘unprocessed timber’ means any log, cant, or similar form of timber.’

    (c) SOURCE RULE- Subsection (b) of section 865 (relating to source rules for personal property sales) is amended by adding at the end the following: ‘Notwithstanding the preceding sentence, any income from the sale of any unprocessed timber which is a softwood and was cut from an area in the United States shall be sourced in the United States and the rules of sections 862(a)(6) and 863(b) shall not apply to any such income. For purposes of the preceding sentence, the term ‘unprocessed timber’ means any log, cant, or similar form of timber.’

    (d) ELIMINATION OF DEFERRAL- Subsection (d) of section 954 is amended by adding at the end the following new paragraph:

      ‘(4) SPECIAL RULE FOR CERTAIN TIMBER PRODUCTS- For purposes of subsection (a)(2), the term ‘foreign base company sales income’ includes any income (whether in the form of profits, commissions, fees, or otherwise) derived in connection with--

        ‘(A) the sale of any unprocessed timber referred to in section 865(b), or

        ‘(B) the milling of any such timber outside the United States.

      Subpart G shall not apply to any amount treated as subpart F income by reason of this paragraph.’

    (e) EFFECTIVE DATE- The amendments made by this section shall apply to sales, exchanges, or other dispositions after the date of the enactment of this Act.

PART IV--TRANSPORTATION FUELS PROVISIONS

Subpart A--Transportation Fuels Tax

SEC. 13241. TRANSPORTATION FUELS TAX.

    (a) GASOLINE- Clause (iii) of section 4081(a)(2)(B) (relating to rates of tax) is amended to read as follows:

          ‘(iii) the deficit reduction rate is 6.8 cents per gallon.’

    (b) DIESEL FUEL AND NONCOMMERCIAL AVIATION FUEL-

      (1) DIESEL FUEL- Paragraph (4) of section 4091(b) (relating to rate of tax) is amended by striking ‘2.5 cents’ and inserting ‘6.8 cents’.

      (2) AVIATION FUEL-

        (A) GASOLINE IN NONCOMMERCIAL AVIATION- Paragraph (3) of section 4041(c) is amended to read as follows:

      ‘(3) RATE OF TAX- The rate of tax imposed by paragraph (2) on any gasoline is 1 cent per gallon.’

        (B) FUEL OTHER THAN GASOLINE-

          (i) Clause (ii) of section 4091(b)(1)(A) is amended by inserting ‘and the aviation fuel deficit reduction rate’ after ‘financing rate’.

          (ii) Subsection (b) of section 4091 is amended by redesignating paragraph (6) as paragraph (7) and by inserting after paragraph (5) the following new paragraph:

      ‘(6) AVIATION FUEL DEFICIT REDUCTION RATE- For purposes of paragraph (1), the aviation fuel deficit reduction rate is 4.3 cents per gallon.’

          (iii) Paragraph (1) of section 4041(c) is amended--

            (I) by striking ‘of 17.5 cents a gallon’, and

            (II) by inserting before the last sentence the following new sentence:

      ‘The rate of the tax imposed by this paragraph shall be the sum of the Airport and Airway Trust Fund financing rate and the aviation fuel deficit reduction rate in effect under section 4091 at the time of such sale or use.’

    (c) CERTAIN ALCOHOL FUELS- Section 4041(m)(1)(A) is amended to read as follows:

        ‘(A) under subsection (a)(2)--

          ‘(i) the Highway Trust Fund financing rate shall be 5.75 cents per gallon, and

          ‘(ii) the deficit reduction rate shall be 5.55 cents per gallon.’

    (d) FUEL USED IN COMMERCIAL TRANSPORTATION ON INLAND WATERWAYS-

      (1) IN GENERAL- Section 4042(b)(1) (relating to amount of tax) is amended--

        (A) by striking ‘and’ at the end of subparagraph (A),

        (B) by striking the period at the end of subparagraph (B) and inserting ‘, and’, and

        (C) by adding at the end thereof the following new subparagraph:

        ‘(C) the deficit reduction rate.’

      (2) RATE- Section 4042(b)(2) (relating to rates) is amended by adding at the end the following new subparagraph:

        ‘(C) The deficit reduction rate is 4.3 cents per gallon.’

    (e) COMPRESSED NATURAL GAS-

      (1) IN GENERAL- Subsection (a) of section 4041 is amended by adding at the end thereof the following new paragraph:

      ‘(3) COMPRESSED NATURAL GAS-

        ‘(A) IN GENERAL- There is hereby imposed a tax on compressed natural gas--

          ‘(i) sold by any person to an owner, lessee, or other operator of a motor vehicle or motorboat for use as a fuel in such motor vehicle or motorboat, or

          ‘(ii) used by any person as a fuel in a motor vehicle or motorboat unless there was a taxable sale of such gas under clause (i).

        The rate of the tax imposed by this paragraph shall be 48.54 cents per MCF (determined at standard temperature and pressure).

        ‘(B) BUS USES- No tax shall be imposed by this paragraph on any sale for use, or use, described in subparagraph (B) or (C) of section 6427(b)(2) (relating to school bus and intracity transportation).

        ‘(C) ADMINISTRATIVE PROVISIONS- For purposes of applying this title with respect to the taxes imposed by this subsection, references to any liquid subject to tax under this subsection shall be treated as including references to compressed natural gas subject to tax under this paragraph, and references to gallons shall be treated as including references to MCF with respect to such gas.’

      (2) EXEMPTION FROM LEAKING UNDERGROUND STORAGE TANK TRUST FUND TAX- Paragraph (1) of section 4041(d) is amended by striking ‘subsection (a)’ the second place it appears in the text and inserting ‘subsection (a)(1) or (2)’.

    (f) CONFORMING AMENDMENTS-

      (1) Paragraph (3) of section 4041(f) is hereby repealed.

      (2) Subsection (g) of section 4041 is amended by striking the last sentence.

      (3) Subparagraphs (A) and (B) of section 4093(c)(2) are amended to read as follows:

        ‘(A) NO EXEMPTION FROM CERTAIN TAXES ON FUEL USED IN DIESEL-POWERED TRAINS- In the case of fuel sold for use in a diesel-powered train, paragraph (1) shall not apply to so much of the tax imposed by section 4091 as is attributable to the Leaking Underground Storage Tank Trust Fund financing rate and the diesel fuel deficit reduction rate imposed under such section. The preceding sentence shall not apply in the case of fuel sold for exclusive use by a State or any political subdivision thereof.

        ‘(B) NO EXEMPTION FROM LEAKING UNDERGROUND STORAGE TANK TRUST FUND TAXES ON FUEL USED IN COMMERCIAL AVIATION- In the case of fuel sold for use in commercial aviation (other than supplies for vessels or aircraft within the meaning of section 4221(d)(3)), paragraph (1) also shall not apply to so much of the tax imposed by section 4091 as is attributable to the Leaking Underground Storage Tank Trust Fund financing rate imposed by such section. For purposes of the preceding sentence, the term ‘commercial aviation’ means any use of an aircraft other than in noncommercial aviation (as defined in section 4041(c)(4)).’

      (4) Section 4093(d) is amended by inserting ‘and the aviation fuel deficit reduction rate’ after ‘rate’.

      (5) Section 6420 is amended by striking subsection (h).

      (6) Paragraph (3) of section 6421(f) is amended by inserting ‘and at the deficit reduction rate’ after ‘financing rate’, and by inserting ‘AND DEFICIT REDUCTION TAX’ after ‘TAX’ in the heading.

      (7) Section 6421 is amended by striking subsection (i).

      (8) Paragraph (2) of section 6427(b) is amended--

        (A) by striking ‘3.1 cents’ in subparagraph (A) and inserting ‘7.4 cents’, and

        (B) by striking ‘3-CENT REDUCTION’ in the paragraph heading and inserting ‘REDUCTION’.

      (9) Section 6427(l) is amended by striking paragraphs (3) and (4) and inserting the following new paragraphs:

      ‘(3) NO REFUND OF CERTAIN TAXES ON FUEL USED IN DIESEL-POWERED TRAINS- In the case of fuel used in a diesel-powered train, paragraph (1) shall not apply to so much of the tax imposed by section 4091 as is attributable to the Leaking Underground Storage Tank Trust Fund financing rate and the diesel fuel deficit reduction rate imposed by such section. The preceding sentence shall not apply in the case of fuel sold for exclusive use by a State or any political subdivision thereof.

      ‘(4) NO REFUND OF LEAKING UNDERGROUND STORAGE TANK TRUST FUND TAXES ON FUEL USED IN COMMERCIAL AVIATION- In the case of fuel used in commercial aviation (as defined in section 4093(c)(2)(B)) (other than supplies for vessels or aircraft within the meaning of section 4221(d)(3)), paragraph (1) shall not apply to so much of the tax imposed by section 4091 as is attributable to the Leaking Underground Storage Tank Trust Fund financing rate imposed by such section.’

      (10) Section 6427 is amended by striking subsections (m) and (o).

    (g) EFFECTIVE DATE- The amendments made by this section shall take effect on October 1, 1993.

    (h) FLOOR STOCKS TAXES-

      (1) IMPOSITION OF TAX- In the case of gasoline, diesel fuel, and aviation fuel on which tax was imposed under section 4081 or 4091 of the Internal Revenue Code of 1986 before October 1, 1993, and which is held on such date by any person, there is hereby imposed a floor stocks tax of 4.3 cents per gallon on such gasoline, diesel fuel, and aviation fuel.

      (2) LIABILITY FOR TAX AND METHOD OF PAYMENT-

        (A) LIABILITY FOR TAX- A person holding gasoline, diesel fuel, or aviation fuel on October 1, 1993, to which the tax imposed by paragraph (1) applies shall be liable for such tax.

        (B) METHOD OF PAYMENT- The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe.

        (C) TIME FOR PAYMENT- The tax imposed by paragraph (1) shall be paid on or before November 30, 1993.

      (3) DEFINITIONS- For purposes of this subsection--

        (A) HELD BY A PERSON- Gasoline, diesel fuel, and aviation fuel shall be considered as ‘held by a person’ if title thereto has passed to such person (whether or not delivery to the person has been made).

        (B) GASOLINE- The term ‘gasoline’ has the meaning given such term by section 4082 of such Code.

        (C) DIESEL FUEL- The term ‘diesel fuel’ has the meaning given such term by section 4092 of such Code.

        (D) AVIATION FUEL- The term ‘aviation fuel’ has the meaning given such term by section 4092 of such Code.

        (E) SECRETARY- The term ‘Secretary’ means the Secretary of the Treasury or his delegate.

      (4) EXCEPTION FOR EXEMPT USES- The tax imposed by paragraph (1) shall not apply to gasoline, diesel fuel, or aviation fuel held by any person exclusively for any use to the extent a credit or refund of the tax imposed by section 4081 or 4091 of such Code, as the case may be, is allowable for such use.

      (5) EXCEPTION FOR FUEL HELD IN VEHICLE TANK- No tax shall be imposed by paragraph (1) on gasoline or diesel fuel held in the tank of a motor vehicle or motorboat.

      (6) EXCEPTION FOR CERTAIN AMOUNTS OF FUEL-

        (A) IN GENERAL- No tax shall be imposed by paragraph (1)--

          (i) on gasoline held on October 1, 1993, by any person if the aggregate amount of gasoline held by such person on such date does not exceed 4,000 gallons, and

          (ii) on diesel fuel or aviation fuel held on October 1, 1993, by any person if the aggregate amount of diesel fuel or aviation fuel held by such person on such date does not exceed 2,000 gallons.

        The preceding sentence shall apply only if such person submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary shall require for purposes of this paragraph.

        (B) EXEMPT FUEL- For purposes of subparagraph (A), there shall not be taken into account fuel held by any person which is exempt from the tax imposed by paragraph (1) by reason of paragraph (4) or (5).

        (C) CONTROLLED GROUPS- For purposes of this paragraph--

          (i) CORPORATIONS-

            (I) IN GENERAL- All persons treated as a controlled group shall be treated as 1 person.

            (II) CONTROLLED GROUP- The term ‘controlled group’ has the meaning given to such term by subsection (a) of section 1563 of such Code; except that for such purposes the phrase ‘more than 50 percent’ shall be substituted for the phrase ‘at least 80 percent’ each place it appears in such subsection.

          (ii) NONINCORPORATED PERSONS UNDER COMMON CONTROL- Under regulations prescribed by the Secretary, principles similar to the principles of clause (i) shall apply to a group of persons under common control where 1 or more of such persons is not a corporation.

      (7) OTHER LAW APPLICABLE- All provisions of law, including penalties, applicable with respect to the taxes imposed by section 4081 of such Code in the case of gasoline and section 4091 of such Code in the case of diesel fuel and aviation fuel shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply with respect to the floor stock taxes imposed by paragraph (1) to the same extent as if such taxes were imposed by such section 4081 or 4091.

Subpart B--Modifications to Tax on Diesel Fuel

SEC. 13242. MODIFICATIONS TO TAX ON DIESEL FUEL.

    (a) IN GENERAL- Subparts A and B of part III of subchapter A of chapter 32 (relating to manufacturers excise taxes), as amended by subpart A, are amended to read as follows:

‘Subpart A--Gasoline and Diesel Fuel

‘Sec. 4081. Imposition of tax.

‘Sec. 4082. Exemptions for diesel fuel.

‘Sec. 4083. Definitions; special rule; administrative authority.

‘Sec. 4084. Cross references.

‘SEC. 4081. IMPOSITION OF TAX.

    ‘(a) TAX IMPOSED-

      ‘(1) TAX ON REMOVAL, ENTRY, OR SALE-

        ‘(A) IN GENERAL- There is hereby imposed a tax at the rate specified in paragraph (2) on--

          ‘(i) the removal of a taxable fuel from any refinery,

          ‘(ii) the removal of a taxable fuel from any terminal,

          ‘(iii) the entry into the United States of any taxable fuel for consumption, use, or warehousing, and

          ‘(iv) the sale of a taxable fuel to any person who is not registered under section 4101 unless there was a prior taxable removal or entry of such fuel under clause (i), (ii), or (iii).

        ‘(B) EXEMPTION FOR BULK TRANSFERS TO REGISTERED TERMINALS OR REFINERIES- The tax imposed by this paragraph shall not apply to any removal or entry of a taxable fuel transferred in bulk to a terminal or refinery if the person removing or entering the taxable fuel and the operator of such terminal or refinery are registered under section 4101.

      ‘(2) RATES OF TAX-

        ‘(A) IN GENERAL- The rate of the tax imposed by this section is--

          ‘(i) in the case of gasoline, 18.3 cents per gallon, and

          ‘(ii) in the case of diesel fuel, 24.3 cents per gallon.

        ‘(B) LEAKING UNDERGROUND STORAGE TANK TRUST FUND TAX- The rates of tax specified in subparagraph (A) shall each be increased by 0.1 cent per gallon. The increase in tax under this subparagraph shall in this title be referred to as the Leaking Underground Storage Tank Trust Fund financing rate.

    ‘(b) TREATMENT OF REMOVAL OR SUBSEQUENT SALE BY BLENDER-

      ‘(1) IN GENERAL- There is hereby imposed a tax at the rate determined under subsection (a) on taxable fuel removed or sold by the blender thereof.

      ‘(2) CREDIT FOR TAX PREVIOUSLY PAID- If--

        ‘(A) tax is imposed on the removal or sale of a taxable fuel by reason of paragraph (1), and

        ‘(B) the blender establishes the amount of the tax paid with respect to such fuel by reason of subsection (a),

      the amount of the tax so paid shall be allowed as a credit against the tax imposed by reason of paragraph (1).

    ‘(c) TAXABLE FUELS MIXED WITH ALCOHOL- Under regulations prescribed by the Secretary--

      ‘(1) IN GENERAL- The rate of tax under subsection (a) shall be the alcohol mixture rate in the case of the removal or entry of any qualified alcohol mixture.

      ‘(2) TAX PRIOR TO MIXING-

        ‘(A) IN GENERAL- In the case of the removal or entry of any taxable fuel for use in producing at the time of such removal or entry a qualified alcohol mixture, the rate of tax under subsection (a) shall be the applicable fraction of the alcohol mixture rate. Subject to such terms and conditions as the Secretary may prescribe (including the application of section 4101), the treatment under the preceding sentence also shall apply to use in producing a qualified alcohol mixture after the time of such removal or entry.

        ‘(B) APPLICABLE FRACTION- For purposes of subparagraph (A), the applicable fraction is--

          ‘(i) in the case of a qualified alcohol mixture which contains gasoline, the fraction the numerator of which is 10 and the denominator of which is--

            ‘(I) 9 in the case of 10 percent gasohol,

            ‘(II) 9.23 in the case of 7.7 percent gasohol, and

            ‘(III) 9.43 in the case of 5.7 percent gasohol, and

          ‘(ii) in the case of a qualified alcohol mixture which does not contain gasoline, 10/9 .

      ‘(3) ALCOHOL; QUALIFIED ALCOHOL MIXTURE- For purposes of this subsection--

        ‘(A) ALCOHOL- The term ‘alcohol’ includes methanol and ethanol but does not include alcohol produced from petroleum, natural gas, or coal (including peat). Such term does not include alcohol with a proof of less than 190 (determined without regard to any added denaturants).

        ‘(B) QUALIFIED ALCOHOL MIXTURE- The term ‘qualified alcohol mixture’ means--

          ‘(i) any mixture of gasoline with alcohol if at least 5.7 percent of such mixture is alcohol, and

          ‘(ii) any mixture of diesel fuel with alcohol if at least 10 percent of such mixture is alcohol.

      ‘(4) ALCOHOL MIXTURE RATES FOR GASOLINE MIXTURES- For purposes of this subsection--

        ‘(A) IN GENERAL- The alcohol mixture rate for a qualified alcohol mixture which contains gasoline is the excess of the rate which would (but for this paragraph) be determined under subsection (a) over--

          ‘(i) 5.4 cents per gallon for 10 percent gasohol,

          ‘(ii) 4.158 cents per gallon for 7.7 percent gasohol, and

          ‘(iii) 3.078 cents per gallon for 5.7 percent gasohol.

        In the case of a mixture none of the alcohol in which consists of ethanol, clauses (i), (ii), and (iii) shall be applied by substituting ‘6 cents’ for ‘5.4 cents’, ‘4.62 cents’ for ‘4.158 cents’, and ‘3.42 cents’ for ‘3.078 cents’.

        ‘(B) 10 PERCENT GASOHOL- The term ‘10 percent gasohol’ means any mixture of gasoline with alcohol if at least 10 percent of such mixture is alcohol.

        ‘(C) 7.7 PERCENT GASOHOL- The term ‘7.7 percent gasohol’ means any mixture of gasoline with alcohol if at least 7.7 percent, but not 10 percent or more, of such mixture is alcohol.

        ‘(D) 5.7 PERCENT GASOHOL- The term ‘5.7 percent gasohol’ means any mixture of gasoline with alcohol if at least 5.7 percent, but not 7.7 percent or more, of such mixture is alcohol.

      ‘(5) ALCOHOL MIXTURE RATE FOR DIESEL FUEL MIXTURES- The alcohol mixture rate for a qualified alcohol mixture which does not contain gasoline is the excess of the rate which would (but for this paragraph) be determined under subsection (a) over 5.4 cents per gallon (6 cents per gallon in the case of a qualified alcohol mixture none of the alcohol in which consists of ethanol).

      ‘(6) LIMITATION- In no event shall any alcohol mixture rate determined under this subsection be less than 4.3 cents per gallon.

      ‘(7) LATER SEPARATION OF FUEL FROM QUALIFIED ALCOHOL MIXTURE- If any person separates the taxable fuel from a qualified alcohol mixture on which tax was imposed under subsection (a) at a rate determined under paragraph (1) or (2) (or with respect to which a credit or payment was allowed or made by reason of section 6427(f)(1)), such person shall be treated as the refiner of such taxable fuel. The amount of tax imposed on any removal of such fuel by such person shall be reduced by the amount of tax imposed (and not credited or refunded) on any prior removal or entry of such fuel.

      ‘(8) TERMINATION- Paragraphs (1) and (2) shall not apply to any removal, entry, or sale after September 30, 2000.

    ‘(d) TERMINATION-

      ‘(1) IN GENERAL- On and after October 1, 1999, each rate of tax specified in subsection (a)(2)(A) shall be 4.3 cents per gallon.

      ‘(2) LEAKING UNDERGROUND STORAGE TANK TRUST FUND FINANCING RATE- The Leaking Underground Storage Tank Trust Fund financing rate under subsection (a)(2) shall not apply after December 31, 1995.

    ‘(e) REFUNDS IN CERTAIN CASES- Under regulations prescribed by the Secretary, if any person who paid the tax imposed by this section with respect to any taxable fuel establishes to the satisfaction of the Secretary that a prior tax was paid (and not credited or refunded) with respect to such taxable fuel, then an amount equal to the tax paid by such person shall be allowed as a refund (without interest) to such person in the same manner as if it were an overpayment of tax imposed by this section.

‘SEC. 4082. EXEMPTIONS FOR DIESEL FUEL.

    ‘(a) IN GENERAL- The tax imposed by section 4081 shall not apply to diesel fuel--

      ‘(1) which the Secretary determines is destined for a nontaxable use,

      ‘(2) which is indelibly dyed in accordance with regulations which the Secretary shall prescribe, and

      ‘(3) which meets such marking requirements (if any) as may be prescribed by the Secretary in regulations.

    Such regulations shall allow an individual choice of dye color approved by the Secretary or chosen from any list of approved dye colors that the Secretary may publish.

    ‘(b) NONTAXABLE USE- For purposes of this section, the term ‘nontaxable use’ means--

      ‘(1) any use which is exempt from the tax imposed by section 4041(a)(1) other than by reason of a prior imposition of tax,

      ‘(2) any use in a train, and

      ‘(3) any use described in section 6427(b)(1) (after the application of section 6427(b)(3)).

    ‘(c) REGULATIONS- The Secretary shall prescribe such regulations as may be necessary to carry out this section, including regulations requiring the conspicuous labeling of retail diesel fuel pumps and other delivery facilities to assure that persons are aware of which fuel is available only for nontaxable uses.

    ‘(d) Cross Reference-

‘For tax on train and certain bus uses of fuel purchased tax-free, see section 4041(a)(1).

‘SEC. 4083. DEFINITIONS; SPECIAL RULE; ADMINISTRATIVE AUTHORITY.

    ‘(a) TAXABLE FUEL- For purposes of this subpart--

      ‘(1) IN GENERAL- The term ‘taxable fuel’ means--

        ‘(A) gasoline, and

        ‘(B) diesel fuel.

      ‘(2) GASOLINE- The term ‘gasoline’ includes, to the extent prescribed in regulations--

        ‘(A) gasoline blend stocks, and

        ‘(B) products commonly used as additives in gasoline.

      For purposes of subparagraph (A), the term ‘gasoline blend stock’ means any petroleum product component of gasoline.

      ‘(3) DIESEL FUEL- The term ‘diesel fuel’ means any liquid (other than gasoline) which is suitable for use as a fuel in a diesel-powered highway vehicle, a diesel-powered train, or a diesel-powered boat.

    ‘(b) CERTAIN USES DEFINED AS REMOVAL- If any person uses taxable fuel (other than in the production of gasoline, diesel fuel, or special fuels referred to in section 4041), such use shall for the purposes of this chapter be considered a removal.

    ‘(c) ADMINISTRATIVE AUTHORITY-

      ‘(1) IN GENERAL- In addition to the authority otherwise granted by this title, the Secretary may in administering compliance with this subpart, section 4041, and penalties and other administrative provisions related thereto--

        ‘(A) enter any place at which taxable fuel is produced or is stored (or may be stored) for purposes of--

          ‘(i) examining the equipment used to determine the amount or composition of such fuel and the equipment used to store such fuel, and

          ‘(ii) taking and removing samples of such fuel, and

        ‘(B) detain, for the purposes referred in subparagraph (A), any container which contains or may contain any taxable fuel.

      ‘(2) INSPECTION SITES- The Secretary may establish inspection sites for purposes of carrying out the Secretary’s authority under paragraph (1)(B).

      ‘(3) PENALTY FOR REFUSAL OF ENTRY- The penalty provided by section 7342 shall apply to any refusal to admit entry or other refusal to permit an action by the Secretary authorized by paragraph (1), except that section 7342 shall be applied by substituting ‘$1,000’ for ‘$500’ for each such refusal.

‘SEC. 4084. CROSS REFERENCES.

‘(1) For provisions to relieve farmers from excise tax in the case of gasoline used on the farm for farming purposes, see section 6420.

‘(2) For provisions to relieve purchasers of gasoline from excise tax in the case of gasoline used for certain nonhighway purposes, used by local transit systems, or sold for certain exempt purposes, see section 6421.

‘(3) For provisions to relieve purchasers from excise tax in the case of taxable fuel not used for taxable purposes, see section 6427.

‘Subpart B--Aviation Fuel

‘Sec. 4091. Imposition of tax.

‘Sec. 4092. Exemptions.

‘Sec. 4093. Definitions.

‘SEC. 4091. IMPOSITION OF TAX.

    ‘(a) TAX ON SALE-

      ‘(1) IN GENERAL- There is hereby imposed a tax on the sale of aviation fuel by the producer or the importer thereof or by any producer of aviation fuel.

      ‘(2) USE TREATED AS SALE- For purposes of paragraph (1), if any producer uses aviation fuel (other than for a nontaxable use as defined in section 6427(l)(2)(B)) on which no tax has been imposed under such paragraph, then such use shall be considered a sale.

    ‘(b) RATE OF TAX-

      ‘(1) IN GENERAL- The rate of the tax imposed by subsection (a) shall be 21.8 cents per gallon.

      ‘(2) LEAKING UNDERGROUND STORAGE TANK TRUST FUND TAX- The rate of tax specified in paragraph (1) shall be increased by 0.1 cent per gallon. The increase in tax under this paragraph shall in this title be referred to as the Leaking Underground Storage Tank Trust Fund financing rate.

      ‘(3) TERMINATION-

        ‘(A) On and after January 1, 1996, the rate of tax specified in paragraph (1) shall be 4.3 cents per gallon.

        ‘(B) The Leaking Underground Storage Tank Fund financing rate shall not apply during any period during which the Leaking Underground Storage Tank Trust Fund financing rate under section 4081 does not apply.

    ‘(c) REDUCED RATE OF TAX FOR AVIATION FUEL IN ALCOHOL MIXTURE, ETC- Under regulations prescribed by the Secretary--

      ‘(1) IN GENERAL- The rate of tax under subsection (a) shall be reduced by 13.4 cents per gallon in the case of the sale of any mixture of aviation fuel if--

        ‘(A) at least 10 percent of such mixture consists of alcohol (as defined in section 4081(c)(3)), and

        ‘(B) the aviation fuel in such mixture was not taxed under paragraph (2).

      In the case of such a mixture none of the alcohol in which is ethanol, the preceding sentence shall be applied by substituting ‘14 cents’ for ‘13.4 cents’.

      ‘(2) TAX PRIOR TO MIXING- In the case of the sale of aviation fuel for use (at the time of such sale) in producing a mixture described in paragraph (1), the rate of tax under subsection (a) shall be 10/9 of the rate which would (but for this paragraph) have been applicable to such mixture had such mixture been created prior to such sale.

      ‘(3) LATER SEPARATION- If any person separates the aviation fuel from a mixture of the aviation fuel and alcohol on which tax was imposed under subsection (a) at a rate determined under paragraph (1) or (2) (or with respect to which a credit or payment was allowed or made by reason of section 6427(f)(1)), such person shall be treated as the producer of such aviation fuel. The amount of tax imposed on any sale of such aviation fuel by such person shall be reduced by the amount of tax imposed (and not credited or refunded) on any prior sale of such fuel.

      ‘(4) LIMITATION- In no event shall any rate determined under paragraph (1) be less than 4.3 cents per gallon.

      ‘(5) TERMINATION- Paragraphs (1) and (2) shall not apply to any sale after September 30, 2000.

‘SEC. 4092. EXEMPTIONS.

    ‘(a) NONTAXABLE USES- No tax shall be imposed by section 4091 on aviation fuel sold by a producer or importer for use by the purchaser in a nontaxable use (as defined in section 6427(l)(2)(B)).

    ‘(b) NO EXEMPTION FROM CERTAIN TAXES ON FUEL USED IN COMMERCIAL AVIATION- In the case of fuel sold for use in commercial aviation (other than supplies for vessels or aircraft within the meaning of section 4221(d)(3)), subsection (a) shall not apply to so much of the tax imposed by section 4091 as is attributable to--

      ‘(1) the Leaking Underground Storage Tank Trust Fund financing rate imposed by such section, and

      ‘(2) in the case of fuel sold after September 30, 1995, 4.3 cents per gallon of the rate specified in section 4091(b)(1).

    For purposes of the preceding sentence, the term ‘commercial aviation’ means any use of an aircraft other than in noncommercial aviation (as defined in section 4041(c)(4)).

    ‘(c) SALES TO PRODUCER- Under regulations prescribed by the Secretary, the tax imposed by section 4091 shall not apply to aviation fuel sold to a producer of such fuel.

‘SEC. 4093. DEFINITIONS.

    ‘(a) AVIATION FUEL- For purposes of this subpart, the term ‘aviation fuel’ means any liquid (other than any product taxable under section 4081) which is suitable for use as a fuel in an aircraft.

    ‘(b) PRODUCER- For purposes of this subpart--

      ‘(1) CERTAIN PERSONS TREATED AS PRODUCERS-

        ‘(A) IN GENERAL- The term ‘producer’ includes any person described in subparagraph (B) and registered under section 4101 with respect to the tax imposed by section 4091.

        ‘(B) PERSONS DESCRIBED- A person is described in this subparagraph if such person is--

          ‘(i) a refiner, blender, or wholesale distributor of aviation fuel, or

          ‘(ii) a dealer selling aviation fuel exclusively to producers of aviation fuel.

        ‘(C) REDUCED RATE PURCHASERS TREATED AS PRODUCERS- Any person to whom aviation fuel is sold at a reduced rate under this subpart shall be treated as the producer of such fuel.

      ‘(2) WHOLESALE DISTRIBUTOR- For purposes of paragraph (1), the term ‘wholesale distributor’ includes any person who sells aviation fuel to producers, retailers, or to users who purchase in bulk quantities and accept delivery into bulk storage tanks. Such term does not include any person who (excluding the term ‘wholesale distributor’ from paragraph (1)) is a producer or importer.’

    (b) CIVIL PENALTY FOR USING REDUCED-RATE FUEL FOR TAXABLE USE, ETC-

      (1) IN GENERAL- Part I of subchapter B of chapter 68 (relating to assessable penalties) is amended by adding at the end thereof the following new section:

‘SEC. 6714. DYED FUEL SOLD FOR USE OR USED IN TAXABLE USE, ETC.

    ‘(a) IMPOSITION OF PENALTY- If--

      ‘(1) any dyed fuel is sold or held for sale by any person for any use which such person knows or has reason to know is not a nontaxable use of such fuel,

      ‘(2) any dyed fuel is held for use or used by any person for a use other than a nontaxable use and such person knew, or had reason to know, that such fuel was so dyed, or

      ‘(3) any person willfully alters, or attempts to alter, the strength or composition of any dye or marking done pursuant to section 4082 in any dyed fuel,

    then such person shall pay a penalty in addition to the tax (if any).

    ‘(b) AMOUNT OF PENALTY-

      ‘(1) IN GENERAL- Except as provided in paragraph (2), the amount of the penalty under subsection (a) on each act shall be the greater of--

        ‘(A) $1,000, or

        ‘(B) $10 for each gallon of the dyed fuel involved.

      ‘(2) MULTIPLE VIOLATIONS- In determining the penalty under subsection (a) on any person, paragraph (1) shall be applied by increasing the amount in paragraph (1)(A) by the product of such amount and the number of prior penalties (if any) imposed by this section on such person (or a related person or any predecessor of such person or related person).

    ‘(c) DEFINITIONS- For purposes of this section--

      ‘(1) DYED FUEL- The term ‘dyed fuel’ means any dyed diesel fuel, whether or not the fuel was dyed pursuant to section 4082.

      ‘(2) NONTAXABLE USE- The term ‘nontaxable use’ has the meaning given such term by section 4082(b).

    ‘(d) JOINT AND SEVERAL LIABILITY OF CERTAIN OFFICERS AND EMPLOYEES- If a penalty is imposed under this section on any business entity, each officer, employee, or agent of such entity who willfully participated in any act giving rise to such penalty shall be jointly and severally liable with such entity for such penalty.’

      (2) CLERICAL AMENDMENT- The table of sections for such part I is amended by adding at the end thereof the following new item:

‘Sec. 6714. Dyed fuel sold for use or used in taxable use, etc.’

    (c) REGISTERED VENDORS TO ADMINISTER CLAIMS FOR CERTAIN REFUNDS OF DIESEL FUEL-

      (1) IN GENERAL- Section 6427(l) (relating to nontaxable uses of diesel fuel and aviation fuel) is amended by adding at the end the following new paragraph:

      ‘(5) REGISTERED VENDORS TO ADMINISTER CLAIMS FOR REFUND OF DIESEL FUEL SOLD TO FARMERS AND STATE AND LOCAL GOVERNMENTS-

        ‘(A) IN GENERAL- Paragraph (1) shall not apply to diesel fuel used--

          ‘(i) on a farm for farming purposes (within the meaning of section 6420(c)), or

          ‘(ii) by a State or local government.

        ‘(B) PAYMENT TO ULTIMATE, REGISTERED VENDOR- The amount which would (but for subparagraph (A)) have been paid under paragraph (1) with respect to any fuel shall be paid to the ultimate vendor of such fuel, if such vendor--

          ‘(i) is registered under section 4101, and

          ‘(ii) meets the requirements of subparagraph (A), (B), or (D) of section 6416(a)(1).’

      (2) SPECIAL REFUND RULES-

        (A) Subsection (i) of section 6427 is amended by adding at the end thereof the following new paragraph:

      ‘(5) SPECIAL RULE FOR VENDOR REFUNDS-

        ‘(A) IN GENERAL- A claim may be filed under subsection (l)(5) by any person with respect to fuel sold by such person for any period--

          ‘(i) for which $200 or more is payable under subsection (l)(5), and

          ‘(ii) which is not less than 1 week.

        Notwithstanding subsection (l)(1), paragraph (3)(B) shall apply to claims filed under the preceding sentence.

        ‘(B) TIME FOR FILING CLAIM- No claim filed under this paragraph shall be allowed unless filed on or before the last day of the first quarter following the earliest quarter included in the claim.’

        (B) Paragraph (1) of section 6427(i) is amended by striking ‘provided in paragraphs (2), (3), and (4)’ and inserting ‘otherwise provided in this subsection’.

        (C) Paragraph (2) of section 6427(k) is amended by striking ‘or (4)’ and inserting ‘(4), or (5)’.

        (D) Paragraph (3) of section 6427(i) is amended by adding at the end thereof the following new subparagraph:

        ‘(C) TIME FOR FILING CLAIM- No claim filed under this paragraph shall be allowed unless filed on or before the last day of the first quarter following the earliest quarter included in the claim.’

    (d) TECHNICAL AND CONFORMING AMENDMENTS-

      (1) Sections 4101(a) and 4103 are each amended by striking ‘4081’ and inserting ‘4041(a)(1), 4081,’.

      (2) Section 4102 is amended by striking ‘gasoline’ and inserting ‘any taxable fuel (as defined in section 4083)’.

      (3) Paragraph (1) of section 4041(a), as amended by subchapter A, is amended to read as follows:

      ‘(1) TAX ON DIESEL FUEL IN CERTAIN CASES-

        ‘(A) IN GENERAL- There is hereby imposed a tax on any liquid other than gasoline (as defined in section 4083)--

          ‘(i) sold by any person to an owner, lessee, or other operator of a diesel-powered highway vehicle, a diesel-powered train, or a diesel-powered boat for use as a fuel in such vehicle, train, or boat, or

          ‘(ii) used by any person as a fuel in a diesel-powered highway vehicle, a diesel-powered train, or a diesel-powered boat unless there was a taxable sale of such fuel under clause (i).

        ‘(B) EXEMPTION FOR PREVIOUSLY TAXED FUEL- No tax shall be imposed by this paragraph on the sale or use of any liquid if tax was imposed on such liquid under section 4081 and the tax thereon was not credited or refunded.

        ‘(C) RATE OF TAX-

          ‘(i) IN GENERAL- Except as otherwise provided in this subparagraph, the rate of the tax imposed by this paragraph shall be the rate of tax specified in section 4081(a)(2)(A) on diesel fuel which is in effect at the time of such sale or use.

          ‘(ii) RATE OF TAX ON TRAINS- In the case of any sale for use, or use, of diesel fuel in a train, the rate of tax imposed by this paragraph shall be--

            ‘(I) 6.8 cents per gallon after September 30, 1993, and before October 1, 1995,

            ‘(II) 5.55 cents per gallon after September 30, 1995, and before October 1, 1999, and

            ‘(III) 4.3 cents per gallon after September 30, 1999.

          ‘(iii) RATE OF TAX ON CERTAIN BUSES-

            ‘(I) IN GENERAL- Except as provided in subclause (II), in the case of fuel sold for use or used in a use described in section 6427(b)(1) (after the application of section 6427(b)(3)), the rate of tax imposed by this paragraph shall be 7.3 cents per gallon (4.3 cents per gallon after September 30, 1999).

            ‘(II) SCHOOL BUS AND INTRACITY TRANSPORTATION- No tax shall be imposed by this paragraph on any sale for use, or use, described in subparagraph (B) or (C) of section 6427(b)(2).

        ‘(D) DIESEL FUEL USED IN MOTORBOATS- In the case of any sale for use, or use, of fuel in a diesel-powered motorboat--

          ‘(i) effective during the period after September 30, 1999, and before January 1, 2000, the rate of tax imposed by this paragraph is 24.3 cents per gallon, and

          ‘(ii) the termination of the tax under subsection (d) shall not occur before January 1, 2000.’

      (4) Paragraph (2) of section 4041(a) is amended--

        (A) by striking ‘or paragraph (1) of this subsection’, and

        (B) by striking the last sentence and inserting the following new flush sentence:

      ‘The rate of the tax imposed by this paragraph shall be the rate of tax specified in section 4081(a)(2)(A) on gasoline which is in effect at the time of such sale or use.’

      (5)(A) Subparagraph (B) of section 4041(b)(1) is amended by striking ‘paragraph (1)(B) or (2)(B)’ and inserting ‘paragraph (1)(B), (2)(B), or (3)(A)(ii)’ and by inserting before the period ‘(if any)’.

      (B) Subparagraph (C) of section 4041(b)(1) is amended by inserting before the period ‘; except that such term shall not, for purposes of subsection (a)(1), include use in a diesel-powered train’.

      (C) Clause (i) of section 4041(b)(2)(A) is amended by striking ‘Highway Trust Fund financing’.

      (6) Paragraph (1) of section 4041(c), as amended by subpart A, is amended by striking the next to the last sentence and inserting the following new flush sentence:

      ‘The rate of the tax imposed by this paragraph shall be the rate of tax specified in section 4091(b)(1) which is in effect at the time of such sale or use.’

      (7) Paragraph (2) of section 4041(c) is amended by striking ‘any product taxable under section 4081’ and inserting ‘gasoline (as defined in section 4083)’.

      (8) Paragraph (5) of section 4041(c) is amended by adding at the end thereof the following: ‘The termination under the preceding sentence shall not apply to so much of the tax imposed by paragraph (1) as does not exceed 4.3 cents per gallon.’.

      (9) Subsection (d) of section 4041 is amended by striking paragraph (2) and by redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively.

      (10) Paragraph (2) of section 4041(d), as redesignated by the preceding paragraph, is amended by striking ‘(other than any product taxable under section 4081)’ and inserting ‘(other than gasoline (as defined in section 4083))’.

      (11) Subparagraph (A) of section 4041(k)(1) is amended--

        (A) by striking ‘Highway Trust Fund financing’, and

        (B) by striking ‘sections 4081(c) and 4091(c), as the case may be’ and inserting ‘section 4081(c)’.

      (12) Subparagraph (B) of section 4041(k)(1) is amended by striking ‘4091(d)’ and inserting ‘4091(c)’.

      (13) Subparagraphs (A) and (B) of section 4041(m)(1) are amended to read as follows:

        ‘(A) the rate of the tax imposed by subsection (a)(2) shall be--

          ‘(i) 11.3 cents per gallon after September 30, 1993, and before October 1, 1999, and

          ‘(ii) 4.3 cents per gallon after September 30, 1999, and

        ‘(B) the rate of the tax imposed by subsection (c)(1) shall be the comparable rate under section 4091(c)(1).’

      (14) Section 6206 is amended by striking ‘4041 or 4091’ and inserting ‘4041, 4081, or 4091’.

      (15) The heading for subsection (f) of section 6302 is amended by inserting ‘AND DIESEL FUEL’ after ‘GASOLINE’.

      (16) Paragraph (1) of section 6412(a) is amended by striking ‘gasoline’ each place it appears (including the heading) and inserting ‘taxable fuel’.

      (17)(A) Subparagraph (A) of section 6416(a)(4) is amended by striking ‘product’ each place it appears and inserting ‘gasoline’.

      (B) Subparagraph (B) of section 6416(a)(4) is amended--

        (i) by striking ‘section 4092(b)(2)’ and inserting ‘section 4093(b)(2)’, and

        (ii) by striking all that follows ‘substituting’ and inserting ‘any gasoline taxable under section 4081’ for ‘aviation fuel’ therein).’

      (18) The material following the first sentence of section 6416(b)(2) is amended by inserting ‘any tax imposed under section 4041(a)(1) or 4081 on diesel fuel and’ after ‘This paragraph shall not apply in the case of’.

      (19)(A) Subparagraph (A) of section 6416(b)(3) is amended by striking ‘gasoline taxable under section 4081 and other than any fuel taxable under section 4091’ and inserting ‘any fuel taxable under section 4081 or 4091’.

      (B) Subparagraph (B) of section 6416(b)(3) is amended by striking ‘gasoline taxable under section 4081 or any fuel taxable under section 4091, such gasoline or fuel’ and inserting ‘any fuel taxable under section 4081 or 4091, such fuel’.

      (20) Sections 6420(c)(5) and 6421(e)(1) are each amended by striking ‘section 4082(b)’ and inserting ‘section 4083(a)’.

      (21) Subsections (a) and (c) of section 6427 are each amended by striking ‘section 4041(a) or (c)’ and inserting ‘paragraph (2) or (3) of section 4041(a) or section 4041(c)’.

      (22) Subsection (c) of section 6421 is amended by adding at the end thereof the following: ‘The preceding sentence shall apply notwithstanding paragraphs (2)(A) and (3) of subsection (f).’

      (23) Subparagraph (B) of section 6421(f)(2) is amended by inserting before the period ‘and, in the case of fuel purchased after September 30, 1995, at so much of the rate specified in section 4081(a)(2)(A) as does not exceed 4.3 cents per gallon’.

      (24) Paragraph (3) of section 6421(f), as amended by subpart A, is amended to read as follows:

      ‘(3) GASOLINE USED IN TRAINS- In the case of gasoline used as a fuel in a train, this section shall not apply with respect to--

        ‘(A) the Leaking Underground Storage Tank Trust Fund financing rate under section 4081, and

        ‘(B) so much of the rate specified in section 4081(a)(2)(A) as does not exceed--

          ‘(i) 6.8 cents per gallon after September 30, 1993, and before October 1, 1995,

          ‘(ii) 5.55 cents per gallon after September 30, 1995, and before October 1, 1999, and

          ‘(iii) 4.3 cents per gallon after September 30, 1999.’

      (25) Subsection (b) of section 6427 is amended--

        (A) by striking ‘if any fuel’ in paragraph (1) and inserting ‘if any fuel other than gasoline (as defined in section 4083(a))’, and

        (B) by striking ‘4091’ each place it appears and inserting ‘4081’.

      (26)(A) Paragraph (1) of section 6427(f) is amended by striking ‘, 4091(c)(1)(A), or 4091(d)(1)(A)’ and inserting ‘or 4091(c)(1)(A)’.

      (B) Paragraph (2) of section 6427(f) is amended to read as follows:

      ‘(2) DEFINITIONS- For purposes of paragraph (1)--

        ‘(A) REGULAR TAX RATE- The term ‘regular tax rate’ means--

          ‘(i) in the case of gasoline or diesel fuel, the aggregate rate of tax imposed by section 4081 determined without regard to subsection (c) thereof, and

          ‘(ii) in the case of aviation fuel, the aggregate rate of tax imposed by section 4091 determined without regard to subsection (c) thereof.

        ‘(B) INCENTIVE TAX RATE- The term ‘incentive tax rate’ means--

          ‘(i) in the case of gasoline or diesel fuel, the aggregate rate of tax imposed by section 4081 with respect to fuel described in subsection (c)(2) thereof, and

          ‘(ii) in the case of aviation fuel, the aggregate rate of tax imposed by section 4091 with respect to fuel described in subsection (c)(2) thereof.’

      (27) Subsection (h) of section 6427 is amended by striking ‘section 4082(b)’ and inserting ‘section 4083(a)(2)’.

      (28) Paragraph (3) of section 6427(i) is amended--

        (A) by striking ‘GASOHOL’ in the heading and inserting ‘ALCOHOL MIXTURE’, and

        (B) by striking ‘gasoline used to produce gasohol (as defined in section 4081(c)(1))’ in subparagraph (A) and inserting ‘gasoline or diesel fuel used to produce a qualified alcohol mixture (as defined in section 4081(c)(3))’.

      (29) Paragraph (1) of section 6427(j) is amended by striking ‘section 4041’ and inserting ‘sections 4041, 4081, and 4091’.

      (30) The heading of paragraph (4) of section 6427(i) is amended by inserting ‘4081 OR’ before ‘4091’.

      (31) So much of subsection (l) of section 6427, as previously amended by this part, as precedes paragraph (5) is amended to read as follows:

    ‘(l) NONTAXABLE USES OF DIESEL FUEL AND AVIATION FUEL-

      ‘(1) IN GENERAL- Except as otherwise provided in this subsection and in subsection (k), if--

        ‘(A) any diesel fuel on which tax has been imposed by section 4041 or 4081, or

        ‘(B) any aviation fuel on which tax has been imposed by section 4091,

      is used by any person in a nontaxable use, the Secretary shall pay (without interest) to the ultimate purchaser of such fuel an amount equal to the aggregate amount of tax imposed on such fuel under section 4041, 4081, or 4091, as the case may be.

      ‘(2) NONTAXABLE USE- For purposes of this subsection, the term ‘nontaxable use’ means--

        ‘(A) in the case of diesel fuel, any use which is exempt from the tax imposed by section 4041(a)(1) other than by reason of a prior imposition of tax, and

        ‘(B) in the case of aviation fuel, any use which is exempt from the tax imposed by section 4041(c)(1) other than by reason of a prior imposition of tax.

      ‘(3) REFUND OF CERTAIN TAXES ON FUEL USED IN DIESEL-POWERED TRAINS- For purposes of this subsection, the term ‘nontaxable use’ includes fuel used in a diesel-powered train. The preceding sentence shall not apply with respect to--

        ‘(A) the Leaking Underground Storage Tank Trust Fund financing rate under sections 4041 and 4081, and

        ‘(B) so much of the rate specified in section 4081(a)(2)(A) as does not exceed--

          ‘(i) 6.8 cents per gallon after September 30, 1993, and before October 1, 1995,

          ‘(ii) 5.55 cents per gallon after September 30, 1995, and before October 1, 1999, and

          ‘(iii) 4.3 cents per gallon after September 30, 1999.

      The preceding sentence shall not apply in the case of fuel sold for exclusive use by a State or any political subdivision thereof.

      ‘(4) NO REFUND OF CERTAIN TAXES ON FUEL USED IN COMMERCIAL AVIATION- In the case of fuel used in commercial aviation (as defined in section 4092(b)) (other than supplies for vessels or aircraft within the meaning of section 4221(d)(3)), paragraph (1) shall not apply to so much of the tax imposed by section 4091 as is attributable to--

        ‘(A) the Leaking Underground Storage Tank Trust Fund financing rate imposed by such section, and

        ‘(B) in the case of fuel purchased after September 30, 1995, so much of the rate of tax specified in section 4091(b)(1) as does not exceed 4.3 cents per gallon.’

      (32) Section 9502 is amended by adding at the end thereof the following new subsection:

    ‘(f) DEFINITION OF AIRPORT AND AIRWAY TRUST FUND FINANCING RATE- For purposes of this section--

      ‘(1) IN GENERAL- Except as otherwise provided in this subsection, the Airport and Airway Trust Fund financing rate is--

        ‘(A) in the case of fuel used in an aircraft in noncommercial aviation (as defined in section 4041(c)(4)), 17.5 cents per gallon, and

        ‘(B) in the case of fuel used in an aircraft other than in noncommercial aviation (as so defined), zero.

      ‘(2) ALCOHOL FUELS- If the rate of tax on any fuel is determined under section 4091(c), the Airport and Airway Trust Fund financing rate is the excess (if any) of the rate of tax determined under section 4091(c) over 4.4 cents per gallon ( 10/9 of 4.4 cents per gallon in the case of a rate of tax determined under section 4091(c)(2)).

      ‘(3) TERMINATION- Notwithstanding the preceding provisions of this subsection, the Airport and Airway Trust Fund financing rate is zero with respect to tax received after December 31, 1995.’

      (33) Paragraph (2) of section 9502(b) is amended by striking ‘(to the extent attributable to the Highway Trust Fund financing rate and the deficit reduction rate)’ and inserting ‘(to the extent of 14 cents per gallon)’.

      (34) Paragraph (1) of section 9503(b) is amended--

        (A) by striking ‘gasoline),’ in subparagraph (E) and inserting ‘gasoline and diesel fuel), and’,

        (B) by striking subparagraph (F), and

        (C) by redesignating subparagraph (G) as subparagraph (F).

      (35)(A) Subparagraph (B) of section 9503(b)(4) is amended by striking ‘, 4081, and 4091’ and inserting ‘and 4081’ and by striking ‘rates under such sections’ and inserting ‘rate’.

      (B) Subparagraph (C) of section 9503(b)(4), as amended by subchapter A, is amended by striking ‘4091’ and inserting ‘4081’.

      (36) Paragraph (5) of section 9503(b) is amended by striking ‘, (E), and (F)’ and inserting ‘and (E)’.

      (37) Subparagraph (D) of section 9503(c)(6) is amended by striking ‘, 4081, and 4091’ and inserting ‘and 4081’.

      (38) Subparagraph (D) of section 9503(c)(4) is amended by striking ‘rates under such sections’ and inserting ‘rate’.

      (39) Subparagraph (B) of section 9503(c)(5) is amended by striking ‘rate under such section’ and inserting ‘rate’.

      (40) Paragraph (2) of section 9503(e) is amended--

        (A) by striking ‘, 4081, and 4091’ and inserting ‘and 4081’, and

        (B) by striking ‘, 4081, or 4091’ and inserting ‘or 4081’.

      (41) Section 9503 is amended by adding at the end thereof the following new subsection:

    ‘(f) DEFINITION OF HIGHWAY TRUST FUND FINANCING RATE- For purposes of this section--

      ‘(1) IN GENERAL- Except as otherwise provided in this subsection, the Highway Trust Fund financing rate is--

        ‘(A) in the case of gasoline and special motor fuels, 11.5 cents per gallon (14 cents per gallon after September 30, 1995), and

        ‘(B) in the case of diesel fuel, 17.5 cents per gallon (20 cents per gallon after September 30, 1995).

      ‘(2) CERTAIN USES-

        ‘(A) TRAINS- In the case of fuel used in a train, the Highway Trust Fund financing rate is zero.

        ‘(B) CERTAIN BUSES- In the case of diesel fuel used in a use described in section 6427(b)(1) (after the application of section 6427(b)(3)), the Highway Trust Fund financing rate is 3 cents per gallon.

        ‘(C) CERTAIN BOATS- In the case of diesel fuel used in a boat described in clause (iv) of section 6421(e)(2)(B), the Highway Trust Fund financing rate is zero.

        ‘(D) COMPRESSED NATURAL GAS- In the case of the tax imposed by section 4041(a)(3), the Highway Trust Fund financing rate is zero.

        ‘(E) CERTAIN OTHER NONHIGHWAY USES- In the case of gasoline and special motor fuels used as described in paragraph (4)(D), (5)(B), or (6)(D) of subsection (c), the Highway Trust Fund financing rate is 11.5 cents per gallon; and, in the case of diesel fuel used as described in subsection (c)(6)(D), the Highway Trust Fund financing rate is 17.5 cents per gallon.

      ‘(3) ALCOHOL FUELS-

        ‘(A) IN GENERAL- If the rate of tax on any fuel is determined under section 4041(b)(2)(A), 4041(k), or 4081(c), the Highway Trust Fund financing rate is the excess (if any) of the rate so determined over--

          ‘(i) 6.8 cents per gallon after September 30, 1993, and before October 1, 1999,

          ‘(ii) 4.3 cents per gallon after September 30, 1999.

        In the case of a rate of tax determined under section 4081(c), the preceding sentence shall be applied by increasing the rates specified in clauses (i) and (ii) by 0.1 cent.

        ‘(B) FUELS USED TO PRODUCE MIXTURES- In the case of a rate of tax determined under section 4081(c)(2), subparagraph (A) shall be applied by substituting rates which are 10/9 of the rates otherwise applicable under clauses (i) and (ii) of subparagraph (A).

        ‘(C) PARTIALLY EXEMPT METHANOL OR ETHANOL FUEL- In the case of a rate of tax determined under section 4041(m), the Highway Trust Fund financing rate is the excess (if any) of the rate so determined over--

          ‘(i) 5.55 cents per gallon after September 30, 1993, and before October 1, 1995, and

          ‘(ii) 4.3 cents per gallon after September 30, 1995.

      ‘(4) TERMINATION- Notwithstanding the preceding provisions of this subsection, the Highway Trust Fund financing rate is zero with respect to taxes received in the Treasury after June 30, 2000.’

      (42) Subsection (b) of section 9508 is amended--

        (A) by inserting ‘and diesel fuel’ after ‘gasoline’ in paragraph (2),

        (B) by striking ‘diesel fuel and’ in paragraph (3), and

        (C) by striking ‘4091’ in the last sentence, as added by subtitle A, and inserting ‘4081’.

      (43) The table of subparts for part III of subchapter A of chapter 32 is amended by striking the items relating to subparts A and B and inserting the following new items:

‘Subpart A. Gasoline and diesel fuel.

‘Subpart B. Aviation fuel.’

    (e) EFFECTIVE DATE- The amendments made by this section shall take effect on January 1, 1994.

SEC. 13243. FLOOR STOCKS TAX.

    (a) IN GENERAL- There is hereby imposed a floor stocks tax on diesel fuel held by any person on January 1, 1994, if--

      (1) no tax was imposed on such fuel under section 4041(a) or 4091 of the Internal Revenue Code of 1986 as in effect on December 31, 1993, and

      (2) tax would have been imposed by section 4081 of such Code, as amended by this Act, on any prior removal, entry, or sale of such fuel had such section 4081 applied to such fuel for periods before January 1, 1994.

    (b) RATE OF TAX- The rate of the tax imposed by subsection (a) shall be the amount of tax which would be imposed under section 4081 of the Internal Revenue Code of 1986 if there were a taxable sale of such fuel on such date.

    (c) LIABILITY AND PAYMENT OF TAX-

      (1) LIABILITY FOR TAX- A person holding the diesel fuel on January 1, 1994, to which the tax imposed by this section applies shall be liable for such tax.

      (2) METHOD OF PAYMENT- The tax imposed by this section shall be paid in such manner as the Secretary shall prescribe.

      (3) TIME FOR PAYMENT- The tax imposed by this section shall be paid on or before July 31, 1994.

    (d) DEFINITIONS- For purposes of this section--

      (1) DIESEL FUEL- The term ‘diesel fuel’ has the meaning given such term by section 4083(a) of such Code.

      (2) SECRETARY- The term ‘Secretary’ means the Secretary of the Treasury or his delegate.

    (e) EXCEPTIONS-

      (1) PERSONS ENTITLED TO CREDIT OR REFUND- The tax imposed by this section shall not apply to fuel held by any person exclusively for any use to the extent a credit or refund of the tax imposed by section 4081 is allowable for such use.

      (2) COMPLIANCE WITH DYEING REQUIRED- Paragraph (1) shall not apply to the holder of any fuel if the holder of such fuel fails to comply with any requirement imposed by the Secretary with respect to dyeing and marking such fuel.

    (f) OTHER LAWS APPLICABLE- All provisions of law, including penalties, applicable with respect to the taxes imposed by section 4081 of such Code shall, insofar as applicable and not inconsistent with the provisions of this section, apply with respect to the floor stock taxes imposed by this section to the same extent as if such taxes were imposed by such section 4081.

Subpart C--Other Provisions

SEC. 13244. INCREASED DEPOSITS INTO MASS TRANSIT ACCOUNT.

    (a) IN GENERAL- Paragraph (2) of section 9503(e) is amended by striking ‘1.5 cents’ and inserting ‘2 cents’.

    (b) EFFECTIVE DATE- The amendment made by this section shall apply to amounts attributable to taxes imposed on or after October 1, 1995.

SEC. 13245. FLOOR STOCKS TAX ON COMMERCIAL AVIATION FUEL HELD ON OCTOBER 1, 1995.

    (a) IMPOSITION OF TAX- In the case of commercial aviation fuel on which tax was imposed under section 4091 of the Internal Revenue Code of 1986 before October 1, 1995, and which is held on such date by any person, there is hereby imposed a floor stocks tax of 4.3 cents per gallon.

    (b) LIABILITY FOR TAX AND METHOD OF PAYMENT-

      (1) LIABILITY FOR TAX- A person holding aviation fuel on October 1, 1995, to which the tax imposed by subsection (a) applies shall be liable for such tax.

      (2) METHOD OF PAYMENT- The tax imposed by subsection (a) shall be paid in such manner as the Secretary shall prescribe.

      (3) TIME FOR PAYMENT- The tax imposed by subsection (a) shall be paid on or before April 30, 1996.

    (c) DEFINITIONS- For purposes of this subsection--

      (1) HELD BY A PERSON- Aviation fuel shall be considered as ‘held by a person’ if title thereto has passed to such person (whether or not delivery to the person has been made).

      (2) COMMERCIAL AVIATION FUEL- The term ‘commercial aviation fuel’ means aviation fuel (as defined in section 4093 of such Code) which is held on October 1, 1995, for sale or use in commercial aviation (as defined in section 4092(b) of such Code).

      (3) SECRETARY- The term ‘Secretary’ means the Secretary of the Treasury or his delegate.

    (d) EXCEPTION FOR EXEMPT USES- The tax imposed by subsection (a) shall not apply to aviation fuel held by any person exclusively for any use for which a credit or refund of the entire tax imposed by section 4091 of such Code is allowable for aviation fuel purchased after September 30, 1995, for such use.

    (e) EXCEPTION FOR CERTAIN AMOUNTS OF FUEL-

      (1) IN GENERAL- No tax shall be imposed by subsection (a) on aviation fuel held on October 1, 1995, by any person if the aggregate amount of commercial aviation fuel held by such person on such date does not exceed 2,000 gallons. The preceding sentence shall apply only if such person submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary shall require for purposes of this paragraph.

      (2) EXEMPT FUEL- For purposes of paragraph (1), there shall not be taken into account fuel held by any person which is exempt from the tax imposed by subsection (a) by reason of subsection (d).

      (3) CONTROLLED GROUPS- For purposes of this subsection--

        (A) CORPORATIONS-

          (i) IN GENERAL- All persons treated as a controlled group shall be treated as 1 person.

          (ii) CONTROLLED GROUP- The term ‘controlled group’ has the meaning given to such term by subsection (a) of section 1563 of such Code; except that for such purposes the phrase ‘more than 50 percent’ shall be substituted for the phrase ‘at least 80 percent’ each place it appears in such subsection.

        (B) NONINCORPORATED PERSONS UNDER COMMON CONTROL- Under regulations prescribed by the Secretary, principles similar to the principles of subparagraph (A) shall apply to a group of persons under common control where 1 or more of such persons is not a corporation.

    (f) OTHER LAW APPLICABLE- All provisions of law, including penalties, applicable with respect to the taxes imposed by section 4091 of such Code shall, insofar as applicable and not inconsistent with the provisions of this section, apply with respect to the floor stock taxes imposed by subsection (a) to the same extent as if such taxes were imposed by such section 4091.

PART V--COMPLIANCE PROVISIONS

SEC. 13251. MODIFICATIONS TO SUBSTANTIAL UNDERSTATEMENT PENALTY.

    (a) REASONABLE BASIS REQUIRED- Clause (ii) of section 6662(d)(2)(B) (relating to reduction for understatement due to position of taxpayer or disclosed item) is amended to read as follows:

          ‘(ii) any item if--

            ‘(I) the relevant facts affecting the item’s tax treatment are adequately disclosed in the return or in a statement attached to the return, and

            ‘(II) there is a reasonable basis for the tax treatment of such item by the taxpayer.’

    (b) EFFECTIVE DATE- The amendment made by this section shall apply to returns the due dates for which (determined without regard to extensions) are after December 31, 1993.

SEC. 13252. RETURNS RELATING TO THE CANCELLATION OF INDEBTEDNESS BY CERTAIN FINANCIAL ENTITIES.

    (a) IN GENERAL- Subpart B of part III of subchapter A of chapter 61 (relating to information concerning transactions with other persons) is amended by adding at the end thereof the following new section:

‘SEC. 6050P. RETURNS RELATING TO THE CANCELLATION OF INDEBTEDNESS BY CERTAIN FINANCIAL ENTITIES.

    ‘(a) IN GENERAL- Any applicable financial entity which discharges (in whole or in part) the indebtedness of any person during any calendar year shall make a return (at such time and in such form as the Secretary may by regulations prescribe) setting forth--

      ‘(1) the name, address, and TIN of each person whose indebtedness was discharged during such calendar year,

      ‘(2) the date of the discharge and the amount of the indebtedness discharged, and

      ‘(3) such other information as the Secretary may prescribe.

    ‘(b) EXCEPTION- Subsection (a) shall not apply to any discharge of less than $600.

    ‘(c) DEFINITIONS AND SPECIAL RULES- For purposes of this section--

      ‘(1) APPLICABLE FINANCIAL ENTITY- The term ‘applicable financial entity’ means--

        ‘(A) any financial institution described in section 581 or 591(a) and any credit union,

        ‘(B) the Federal Deposit Insurance Corporation, the Resolution Trust Corporation, the National Credit Union Administration, and any other Federal executive agency (as defined in section 6050M), and any successor or subunit of any of the foregoing, and

        ‘(C) any other corporation which is a direct or indirect subsidiary of an entity referred to in subparagraph (A) but only if, by virtue of being affiliated with such entity, such other corporation is subject to supervision and examination by a Federal or State agency which regulates entities referred to in subparagraph (A).

      ‘(2) GOVERNMENTAL UNITS- In the case of an entity described in paragraph (1)(B), any return under this section shall be made by the officer or employee appropriately designated for the purpose of making such return.

    ‘(d) STATEMENTS TO BE FURNISHED TO PERSONS WITH RESPECT TO WHOM INFORMATION IS REQUIRED TO BE FURNISHED- Every applicable financial entity required to make a return under subsection (a) shall furnish to each person whose name is required to be set forth in such return a written statement showing--

      ‘(1) the name and address of the entity required to make such return, and

      ‘(2) the information required to be shown on the return with respect to such person.

    The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) was made.’

    (b) PENALTIES-

      (1) RETURNS- Subparagraph (B) of section 6724(d)(1) is amended by inserting after clause (vii) the following new clause (and by redesignating the following clauses accordingly):

          ‘(viii) section 6050P (relating to returns relating to the cancellation of indebtedness by certain financial entities),’.

      (2) STATEMENTS- Paragraph (2) of section 6724(d) is amended by redesignating subparagraphs (P) through (S) as subparagraphs (Q) through (T), respectively, and by inserting after subparagraph (O) the following new subparagraph:

        ‘(P) section 6050P(d) (relating to returns relating to the cancellation of indebtedness by certain financial entities),’.

    (c) CLERICAL AMENDMENT- The table of sections for subpart B of part III of subchapter A of chapter 61 is amended by adding at the end thereof the following new item:

‘Sec. 6050P. Returns relating to the cancellation of indebtedness by certain financial entities.’

    (d) EFFECTIVE DATE-

      (1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to discharges of indebtedness after December 31, 1993.

      (2) GOVERNMENTAL ENTITIES- In the case of an entity referred to in section 6050P(c)(1)(B) of the Internal Revenue Code of 1986 (as added by this section), the amendments made by this section shall apply to discharges of indebtedness after the date of the enactment of this Act.

PART VI--TREATMENT OF INTANGIBLES

SEC. 13261. AMORTIZATION OF GOODWILL AND CERTAIN OTHER INTANGIBLES.

    (a) GENERAL RULE- Part VI of subchapter B of chapter 1 (relating to itemized deductions for individuals and corporations) is amended by adding at the end thereof the following new section:

‘SEC. 197. AMORTIZATION OF GOODWILL AND CERTAIN OTHER INTANGIBLES.

    ‘(a) GENERAL RULE- A taxpayer shall be entitled to an amortization deduction with respect to any amortizable section 197 intangible. The amount of such deduction shall be determined by amortizing the adjusted basis (for purposes of determining gain) of such intangible ratably over the 15-year period beginning with the month in which such intangible was acquired.

    ‘(b) NO OTHER DEPRECIATION OR AMORTIZATION DEDUCTION ALLOWABLE- Except as provided in subsection (a), no depreciation or amortization deduction shall be allowable with respect to any amortizable section 197 intangible.

    ‘(c) AMORTIZABLE SECTION 197 INTANGIBLE- For purposes of this section--

      ‘(1) IN GENERAL- Except as otherwise provided in this section, the term ‘amortizable section 197 intangible’ means any section 197 intangible--

        ‘(A) which is acquired by the taxpayer after the date of the enactment of this section, and

        ‘(B) which is held in connection with the conduct of a trade or business or an activity described in section 212.

      ‘(2) EXCLUSION OF SELF-CREATED INTANGIBLES, ETC- The term ‘amortizable section 197 intangible’ shall not include any section 197 intangible--

        ‘(A) which is not described in subparagraph (D), (E), or (F) of subsection (d)(1), and

        ‘(B) which is created by the taxpayer.

      This paragraph shall not apply if the intangible is created in connection with a transaction (or series of related transactions) involving the acquisition of assets constituting a trade or business or substantial portion thereof.

      ‘(3) ANTI-CHURNING RULES-

‘For exclusion of intangibles acquired in certain transactions, see subsection (f)(9).

    ‘(d) SECTION 197 INTANGIBLE- For purposes of this section--

      ‘(1) IN GENERAL- Except as otherwise provided in this section, the term ‘section 197 intangible’ means--

        ‘(A) goodwill,

        ‘(B) going concern value,

        ‘(C) any of the following intangible items:

          ‘(i) workforce in place including its composition and terms and conditions (contractual or otherwise) of its employment,

          ‘(ii) business books and records, operating systems, or any other information base (including lists or other information with respect to current or prospective customers),

          ‘(iii) any patent, copyright, formula, process, design, pattern, knowhow, format, or other similar item,

          ‘(iv) any customer-based intangible,

          ‘(v) any supplier-based intangible, and

          ‘(vi) any other similar item,

        ‘(D) any license, permit, or other right granted by a governmental unit or an agency or instrumentality thereof,

        ‘(E) any covenant not to compete (or other arrangement to the extent such arrangement has substantially the same effect as a covenant not to compete) entered into in connection with an acquisition (directly or indirectly) of an interest in a trade or business or substantial portion thereof, and

        ‘(F) any franchise, trademark, or trade name.

      ‘(2) CUSTOMER-BASED INTANGIBLE-

        ‘(A) IN GENERAL- The term ‘customer-based intangible’ means--

          ‘(i) composition of market,

          ‘(ii) market share, and

          ‘(iii) any other value resulting from future provision of goods or services pursuant to relationships (contractual or otherwise) in the ordinary course of business with customers.

        ‘(B) SPECIAL RULE FOR FINANCIAL INSTITUTIONS- In the case of a financial institution, the term ‘customer-based intangible’ includes deposit base and similar items.

      ‘(3) SUPPLIER-BASED INTANGIBLE- The term ‘supplier-based intangible’ means any value resulting from future acquisitions of goods or services pursuant to relationships (contractual or otherwise) in the ordinary course of business with suppliers of goods or services to be used or sold by the taxpayer.

    ‘(e) EXCEPTIONS- For purposes of this section, the term ‘section 197 intangible’ shall not include any of the following:

      ‘(1) FINANCIAL INTERESTS- Any interest--

        ‘(A) in a corporation, partnership, trust, or estate, or

        ‘(B) under an existing futures contract, foreign currency contract, notional principal contract, or other similar financial contract.

      ‘(2) LAND- Any interest in land.

      ‘(3) COMPUTER SOFTWARE-

        ‘(A) IN GENERAL- Any--

          ‘(i) computer software which is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified, and

          ‘(ii) other computer software which is not acquired in a transaction (or series of related transactions) involving the acquisition of assets constituting a trade or business or substantial portion thereof.

        ‘(B) COMPUTER SOFTWARE DEFINED- For purposes of subparagraph (A), the term ‘computer software’ means any program designed to cause a computer to perform a desired function. Such term shall not include any data base or similar item unless the data base or item is in the public domain and is incidental to the operation of otherwise qualifying computer software.

      ‘(4) CERTAIN INTERESTS OR RIGHTS ACQUIRED SEPARATELY- Any of the following not acquired in a transaction (or series of related transactions) involving the acquisition of assets constituting a trade business or substantial portion thereof:

        ‘(A) Any interest in a film, sound recording, video tape, book, or similar property.

        ‘(B) Any right to receive tangible property or services under a contract or granted by a governmental unit or agency or instrumentality thereof.

        ‘(C) Any interest in a patent or copyright.

        ‘(D) To the extent provided in regulations, any right under a contract (or granted by a governmental unit or an agency or instrumentality thereof) if such right--

          ‘(i) has a fixed duration of less than 15 years, or

          ‘(ii) is fixed as to amount and, without regard to this section, would be recoverable under a method similar to the unit-of-production method.

      ‘(5) INTERESTS UNDER LEASES AND DEBT INSTRUMENTS- Any interest under--

        ‘(A) an existing lease of tangible property, or

        ‘(B) except as provided in subsection (d)(2)(B), any existing indebtedness.

      ‘(6) TREATMENT OF SPORTS FRANCHISES- A franchise to engage in professional football, basketball, baseball, or other professional sport, and any item acquired in connection with such a franchise.

      ‘(7) MORTGAGE SERVICING- Any right to service indebtedness which is secured by residential real property unless such right is acquired in a transaction (or series of related transactions) involving the acquisition of assets (other than rights described in this paragraph) constituting a trade or business or substantial portion thereof.

      ‘(8) CERTAIN TRANSACTION COSTS- Any fees for professional services, and any transaction costs, incurred by parties to a transaction with respect to which any portion of the gain or loss is not recognized under part III of subchapter C.

    ‘(f) SPECIAL RULES-

      ‘(1) TREATMENT OF CERTAIN DISPOSITIONS, ETC-

        ‘(A) IN GENERAL- If there is a disposition of any amortizable section 197 intangible acquired in a transaction or series of related transactions (or any such intangible becomes worthless) and one or more other amortizable section 197 intangibles acquired in such transaction or series of related transactions are retained--

          ‘(i) no loss shall be recognized by reason of such disposition (or such worthlessness), and

          ‘(ii) appropriate adjustments to the adjusted bases of such retained intangibles shall be made for any loss not recognized under clause (i).

        ‘(B) SPECIAL RULE FOR COVENANTS NOT TO COMPETE- In the case of any section 197 intangible which is a covenant not to compete (or other arrangement) described in subsection (d)(1)(E), in no event shall such covenant or other arrangement be treated as disposed of (or becoming worthless) before the disposition of the entire interest described in such subsection in connection with which such covenant (or other arrangement) was entered into.

        ‘(C) SPECIAL RULE- All persons treated as a single taxpayer under section 41(f)(1) shall be so treated for purposes of this paragraph.

      ‘(2) TREATMENT OF CERTAIN TRANSFERS-

        ‘(A) IN GENERAL- In the case of any section 197 intangible transferred in a transaction described in subparagraph (B), the transferee shall be treated as the transferor for purposes of applying this section with respect to so much of the adjusted basis in the hands of the transferee as does not exceed the adjusted basis in the hands of the transferor.

        ‘(B) TRANSACTIONS COVERED- The transactions described in this subparagraph are--

          ‘(i) any transaction described in section 332, 351, 361, 721, 731, 1031, or 1033, and

          ‘(ii) any transaction between members of the same affiliated group during any taxable year for which a consolidated return is made by such group.

      ‘(3) TREATMENT OF AMOUNTS PAID PURSUANT TO COVENANTS NOT TO COMPETE, ETC- Any amount paid or incurred pursuant to a covenant or arrangement referred to in subsection (d)(1)(E) shall be treated as an amount chargeable to capital account.

      ‘(4) TREATMENT OF FRANCHISES, ETC-

        ‘(A) FRANCHISE- The term ‘franchise’ has the meaning given to such term by section 1253(b)(1).

        ‘(B) TREATMENT OF RENEWALS- Any renewal of a franchise, trademark, or trade name (or of a license, a permit, or other right referred to in subsection (d)(1)(D)) shall be treated as an acquisition. The preceding sentence shall only apply with respect to costs incurred in connection with such renewal.

        ‘(C) CERTAIN AMOUNTS NOT TAKEN INTO ACCOUNT- Any amount to which section 1253(d)(1) applies shall not be taken into account under this section.

      ‘(5) TREATMENT OF CERTAIN REINSURANCE TRANSACTIONS- In the case of any amortizable section 197 intangible resulting from an assumption reinsurance transaction, the amount taken into account as the adjusted basis of such intangible under this section shall be the excess of--

        ‘(A) the amount paid or incurred by the acquirer under the assumption reinsurance transaction, over

        ‘(B) the amount required to be capitalized under section 848 in connection with such transaction.

      Subsection (b) shall not apply to any amount required to be capitalized under section 848.

      ‘(6) TREATMENT OF CERTAIN SUBLEASES- For purposes of this section, a sublease shall be treated in the same manner as a lease of the underlying property involved.

      ‘(7) TREATMENT AS DEPRECIABLE- For purposes of this chapter, any amortizable section 197 intangible shall be treated as property which is of a character subject to the allowance for depreciation provided in section 167.

      ‘(8) TREATMENT OF CERTAIN INCREMENTS IN VALUE- This section shall not apply to any increment in value if, without regard to this section, such increment is properly taken into account in determining the cost of property which is not a section 197 intangible.

      ‘(9) ANTI-CHURNING RULES- For purposes of this section--

        ‘(A) IN GENERAL- The term ‘amortizable section 197 intangible’ shall not include any section 197 intangible which is described in subparagraph (A) or (B) of subsection (d)(1) (or for which depreciation or amortization would not have been allowable but for this section) and which is acquired by the taxpayer after the date of the enactment of this section, if--

          ‘(i) the intangible was held or used at any time on or after July 25, 1991, and on or before such date of enactment by the taxpayer or a related person,

          ‘(ii) the intangible was acquired from a person who held such intangible at any time on or after July 25, 1991, and on or before such date of enactment, and, as part of the transaction, the user of such intangible does not change, or

          ‘(iii) the taxpayer grants the right to use such intangible to a person (or a person related to such person) who held or used such intangible at any time on or after July 25, 1991, and on or before such date of enactment.

        For purposes of this subparagraph, the determination of whether the user of property changes as part of a transaction shall be determined in accordance with regulations prescribed by the Secretary. For purposes of this subparagraph, deductions allowable under section 1253(d) shall be treated as deductions allowable for amortization.

        ‘(B) EXCEPTION WHERE GAIN RECOGNIZED- If--

          ‘(i) subparagraph (A) would not apply to an intangible acquired by the taxpayer but for the last sentence of subparagraph (C)(i), and

          ‘(ii) the person from whom the taxpayer acquired the intangible elects, notwithstanding any other provision of this title--

            ‘(I) to recognize gain on the disposition of the intangible, and

            ‘(II) to pay a tax on such gain which, when added to any other income tax on such gain under this title, equals such gain multiplied by the highest rate of income tax applicable to such person under this title,

          then subparagraph (A) shall apply to the intangible only to the extent that the taxpayer’s adjusted basis in the intangible exceeds the gain recognized under clause (ii)(I).

        ‘(C) RELATED PERSON DEFINED- For purposes of this paragraph--

          ‘(i) RELATED PERSON- A person (hereinafter in this paragraph referred to as the ‘related person’) is related to any person if--

            ‘(I) the related person bears a relationship to such person specified in section 267(b) or section 707(b)(1), or

            ‘(II) the related person and such person are engaged in trades or businesses under common control (within the meaning of subparagraphs (A) and (B) of section 41(f)(1)).

          For purposes of subclause (I), in applying section 267(b) or 707(b)(1), ‘20 percent’ shall be substituted for ‘50 percent’.

          ‘(ii) TIME FOR MAKING DETERMINATION- A person shall be treated as related to another person if such relationship exists immediately before or immediately after the acquisition of the intangible involved.

        ‘(D) ACQUISITIONS BY REASON OF DEATH- Subparagraph (A) shall not apply to the acquisition of any property by the taxpayer if the basis of the property in the hands of the taxpayer is determined under section 1014(a).

        ‘(E) SPECIAL RULE FOR PARTNERSHIPS- With respect to any increase in the basis of partnership property under section 732, 734, or 743, determinations under this paragraph shall be made at the partner level and each partner shall be treated as having owned and used such partner’s proportionate share of the partnership assets.

        ‘(F) ANTI-ABUSE RULES- The term ‘amortizable section 197 intangible’ does not include any section 197 intangible acquired in a transaction, one of the principal purposes of which is to avoid the requirement of subsection (c)(1) that the intangible be acquired after the date of the enactment of this section or to avoid the provisions of subparagraph (A).

    ‘(g) REGULATIONS- The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this section, including such regulations as may be appropriate to prevent avoidance of the purposes of this section through related persons or otherwise.’

    (b) MODIFICATIONS TO DEPRECIATION RULES-

      (1) TREATMENT OF CERTAIN PROPERTY EXCLUDED FROM SECTION 197- Section 167 (relating to depreciation deduction) is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:

    ‘(f) TREATMENT OF CERTAIN PROPERTY EXCLUDED FROM SECTION 197-

      ‘(1) COMPUTER SOFTWARE-

        ‘(A) IN GENERAL- If a depreciation deduction is allowable under subsection (a) with respect to any computer software, such deduction shall be computed by using the straight line method and a useful life of 36 months.

        ‘(B) COMPUTER SOFTWARE- For purposes of this section, the term ‘computer software’ has the meaning given to such term by section 197(e)(3)(B); except that such term shall not include any such software which is an amortizable section 197 intangible.

      ‘(2) CERTAIN INTERESTS OR RIGHTS ACQUIRED SEPARATELY- If a depreciation deduction is allowable under subsection (a) with respect to any property described in subparagraph (B), (C), or (D) of section 197(e)(4), such deduction shall be computed in accordance with regulations prescribed by the Secretary.

      ‘(3) MORTGAGE SERVICING RIGHTS- If a depreciation deduction is allowable under subsection (a) with respect to any right described in section 197(e)(7), such deduction shall be computed by using the straight line method and a useful life of 108 months.’

      (2) ALLOCATION OF BASIS IN CASE OF LEASED PROPERTY- Subsection (c) of section 167 is amended to read as follows:

    ‘(c) BASIS FOR DEPRECIATION-

      ‘(1) IN GENERAL- The basis on which exhaustion, wear and tear, and obsolescence are to be allowed in respect of any property shall be the adjusted basis provided in section 1011, for the purpose of determining the gain on the sale or other disposition of such property.

      ‘(2) SPECIAL RULE FOR PROPERTY SUBJECT TO LEASE- If any property is acquired subject to a lease--

        ‘(A) no portion of the adjusted basis shall be allocated to the leasehold interest, and

        ‘(B) the entire adjusted basis shall be taken into account in determining the depreciation deduction (if any) with respect to the property subject to the lease.’

    (c) AMENDMENTS TO SECTION 1253- Subsection (d) of section 1253 is amended by striking paragraphs (2), (3), (4), and (5) and inserting the following:

      ‘(2) OTHER PAYMENTS- Any amount paid or incurred on account of a transfer, sale, or other disposition of a franchise, trademark, or trade name to which paragraph (1) does not apply shall be treated as an amount chargeable to capital account.

      ‘(3) RENEWALS, ETC- For purposes of determining the term of a transfer agreement under this section, there shall be taken into account all renewal options (and any other period for which the parties reasonably expect the agreement to be renewed).’

    (d) AMENDMENT TO SECTION 848- Subsection (g) of section 848 is amended by striking ‘this section’ and inserting ‘this section or section 197’.

    (e) AMENDMENTS TO SECTION 1060-

      (1) Paragraph (1) of section 1060(b) is amended by striking ‘goodwill or going concern value’ and inserting ‘section 197 intangibles’.

      (2) Paragraph (1) of section 1060(d) is amended by striking ‘goodwill or going concern value (or similar items)’ and inserting ‘section 197 intangibles’.

    (f) TECHNICAL AND CONFORMING AMENDMENTS-

      (1) Subsection (g) of section 167 (as redesignated by subsection (b)) is amended to read as follows:

    ‘(g) CROSS REFERENCES-

‘(1) For additional rule applicable to depreciation of improvements in the case of mines, oil and gas wells, other natural deposits, and timber, see section 611.

‘(2) For amortization of goodwill and certain other intangibles, see section 197.’

      (2) Subsection (f) of section 642 is amended by striking ‘section 169’ and inserting ‘sections 169 and 197’.

      (3) Subsection (a) of section 1016 is amended by striking paragraph (19) and by redesignating the following paragraphs accordingly.

      (4) Subparagraph (C) of section 1245(a)(2) is amended by striking ‘193, or 1253(d) (2) or (3)’ and inserting ‘or 193’.

      (5) Paragraph (3) of section 1245(a) is amended by striking ‘section 185 or 1253(d) (2) or (3)’.

      (6) The table of sections for part VI of subchapter B of chapter 1 is amended by adding at the end thereof the following new item:

‘Sec. 197. Amortization of goodwill and certain other intangibles.’.

    (g) EFFECTIVE DATE-

      (1) IN GENERAL- Except as otherwise provided in this subsection, the amendments made by this section shall apply with respect to property acquired after the date of the enactment of this Act.

      (2) Election to have amendments apply to property acquired after july 25, 1991-

        (A) IN GENERAL- If an election under this paragraph applies to the taxpayer--

          (i) the amendments made by this section shall apply to property acquired by the taxpayer after July 25, 1991,

          (ii) subsection (c)(1)(A) of section 197 of the Internal Revenue Code of 1986 (as added by this section) (and so much of subsection (f)(9)(A) of such section 197 as precedes clause (i) thereof) shall be applied with respect to the taxpayer by treating July 25, 1991, as the date of the enactment of such section, and

          (iii) in applying subsection (f)(9) of such section, with respect to any property acquired by the taxpayer on or before the date of the enactment of this Act, only holding or use on July 25, 1991, shall be taken into account.

        (B) ELECTION- An election under this paragraph shall be made at such time and in such manner as the Secretary of the Treasury or his delegate may prescribe. Such an election by any taxpayer, once made--

          (i) may be revoked only with the consent of the Secretary, and

          (ii) shall apply to the taxpayer making such election and any other taxpayer under common control with the taxpayer (within the meaning of subparagraphs (A) and (B) of section 41(f)(1) of such Code) at any time after August 2, 1993, and on or before the date on which such election is made.

      (3) ELECTIVE BINDING CONTRACT EXCEPTION-

        (A) IN GENERAL- The amendments made by this section shall not apply to any acquisition of property by the taxpayer if--

          (i) such acquisition is pursuant to a written binding contract in effect on the date of the enactment of this Act and at all times thereafter before such acquisition,

          (ii) an election under paragraph (2) does not apply to the taxpayer, and

          (iii) the taxpayer makes an election under this paragraph with respect to such contract.

        (B) ELECTION- An election under this paragraph shall be made at such time and in such manner as the Secretary of the Treasury or his delegate shall prescribe. Such an election, once made--

          (i) may be revoked only with the consent of the Secretary, and

          (ii) shall apply to all property acquired pursuant to the contract with respect to which such election was made.

SEC. 13262. TREATMENT OF CERTAIN PAYMENTS TO RETIRED OR DECEASED PARTNER.

    (a) SECTION 736(b) NOT TO APPLY IN CERTAIN CASES- Subsection (b) of section 736 (relating to payments for interest in partnership) is amended by adding at the end thereof the following new paragraph:

      ‘(3) LIMITATION ON APPLICATION OF PARAGRAPH (2)- Paragraph (2) shall apply only if--

        ‘(A) capital is not a material income-producing factor for the partnership, and

        ‘(B) the retiring or deceased partner was a general partner in the partnership.’

    (b) LIMITATION ON DEFINITION OF UNREALIZED RECEIVABLES-

      (1) IN GENERAL- Subsection (c) of section 751 (defining unrealized receivables) is amended--

        (A) by striking ‘sections 731, 736, and 741’ each place they appear and inserting ‘, sections 731 and 741 (but not for purposes of section 736)’, and

        (B) by striking ‘section 731, 736, or 741’ each place it appears and inserting ‘section 731 or 741’.

      (2) TECHNICAL AMENDMENTS-

        (A) Subsection (e) of section 751 is amended by striking ‘sections 731, 736, and 741’ and inserting ‘sections 731 and 741’.

        (B) Section 736 is amended by striking subsection (c).

    (c) EFFECTIVE DATE-

      (1) IN GENERAL- The amendments made by this section shall apply in the case of partners retiring or dying on or after January 5, 1993.

      (2) BINDING CONTRACT EXCEPTION- The amendments made by this section shall not apply to any partner retiring on or after January 5, 1993, if a written contract to purchase such partner’s interest in the partnership was binding on January 4, 1993, and at all times thereafter before such purchase.

PART VII--MISCELLANEOUS PROVISIONS

SEC. 13271. DISALLOWANCE OF INTEREST ON CERTAIN OVERPAYMENTS OF TAX.

    (a) GENERAL RULE- Subsection (e) of section 6611 is amended to read as follows:

    ‘(e) DISALLOWANCE OF INTEREST ON CERTAIN OVERPAYMENTS-

      ‘(1) REFUNDS WITHIN 45 DAYS AFTER RETURN IS FILED- If any overpayment of tax imposed by this title is refunded within 45 days after the last day prescribed for filing the return of such tax (determined without regard to any extension of time for filing the return) or, in the case of a return filed after such last date, is refunded within 45 days after the date the return is filed, no interest shall be allowed under subsection (a) on such overpayment.

      ‘(2) REFUNDS AFTER CLAIM FOR CREDIT OR REFUND- If--

        ‘(A) the taxpayer files a claim for a credit or refund for any overpayment of tax imposed by this title, and

        ‘(B) such overpayment is refunded within 45 days after such claim is filed,

      no interest shall be allowed on such overpayment from the date the claim is filed until the day the refund is made.

      ‘(3) IRS INITIATED ADJUSTMENTS- If an adjustment initiated by the Secretary, results in a refund or credit of an overpayment, interest on such overpayment shall be computed by subtracting 45 days from the number of days interest would otherwise be allowed with respect to such overpayment.’

    (b) EFFECTIVE DATES-

      (1) Paragraph (1) of section 6611(e) of the Internal Revenue Code of 1986 (as amended by subsection (a)) shall apply in the case of returns the due date for which (determined without regard to extensions) is on or after January 1, 1994.

      (2) Paragraph (2) of section 6611(e) of such Code (as so amended) shall apply in the case of claims for credit or refund of any overpayment filed on or after January 1, 1995, regardless of the taxable period to which such refund relates.

      (3) Paragraph (3) of section 6611(e) of such Code (as so amended) shall apply in the case of any refund paid on or after January 1, 1995, regardless of the taxable period to which such refund relates.

SEC. 13272. DENIAL OF DEDUCTION RELATING TO TRAVEL EXPENSES.

    (a) IN GENERAL- Section 274(m) (relating to additional limitations on travel expenses) is amended by adding at the end thereof the following new paragraph:

      ‘(3) TRAVEL EXPENSES OF SPOUSE, DEPENDENT, OR OTHERS- No deduction shall be allowed under this chapter (other than section 217) for travel expenses paid or incurred with respect to a spouse, dependent, or other individual accompanying the taxpayer (or an officer or employee of the taxpayer) on business travel, unless--

        ‘(A) the spouse, dependent, or other individual is an employee of the taxpayer,

        ‘(B) the travel of the spouse, dependent, or other individual is for a bona fide business purpose, and

        ‘(C) such expenses would otherwise be deductible by the spouse, dependent, or other individual.’

    (b) EFFECTIVE DATE- The amendment made by this section shall apply to amounts paid or incurred after December 31, 1993.

SEC. 13273. INCREASE IN WITHHOLDING FROM SUPPLEMENTAL WAGE PAYMENTS.

    If an employer elects under Treasury Regulation 31.3402 (g)-1 to determine the amount to be deducted and withheld from any supplemental wage payment by using a flat percentage rate, the rate to be used in determining the amount to be so deducted and withheld shall not be less than 28 percent. The preceding sentence shall apply to payments made after December 31, 1993.

Subchapter C--Empowerment Zones, Enterprise Communities, Rural Development Investment Areas, Etc.

PART I--EMPOWERMENT ZONES, ENTERPRISE COMMUNITIES, AND RURAL DEVELOPMENT INVESTMENT AREAS

SEC. 13301. DESIGNATION AND TREATMENT OF EMPOWERMENT ZONES, ENTERPRISE COMMUNITIES, AND RURAL DEVELOPMENT INVESTMENT AREAS.

    (a) IN GENERAL- Chapter 1 (relating to normal taxes and surtaxes) is amended by inserting after subchapter T the following new subchapter:

‘Subchapter U--Designation and Treatment of Empowerment Zones, Enterprise Communities, and Rural Development Investment Areas

‘Part I. Designation.

‘Part II. Tax-exempt facility bonds for empowerment zones and enterprise communities.

‘Part III. Additional incentives for empowerment zones.

‘Part IV. Regulations.

‘PART I--DESIGNATION

‘Sec. 1391. Designation procedure.

‘Sec. 1392. Eligibility criteria.

‘Sec. 1393. Definitions and special rules.

‘SEC. 1391. DESIGNATION PROCEDURE.

    ‘(a) IN GENERAL- From among the areas nominated for designation under this section, the appropriate Secretaries may designate empowerment zones and enterprise communities.

    ‘(b) NUMBER OF DESIGNATIONS-

      ‘(1) ENTERPRISE COMMUNITIES- The appropriate Secretaries may designate in the aggregate 95 nominated areas as enterprise communities under this section, subject to the availability of eligible nominated areas. Of that number, not more than 65 may be designated in urban areas and not more than 30 may be designated in rural areas.

      ‘(2) EMPOWERMENT ZONES- The appropriate Secretaries may designate in the aggregate 9 nominated areas as empowerment zones under this section, subject to the availability of eligible nominated areas. Of that number, not more than 6 may be designated in urban areas and not more than 3 may be designated in rural areas. If 6 empowerment zones are designated in urban areas, no less than 1 shall be designated in an urban area the most populous city of which has a population of 500,000 or less and no less than 1 shall be a nominated area which includes areas in 2 States and which has a population of 50,000 or less. The Secretary of Housing and Urban Development shall designate empowerment zones located in urban areas in such a manner that the aggregate population of all such zones does not exceed 750,000.

    ‘(c) PERIOD DESIGNATIONS MAY BE MADE- A designation may be made under this section only after 1993 and before 1996.

    ‘(d) PERIOD FOR WHICH DESIGNATION IS IN EFFECT-

      ‘(1) IN GENERAL- Any designation under this section shall remain in effect during the period beginning on the date of the designation and ending on the earliest of--

        ‘(A) the close of the 10th calendar year beginning on or after such date of designation,

        ‘(B) the termination date designated by the State and local governments as provided for in their nomination, or

        ‘(C) the date the appropriate Secretary revokes the designation.

      ‘(2) REVOCATION OF DESIGNATION- The appropriate Secretary may revoke the designation under this section of an area if such Secretary determines that the local government or the State in which it is located--

        ‘(A) has modified the boundaries of the area, or

        ‘(B) is not complying substantially with, or fails to make progress in achieving the benchmarks set forth in, the strategic plan under subsection (f)(2).

    ‘(e) LIMITATIONS ON DESIGNATIONS- No area may be designated under subsection (a) unless--

      ‘(1) the area is nominated by 1 or more local governments and the State or States in which it is located for designation under this section,

      ‘(2) such State or States and the local governments have the authority--

        ‘(A) to nominate the area for designation under this section, and

        ‘(B) to provide the assurances described in paragraph (3),

      ‘(3) such State or States and the local governments provide written assurances satisfactory to the appropriate Secretary that the strategic plan described in the application under subsection (f)(2) for such area will be implemented,

      ‘(4) the appropriate Secretary determines that any information furnished is reasonably accurate, and

      ‘(5) such State or States and local governments certify that no portion of the area nominated is already included in an empowerment zone or in an enterprise community or in an area otherwise nominated to be designated under this section.

    ‘(f) APPLICATION- No area may be designated under subsection (a) unless the application for such designation--

      ‘(1) demonstrates that the nominated area satisfies the eligibility criteria described in section 1392,

      ‘(2) includes a strategic plan for accomplishing the purposes of this subchapter that--

        ‘(A) describes the coordinated economic, human, community, and physical development plan and related activities proposed for the nominated area,

        ‘(B) describes the process by which the affected community is a full partner in the process of developing and implementing the plan and the extent to which local institutions and organizations have contributed to the planning process,

        ‘(C) identifies the amount of State, local, and private resources that will be available in the nominated area and the private/public partnerships to be used, which may include participation by, and cooperation with, universities, medical centers, and other private and public entities,

        ‘(D) identifies the funding requested under any Federal program in support of the proposed economic, human, community, and physical development and related activities,

        ‘(E) identifies baselines, methods, and benchmarks for measuring the success of carrying out the strategic plan, including the extent to which poor persons and families will be empowered to become economically self-sufficient, and

        ‘(F) does not include any action to assist any establishment in relocating from one area outside the nominated area to the nominated area, except that assistance for the expansion of an existing business entity through the establishment of a new branch, affiliate, or subsidiary is permitted if--

          ‘(i) the establishment of the new branch, affiliate, or subsidiary will not result in a decrease in employment in the area of original location or in any other area where the existing business entity conducts business operations, and

          ‘(ii) there is no reason to believe that the new branch, affiliate, or subsidiary is being established with the intention of closing down the operations of the existing business entity in the area of its original location or in any other area where the existing business entity conducts business operation, and

      ‘(3) includes such other information as may be required by the appropriate Secretary.

‘SEC. 1392. ELIGIBILITY CRITERIA.

    ‘(a) IN GENERAL- A nominated area shall be eligible for designation under section 1391 only if it meets the following criteria:

      ‘(1) POPULATION- The nominated area has a maximum population of--

        ‘(A) in the case of an urban area, the lesser of--

          ‘(i) 200,000, or

          ‘(ii) the greater of 50,000 or 10 percent of the population of the most populous city located within the nominated area, and

        ‘(B) in the case of a rural area, 30,000.

      ‘(2) DISTRESS- The nominated area is one of pervasive poverty, unemployment, and general distress.

      ‘(3) SIZE- The nominated area--

        ‘(A) does not exceed 20 square miles if an urban area or 1,000 square miles if a rural area,

        ‘(B) has a boundary which is continuous, or, except in the case of a rural area located in more than 1 State, consists of not more than 3 noncontiguous parcels,

        ‘(C)(i) in the case of an urban area, is located entirely within no more than 2 contiguous States, and

        ‘(ii) in the case of a rural area, is located entirely within no more than 3 contiguous States, and

        ‘(D) does not include any portion of a central business district (as such term is used for purposes of the most recent Census of Retail Trade) unless the poverty rate for each population census tract in such district is not less than 35 percent (30 percent in the case of an enterprise community).

      ‘(4) POVERTY RATE- The poverty rate--

        ‘(A) for each population census tract within the nominated area is not less than 20 percent,

        ‘(B) for at least 90 percent of the population census tracts within the nominated area is not less than 25 percent, and

        ‘(C) for at least 50 percent of the population census tracts within the nominated area is not less than 35 percent.

    ‘(b) SPECIAL RULES RELATING TO DETERMINATION OF POVERTY RATE- For purposes of subsection (a)(4)--

      ‘(1) TREATMENT OF CENSUS TRACTS WITH SMALL POPULATIONS-

        ‘(A) TRACTS WITH NO POPULATION- In the case of a population census tract with no population--

          ‘(i) such tract shall be treated as having a poverty rate which meets the requirements of subparagraphs (A) and (B) of subsection (a)(4), but

          ‘(ii) such tract shall be treated as having a zero poverty rate for purposes of applying subparagraph (C) thereof.

        ‘(B) TRACTS WITH POPULATIONS OF LESS THAN 2,000- A population census tract with a population of less than 2,000 shall be treated as having a poverty rate which meets the requirements of subparagraphs (A) and (B) of subsection (a)(4) if more than 75 percent of such tract is zoned for commercial or industrial use.

      ‘(2) DISCRETION TO ADJUST REQUIREMENTS FOR ENTERPRISE COMMUNITIES- In determining whether a nominated area is eligible for designation as an enterprise community, the appropriate Secretary may, where necessary to carry out the purposes of this subchapter, reduce by 5 percentage points one of the following thresholds for not more than 10 percent of the population census tracts (or, if fewer, 5 population census tracts) in the nominated area:

        ‘(A) The 20 percent threshold in subsection (a)(4)(A).

        ‘(B) The 25 percent threshold in subsection (a)(4)(B).

        ‘(C) The 35 percent threshold in subsection (a)(4)(C).

      If the appropriate Secretary elects to reduce the threshold under subparagraph (C), such Secretary may (in lieu of applying the preceding sentence) reduce by 10 percentage points the threshold under subparagraph (C) for 3 population census tracts.

      ‘(3) EACH NONCONTIGUOUS AREA MUST SATISFY POVERTY RATE RULE- A nominated area may not include a noncontiguous parcel unless such parcel separately meets (subject to paragraphs (1) and (2)) the criteria set forth in subsection (a)(4).

      ‘(4) AREAS NOT WITHIN CENSUS TRACTS- In the case of an area which is not tracted for population census tracts, the equivalent county divisions (as defined by the Bureau of the Census for purposes of defining poverty areas) shall be used for purposes of determining poverty rates.

    ‘(c) FACTORS TO CONSIDER- From among the nominated areas eligible for designation under section 1391 by the appropriate Secretary, such appropriate Secretary shall make designations of empowerment zones and enterprise communities on the basis of--

      ‘(1) the effectiveness of the strategic plan submitted pursuant to section 1391(f)(2) and the assurances made pursuant to section 1391(e)(3), and

      ‘(2) criteria specified by the appropriate Secretary.

‘SEC. 1393. DEFINITIONS AND SPECIAL RULES.

    ‘(a) IN GENERAL- For purposes of this subchapter--

      ‘(1) APPROPRIATE SECRETARY- The term ‘appropriate Secretary’ means--

        ‘(A) the Secretary of Housing and Urban Development in the case of any nominated area which is located in an urban area, and

        ‘(B) the Secretary of Agriculture in the case of any nominated area which is located in a rural area.

      ‘(2) RURAL AREA- The term ‘rural area’ means any area which is--

        ‘(A) outside of a metropolitan statistical area (within the meaning of section 143(k)(2)(B)), or

        ‘(B) determined by the Secretary of Agriculture, after consultation with the Secretary of Commerce, to be a rural area.

      ‘(3) URBAN AREA- The term ‘urban area’ means an area which is not a rural area.

      ‘(4) SPECIAL RULES FOR INDIAN RESERVATIONS-

        ‘(A) IN GENERAL- No empowerment zone or enterprise community may include any area within an Indian reservation.

        ‘(B) INDIAN RESERVATION DEFINED- The term ‘Indian reservation’ has the meaning given such term by section 168(j)(6).

      ‘(5) LOCAL GOVERNMENT- The term ‘local government’ means--

        ‘(A) any county, city, town, township, parish, village, or other general purpose political subdivision of a State, and

        ‘(B) any combination of political subdivisions described in subparagraph (A) recognized by the appropriate Secretary.

      ‘(6) NOMINATED AREA- The term ‘nominated area’ means an area which is nominated by 1 or more local governments and the State or States in which it is located for designation under section 1391.

      ‘(7) GOVERNMENTS- If more than 1 State or local government seeks to nominate an area under this part, any reference to, or requirement of, this subchapter shall apply to all such governments.

      ‘(8) SPECIAL RULE- An area shall be treated as nominated by a State and a local government if it is nominated by an economic development corporation chartered by the State.

      ‘(9) USE OF CENSUS DATA- Population and poverty rate shall be determined by the most recent decennial census data available.

    ‘(b) EMPOWERMENT ZONE; ENTERPRISE COMMUNITY- For purposes of this title, the terms ‘empowerment zone’ and ‘enterprise community’ mean areas designated as such under section 1391.

‘PART II--TAX-EXEMPT FACILITY BONDS FOR EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES

‘Sec. 1394. Tax-exempt enterprise zone facility bonds.

‘SEC. 1394. TAX-EXEMPT ENTERPRISE ZONE FACILITY BONDS.

    ‘(a) IN GENERAL- For purposes of part IV of subchapter B of this chapter (relating to tax exemption requirements for State and local bonds), the term ‘exempt facility bond’ includes any bond issued as part of an issue 95 percent or more of the net proceeds (as defined in section 150(a)(3)) of which are to be used to provide any enterprise zone facility.

    ‘(b) ENTERPRISE ZONE FACILITY- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘enterprise zone facility’ means any qualified zone property the principal user of which is an enterprise zone business, and any land which is functionally related and subordinate to such property.

      ‘(2) QUALIFIED ZONE PROPERTY- The term ‘qualified zone property’ has the meaning given such term by section 1397C; except that the references to empowerment zones shall be treated as including references to enterprise communities.

      ‘(3) ENTERPRISE ZONE BUSINESS- The term ‘enterprise zone business’ has the meaning given to such term by section 1397B, except that--

        ‘(A) references to empowerment zones shall be treated as including references to enterprise communities, and

        ‘(B) such term includes any trades or businesses which would qualify as an enterprise zone business (determined after the modification of subparagraph (A)) if such trades or businesses were separately incorporated.

    ‘(c) LIMITATION ON AMOUNT OF BONDS-

      ‘(1) IN GENERAL- Subsection (a) shall not apply to any issue if the aggregate amount of outstanding enterprise zone facility bonds allocable to any person (taking into account such issue) exceeds--

        ‘(A) $3,000,000 with respect to any 1 empowerment zone or enterprise community, or

        ‘(B) $20,000,000 with respect to all empowerment zones and enterprise communities.

      ‘(2) AGGREGATE ENTERPRISE ZONE FACILITY BOND BENEFIT- For purposes of subparagraph (A), the aggregate amount of outstanding enterprise zone facility bonds allocable to any person shall be determined under rules similar to the rules of section 144(a)(10), taking into account only bonds to which subsection (a) applies.

    ‘(d) ACQUISITION OF LAND AND EXISTING PROPERTY PERMITTED- The requirements of sections 147(c)(1)(A) and 147(d) shall not apply to any bond described in subsection (a).

    ‘(e) PENALTY FOR CEASING TO MEET REQUIREMENTS-

      ‘(1) FAILURES CORRECTED- An issue which fails to meet 1 or more of the requirements of subsections (a) and (b) shall be treated as meeting such requirements if--

        ‘(A) the issuer and any principal user in good faith attempted to meet such requirements, and

        ‘(B) any failure to meet such requirements is corrected within a reasonable period after such failure is first discovered.

      ‘(2) LOSS OF DEDUCTIONS WHERE FACILITY CEASES TO BE QUALIFIED- No deduction shall be allowed under this chapter for interest on any financing provided from any bond to which subsection (a) applies with respect to any facility to the extent such interest accrues during the period beginning on the first day of the calendar year which includes the date on which--

        ‘(A) substantially all of the facility with respect to which the financing was provided ceases to be used in an empowerment zone or enterprise community, or

        ‘(B) the principal user of such facility ceases to be an enterprise zone business (as defined in subsection (b)).

      ‘(3) EXCEPTION IF ZONE CEASES- Paragraphs (1) and (2) shall not apply solely by reason of the termination or revocation of a designation as an empowerment zone or an enterprise community.

      ‘(4) EXCEPTION FOR BANKRUPTCY- Paragraphs (1) and (2) shall not apply to any cessation resulting from bankruptcy.

‘PART III--ADDITIONAL INCENTIVES FOR EMPOWERMENT ZONES

‘SUBPART A. Empowerment zone employment credit.

‘SUBPART B. Additional expensing.

‘SUBPART C. General provisions.

‘Subpart A--Empowerment Zone Employment Credit

‘Sec. 1396. Empowerment zone employment credit.

‘Sec. 1397. Other definitions and special rules.

‘SEC. 1396. EMPOWERMENT ZONE EMPLOYMENT CREDIT.

    ‘(a) AMOUNT OF CREDIT- For purposes of section 38, the amount of the empowerment zone employment credit determined under this section with respect to any employer for any taxable year is the applicable percentage of the qualified zone wages paid or incurred during the calendar year which ends with or within such taxable year.

    ‘(b) APPLICABLE PERCENTAGE- For purposes of this section, the term ‘applicable percentage’ means the percentage determined in accordance with the following table:

‘In the case of wages paid or

--The applicable

incurred during calendar year:

--percentage is:

1994 through 2001

--20

2002

--15

2003

--10

2004

--5

    ‘(c) QUALIFIED ZONE WAGES-

      ‘(1) IN GENERAL- For purposes of this section, the term ‘qualified zone wages’ means any wages paid or incurred by

      an employer for services performed by an employee while such employee is a qualified zone employee.

      ‘(2) ONLY FIRST $15,000 OF WAGES PER YEAR TAKEN INTO ACCOUNT- With respect to each qualified zone employee, the amount of qualified zone wages which may be taken into account for a calendar year shall not exceed $15,000.

      ‘(3) COORDINATION WITH TARGETED JOBS CREDIT-

        ‘(A) IN GENERAL- The term ‘qualified zone wages’ shall not include wages taken into account in determining the credit under section 51.

        ‘(B) COORDINATION WITH PARAGRAPH (2)- The $15,000 amount in paragraph (2) shall be reduced for any calendar year by the amount of wages paid or incurred during such year which are taken into account in determining the credit under section 51.

    ‘(d) QUALIFIED ZONE EMPLOYEE- For purposes of this section--

      ‘(1) IN GENERAL- Except as otherwise provided in this subsection, the term ‘qualified zone employee’ means, with respect to any period, any employee of an employer if--

        ‘(A) substantially all of the services performed during such period by such employee for such employer are performed within an empowerment zone in a trade or business of the employer, and

        ‘(B) the principal place of abode of such employee while performing such services is within such empowerment zone.

      ‘(2) CERTAIN INDIVIDUALS NOT ELIGIBLE- The term ‘qualified zone employee’ shall not include--

        ‘(A) any individual described in subparagraph (A), (B), or (C) of section 51(i)(1),

        ‘(B) any 5-percent owner (as defined in section 416(i)(1)(B)),

        ‘(C) any individual employed by the employer for less than 90 days,

        ‘(D) any individual employed by the employer at any facility described in section 144(c)(6)(B), and

        ‘(E) any individual employed by the employer in a trade or business the principal activity of which is farming (within the meaning of subparagraph (A) or (B) of section 2032A(e)(5)), but only if, as of the close of the taxable year, the sum of--

          ‘(i) the aggregate unadjusted bases (or, if greater, the fair market value) of the assets owned by the employer which are used in such a trade or business, and

          ‘(ii) the aggregate value of assets leased by the employer which are used in such a trade or business (as determined under regulations prescribed by the Secretary),

        exceeds $500,000.

      ‘(3) SPECIAL RULES RELATED TO TERMINATION OF EMPLOYMENT-

        ‘(A) IN GENERAL- Paragraph (2)(C) shall not apply to--

          ‘(i) a termination of employment of an individual who before the close of the period referred to in paragraph (2)(C) becomes disabled to perform the services of such employment unless such disability is removed before the close of such period and the taxpayer fails to offer reemployment to such individual, or

          ‘(ii) a termination of employment of an individual if it is determined under the applicable State unemployment compensation law that the termination was due to the misconduct of such individual.

        ‘(B) CHANGES IN FORM OF BUSINESS- For purposes of paragraph (2)(C), the employment relationship between the taxpayer and an employee shall not be treated as terminated--

          ‘(i) by a transaction to which section 381(a) applies if the employee continues to be employed by the acquiring corporation, or

          ‘(ii) by reason of a mere change in the form of conducting the trade or business of the taxpayer if the employee continues to be employed in such trade or business and the taxpayer retains a substantial interest in such trade or business.

‘SEC. 1397. OTHER DEFINITIONS AND SPECIAL RULES.

    ‘(a) WAGES- For purposes of this subpart--

      ‘(1) IN GENERAL- The term ‘wages’ has the same meaning as when used in section 51.

      ‘(2) CERTAIN TRAINING AND EDUCATIONAL BENEFITS-

        ‘(A) IN GENERAL- The following amounts shall be treated as wages paid to an employee:

          ‘(i) Any amount paid or incurred by an employer which is excludable from the gross income of an employee under section 127, but only to the extent paid or incurred to a person not related to the employer.

          ‘(ii) In the case of an employee who has not attained the age of 19, any amount paid or incurred by an employer for any youth training program operated by such employer in conjunction with local education officials.

        ‘(B) RELATED PERSON- A person is related to any other person if the person bears a relationship to such other person specified in section 267(b) or 707(b)(1), or such person and such other person are engaged in trades or businesses under common control (within the meaning of subsections (a) and (b) of section 52). For purposes of the preceding sentence, in applying section 267(b) or 707(b)(1), ‘10 percent’ shall be substituted for ‘50 percent’.

    ‘(b) CONTROLLED GROUPS- For purposes of this subpart--

      ‘(1) all employers treated as a single employer under subsection (a) or (b) of section 52 shall be treated as a single employer for purposes of this subpart, and

      ‘(2) the credit (if any) determined under section 1396 with respect to each such employer shall be its proportionate share of the wages giving rise to such credit.

    ‘(c) CERTAIN OTHER RULES MADE APPLICABLE- For purposes of this subpart, rules similar to the rules of section 51(k) and subsections (c), (d), and (e) of section 52 shall apply.

‘Subpart B--Additional Expensing

‘Sec. 1397A. Increase in expensing under section 179.

‘SEC. 1397A. INCREASE IN EXPENSING UNDER SECTION 179.

    ‘(a) GENERAL RULE- In the case of an enterprise zone business, for purposes of section 179--

      ‘(1) the limitation under section 179(b)(1) shall be increased by the lesser of--

        ‘(A) $20,000, or

        ‘(B) the cost of section 179 property which is qualified zone property placed in service during the taxable year, and

      ‘(2) the amount taken into account under section 179(b)(2) with respect to any section 179 property which is qualified zone property shall be 50 percent of the cost thereof.

    ‘(b) RECAPTURE- Rules similar to the rules under section 179(d)(10) shall apply with respect to any qualified zone property which ceases to be used in an empowerment zone by an enterprise zone business.

‘Subpart C--General Provisions

‘Sec. 1397B. Enterprise zone business defined.

‘Sec. 1397C. Qualified zone property defined.

‘SEC. 1397B. ENTERPRISE ZONE BUSINESS DEFINED.

    ‘(a) IN GENERAL- For purposes of this part, the term ‘enterprise zone business’ means--

      ‘(1) any qualified business entity, and

      ‘(2) any qualified proprietorship.

    ‘(b) QUALIFIED BUSINESS ENTITY- For purposes of this section, the term ‘qualified business entity’ means, with respect to any taxable year, any corporation or partnership if for such year--

      ‘(1) every trade or business of such entity is the active conduct of a qualified business within an empowerment zone,

      ‘(2) at least 80 percent of the total gross income of such entity is derived from the active conduct of such business,

      ‘(3) substantially all of the use of the tangible property of such entity (whether owned or leased) is within an empowerment zone,

      ‘(4) substantially all of the intangible property of such entity is used in, and exclusively related to, the active conduct of any such business,

      ‘(5) substantially all of the services performed for such entity by its employees are performed in an empowerment zone,

      ‘(6) at least 35 percent of its employees are residents of an empowerment zone,

      ‘(7) less than 5 percent of the average of the aggregate unadjusted bases of the property of such entity is attributable to collectibles (as defined in section 408(m)(2)) other than collectibles that are held primarily for sale to customers in the ordinary course of such business, and

      ‘(8) less than 5 percent of the average of the aggregate unadjusted bases of the property of such entity is attributable to nonqualified financial property.

    ‘(c) QUALIFIED PROPRIETORSHIP- For purposes of this section, the term ‘qualified proprietorship’ means, with respect to any taxable year, any qualified business carried on by an individual as a proprietorship if for such year--

      ‘(1) at least 80 percent of the total gross income of such individual from such business is derived from the active conduct of such business in an empowerment zone,

      ‘(2) substantially all of the use of the tangible property of such individual in such business (whether owned or leased) is within an empowerment zone,

      ‘(3) substantially all of the intangible property of such business is used in, and exclusively related to, the active conduct of such business,

      ‘(4) substantially all of the services performed for such individual in such business by employees of such business are performed in an empowerment zone,

      ‘(5) at least 35 percent of such employees are residents of an empowerment zone,

      ‘(6) less than 5 percent of the average of the aggregate unadjusted bases of the property of such individual which is used in such business is attributable to collectibles (as defined in section 408(m)(2)) other than collectibles that are held primarily for sale to customers in the ordinary course of such business, and

      ‘(7) less than 5 percent of the average of the aggregate unadjusted bases of the property of such individual which is used in such business is attributable to nonqualified financial property.

    For purposes of this subsection, the term ‘employee’ includes the proprietor.

    ‘(d) QUALIFIED BUSINESS- For purposes of this section--

      ‘(1) IN GENERAL- Except as otherwise provided in this subsection, the term ‘qualified business’ means any trade or business.

      ‘(2) RENTAL OF REAL PROPERTY- The rental to others of real property located in an empowerment zone shall be treated as a qualified business if and only if--

        ‘(A) the property is not residential rental property (as defined in section 168(e)(2)), and

        ‘(B) at least 50 percent of the gross rental income from the real property is from enterprise zone businesses.

      ‘(3) RENTAL OF TANGIBLE PERSONAL PROPERTY- The rental to others of tangible personal property shall be treated as a qualified business if and only if substantially all of the rental of such property is by enterprise zone businesses or by residents of an empowerment zone.

      ‘(4) TREATMENT OF BUSINESS HOLDING INTANGIBLES- The term ‘qualified business’ shall not include any trade or business consisting predominantly of the development or holding of intangibles for sale or license.

      ‘(5) CERTAIN BUSINESSES EXCLUDED- The term ‘qualified business’ shall not include--

        ‘(A) any trade or business consisting of the operation of any facility described in section 144(c)(6)(B), and

        ‘(B) any trade or business the principal activity of which is farming (within the meaning of subparagraphs (A) or (B) of section 2032A(e)(5)), but only if, as of the close of the preceding taxable year, the sum of--

          ‘(i) the aggregate unadjusted bases (or, if greater, the fair market value) of the assets owned by the taxpayer which are used in such a trade or business, and

          ‘(ii) the aggregate value of assets leased by the taxpayer which are used in such a trade or business,

        exceeds $500,000.

      For purposes of subparagraph (B), rules similar to the rules of section 1397(b) shall apply.

    ‘(e) NONQUALIFIED FINANCIAL PROPERTY- For purposes of this section, the term ‘nonqualified financial property’ means debt, stock, partnership interests, options, futures contracts, forward contracts, warrants, notional principal contracts, annuities, and other similar property specified in regulations; except that such term shall not include--

      ‘(1) reasonable amounts of working capital held in cash, cash equivalents, or debt instruments with a term of 18 months or less, or

      ‘(2) debt instruments described in section 1221(4).

‘SEC. 1397C. QUALIFED ZONE PROPERTY DEFINED.

    ‘(a) GENERAL RULE- For purposes of this part--

      ‘(1) IN GENERAL- The term ‘qualified zone property’ means any property to which section 168 applies (or would apply but for section 179) if--

        ‘(A) such property was acquired by the taxpayer by purchase (as defined in section 179(d)(2)) after the date on which the designation of the empowerment zone took effect,

        ‘(B) the original use of which in an empowerment zone commences with the taxpayer, and

        ‘(C) substantially all of the use of which is in an empowerment zone and is in the active conduct of a qualified business by the taxpayer in such zone.

      ‘(2) SPECIAL RULE FOR SUBSTANTIAL RENOVATIONS- In the case of any property which is substantially renovated by the taxpayer, the requirements of subparagraphs (A) and (B) of paragraph (1) shall be treated as satisfied. For purposes of the preceding sentence, property shall be treated as substantially renovated by the taxpayer if, during any 24-month period beginning after the date on which the designation of the empowerment zone took effect, additions to basis with respect to such property in the hands of the taxpayer exceed the greater of (i) an amount equal to the adjusted basis at the beginning of such 24-month period in the hands of the taxpayer, or (ii) $5,000.

    ‘(b) SPECIAL RULES FOR SALE-LEASEBACKS- For purposes of subsection (a)(1)(B), if property is sold and leased back by the taxpayer within 3 months after the date such property was originally placed in service, such property shall be treated as originally placed in service not earlier than the date on which such property is used under the leaseback.

‘PART IV--REGULATIONS

‘Sec. 1397D. Regulations.

‘SEC. 1397D. REGULATIONS.

    ‘The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of parts II and III, including--

      ‘(1) regulations limiting the benefit of parts II and III in circumstances where such benefits, in combination with benefits provided under other Federal programs, would result in an activity being 100 percent or more subsidized by the Federal Government,

      ‘(2) regulations preventing abuse of the provisions of parts II and III, and

      ‘(3) regulations dealing with inadvertent failures of entities to be enterprise zone businesses.’

    (b) CLERICAL AMENDMENT- The table of subchapters for chapter 1 is amended by inserting after the item relating to subchapter T the following new item:

‘Subchapter U. Designation and treatment of empowerment zones, enterprise communities, and rural development investment areas.’

SEC. 13302. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) EMPOWERMENT ZONE EMPLOYMENT CREDIT PART OF GENERAL BUSINESS CREDIT-

      (1) Subsection (b) of section 38 (relating to current year business credit) is amended by striking ‘plus’ at the end of paragraph (7), by striking the period at the end of paragraph (8) and inserting ‘, and’, and by adding at the end the following new paragraph:

      ‘(9) the empowerment zone employment credit determined under section 1396(a).’

      (2) Subsection (d) of section 39 is amended by adding at the end the following new paragraph:

      ‘(4) EMPOWERMENT ZONE EMPLOYMENT CREDIT- No portion of the unused business credit which is attributable to the credit determined under section 1396 (relating to empowerment zone employment credit) may be carried to any taxable year ending before January 1, 1994.’

    (b) DENIAL OF DEDUCTION FOR PORTION OF WAGES EQUAL TO EMPOWERMENT ZONE EMPLOYMENT CREDIT-

      (1) Subsection (a) of section 280C (relating to rule for targeted jobs credit) is amended--

        (A) by striking ‘the amount of the credit determined for the taxable year under section 51(a)’ and inserting ‘the sum of the credits determined for the taxable year under sections 51(a) and 1396(a)’, and

        (B) by striking ‘TARGETED JOBS CREDIT’ in the subsection heading and inserting ‘EMPLOYMENT CREDITS’.

      (2) Subsection (c) of section 196 (relating to deduction for certain unused business credits) is amended by striking ‘and’ at the end of paragraph (4), by striking the period at the end of paragraph (5) and inserting ‘, and’, and by adding at the end the following new paragraph:

      ‘(6) the empowerment zone employment credit determined under section 1396(a).’

    (c) EMPOWERMENT ZONE EMPLOYMENT CREDIT MAY OFFSET 25 PERCENT OF MINIMUM TAX-

      (1) IN GENERAL- Section 38(c) (relating to limitation based on amount of tax) is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph:

      ‘(2) EMPOWERMENT ZONE EMPLOYMENT CREDIT MAY OFFSET 25 PERCENT OF MINIMUM TAX-

        ‘(A) IN GENERAL- In the case of the empowerment zone employment credit credit--

          ‘(i) this section and section 39 shall be applied separately with respect to such credit, and

          ‘(ii) for purposes of applying paragraph (1) to such credit--

            ‘(I) 75 percent of the tentative minimum tax shall be substituted for the tentative minimum tax under subparagraph (A) thereof, and

            ‘(II) the limitation under paragraph (1) (as modified by subclause (I)) shall be reduced by the credit allowed under subsection (a) for the taxable year (other than the empowerment zone employment credit).

        ‘(B) EMPOWERMENT ZONE EMPLOYMENT CREDIT- For purposes of this paragraph, the term ‘empowerment zone employment credit’ means the portion of the credit under subsection (a) which is attributable to the credit determined under section 1396 (relating to empowerment zone employment credit).’

    (d) AMENDMENT OF TARGETED JOBS CREDIT- Subparagraph (A) of section 51(i)(1) is amended by inserting ‘, or, if the taxpayer is an entity other than a corporation, to any individual who owns, directly or indirectly, more than 50 percent of the capital and profits interests in the entity,’ after ‘of the corporation’.

    (e) CARRYOVERS- Subsection (c) of section 381 (relating to carryovers in certain corporate acquisitions) is amended by adding at the end the following new paragraph:

      ‘(26) ENTERPRISE ZONE PROVISIONS- The acquiring corporation shall take into account (to the extent proper to carry out the purposes of this section and subchapter U, and under such regulations as may be prescribed by the Secretary) the items required to be taken into account for purposes of subchapter U in respect of the distributor or transferor corporation.’

SEC. 13303. EFFECTIVE DATE.

    The amendments made by this part shall take effect on the date of the enactment of this Act.

PART II--CREDIT FOR CONTRIBUTIONS TO CERTAIN COMMUNITY DEVELOPMENT CORPORATIONS

SEC. 13311. CREDIT FOR CONTRIBUTIONS TO CERTAIN COMMUNITY DEVELOPMENT CORPORATIONS.

    (a) IN GENERAL- For purposes of section 38 of the Internal Revenue Code of 1986, the current year business credit shall include the credit determined under this section.

    (b) DETERMINATION OF CREDIT- The credit determined under this section for each taxable year in the credit period with respect to any qualified CDC contribution made by the taxpayer is an amount equal to 5 percent of such contribution.

    (c) CREDIT PERIOD- For purposes of this section, the credit period with respect to any qualified CDC contribution is the period of 10 taxable years beginning with the taxable year during which such contribution was made.

    (d) QUALIFIED CDC CONTRIBUTION- For purposes of this section--

      (1) IN GENERAL- The term ‘qualified CDC contribution’ means any transfer of cash--

        (A) which is made to a selected community development corporation during the 5-year period beginning on the date such corporation was selected for purposes of this section,

        (B) the amount of which is available for use by such corporation for at least 10 years,

        (C) which is to be used by such corporation for qualified low-income assistance within its operational area, and

        (D) which is designated by such corporation for purposes of this section.

      (2) LIMITATIONS ON AMOUNT DESIGNATED- The aggregate amount of contributions to a selected community development corporation which may be designated by such corporation shall not exceed $2,000,000.

    (e) SELECTED COMMUNITY DEVELOPMENT CORPORATIONS-

      (1) IN GENERAL- For purposes of this section, the term ‘selected community development corporation’ means any corporation--

        (A) which is described in section 501(c)(3) of such Code and exempt from tax under section 501(a) of such Code,

        (B) the principal purposes of which include promoting employment of, and business opportunities for, low-income individuals who are residents of the operational area, and

        (C) which is selected by the Secretary of Housing and Urban Development for purposes of this section.

      (2) ONLY 20 CORPORATIONS MAY BE SELECTED- The Secretary of Housing and Urban Development may select 20 corporations for purposes of this section, subject to the availability of eligible corporations. Such selections may be made only before July 1, 1994. At least 8 of the operational areas of the corporations selected must be rural areas (as defined by section 1393(a)(3) of such Code).

      (3) OPERATIONAL AREAS MUST HAVE CERTAIN CHARACTERISTICS- A corporation may be selected for purposes of this section only if its operational area meets the following criteria:

        (A) The area meets the size requirements under section 1392(a)(3).

        (B) The unemployment rate (as determined by the appropriate available data) is not less than the national unemployment rate.

        (C) The median family income of residents of such area does not exceed 80 percent of the median gross income of residents of the jurisdiction of the local government which includes such area.

    (f) QUALIFIED LOW-INCOME ASSISTANCE- For purposes of this section, the term ‘qualified low-income assistance’ means assistance--

      (1) which is designed to provide employment of, and business opportunities for, low-income individuals who are residents of the operational area of the community development corporation, and

      (2) which is approved by the Secretary of Housing and Urban Development.

Part III--Investment in Indian Reservations

SEC. 13321. ACCELERATED DEPRECIATION FOR PROPERTY ON INDIAN RESERVATIONS.

    (a) IN GENERAL- Section 168 is amended by adding at the end the following new subsection:

    ‘(j) PROPERTY ON INDIAN RESERVATIONS-

      ‘(1) IN GENERAL- For purposes of subsection (a), the applicable recovery period for qualified Indian reservation property shall be determined in accordance with the table contained in paragraph (2) in lieu of the table contained in subsection (c).

      ‘(2) APPLICABLE RECOVERY PERIOD FOR INDIAN RESERVATION PROPERTY- For purposes of paragraph (1)--

The applicable

‘In the case of:

recovery period is:

3-year property

2 years

5-year property

3 years

7-year property

4 years

10-year property

6 years

15-year property

9 years

20-year property

12 years

Nonresidential real property

22 years.

      ‘(3) DEDUCTION ALLOWED IN COMPUTING MINIMUM TAX- For purposes of determining alternative minimum taxable income under section 55, the deduction under subsection (a) for property to which paragraph (1) applies shall be determined under this section without regard to any adjustment under section 56.

      ‘(4) QUALIFIED INDIAN RESERVATION PROPERTY DEFINED- For purposes of this subsection--

        ‘(A) IN GENERAL- The term ‘qualified Indian reservation property’ means property which is property described in the table in paragraph (2) and which is--

          ‘(i) used by the taxpayer predominantly in the active conduct of a trade or business within an Indian reservation,

          ‘(ii) not used or located outside the Indian reservation on a regular basis,

          ‘(iii) not acquired (directly or indirectly) by the taxpayer from a person who is related to the taxpayer (within the meaning of section 465(b)(3)(C)), and

          ‘(iv) not property (or any portion thereof) placed in service for purposes of conducting or housing class I, II, or III gaming (as defined in section 4 of the Indian Regulatory Act (25 U.S.C. 2703)).

        ‘(B) EXCEPTION FOR ALTERNATIVE DEPRECIATION PROPERTY- The term ‘qualified Indian reservation property’ does not include any property to which the alternative depreciation system under subsection (g) applies, determined--

          ‘(i) without regard to subsection (g)(7) (relating to election to use alternative depreciation system), and

          ‘(ii) after the application of section 280F(b) (relating to listed property with limited business use).

        ‘(C) SPECIAL RULE FOR RESERVATION INFRASTRUCTURE INVESTMENT-

          ‘(i) IN GENERAL- Subparagraph (A)(ii) shall not apply to qualified infrastructure property located outside of the Indian reservation if the purpose of such property is to connect with qualified infrastructure property located within the Indian reservation.

          ‘(ii) QUALIFIED INFRASTRUCTURE PROPERTY- For purposes of this subparagraph, the term ‘qualified infrastructure property’ means qualified Indian reservation property (determined without regard to subparagraph (A)(ii)) which--

            ‘(I) benefits the tribal infrastructure,

            ‘(II) is available to the general public, and

            ‘(III) is placed in service in connection with the taxpayer’s active conduct of a trade or business within an Indian reservation.

          Such term includes, but is not limited to, roads, power lines, water systems, railroad spurs, and communications facilities.

      ‘(5) REAL ESTATE RENTALS- For purposes of this subsection, the rental to others of real property located within an Indian reservation shall be treated as the active conduct of a trade or business within an Indian reservation.

      ‘(6) INDIAN RESERVATION DEFINED- For purposes of this subsection, the term ‘Indian reservation’ means a reservation, as defined in--

        ‘(A) section 3(d) of the Indian Financing Act of 1974 (25 U.S.C. 1452(d)), or

        ‘(B) section 4(10) of the Indian Child Welfare Act of 1978 (25 U.S.C. 1903(10)).

      ‘(7) COORDINATION WITH NONREVENUE LAWS- Any reference in this subsection to a provision not contained in this title shall be treated for purposes of this subsection as a reference to such provision as in effect on the date of the enactment of this paragraph.

      ‘(8) TERMINATION- This subsection shall not apply to property placed in service after December 31, 2003.’

    (b) EFFECTIVE DATE- The amendment made by this section shall apply to property placed in service after December 31, 1993.

SEC. 13322. INDIAN EMPLOYMENT CREDIT.

    (a) ALLOWANCE OF INDIAN EMPLOYMENT CREDIT- Section 38(b) (relating to general business credits) is amended by striking ‘plus’ at the end of paragraph (8), by striking the period at the end of paragraph (9) and inserting ‘, plus’, and by adding after paragraph (9) the following new paragraph:

      ‘(10) the Indian employment credit as determined under section 45A(a).’

    (b) AMOUNT OF INDIAN EMPLOYMENT CREDIT- Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits) is amended by adding at the end thereof the following new section:

‘SEC. 45A. INDIAN EMPLOYMENT CREDIT.

    ‘(a) AMOUNT OF CREDIT- For purposes of section 38, the amount of the Indian employment credit determined under this section with respect to any employer for any taxable year is an amount equal to 20 percent of the excess (if any) of --

      ‘(1) the sum of--

        ‘(A) the qualified wages paid or incurred during such taxable year, plus

        ‘(B) qualified employee health insurance costs paid or incurred during such taxable year, over

      ‘(2) the sum of the qualified wages and qualified employee health insurance costs (determined as if this section were in effect) which were paid or incurred by the employer (or any predecessor) during calendar year 1993.

    ‘(b) QUALIFIED WAGES; QUALIFIED EMPLOYEE HEALTH INSURANCE COSTS- For purposes of this section--

      ‘(1) QUALIFIED WAGES-

        ‘(A) IN GENERAL- The term ‘qualified wages’ means any wages paid or incurred by an employer for services performed by an employee while such employee is a qualified employee.

        ‘(B) COORDINATION WITH TARGETED JOBS CREDIT- The term ‘qualified wages’ shall not include wages attributable to service rendered during the 1-year period beginning with the day the individual begins work for the employer if any portion of such wages is taken into account in determining the credit under section 51.

      ‘(2) Qualified employee health insurance costs-

        ‘(A) IN GENERAL- The term ‘qualified employee health insurance costs’ means any amount paid or incurred by an employer for health insurance to the extent such amount is attributable to coverage provided to any employee while such employee is a qualified employee.

        ‘(B) EXCEPTION FOR AMOUNTS PAID UNDER SALARY REDUCTION ARRANGEMENTS- No amount paid or incurred for health insurance pursuant to a salary reduction arrangement shall be taken into account under subparagraph (A).

      ‘(3) LIMITATION- The aggregate amount of qualified wages and qualified employee health insurance costs taken into account with respect to any employee for any taxable year (and for the base period under subsection (a)(2)) shall not exceed $20,000.

    ‘(c) QUALIFIED EMPLOYEE- For purposes of this section--

      ‘(1) IN GENERAL- Except as otherwise provided in this subsection, the term ‘qualified employee’ means, with respect to any period, any employee of an employer if--

        ‘(A) the employee is an enrolled member of an Indian tribe or the spouse of an enrolled member of an Indian tribe,

        ‘(B) substantially all of the services performed during such period by such employee for such employer are performed within an Indian reservation, and

        ‘(C) the principal place of abode of such employee while performing such services is on or near the reservation in which the services are performed.

      ‘(2) INDIVIDUALS RECEIVING WAGES IN EXCESS OF $30,000 NOT ELIGIBLE- An employee shall not be treated as a qualified employee for any taxable year of the employer if the total amount of the wages paid or incurred by such employer to such employee during such taxable year (whether or not for services within an Indian reservation) exceeds the amount determined at an annual rate of $30,000.

      ‘(3) INFLATION ADJUSTMENT- The Secretary shall adjust the $30,000 amount under paragraph (2) for years beginning after 1994 at the same time and in the same manner as under section 415(d).

      ‘(4) EMPLOYMENT MUST BE TRADE OR BUSINESS EMPLOYMENT- An employee shall be treated as a qualified employee for any taxable year of the employer only if more than 50 percent of the wages paid or incurred by the employer to such employee during such taxable year are for services performed in a trade or business of the employer. Any determination as to whether the preceding sentence applies with respect to any employee for any taxable year shall be made without regard to subsection (e)(2).

      ‘(5) CERTAIN EMPLOYEES NOT ELIGIBLE- The term ‘qualified employee’ shall not include--

        ‘(A) any individual described in subparagraph (A), (B), or (C) of section 51(i)(1),

        ‘(B) any 5-percent owner (as defined in section 416(i)(1)(B)), and

        ‘(C) any individual if the services performed by such individual for the employer involve the conduct of class I, II, or III gaming as defined in section 4 of the Indian Gaming Regulatory Act (25 U.S.C. 2703), or are performed in a building housing such gaming activity.

      ‘(6) INDIAN TRIBE DEFINED- The term ‘Indian tribe’ means any Indian tribe, band, nation, pueblo, or other organized group or community, including any Alaska Native village, or regional or village corporation, as defined in, or established pursuant to, the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.

      ‘(7) INDIAN RESERVATION DEFINED- The term ‘Indian reservation’ has the meaning given such term by section 168(j)(6).

    ‘(d) EARLY TERMINATION OF EMPLOYMENT BY EMPLOYER-

      ‘(1) IN GENERAL- If the employment of any employee is terminated by the taxpayer before the day 1 year after the day on which such employee began work for the employer--

        ‘(A) no wages (or qualified employee health insurance costs) with respect to such employee shall be taken into account under subsection (a) for the taxable year in which such employment is terminated, and

        ‘(B) the tax under this chapter for the taxable year in which such employment is terminated shall be increased by the aggregate credits (if any) allowed under section 38(a) for prior taxable years by reason of wages (or qualified employee health insurance costs) taken into account with respect to such employee.

      ‘(2) CARRYBACKS AND CARRYOVERS ADJUSTED- In the case of any termination of employment to which paragraph (1) applies, the carrybacks and carryovers under section 39 shall be properly adjusted.

      ‘(3) SUBSECTION NOT TO APPLY IN CERTAIN CASES-

        ‘(A) IN GENERAL- Paragraph (1) shall not apply to--

          ‘(i) a termination of employment of an employee who voluntarily leaves the employment of the taxpayer,

          ‘(ii) a termination of employment of an individual who before the close of the period referred to in paragraph (1) becomes disabled to perform the services of such employment unless such disability is removed before the close of such period and the taxpayer fails to offer reemployment to such individual, or

          ‘(iii) a termination of employment of an individual if it is determined under the applicable State unemployment compensation law that the termination was due to the misconduct of such individual.

        ‘(B) CHANGES IN FORM OF BUSINESS- For purposes of paragraph (1), the employment relationship between the taxpayer and an employee shall not be treated as terminated--

          ‘(i) by a transaction to which section 381(a) applies if the employee continues to be employed by the acquiring corporation, or

          ‘(ii) by reason of a mere change in the form of conducting the trade or business of the taxpayer if the employee continues to be employed in such trade or business and the taxpayer retains a substantial interest in such trade or business.

      ‘(4) SPECIAL RULE- Any increase in tax under paragraph (1) shall not be treated as a tax imposed by this chapter for purposes of--

        ‘(A) determining the amount of any credit allowable under this chapter, and

        ‘(B) determining the amount of the tax imposed by section 55.

    ‘(e) OTHER DEFINITIONS AND SPECIAL RULES- For purposes of this section--

      ‘(1) WAGES- The term ‘wages’ has the same meaning given to such term in section 51.

      ‘(2) CONTROLLED GROUPS-

        ‘(A) All employers treated as a single employer under section (a) or (b) of section 52 shall be treated as a single employer for purposes of this section.

        ‘(B) The credit (if any) determined under this section with respect to each such employer shall be its proportionate share of the wages and qualified employee health insurance costs giving rise to such credit.

      ‘(3) CERTAIN OTHER RULES MADE APPLICABLE- Rules similar to the rules of section 51(k) and subsections (c), (d), and (e) of section 52 shall apply.

      ‘(4) COORDINATION WITH NONREVENUE LAWS- Any reference in this section to a provision not contained in this title shall be treated for purposes of this section as a reference to such provision as in effect on the date of the enactment of this paragraph.

      ‘(5) SPECIAL RULE FOR SHORT TAXABLE YEARS- For any taxable year having less than 12 months, the amount determined under subsection (a)(2) shall be multiplied by a fraction, the numerator of which is the number of days in the taxable year and the denominator of which is 365.

    ‘(f) TERMINATION- This section shall not apply to taxable years beginning after December 31, 2003.’

    (c) DENIAL OF DEDUCTION FOR PORTION OF WAGES EQUAL TO INDIAN EMPLOYMENT CREDIT-

      (1) Subsection (a) of section 280C (relating to rule for targeted jobs credit) is amended by striking ‘51(a)’ and inserting ‘45A(a), 51(a), and’.

      (2) Subsection (c) of section 196 (relating to deduction for certain unused business credits) is amended by striking ‘and’ at the end of paragraph (5), by striking the period at the end of paragraph (6) and inserting ‘, and’, and by adding at the end the following new paragraph:

      ‘(7) the Indian employment credit determined under section 45A(a).’

    (d) DENIAL OF CARRYBACKS TO PREENACTMENT YEARS- Subsection (d) of section 39 is amended by adding at the end thereof the following new paragraph:

      ‘(5) NO CARRYBACK OF SECTION 45 CREDIT BEFORE ENACTMENT- No portion of the unused business credit for any taxable year which is attributable to the Indian employment credit determined under section 45A may be carried to a taxable year ending before the date of the enactment of section 45A.’

    (e) CLERICAL AMENDMENT- The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end thereof the following:

‘Sec. 45A. Indian employment credit.’

    (f) EFFECTIVE DATE- The amendments made by this section shall apply to wages paid or incurred after December 31, 1993.

Subchapter D--Other Provisions

PART I--DISCLOSURE PROVISIONS

SEC. 13401. DISCLOSURE OF RETURN INFORMATION FOR ADMINISTRATION OF CERTAIN VETERANS PROGRAMS.

    (a) GENERAL RULE- Subparagraph (D) of section 6103(l)(7) (relating to disclosure of return information to Federal, State, and local agencies administering certain programs) is amended by striking ‘September 30, 1997’ in the second sentence following clause (viii) and inserting ‘September 30, 1998’.

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect on the date of the enactment of this Act.

SEC. 13402. DISCLOSURE OF RETURN INFORMATION TO CARRY OUT INCOME CONTINGENT REPAYMENT OF STUDENT LOANS.

    (a) GENERAL RULE- Subsection (l) of section 6103 (relating to confidentiality and disclosure of returns and return information) is amended by adding at the end thereof the following new paragraph:

      ‘(13) DISCLOSURE OF RETURN INFORMATION TO CARRY OUT INCOME CONTINGENT REPAYMENT OF STUDENT LOANS-

        ‘(A) IN GENERAL- The Secretary may, upon written request from the Secretary of Education, disclose to officers and employees of the Department of Education return information with respect to a taxpayer who has received an applicable student loan and whose loan repayment amounts are based in whole or in part on the taxpayer’s income. Such return information shall be limited to--

          ‘(i) taxpayer identity information with respect to such taxpayer,

          ‘(ii) the filing status of such taxpayer, and

          ‘(iii) the adjusted gross income of such taxpayer.

        ‘(B) RESTRICTION ON USE OF DISCLOSED INFORMATION- Return information disclosed under subparagraph (A) may be used by officers and employees of the Department of Education only for the purposes of, and to the extent necessary in, establishing the appropriate income contingent repayment amount for an applicable student loan.

        ‘(C) APPLICABLE STUDENT LOAN- For purposes of this paragraph, the term ‘applicable student loan’ means--

          ‘(i) any loan made under the program authorized under part D of title IV of the Higher Education Act of 1965, and

          ‘(ii) any loan made under part B or E of title IV of the Higher Education Act of 1965 which is in default and has been assigned to the Department of Education.

        ‘(D) TERMINATION- This paragraph shall not apply to any request made after September 30, 1998.’

    (b) CONFORMING AMENDMENTS-

      (1) So much of paragraph (4) of section 6103(m) as precedes subparagraph (B) thereof is amended to read as follows:

      ‘(4) INDIVIDUALS WHO OWE AN OVERPAYMENT OF FEDERAL PELL GRANTS OR WHO HAVE DEFAULTED ON STUDENT LOANS ADMINISTERED BY THE DEPARTMENT OF EDUCATION-

        ‘(A) IN GENERAL- Upon written request by the Secretary of Education, the Secretary may disclose the mailing address of any taxpayer--

          ‘(i) who owes an overpayment of a grant awarded to such taxpayer under subpart 1 of part A of title IV of the Higher Education Act of 1965, or

          ‘(ii) who has defaulted on a loan--

            ‘(I) made under part B, D, or E of title IV of the Higher Education Act of 1965, or

            ‘(II) made pursuant to section 3(a)(1) of the Migration and Refugee Assistance Act of 1962 to a student at an institution of higher education,

        for use only by officers, employees, or agents of the Department of Education for purposes of locating such taxpayer for purposes of collecting such overpayment or loan .’

      (2) Subparagraph (B) of section 6103(m)(4) is amended--

        (A) in clause (i), by striking ‘under part B’ and inserting ‘under part B or D’; and

        (B) in clause (ii), by striking ‘under part E’ and inserting ‘under subpart 1 of part A, or part D or E,’;

      (3) Section 6103(p) is amended--

        (A) in paragraph (3)(A), by striking ‘(11), or (12), (m)’ and inserting ‘(11), (12), or (13), (m)’;

        (B) in paragraph (4)--

          (i) in the matter preceding subparagraph (A), by striking out ‘(10), or (11),’ and inserting ‘(10), (11), or (13),’, and

          (ii) in subparagraph (F)(ii), by striking ‘(11), or (12),’ and inserting ‘(11), (12), or (13),’.

    (c) EFFECTIVE DATE- The amendments made by this section shall take effect on the date of the enactment of this Act.

SEC. 13403. USE OF RETURN INFORMATION FOR INCOME VERIFICATION UNDER CERTAIN HOUSING ASSISTANCE PROGRAMS.

    (a) IN GENERAL- Subparagraph (D) of section 6103(l)(7) (relating to the disclosure of return information to Federal, State, and local agencies administering certain programs) is amended--

      (1) in clause (vii), by striking ‘and’ at the end;

      (2) in clause (viii), by striking the period at the end and inserting ‘; and’;

      (3) by inserting after clause (viii) the following new clause:

      ‘(ix) any housing assistance program administered by the Department of Housing and Urban Development that involves initial and periodic review of an applicant’s or participant’s income, except that return information may be disclosed under this clause only on written request by the Secretary of Housing and Urban Development and only for use by officers and employees of the Department of Housing and Urban Development with respect to applicants for and participants in such programs.’; and

      (4) by adding at the end thereof the following: ‘Clause (ix) shall not apply after September 30, 1998.’

    (b) CONFORMING AMENDMENT- The heading of paragraph (7) of section 6103(l) is amended by inserting after ‘CODE’ the following: ‘, OR CERTAIN HOUSING ASSISTANCE PROGRAMS’.

    (c) EFFECTIVE DATE- The amendments made by this section shall take effect on the date of the enactment of this Act.

PART II--PUBLIC DEBT LIMIT

SEC. 13411. INCREASE IN PUBLIC DEBT LIMIT.

    (a) GENERAL RULE- Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof ‘$4,900,000,000,000’.

    (b) REPEAL OF TEMPORARY INCREASE- Effective on and after the date of the enactment of this Act, section 1 of Public Law 103-12 is hereby repealed.

PART III--VACCINE PROVISIONS

SEC. 13421. EXCISE TAX ON CERTAIN VACCINES MADE PERMANENT.

    (a) TAX- Subsection (c) of section 4131 (relating to tax on certain vaccines) is amended to read as follows:

    ‘(c) APPLICATION OF SECTION- The tax imposed by this section shall apply--

      ‘(1) after December 31, 1987, and before January 1, 1993, and

      ‘(2) during periods after the date of the enactment of the Revenue Reconciliation Act of 1993.’

    (b) TRUST FUND- Paragraph (1) of section 9510(c) (relating to expenditures from Vaccine Injury Compensation Trust Fund) is amended by striking ‘and before October 1, 1992,’.

    (c) FLOOR STOCKS TAX-

      (1) IMPOSITION OF TAX- On any taxable vaccine--

        (A) which was sold by the manufacturer, producer, or importer on or before the date of the enactment of this Act,

        (B) on which no tax was imposed by section 4131 of the Internal Revenue Code of 1986 (or, if such tax was imposed, was credited or refunded), and

        (C) which is held on such date by any person for sale or use,

      there is hereby imposed a tax in the amount determined under section 4131(b) of such Code.

      (2) LIABILITY FOR TAX AND METHOD OF PAYMENT-

        (A) LIABILITY FOR TAX- The person holding any taxable vaccine to which the tax imposed by paragraph (1) applies shall be liable for such tax.

        (B) METHOD OF PAYMENT- The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe by regulations.

        (C) TIME FOR PAYMENT- The tax imposed by paragraph (1) shall be paid on or before the last day of the 6th month beginning after the date of the enactment of this Act.

      (3) DEFINITIONS- For purposes of this subsection, terms used in this subsection which are also used in section 4131 of such Code shall have the respective meanings such terms have in such section.

      (4) OTHER LAWS APPLICABLE- All provisions of law, including penalties, applicable with respect to the taxes imposed by section 4131 of such Code shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply to the floor stocks taxes imposed by paragraph (1), to the same extent as if such taxes were imposed by such section 4131.

SEC. 13422. CONTINUATION COVERAGE UNDER GROUP HEALTH PLANS OF COSTS OF PEDIATRIC VACCINES.

    (a) IN GENERAL- Paragraph (1) of section 4980B(f) is amended by inserting ‘the coverage of the costs of pediatric vaccines (as defined under section 2162 of the Public Health Service Act) is not reduced below the coverage provided by the plan as of May 1, 1993, and only if’ after ‘only if’.

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply with respect to plan years beginning after the date of the enactment of this Act.

PART IV--DISASTER RELIEF PROVISIONS

SEC. 13431. MODIFICATION OF INVOLUNTARY CONVERSION RULES FOR CERTAIN DISASTER-RELATED CONVERSIONS.

    (a) IN GENERAL- Section 1033 (relating to involuntary conversions) is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection:

    ‘(h) SPECIAL RULES FOR PRINCIPAL RESIDENCES DAMAGED BY PRESIDENTIALLY DECLARED DISASTERS-

      ‘(1) IN GENERAL- If the taxpayer’s principal residence or any of its contents is compulsorily or involuntarily converted as a result of a Presidentially declared disaster--

        ‘(A) TREATMENT OF INSURANCE PROCEEDS-

          ‘(i) EXCLUSION FOR UNSCHEDULED PERSONAL PROPERTY- No gain shall be recognized by reason of the receipt of any insurance proceeds for personal property which was part of such contents and which was not scheduled property for purposes of such insurance.

          ‘(ii) OTHER PROCEEDS TREATED AS COMMON FUND- In the case of any insurance proceeds (not described in clause (i)) for such residence or contents--

            ‘(I) such proceeds shall be treated as received for the conversion of a single item of property, and

            ‘(II) any property which is similar or related in service or use to the residence so converted (or contents thereof) shall be treated for purposes of subsection (a)(2) as property similar or related in service or use to such single item of property.

        ‘(B) EXTENSION OF REPLACEMENT PERIOD- Subsection (a)(2)(B) shall be applied with respect to any property so converted by substituting ‘4 years’ for ‘2 years’.

      ‘(2) PRESIDENTIALLY DECLARED DISASTER- For purposes of this subsection, the term ‘Presidentially declared disaster’ means any disaster which, with respect to the area in which the residence is located, resulted in a subsequent determination by the President that such area warrants assistance by the Federal Government under the Disaster Relief and Emergency Assistance Act.

      ‘(3) PRINCIPAL RESIDENCE- For purposes of this subsection, the term ‘principal residence’ has the same meaning as when used in section 1034, except that such term shall include a residence not treated as a principal residence solely because the taxpayer does not own the residence.’.

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to property compulsorily or involuntarily converted as a result of disasters for which the determination referred to in section 1033(h)(2) of the Internal Revenue Code of 1986 (as added by this section) is made on or after September 1, 1991, and to taxable years ending on or after such date.

Part V--Miscellaneous Provisions

SEC. 13441. INCREASE IN PRESIDENTIAL ELECTION CAMPAIGN FUND CHECK-OFF.

    (a) IN GENERAL- Section 6096(a) (relating to designation by individuals) is amended--

      (1) by striking ‘$1’ each place it appears and inserting ‘$3’, and

      (2) by striking ‘$2’ and inserting ‘$6’.

    (b) EFFECTIVE DATE- The amendments made by subsection (a) apply with respect to tax returns required to be filed after December 31, 1993.

SEC. 13442. SPECIAL RULE FOR HOSPITAL SERVICES.

    (a) IN GENERAL- Section 162 (relating to trade or business deductions), as amended by section 13211, is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following new subsection:

    ‘(n) SPECIAL RULE FOR CERTAIN GROUP HEALTH PLANS-

      ‘(1) IN GENERAL- No deduction shall be allowed under this chapter to an employer for any amount paid or incurred in connection with a group health plan if the plan does not reimburse for inpatient hospital care services provided in the State of New York--

        ‘(A) except as provided in subparagraphs (B) and (C), at the same rate as licensed commercial insurers are required to reimburse hospitals for such services when such reimbursement is not through such a plan,

        ‘(B) in the case of any reimbursement through a health maintenance organization, at the same rate as health maintenance organizations are required to reimburse hospitals for such services for individuals not covered by such a plan (determined without regard to any government-supported individuals exempt from such rate), or

        ‘(C) in the case of any reimbursement through any corporation organized under Article 43 of the New York State Insurance Law, at the same rate as any such corporation is required to reimburse hospitals for such services for individuals not covered by such a plan.

      ‘(2) STATE LAW EXCEPTION- Paragraph (1) shall not apply to any group health plan which is not required under the laws of the State of New York (determined without regard to this subsection or other provisions of Federal law) to reimburse at the rates provided in paragraph (1).

      ‘(3) GROUP HEALTH PLAN- For purposes of this subsection, the term ‘group health plan’ means a plan of, or contributed to by, an employer or employee organization (including a self-insured plan) to provide health care (directly or otherwise) to any employee, any former employee, the employer, or any other individual associated or formerly associated with the employer in a business relationship, or any member of their family.’

    (b) EFFECTIVE DATE- The provisions of this section shall apply to services provided after February 2, 1993, and on or before May 12, 1995.

SEC. 13443. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY TAXES PAID WITH RESPECT TO EMPLOYEE CASH TIPS.

    (a) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits) is amended by adding at the end the following new section:

‘SEC. 45B. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY TAXES PAID WITH RESPECT TO EMPLOYEE CASH TIPS.

    ‘(a) GENERAL RULE- For purposes of section 38, the employer social security credit determined under this section for the taxable year is an amount equal to the excess employer social security tax paid or incurred by the taxpayer during the taxable year.

    ‘(b) EXCESS EMPLOYER SOCIAL SECURITY TAX- For purposes of this section--

      ‘(1) IN GENERAL- The term ‘excess employer social security tax’ means any tax paid by an employer under section 3111 with respect to tips received by an employee during any month, to the extent such tips--

        ‘(A) are deemed to have been paid by the employer to the employee pursuant to section 3121(q), and

        ‘(B) exceed the amount by which the wages (excluding tips) paid by the employer to the employee during such month are less than the total amount which would be payable (with respect to such employment) at the minimum wage rate applicable to such individual under section 6(a)(1) of the Fair Labor Standards Act of 1938 (determined without regard to section 3(m) of such Act).

      ‘(2) ONLY TIPS RECEIVED AT FOOD AND BEVERAGE ESTABLISHMENTS TAKEN INTO ACCOUNT- In applying paragraph (1), there shall be taken into account only tips received from customers in connection with the provision of food or beverages for consumption on the premises of an establishment with respect to which the tipping of employees serving food or beverages by customers is customary.

    ‘(c) DENIAL OF DOUBLE BENEFIT- No deduction shall be allowed under this chapter for any amount taken into account in determining the credit under this section.

    ‘(d) ELECTION NOT TO CLAIM CREDIT- This section shall not apply to a taxpayer for any taxable year if such taxpayer elects to have this section not apply for such taxable year.’

    (b) CREDIT TO BE PART OF GENERAL BUSINESS CREDIT-

      (1) IN GENERAL- Subsection (b) of section 38 (relating to current year business credit) is amended by striking ‘plus’ at the end of paragraph (9), by striking the period at the end of paragraph (10) and inserting ‘, plus’, and by adding at the end the following new paragraph:

      ‘(11) the employer social security credit determined under section 45B(a).’

      (2) LIMITATION ON CARRYBACKS- Subsection (d) of section 39 (relating to transitional rules) is amended by adding at the end the following new paragraph:

      ‘(6) NO CARRYBACK OF SECTION 45 CREDIT BEFORE ENACTMENT- No portion of the unused business credit for any taxable year which is attributable to the employer social security credit determined under section 45B may be carried back to a taxable year ending before the date of the enactment of section 45B.’

    (c) CLERICAL AMENDMENT- The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

‘Sec. 45B. Credit for portion of employer social security taxes paid with respect to employee cash tips.’

    (d) EFFECTIVE DATE- The amendments made by this section shall apply with respect to taxes paid after December 31, 1993.

SEC. 13444. AVAILABILITY AND USE OF DEATH INFORMATION.

    (a) RESTRICTION ON DISCLOSURE OF TAX RETURN INFORMATION- Subsection (d) of section 6103 is amended by adding at the end thereof the following new paragraph:

      ‘(4) AVAILABILITY AND USE OF DEATH INFORMATION-

        ‘(A) IN GENERAL- No returns or return information may be disclosed under paragraph (1) to any agency, body, or commission of any State (or any legal representative thereof) during any period during which a contract meeting the requirements of subparagraph (B) is not in effect between such State and the Secretary of Health and Human Services.

        ‘(B) CONTRACTUAL REQUIREMENTS- A contract meets the requirements of this subparagraph if--

          ‘(i) such contract requires the State to furnish the Secretary of Health and Human Services information concerning individuals with respect to whom death certificates (or equivalent documents maintained by the State or any subdivision thereof) have been officially filed with it, and

          ‘(ii) such contract does not include any restriction on the use of information obtained by such Secretary pursuant to such contract, except that such contract may provide that such information is only to be used by the Secretary (or any other Federal agency) for purposes of ensuring that Federal benefits or other payments are not erroneously paid to deceased individuals.

        Any information obtained by the Secretary of Health and Human Services under such a contract shall be exempt from disclosure under section 552 of title 5, United States Code, and from the requirements of section 552a of such title 5.

        ‘(C) SPECIAL EXCEPTION- The provisions of subparagraph (A) shall not apply to any State which on July 1, 1993, was not, pursuant to a contract, furnishing the Secretary of Health and Human Services information concerning individuals with respect to whom death certificates (or equivalent documents maintained by the State or any subdivision thereof) have been officially filed with it.’

    (b) EFFECTIVE DATE-

      (1) IN GENERAL- Except as provided in paragraph (2), the amendment made by subsection (a) shall take effect on the date one year after the date of the enactment of this Act.

      (2) SPECIAL RULE- The amendment made by subsection (a) shall take effect on the date 2 years after the date of the enactment of this Act in the case of any State if it is established to the satisfaction of the Secretary of the Treasury that--

        (A) under the law of such State as in effect on the date of the enactment of this Act, it is impossible for such State to enter into an agreement meeting the requirements of section 6103(d)(4)(B) of the Internal Revenue Code of 1986 (as added by subsection (a)), and

        (B) it is likely that such State will enter into such an agreement during the extension period under this paragraph.

CHAPTER 2--HEALTH CARE, HUMAN RESOURCES, INCOME SECURITY, AND CUSTOMS AND TRADE PROVISIONS

Subchapter A--Medicare

SEC. 13500. REFERENCES IN SUBCHAPTER; TABLE OF CONTENTS OF SUBCHAPTER.

    (a) AMENDMENTS TO SOCIAL SECURITY ACT- Except as otherwise specifically provided, whenever in this subchapter an amendment 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 that section or other provision of the Social Security Act.

    (b) REFERENCES TO OBRA- In this subchapter, the terms ‘OBRA-1986’, ‘OBRA-1987’, ‘OBRA-1989’, and ‘OBRA-1990’ refer to the Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509), the Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203), the Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239), and the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508), respectively.

    (c) TABLE OF CONTENTS OF SUBCHAPTER- The table of contents of this subchapter is as follows:

SUBCHAPTER A--MEDICARE

Sec. 13500. References in subchapter; table of contents of subchapter.

Part I--Provisions Relating to Part A

Sec. 13501. Payments for PPS hospitals.

Sec. 13502. Reductions in payments for PPS-exempt hospitals.

Sec. 13503. Reductions in payments for skilled nursing facility services.

Sec. 13504. Reductions in payments for hospice services.

Sec. 13505. Hemophilia pass-through extension.

Sec. 13506. Graduate medical education payments in hospital-owned community health centers.

Sec. 13507. Extension of rural hospital demonstration.

Sec. 13508. Reduction in part A premium for certain individuals with 30 or more quarters of Social Security coverage.

Part II--Provisions Relating to Part B

SUBPART A--PHYSICIANS’ SERVICES

Sec. 13511. Reduction in default update for conversion factor for 1994 and 1995.

Sec. 13512. Reduction in performance standard rate of increase and increase in maximum reduction permitted in default update.

Sec. 13513. Practice expense relative value units.

Sec. 13514. Separate payment for interpretation of electrocardiograms.

Sec. 13515. Payments for new physicians and practitioners.

Sec. 13516. Payments for anesthesia.

Sec. 13517. Extension of physician payment provisions to nonparticipating suppliers and other persons.

Sec. 13518. Antigens under physician fee schedule.

SUBPART B--OUTPATIENT HOSPITAL SERVICES

Sec. 13521. Extension of 10 percent reduction in payments for capital-related costs of outpatient hospital services.

Sec. 13522. Extension of reduction in payments for other costs of outpatient hospital services.

SUBPART C--AMBULATORY SURGICAL CENTER SERVICES

Sec. 13531. Ambulatory surgical center services.

Sec. 13532. Designation of certain hospitals as eye or eye and ear hospitals.

Sec. 13533. Reduction in payments for intraocular lenses.

SUBPART D--DURABLE MEDICAL EQUIPMENT

Sec. 13541. Payment for parenteral and enteral nutrients, supplies, and equipment during 1994 and 1995.

Sec. 13542. Revisions to payment rules for durable medical equipment.

Sec. 13543. Treatment of nebulizers, aspirators, and certain ventilators.

Sec. 13544. Payment for ostomy supplies and other supplies.

Sec. 13545. Payments for TENS devices.

Sec. 13546. Payments for orthotics, prosthetics, and prosthetic devices.

SUBPART E--OTHER PROVISIONS

Sec. 13551. Payments for clinical diagnostic laboratory tests.

Sec. 13552. Extension of Alzheimer’s disease demonstration projects.

Sec. 13553. Oral cancer drugs.

Sec. 13554. Clarification of coverage of certified nurse-midwife services performed outside the maternity cycle.

Sec. 13555. Increase in annual cap on amount of medicare payment for outpatient physical therapy and occupational therapy services.

Sec. 13556. Rural health clinics and federally qualified health centers.

Sec. 13557. Extension of municipal health service demonstration projects.

Part III--Provisions Relating to Parts A and B

Sec. 13561. Medicare as secondary payer.

Sec. 13562. Physician ownership and referral.

Sec. 13563. Direct graduate medical education.

Sec. 13564. Reduction in payments for home health services.

Sec. 13565. Immunosuppressive drug therapy.

Sec. 13566. Reduction in payments for erythropoientin.

Sec. 13567. Extension of social health maintenance organization demonstrations.

Sec. 13568. Timing of claims payment.

Sec. 13569. Extension of waiver for Watts Health Foundation.

Part IV--Provision Relating to Part B Premium

Sec. 13571. Part B premium.

Part V--Provision Relating to Data Bank

Sec. 13581. Medicare and medicaid coverage data bank.

PART I--PROVISIONS RELATING TO PART A

SEC. 13501. PAYMENTS FOR PPS HOSPITALS.

    (a) REDUCTIONS IN PAYMENTS-

      (1) REDUCTIONS IN INFLATION UPDATES- Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i)) is amended--

        (A) in subclause (IX)--

          (i) by inserting ‘minus 2.5 percentage points’ after ‘market basket percentage increase’ the first place it appears, and

          (ii) by striking ‘plus 1.5 percentage points’ and inserting ‘minus 1.0 percentage point’;

        (B) in subclause (X)--

          (i) by inserting ‘minus 2.5 percentage points’ after ‘market basket percentage increase’, and

          (ii) by striking ‘and’ at the end;

        (C) in subclause (XI)--

          (i) by striking ‘and each subsequent fiscal year’,

          (ii) by inserting ‘minus 2.0 percentage points’ after ‘market basket percentage increase’, and

          (iii) by striking the period at the end and inserting a comma; and

        (D) by adding at the end the following new subclauses:

      ‘(XII) for fiscal year 1997, the market basket percentage increase minus 0.5 percentage point for hospitals in all areas, and

      ‘(XIII) for fiscal year 1998 and each subsequent fiscal year, the market basket percentage increase for hospitals in all areas.’.

      (2) UPDATES FOR SOLE COMMUNITY HOSPITALS AND MEDICARE-DEPENDENT, SMALL RURAL HOSPITALS-

        (A) IN GENERAL- Section 1886(b)(3)(B) (42 U.S.C. 1395ww(b)(3)(B)) is amended by adding at the end the following new clause:

    ‘(iv) For purposes of subparagraphs (C) and (D), the ‘applicable percentage increase’ is--

      ‘(I) for 12-month cost reporting periods beginning during fiscal years 1986 through 1993, the applicable percentage increase specified in clause (ii),

      ‘(II) for fiscal year 1994, the market basket percentage increase minus 2.3 percentage points (taking into account any portion of the 12-month cost reporting period beginning during fiscal year 1993 that occurred during fiscal year 1994),

      ‘(III) for fiscal year 1995, the market basket percentage increase minus 2.2 percentage points, and

      ‘(IV) for fiscal year 1996 and each subsequent fiscal year, the applicable percentage increase under clause (i).’.

        (B) CONFORMING AMENDMENTS- Section 1886(b)(3) (42 U.S.C. 1395ww(b)(3)) is amended--

          (i) in subparagraph (B)(ii), by striking ‘, (C), (D),’;

          (ii) in subparagraph (C)(i)(II), by striking ‘or’ at the end;

          (iii) in clause (ii) of subparagraph (C)--

            (I) by striking ‘period, the target’ and inserting ‘period beginning before fiscal year 1994, the target’,

            (II) by striking ‘subparagraph (B)(ii)’ and inserting ‘subparagraph (B)(iv)’, and

            (III) by striking the period at the end of such clause and inserting a comma;

          (iv) in subparagraph (C), by inserting after clause (ii) the following new clauses:

      ‘(iii) with respect to discharges occurring in fiscal year 1994, the target amount for the cost reporting period beginning in fiscal year 1993 increased by the applicable percentage increase under subparagraph (B)(iv), or

      ‘(iv) with respect to discharges occurring in fiscal year 1995 and each subsequent fiscal year, the target amount for the preceding year increased by the applicable percentage increase under subparagraph (B)(iv).’;

          (v) in clause (ii) of subparagraph (D)--

            (I) by striking ‘period, the target’ and inserting ‘period beginning before fiscal year 1994, the target’,

            (II) by striking ‘(B)(ii)’ and inserting ‘(B)(iv)’, and

            (III) by striking the period at the end of such clause and inserting ‘, and’; and

          (vi) in subparagraph (D), by inserting after clause (ii) the following new clause:

      ‘(iii) with respect to discharges occurring in fiscal year 1994, the target amount for the cost reporting period beginning in fiscal year 1993 increased by the applicable percentage increase under subparagraph (B)(iv).’.

      (3) REDUCTION IN FEDERAL PORTION OF CAPITAL PAYMENT RATE- Section 1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is amended by adding at the end the following new sentence: ‘For discharges occurring after September 30, 1993, the Secretary shall reduce by 7.4 percent the unadjusted standard Federal capital payment rate (as described in 42 CFR 412.308(c), as in effect on the date of the enactment of the Omnibus Budget Reconciliation Act of 1993) and shall (for hospital cost reporting periods beginning on or after October 1, 1993) redetermine which payment methodology is applied to the hospital under such system to take into account such reduction.’.

    (b) WAGE INDEX HOLD HARMLESS PROTECTION-

      (1) IN GENERAL- Section 1886(d)(8)(C) (42 U.S.C. 1395ww(d)(8)(C)) is amended by adding at the end the following new clause:

    ‘(iv) The application of subparagraph (B) or a decision of the Medicare Geographic Classification Review Board or of the Secretary under paragraph (1) may not result in a reduction in an urban area’s wage index if--

      ‘(I) the urban area has a wage index below the wage index for rural areas in the State in which it is located; or

      ‘(II) the urban area is located in a State that is composed of a single urban area.’.

      (2) NO STANDARDIZED AMOUNT ADJUSTMENT- The Secretary of Health and Human Services shall not revise the fiscal year 1992 or fiscal year 1993 standardized amounts pursuant to subsections (d)(3)(B) and (d)(8)(D) of section 1886 of the Social Security Act to account for the amendment made by paragraph (1).

      (3) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to discharges occurring on or after October 1, 1991.

    (c) TRANSITION FOR HOSPITAL OUTLIER THRESHOLDS- Section 1886(d)(5)(A) (42 U.S.C. 1395ww(d)(5)(A)) is amended--

      (1) in clause (i), by striking ‘The Secretary’ and inserting ‘For discharges occurring during fiscal years ending on or before September 30, 1997, the Secretary’;

      (2) in clause (ii), by striking the period at the end and inserting the following: ‘, or, for discharges in fiscal years beginning on or after October 1, 1994, exceed the applicable DRG prospective payment rate plus a fixed dollar amount determined by the Secretary.’;

      (3) in clause (iii), by striking ‘shall approximate’ and inserting ‘shall (except as payments under clause (i) are required to be reduced to take into account the requirements of clause (v)) approximate’; and

      (4) by adding at the end the following new clauses:

    ‘(v) The Secretary shall provide that--

      ‘(I) the day outlier percentage for fiscal year 1995 shall be 75 percent of the day outlier percentage for fiscal year 1994;

      ‘(II) the day outlier percentage for fiscal year 1996 shall be 50 percent of the day outlier percentage for fiscal year 1994; and

      ‘(III) the day outlier percentage for fiscal year 1997 shall be 25 percent of the day outlier percentage for fiscal year 1994.

    ‘(vi) For purposes of this subparagraph, the term ‘day outlier percentage’ means, for a fiscal year, the percentage of the total additional payments made by the Secretary under this subparagraph for discharges in that fiscal year which are additional payments under clause (i).’.

    (d) EXTENSION FOR REGIONAL REFERRAL CENTERS-

      (1) EXTENSION OF CLASSIFICATION THROUGH FISCAL YEAR 1994- Any hospital that is classified as a regional referral center under section 1886(d)(5)(C) of the Social Security Act as of September 30, 1992, shall continue to be so classified for cost reporting periods beginning during fiscal year 1993 or fiscal year 1994, unless the area in which the hospital is located is redesignated as a Metropolitan Statistical Area by the Office of Management and Budget for such a fiscal year.

      (2) PERMITTING HOSPITALS TO DECLINE RECLASSIFICATION- If any hospital fails to qualify as a rural referral center under section 1886(d)(5)(C) of the Social Security Act as a result of a decision by the Medicare Geographic Classification Review Board under section 1886(d)(10) of such Act to reclassify the hospital as being located in an urban area for fiscal year 1993 or fiscal year 1994, the Secretary of Health and Human Services shall--

        (A) notify such hospital of such failure to qualify,

        (B) provide an opportunity for such hospital to decline such reclassification, and

        (C) if the hospital--

          (i) declines such reclassification, administer the Social Security Act (other than section 1886(d)(8)(D)) for such fiscal year as if the decision by the Review Board had not occurred, or

          (ii) fails to decline such reclassification, administer the Social Security Act without regard to paragraph (1).

      (3) REQUIRING LUMP-SUM RETROACTIVE PAYMENT FOR HOSPITALS LOSING CLASSIFICATION-

        (A) IN GENERAL- In the case of a hospital described in paragraph (1), the Secretary of Health and Human Services shall make a lump-sum payment to the hospital equal to the difference between the aggregate payment made to the hospital under section 1886 of such Act (excluding outlier payments under subsection (d)(5)(A) of such section) during the period of applicability described in subparagraph (B) and the aggregate payment that would have been made to the hospital under such section if, during the period of applicability, the hospital was classified a regional referral center under section 1886(d)(5)(C) of such Act.

        (B) PERIOD OF APPLICABILITY- In subparagraph (A), the ‘period of applicability’ is the period that begins on October 1, 1992, and ends on the date of the enactment of this Act.

    (e) EXTENSION FOR MEDICARE-DEPENDENT, SMALL RURAL HOSPITALS-

      (1) EXTENSION OF ADDITIONAL PAYMENTS- Section 1886(d)(5)(G) (42 U.S.C. 1395ww(d)(5)(G)) is amended--

        (A) in clause (i) in the matter preceding subclause (I), by striking ‘ending on or before March 31, 1993,’ and all that follows and inserting the following: ‘before October 1, 1994, in the case of a subsection (d) hospital which is a medicare-dependent, small rural hospital, payment under paragraph (1)(A) shall be equal to the sum of the amount determined under clause (ii) and the amount determined under paragraph (1)(A)(iii).’;

        (B) by redesignating clauses (ii) and (iii) as clauses (iii) and (iv); and

        (C) by inserting after clause (i) the following new clause:

    ‘(ii) The amount determined under this clause is--

      ‘(I) for discharges occurring during the first 3 12-month cost reporting periods that begin on or after April 1, 1990, the amount by which the hospital’s target amount for the cost reporting period (as defined in subsection (b)(3)(D)) exceeds the amount determined under paragraph (1)(A)(iii); and

      ‘(II) for discharges occurring during any subsequent cost reporting period (or portion thereof) and before October 1, 1994, 50 percent of the amount by which the hospital’s target amount for the cost reporting period (as defined in subsection (b)(3)(D)) exceeds the amount determined under paragraph (1)(A)(iii).’.

      (2) PERMITTING HOSPITALS TO DECLINE RECLASSIFICATION- If any hospital fails to qualify as a medicare-dependent, small rural hospital under section 1886(d)(5)(G)(i) of the Social Security Act as a result of a decision by the Medicare Geographic Classification Review Board under section 1886(d)(10) of such Act to reclassify the hospital as being located in an urban area for fiscal year 1993 or fiscal year 1994, the Secretary of Health and Human Services shall--

        (A) notify such hospital of such failure to qualify,

        (B) provide an opportunity for such hospital to decline such reclassification, and

        (C) if the hospital declines such reclassification, administer the Social Security Act (other than section 1886(d)(8)(D)) for such fiscal year as if the decision by the Review Board had not occurred.

      (3) REQUIRING LUMP-SUM RETROACTIVE PAYMENT-

        (A) IN GENERAL- In the case of a hospital treated as a medicare-dependent, small rural hospital under section 1886(d)(5)(G) of the Social Security Act, the Secretary of Health and Human Services shall make a lump-sum payment to the hospital equal to the difference between the aggregate payment made to the hospital under section 1886 of such Act (excluding outlier payments under subsection (d)(5)(A) of such section) during the period of applicability described in subparagraph (B) and the aggregate payment that would have been made to the hospital under such section if, during the period of applicability, section 1886(d)(5)(G) of such Act had been applied as if the amendments made by paragraph (1) had been in effect.

        (B) PERIOD OF APPLICABILITY- In subparagraph (A), the ‘period of applicability’ is, with respect to a hospital, the period that begins on the first day of the hospital’s first 12-month cost reporting period that begins after April 1, 1992, and ends on the date of the enactment of this Act.

    (f) EXTENSION OF REGIONAL FLOOR- Section 1886(d)(1)(A)(iii) (42 U.S.C. 1395ww(d)(1)(A)(iii)) is amended to read as follows:

      ‘(iii) beginning on or after April 1, 1988, is equal to--

        ‘(I) the national adjusted DRG prospective payment rate determined under paragraph (3) for such discharges, or

        ‘(II) for discharges occurring during a fiscal year ending on or before September 30, 1996, the sum of 85 percent of the national adjusted DRG prospective payment rate determined under paragraph (3) for such discharges and 15 percent of the regional adjusted DRG prospective payment rate determined under such paragraph, but only if the average standardized amount (described in clause (i)(I) or clause (ii)(I) of paragraph (3)(D)) for hospitals within the region of, and in the same large urban or other area (or, for discharges occurring during a fiscal year ending on or before September 30, 1994, the same rural, large urban, or other urban area) as, the hospital is greater than the average standardized amount (described in the respective clause) for hospitals within the United States in that type of area for discharges occurring during such fiscal year.’.

SEC. 13502. REDUCTIONS IN PAYMENTS FOR PPS-EXEMPT HOSPITALS.

    (a) IN GENERAL- Section 1886(b)(3)(B) (42 U.S.C. 1395ww(b)(3)(B)), as amended by section 13501(a)(2)(B)(i), is amended--

      (1) in clause (ii)--

        (A) by striking ‘and’ at the end of subclause (III);

        (B) in subclause (IV)--

          (i) by striking ‘subsequent fiscal years’ and inserting ‘a subsequent fiscal year ending on or before September 30, 1993,’, and

          (ii) by striking the period at the end and inserting a comma; and

        (C) by adding at the end the following new subclauses:

      ‘(V) fiscal years 1994 through 1997, is the market basket percentage increase minus the applicable reduction (as defined in clause (v)(II)), or in the case of a hospital for a fiscal year for which the hospital’s update adjustment percentage (as defined in clause (v)(I)) is at least 10 percent, the market basket percentage increase, and

      ‘(VI) subsequent fiscal years is the market basket percentage increase.’; and

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

    ‘(v) For purposes of clause (ii)(V)--

      ‘(I) a hospital’s ‘update adjustment percentage’ for a fiscal year is the percentage by which the hospital’s allowable operating costs of inpatient hospital services recognized under this title for the cost reporting period beginning in fiscal year 1990 exceeds the hospital’s target amount (as determined under subparagraph (A)) for such cost reporting period, increased for each fiscal year (beginning with fiscal year 1994) by the sum of any of the hospital’s applicable reductions under subclause (V) for previous fiscal years; and

      ‘(II) the ‘applicable reduction’ with respect to a hospital for a fiscal year is the lesser of 1 percentage point or the percentage point difference between 10 percent and the hospital’s update adjustment percentage for the fiscal year.’.

    (b) EFFECT OF PAYMENT REDUCTION ON EXCEPTIONS AND ADJUSTMENTS- Section 1886(b)(4)(A) (42 U.S.C. 1395ww(b)(4)(A)) is amended--

      (1) by inserting ‘(i)’ after ‘(A)’, and

      (2) by adding at the end the following:

    ‘(ii) The payment reductions under paragraph (3)(B)(ii)(V) shall not be considered by the Secretary in making adjustments pursuant to clause (i).’.

SEC. 13503. REDUCTIONS IN PAYMENTS FOR SKILLED NURSING FACILITY SERVICES.

    (a) PAYMENTS BASED ON COST LIMITS-

      (1) NO CHANGES IN COST LIMITS- The Secretary of Health and Human Services may not provide for any change in the limits on per diem routine service costs for extended care services under section 1888 of the Social Security Act for cost reporting periods beginning during fiscal years 1994 and 1995, except as may be necessary to take into account the amendments made by paragraph (3)(A). The effect of the preceding sentence shall not be considered by the Secretary in making adjustments pursuant to section 1888(c) of such Act to the payment limits for such services during such fiscal years.

      (2) DELAY IN UPDATES- The last sentence of section 1888(a) (42 U.S.C. 1395yy(a)) is amended by inserting after ‘October 1, 1992’ the following: ‘, on or after October 1, 1995,’.

      (3) REPEAL OF EXCESS OVERHEAD ALLOCATIONS FOR HOSPITAL-BASED FACILITIES-

        (A) IN GENERAL- Section 1888(b) (42 U.S.C. 1395yy(b)) is amended--

          (i) by striking ‘shall recognize’ and inserting ‘may not recognize’; and

          (ii) by striking ‘(as determined by’ and all that follows and inserting a period.

        (B) EFFECTIVE DATE- The amendments made by subparagraph (A) shall apply to cost reporting periods beginning on or after October 1, 1993.

    (b) PAYMENTS DETERMINED ON PROSPECTIVE BASIS- The Secretary of Health and Human Services may not change the amount of any prospective payment paid to a skilled nursing facility under section 1888(d) of the Social Security Act for services furnished during cost reporting periods beginning during fiscal years 1994 and 1995, except as may be necessary to take into account the amendment made by subsection (c)(1)(A).

    (c) ELIMINATION OF RETURN ON EQUITY FOR PROPRIETARY SKILLED NURSING FACILITIES-

      (1) REPEAL OF REQUIREMENT FOR RETURN ON EQUITY- (A) Section 1861(v)(1)(B) (42 U.S.C. 1395x(v)(1)(B)) is amended to read as follows:

    ‘(B) In the case of extended care services, the regulations under subparagraph (A) shall not include provision for specific recognition of a return on equity capital.’.

      (B) Section 1878(f)(2) (42 U.S.C. 1395oo(f)(2)) is amended by striking ‘the rate of return on equity capital established by regulation pursuant to section 1861(v)(1)(B) and in effect at the time’ and inserting ‘the rate of interest on obligations issued for purchase by the Federal Hospital Insurance Trust Fund for the month in which’.

      (2) EFFECTIVE DATE- The amendments made by paragraph (1) shall take effect October 1, 1993.

SEC. 13504. REDUCTIONS IN PAYMENTS FOR HOSPICE SERVICES.

    Section 1814(i)(1)(C) (42 U.S.C. 1395f(i)(1)(C)) is amended by striking ‘increased by’ and all that follows and inserting the following: ‘increased by--

      ‘(I) for a fiscal year ending on or before September 30, 1993, the market basket percentage increase (as defined in section 1886(b)(3)(B)(iii)) for the fiscal year;

      ‘(II) for fiscal year 1994, the market basket percentage increase for the fiscal year minus 2.0 percentage points;

      ‘(III) for fiscal year 1995, the market basket percentage increase for the fiscal year minus 1.5 percentage points;

      ‘(IV) for fiscal year 1996, the market basket percentage increase for the fiscal year minus 1.5 percentage points;

      ‘(V) for fiscal year 1997, the market basket percentage increase for the fiscal year minus 0.5 percentage point; and

      ‘(VI) for a subsequent fiscal year, the market basket percentage increase for the fiscal year.’.

SEC. 13505. HEMOPHILIA PASS-THROUGH EXTENSION.

    Effective as if included in the enactment of OBRA-1989, section 6011(d) of such Act is amended by striking ‘2 years after the date of enactment of this Act’ and inserting ‘September 30, 1994’.

SEC. 13506. GRADUATE MEDICAL EDUCATION PAYMENTS IN HOSPITAL-OWNED COMMUNITY HEALTH CENTERS.

    Section 1886(d)(5)(B)(iv) (42 U.S.C. 1395ww(d)(5)(B)(iv)) is amended by inserting after ‘the hospital’ the following: ‘or providing services at any entity receiving a grant under section 330 of the Public Health Service Act that is under the ownership or control of the hospital (if the hospital incurs all, or substantially all, of the costs of the services furnished by such interns and residents)’.

SEC. 13507. EXTENSION OF RURAL HOSPITAL DEMONSTRATION.

    Section 4008(i)(1) of OBRA-1990 is amended by adding at the end the following new sentence: ‘The Secretary shall continue any such demonstration project until at least July 1, 1997.’.

SEC. 13508. REDUCTION IN PART A PREMIUM FOR CERTAIN INDIVIDUALS WITH 30 OR MORE QUARTERS OF SOCIAL SECURITY COVERAGE.

    (a) IN GENERAL- Section 1818(d) (42 U.S.C. 1395i-2(d)) is amended--

      (1) in the second sentence of paragraph (2), by striking ‘Such amount’ and inserting ‘Subject to paragraph (4), the amount of an individual’s monthly premium under this section’; and

      (2) by adding at the end the following new paragraph:

    ‘(4)(A) In the case of an individual described in subparagraph (B), the monthly premium for a month shall be reduced by the applicable reduction percent specified in the following table:

--The applicable

--reduction

‘For a month in:

--percent is:

1994

--25 percent

1995

--30 percent

1996

--35 percent

1997

--40 percent

1998 or subsequent year

--45 percent.

    ‘(B) An individual described in this subparagraph with respect to a month is an individual who establishes to the satisfaction of the Secretary that, as of the last day of the previous month, the individual--

      ‘(i) had at least 30 quarters of coverage under title II;

      ‘(ii) was married (and had been married for the previous 1-year period) to an individual who had at least 30 quarters of coverage under such title;

      ‘(iii) had been married to an individual for a period of at least 1 year (at the time of such individual’s death) if at such time the individual had at least 30 quarters of coverage under such title; or

      ‘(iv) is divorced from an individual and had been married to the individual for a period of at least 10 years (at the time of the divorce) if at such time the individual had at least 30 quarters of coverage under such title.’.

    (b) EFFECTIVE DATE- The amendments made by this section shall apply to monthly premiums under section 1818 of the Social Security Act for months beginning with January 1, 1994.

PART II--PROVISIONS RELATING TO PART B

Subpart A--Physicians’ Services

SEC. 13511. REDUCTION IN DEFAULT UPDATE FOR CONVERSION FACTOR FOR 1994 AND 1995.

    (a) IN GENERAL- Section 1848 (42 U.S.C. 1395w-4) is amended--

      (1) in subsection (d)(3)(A)--

        (A) in clause (i), by striking ‘clause (iii)’ and inserting ‘clauses (iii) through (v)’, and

        (B) by adding at the end the following new clauses:

          ‘(iv) ADJUSTMENT IN PERCENTAGE INCREASE FOR 1994- In applying clause (i) for services furnished in 1994, the percentage increase in the appropriate update index shall be reduced by--

            ‘(I) 3.6 percentage points for services included in the category of surgical services (as defined for purposes of subsection (j)(1)), and

            ‘(II) 2.6 percentage points for other services.

          ‘(v) ADJUSTMENT IN PERCENTAGE INCREASE FOR 1995- In applying clause (i) for services furnished in 1995, the percentage increase in the appropriate update index shall be reduced by 2.7 percentage points.

          ‘(vi) EXCEPTION FOR CATEGORY OF PRIMARY CARE SERVICES- Clauses (iv) and (v) shall not apply to services included in the category of primary care services (as defined for purposes of subsection (j)(1)).’; and

      (2) in subsection (j)(1), by striking ‘Secretary)’ and inserting ‘Secretary and including anesthesia services), primary care services (as defined in section 1842(i)(4)),’.

    (b) EFFECTIVE DATES- The amendments made by this section shall apply to services furnished on or after January 1, 1994; except that amendment made by subsection (a)(2) shall not apply--

      (1) to volume performance standard rates of increase established under section 1848(f) of the Social Security Act for fiscal years before fiscal year 1994, and

      (2) to adjustment in updates in the conversion factors for physicians’ services under section 1848(d)(3)(B) of such Act for physicians’ services to be furnished in calendar years before 1996.

SEC. 13512. REDUCTION IN PERFORMANCE STANDARD RATE OF INCREASE AND INCREASE IN MAXIMUM REDUCTION PERMITTED IN DEFAULT UPDATE.

    (a) REDUCTION IN PERFORMANCE STANDARD FACTOR- Section 1848(f)(2)(B) (42 U.S.C. 1395w-4(f)(2)(B)) is amended--

      (1) by striking ‘and’ at the end of clause (ii), and

      (2) by striking clause (iii) and inserting the following:

          ‘(iii) for 1993 is 2 percentage points,

          ‘(iv) for 1994 is 3 1/2 percentage points, and

          ‘(v) for each succeeding year is 4 percentage points.’.

    (b) INCREASE IN MAXIMUM REDUCTION PERMITTED IN DEFAULT UPDATE- Section 1848(d)(3)(B)(ii) (42 U.S.C. 1395w-4(d)(3)(B)(ii)) is amended--

      (1) in subclause (II), by striking ‘or 1995’, and

      (2) in subclause (III), by striking ‘3’ and inserting ‘5’.

SEC. 13513. PRACTICE EXPENSE RELATIVE VALUE UNITS.

    Section 1848(c)(2) (42 U.S.C. 1395w-4(c)(2)) is amended by adding at the end the following new subparagraph:

        ‘(E) REDUCTION IN PRACTICE EXPENSE RELATIVE VALUE UNITS FOR CERTAIN SERVICES-

          ‘(i) IN GENERAL- Subject to clause (ii), the Secretary shall reduce the practice expense relative value units applied to services described in clause (iii) furnished in--

            ‘(I) 1994, by 25 percent of the number by which the number of practice expense relative value units (determined for 1994 without regard to this subparagraph) exceeds the number of work relative value units determined for 1994,

            ‘(II) 1995, by an additional 25 percent of such excess, and

            ‘(III) 1996, by an additional 25 percent of such excess.

          ‘(ii) FLOOR ON REDUCTIONS- The practice expense relative value units for a physician’s service shall not be reduced under this subparagraph to a number less than 128 percent of the number of work relative value units.

          ‘(iii) SERVICES COVERED- For purposes of clause (i), the services described in this clause are physicians’ services that are not described in clause (iv) and for which--

            ‘(I) there are work relative value units, and

            ‘(II) the number of practice expense relative value units (determined for 1994) exceeds 128 percent of the number of work relative value units (determined for such year).

          ‘(iv) EXCLUDED SERVICES- For purposes of clause (iii), the services described in this clause are services which the Secretary determines at least 75 percent of which are provided under this title in an office setting.’.

SEC. 13514. SEPARATE PAYMENT FOR INTERPRETATION OF ELECTROCARDIOGRAMS.

    (a) IN GENERAL- Paragraph (3) of section 1848(b) (42 U.S.C. 1395w-4(b)) is amended to read as follows:

      ‘(3) TREATMENT OF INTERPRETATION OF ELECTROCARDIOGRAMS- The Secretary--

        ‘(A) shall make separate payment under this section for the interpretation of electrocardiograms performed or ordered to be performed as part of or in conjunction with a visit to or a consultation with a physician, and

        ‘(B) shall adjust the relative values established for visits and consultations under subsection (c) so as not to include relative value units for interpretations of electrocardiograms in the relative value for visits and consultations.’.

    (b) ASSURING BUDGET NEUTRALITY- Section 1848(c)(2) (42 U.S.C. 1395w-4(c)(2)), as amended by section 13513, is further amended by adding at the end the following new subparagraph:

        ‘(F) BUDGET NEUTRALITY ADJUSTMENTS- The Secretary--

          ‘(i) shall reduce the relative values for all services (other than anesthesia services) established under this paragraph (and, in the case of anesthesia services, the conversion factor established by the Secretary for such services) by such percentage as the Secretary determines to be necessary so that, beginning in 1996, the amendment made by section 13514(a) of the Omnibus Budget Reconciliation Act of 1993 would not result in expenditures under this section that exceed the amount of such expenditures that would have been made if such amendment had not been made, and

          ‘(ii) shall reduce the amounts determined under subsection (a)(2)(B)(ii)(I) by such percentage as the Secretary determines to be required to assure that, taking into account the reductions made under clause (i), the amendment made by section 13514(a) of the Omnibus Budget Reconciliation Act of 1993 would not result in expenditures under this section in 1994 that exceed the amount of such expenditures that would have been made if such amendment had not been made.’.

    (c) CONFORMING AMENDMENTS- Section 1848 (42 U.S.C. 1395w-4) is amended--

      (1) in subsection (a)(2)(B)(ii)(I), by inserting ‘and as adjusted under subsection (c)(2)(F)(ii)’ after ‘for 1994’;

      (2) in subsection (c)(2)(A)(i), by adding at the end the following: ‘Such relative values are subject to adjustment under subparagraph (F)(i).’; and

      (3) in subsection (i)(1)(B), by adding at the end ‘including adjustments under subsection (c)(2)(F),’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to services furnished on or after January 1, 1994.

SEC. 13515. PAYMENTS FOR NEW PHYSICIANS AND PRACTITIONERS.

    (a) EQUAL TREATMENT OF NEW PHYSICIANS AND PRACTITIONERS- (1) Section 1848(a) (42 U.S.C. 1395w-4(a)) is amended by striking paragraph (4).

    (2) Section 1842(b)(4) (42 U.S.C. 1395u(b)(4)) is amended by striking subparagraph (F).

    (b) BUDGET NEUTRALITY ADJUSTMENT- Notwithstanding any other provision of law, the Secretary of Health and Human Services shall reduce the following values and amounts for 1994 (to be applied for that year and subsequent years) by such uniform percentage as the Secretary determines to be required to assure that the amendments made by subsection (a) will not result in expenditures under part B of title XVIII of the Social Security Act in 1994 that exceed the amount of such expenditures that would have been made if such amendments had not been made:

      (1) The relative values established under section 1848(c) of such Act for services (other than anesthesia services) and, in the case of anesthesia services, the conversion factor established under section 1848 of such Act for such services.

      (2) The amounts determined under section 1848(a)(2)(B)(ii)(I) of such Act.

      (3) The prevailing charges or fee schedule amounts to be applied under such part for services of a health care practitioner (as defined in section 1842(b)(4)(F)(ii)(I) of such Act, as in effect before the date of the enactment of this Act).

    (c) CONFORMING AMENDMENTS- Section 1848 (42 U.S.C. 1395w-4), as amended by section 13514(c), is amended--

      (1) in subsection (a)(2)(B)(ii)(I), by inserting ‘and under section 13515(b) of the Omnibus Budget Reconciliation Act of 1993’ after ‘subsection (c)(2)(F)(ii)’;

      (2) in subsection (c)(2)(A)(i), by inserting ‘and section 13515(b) of the Omnibus Budget Reconciliation Act of 1993’ after ‘under subparagraph (F)(i)’; and

      (3) in subsection (i)(1)(B), by inserting ‘and section 13515(b) of the Omnibus Budget Reconciliation Act of 1993’ after ‘under subsection (c)(2)(F)’.

    (d) EFFECTIVE DATE- The amendments made by subsection (a) shall apply to services furnished on or after January 1, 1994.

SEC. 13516. PAYMENTS FOR ANESTHESIA.

    (a) PAYMENT TO A PHYSICIAN FOR MEDICAL DIRECTION-

      (1) IN GENERAL- Section 1848(a) (42 U.S.C. 1395w-4(a)), as amended by section 13515(a)(1), is amended by adding at the end the following new paragraph:

      ‘(4) SPECIAL RULE FOR MEDICAL DIRECTION-

        ‘(A) IN GENERAL- With respect to physicians’ services furnished on or after January 1, 1994, and consisting of medical direction of two, three, or four concurrent anesthesia cases, the fee schedule amount to be applied shall be equal to one-half of the amount described in subparagraph (B).

        ‘(B) AMOUNT- The amount described in this subparagraph, for a physician’s medical direction of the performance of anesthesia services, is the following percentage of the fee schedule amount otherwise applicable under this section if the anesthesia services were personally performed by the physician alone:

          ‘(i) For services furnished during 1994, 120 percent.

          ‘(ii) For services furnished during 1995, 115 percent.

          ‘(iii) For services furnished during 1996, 110 percent.

          ‘(iv) For services furnished during 1997, 105 percent.

          ‘(v) For services furnished after 1997, 100 percent.’.

      (2) ELIMINATION OF REDUCTION FOR MEDICAL DIRECTION OF MULTIPLE NURSE ANESTHETISTS AND ESTABLISHMENT OF CONSISTENT BASE AND TIME UNITS- Paragraph (13) of section 1842(b) (42 U.S.C. 1395u(b)) is amended--

        (A) by striking subparagraphs (A) and (B) and inserting the following:

    ‘(13)(A) In determining payments under section 1833(l) and section 1848 for anesthesia services furnished on or after January 1, 1994, the methodology for determining the base and time units used shall be the same for services furnished by physicians, for medical direction by physicians of two, three, or four certified registered nurse anesthetists, or for services furnished by a certified registered nurse anesthetist (whether or not medically directed) and shall be based on the methodology in effect, for anesthesia services furnished by physicians, as of the date of the enactment of the Omnibus Budget Reconciliation Act of 1993.’;

        (B) by redesignating subparagraph (C) as subparagraph (B); and

        (C) by striking ‘subparagraph (A) or (B)’ in subparagraph (B) (as so redesignated) and inserting ‘subparagraph (A)’.

    (b) PAYMENT TO A CERTIFIED REGISTERED NURSE ANESTHETIST FOR MEDICALLY DIRECTED SERVICES- Section 1833(l)(4)(B) (42 U.S.C. 1395l(l)(4)(B)) is amended--

      (1) in clause (i), by inserting ‘and before January 1, 1994,’ after ‘1991,’;

      (2) in clause (ii)--

        (A) by adding ‘and’ at the end of subclause (II),

        (B) by striking the comma at the end of subclause (III) and inserting a period, and

        (C) by striking subclauses (IV) through (VII); and

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

    ‘(iii) In the case of services of a certified registered nurse anesthetist who is medically directed or medically supervised by a physician which are furnished on or after January 1, 1994, the fee schedule amount shall be one-half of the amount described in section 1848(a)(5)(B) with respect to the physician.’.

SEC. 13517. EXTENSION OF PHYSICIAN PAYMENT PROVISIONS TO NONPARTICIPATING SUPPLIERS AND OTHER PERSONS.

    (a) IN GENERAL- Section 1848 (42 U.S.C. 1395w-4) is amended--

      (1) in subsection (a)(3)--

        (A) in the heading, by inserting ‘AND SUPPLIERS’ after ‘PHYSICIANS’,

        (B) by inserting ‘or a nonparticipating supplier or other person’ after ‘nonparticipating physician’, and

        (C) by adding at the end the following: ‘In the case of physicians’ services (including services which the Secretary excludes pursuant to subsection (j)(3)) of a nonparticipating physician, supplier, or other person for which payment is made under this part on a basis other than the fee schedule amount, the payment shall be based on 95 percent of the payment basis for such services furnished by a participating physician, supplier, or other person.’;

      (2) in subsection (g)(1)--

        (A) by inserting ‘or nonparticipating supplier or other person (as defined in section 1842(i)(2))’ after ‘nonparticipating physician’,

        (B) by inserting ‘including services which the Secretary excludes pursuant to subsection (j)(3),’ after ‘physician’s services (’,

        (C) by inserting ‘, supplier, or other person’ after ‘such physician’, and

        (D) by adding at the end the following: ‘In applying this subparagraph, any reference in such section to a physician is deemed also to include a reference to a supplier or other person under this subparagraph.’;

      (3) in subsection (g)(2)(C), by inserting ‘or for nonparticipating suppliers or other persons’ after ‘nonparticipating physicians’;

      (4) in subsection (g)(2)(D), by inserting ‘(or, if payment under this part is made on a basis other than the fee schedule under this section, 95 percent of the other payment basis)’ after ‘subsection (a)’;

      (5) in subsection (h)--

        (A) by inserting ‘or nonparticipating supplier or other person furnishing physicians’ services (as defined in section 1848(j)(3))’ after ‘physician’ the first place it appears,

        (B) by inserting ‘, supplier, or other person’ after ‘physician’ the second place it appears, and

        (C) by inserting ‘, suppliers, and other persons’ after ‘physicians’ the second place it appears; and

      (6) in subsection (j)(3), by inserting ‘, except for purposes of subsections (a)(3), (g), and (h)’ after ‘tests and’.

    (b) CONFORMING DEFINITION- Section 1842(i)(2) (42 U.S.C. 1395u(i)(2)) is amended--

      (1) by striking ‘, and the term’ and inserting ‘; the term’, and

      (2) by inserting before the period at the end the following: ‘; and the term ‘nonparticipating supplier or other person’ means a supplier or other person (excluding a provider of services) that is not a participating physician or supplier (as defined in subsection (h)(1))’.

    (c) EFFECTIVE DATE- The amendments made by subsection (a) shall apply to services furnished on or after January 1, 1994.

SEC. 13518. ANTIGENS UNDER PHYSICIAN FEE SCHEDULE.

    (a) IN GENERAL- Section 1848(j)(3) (42 U.S.C. 1395w-4(j)(3)) is amended by inserting ‘(2)(G),’ after ‘(2)(D),’.

    (b) BUDGET NEUTRALITY ADJUSTMENT IN 1995- Notwithstanding any other provision of law, the Secretary of Health and Human Services shall implement the amendment made by subsection (a) in a manner to assure that such amendment will result in expenditures under part B of title XVIII of the Social Security Act in 1995 for services described in such amendment that shall be equal to the amount of expenditures for such services that would have been made if such amendment had not been made.

    (c) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to services furnished on or after January 1, 1995.

Subpart B--Outpatient Hospital Services

SEC. 13521. EXTENSION OF 10 PERCENT REDUCTION IN PAYMENTS FOR CAPITAL-RELATED COSTS OF OUTPATIENT HOSPITAL SERVICES.

    Section 1861(v)(1)(S)(ii)(I) (42 U.S.C. 1395x(v)(1)(S)(ii)(I)) is amended by striking ‘fiscal year 1992, 1993, 1994, or 1995’ and inserting ‘fiscal years 1992 through 1998’.

SEC. 13522. EXTENSION OF REDUCTION IN PAYMENTS FOR OTHER COSTS OF OUTPATIENT HOSPITAL SERVICES.

    Section 1861(v)(1)(S)(ii)(II) (42 U.S.C. 1395x(v)(1)(S)(ii)(II)) is amended by striking ‘, 1992, 1993, 1994, or 1995’ and inserting ‘through 1998’.

Subpart C--Ambulatory Surgical Center Services

SEC. 13531. AMBULATORY SURGICAL CENTER SERVICES.

    The Secretary of Health and Human Services shall not provide for any inflation update in the payment amounts under subparagraphs (A) and (B) of section 1833(i)(2) of the Social Security Act for fiscal year 1994 or for fiscal year 1995.

SEC. 13532. DESIGNATION OF CERTAIN HOSPITALS AS EYE OR EYE AND EAR HOSPITALS.

    (a) IN GENERAL- Section 1833(i) (42 U.S.C. 1395l(i)) is amended--

      (1) in paragraph (3)(B)(ii)--

        (A) in the matter preceding subclause (I), by striking ‘the last sentence of this clause’ and inserting ‘paragraph (4)’, and

        (B) by striking the last sentence; and

      (2) by inserting after paragraph (3) the following new paragraph:

    ‘(4)(A) In the case of a hospital that--

      ‘(i) makes application to the Secretary and demonstrates that it specializes in eye services or eye and ear services (as determined by the Secretary),

      ‘(ii) receives more than 30 percent of its total revenues from outpatient services, and

      ‘(iii) on October 1, 1987--

        ‘(I) was an eye specialty hospital or an eye and ear specialty hospital, or

        ‘(II) was operated as an eye or eye and ear unit (as defined in subparagraph (B)) of a general acute care hospital which, on the date of the application described in clause (i), operates less than 20 percent of the beds that the hospital operated on October 1, 1987, and has sold or otherwise disposed of a substantial portion of the hospital’s other acute care operations,

    the cost proportion and ASC proportion in effect under subclauses (I) and (II) of paragraph (3)(B)(ii) for cost reporting periods beginning in fiscal year 1988 shall remain in effect for cost reporting periods beginning on or after October 1, 1988, and before January 1, 1995.

    ‘(B) For purposes of this subparagraph (A)(iii)(II), the term ‘eye or eye and ear unit’ means a physically separate or distinct unit containing separate surgical suites devoted solely to eye or eye and ear services.’.

    (b) EFFECTIVE DATE- The amendments made by subsection (a) shall apply to portions of cost reporting periods beginning on or after January 1, 1994.

SEC. 13533. REDUCTION IN PAYMENTS FOR INTRAOCULAR LENSES.

    Notwithstanding section 1833(i)(2)(A)(iii) of the Social Security Act, the amount of payment determined under such section for an intraocular lens inserted subsequent to or during cataract surgery in an ambulatory surgical center on or after January 1, 1994, and before January 1, 1999, shall be equal to $150.

Subpart D--Durable Medical Equipment

SEC. 13541. PAYMENT FOR PARENTERAL AND ENTERAL NUTRIENTS, SUPPLIES, AND EQUIPMENT DURING 1994 AND 1995.

    In determining the amount of payment under part B of title XVIII of the Social Security Act with respect to parenteral and enteral nutrients, supplies, and equipment during 1994 and 1995, the charges determined to be reasonable with respect to such nutrients, supplies, and equipment may not exceed the charges determined to be reasonable with respect to such nutrients, supplies, and equipment during 1993.

SEC. 13542. REVISIONS TO PAYMENT RULES FOR DURABLE MEDICAL EQUIPMENT.

    (a) BASING NATIONAL PAYMENT LIMITS ON MEDIAN OF LOCAL PAYMENT AMOUNTS-

      (1) INEXPENSIVE AND ROUTINELY PURCHASED ITEMS; ITEMS REQUIRING FREQUENT AND SUBSTANTIAL SERVICING- (A) Paragraphs (2)(C)(i)(II) and (3)(C)(i)(II) of section 1834(a) (42 U.S.C. 1395m(a)) are each amended--

        (i) by striking ‘1992’ the first place it appears and inserting ‘1992, 1993, and 1994’; and

        (ii) by striking ‘1992’ the second place it appears and inserting ‘the year’.

      (B) Paragraphs (2)(C)(ii) and (3)(C)(ii) of section 1834(a) (42 U.S.C. 1395m(a)) are each amended--

        (i) by striking ‘and’ at the end of subclause (I);

        (ii) by redesignating subclause (II) as subclause (IV); and

        (iii) by inserting after subclause (I) the following new subclauses:

            ‘(II) for 1992 and 1993, the amount determined under this clause for the preceding year increased by the covered item update for such subsequent year,

            ‘(III) for 1994, the local payment amount determined under clause (i) for such item or device for that year, except that the national limited payment amount may not exceed 100 percent of the median of all local payment amounts determined under such clause for such item for that year and may not be less than 85 percent of the median of all local payment amounts determined under such clause for such item or device for that year, and’.

      (2) MISCELLANEOUS DEVICES AND ITEMS- Section 1834(a)(8) (42 U.S.C. 1395m(a)(8)) is amended--

        (A) in subparagraph (A)(ii)(III), by striking ‘1992’ and inserting ‘1992, 1993, and 1994’; and

        (B) in subparagraph (B)--

          (i) by striking ‘and’ at the end of clause (i),

          (ii) by redesignating clause (ii) as (iv), and

          (iii) by inserting after clause (i) the following new clauses:

          ‘(ii) for 1992 and 1993, the amount determined under this subparagraph for the preceding year increased by the covered item update for such subsequent year;

          ‘(iii) for 1994, the local purchase price computed under subparagraph (A)(ii) for the item for the year, except that such national limited purchase price may not exceed 100 percent of the median of all local purchase prices computed for the item under such subparagraph for the year and may not be less than 85 percent of the median of all local purchase prices computed under such subparagraph for the item for the year; and’.

      (3) OXYGEN AND OXYGEN EQUIPMENT- Section 1834(a)(9) (42 U.S.C. 1395m(a)(9)) is amended--

        (A) in subparagraph (A)(ii)(II), by striking ‘1991 and 1992’ and inserting ‘1991, 1992, 1993, and 1994’; and

        (B) in subparagraph (B)--

          (i) by striking ‘and’ at the end of clause (i),

          (ii) by redesignating clause (ii) as (iv), and

          (iii) by inserting after clause (i) the following new clauses:

          ‘(ii) for 1992 and 1993, the amount determined under this subparagraph for the preceding year increased by the covered item update for such subsequent year;

          ‘(iii) for 1994, the local monthly payment rate computed under subparagraph (A)(ii) for the item for the year, except that such national limited monthly payment rate may not exceed 100 percent of the median of all local monthly payment rates computed for the item under such subparagraph for the year and may not be less than 85 percent of the median of all local monthly payment rates computed for the item under such subparagraph for the year; and’.

    (b) EFFECTIVE DATE- The amendments made by this section shall apply to items furnished on or after January 1, 1994.

SEC. 13543. TREATMENT OF NEBULIZERS, ASPIRATORS, AND CERTAIN VENTILATORS.

    (a) IN GENERAL- Section 1834(a)(3)(A) (42 U.S.C. 1395m(a)(3)(A)) is amended by striking ‘ventilators, aspirators, IPPB machines, and nebulizers’ and inserting ‘IPPB machines and ventilators, excluding ventilators that are either continuous airway pressure devices or intermittent assist devices with continuous airway pressure devices’.

    (b) PAYMENT FOR ACCESSORIES RELATING TO NEBULIZERS, ASPIRATORS, AND CERTAIN VENTILATORS- Section 1834(a)(2)(A) (42 U.S.C. 1395m(a)) is amended--

      (1) by striking ‘or’ at the end of clause (i),

      (2) by adding ‘or’ at the end of clause (ii), and

      (3) by inserting after clause (ii) the following new clause:

          ‘(iii) which is an accessory used in conjunction with a nebulizer, aspirator, or a ventilator excluded under paragraph (3)(A),’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to items furnished on or after January 1, 1994.

SEC. 13544. PAYMENT FOR OSTOMY SUPPLIES AND OTHER SUPPLIES.

    (a) OSTOMY SUPPLIES, TRACHEOSTOMY SUPPLIES, AND UROLOGICALS-

      (1) IN GENERAL- Section 1834(h)(1) (42 U.S.C. 1395m(h)(1)) is amended by adding at the end the following new subparagraph:

        ‘(E) EXCEPTION FOR CERTAIN ITEMS- Payment for ostomy supplies, tracheostomy supplies, and urologicals shall be made in accordance with subparagraphs (B) and (C) of section 1834(a)(2).’.

      (2) CONFORMING AMENDMENT- Section 1834(h)(1)(B) (42 U.S.C. 1395m(h)(1)(B)) is amended by striking ‘subparagraph (C),’ and inserting ‘subparagraphs (C) and (E),’.

      (3) EFFECTIVE DATE- The amendments made by this subsection shall apply to items furnished on or after January 1, 1994.

    (b) SURGICAL DRESSINGS-

      (1) IN GENERAL- Section 1834 (42 U.S.C. 1395m) is amended by adding at the end the following new subsection:

    ‘(i) PAYMENT FOR SURGICAL DRESSINGS-

      ‘(1) IN GENERAL- Payment under this subsection for surgical dressings (described in section 1861(s)(5)) shall be made in a lump sum amount for the purchase of the item in an amount equal to 80 percent of the lesser of--

        ‘(A) the actual charge for the item; or

        ‘(B) a payment amount determined in accordance with the methodology described in subparagraphs (B) and (C) of subsection (a)(2) (except that in applying such methodology, the national limited payment amount referred to in such subparagraphs shall be initially computed based on local payment amounts using average reasonable charges for the 12-month period ending December 31, 1992, increased by the covered item updates described in such subsection for 1993 and 1994).

      ‘(2) EXCEPTIONS- Paragraph (1) shall not apply to surgical dressings that are--

        ‘(A) furnished as an incident to a physician’s professional service; or

        ‘(B) furnished by a home health agency.’.

      (2) CONFORMING AMENDMENT- Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) is amended--

        (A) by striking ‘and’ before ‘(N)’;

        (B) with respect to the matter inserted by section 4155(b)(2)(B) of OBRA-1990--

          (i) by striking ‘(M)’ and inserting ‘, (O)’, and

          (ii) by transferring it and inserting it (as amended) immediately before the semicolon at the end; and

        (C) by inserting before the semicolon at the end the following: ‘, and (P) with respect to surgical dressings, the amounts paid shall be the amounts determined under section 1834(i)’.

      (3) EFFECTIVE DATE- The amendments made by this subsection shall apply to items furnished on or after January 1, 1994.

SEC. 13545. PAYMENTS FOR TENS DEVICES.

    (a) IN GENERAL- Section 1834(a)(1)(D) (42 U.S.C. 1395m(a)(1)(D)) is amended by striking ‘15 percent’ the second place it appears and inserting ‘45 percent’.

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to items furnished on or after January 1, 1994.

SEC. 13546. PAYMENTS FOR ORTHOTICS, PROSTHETICS, AND PROSTHETIC DEVICES.

    Section 1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A)) is amended--

      (1) in clause (i), by striking ‘and’;

      (2) in clause (ii), by striking ‘a subsequent year’ and inserting ‘1992 and 1993’; and

      (3) by adding at the end the following new clauses:

          ‘(iii) for 1994 and 1995, 0 percent, and

          ‘(iv) for a subsequent year, the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending with June of the previous year;’.

Subpart E--Other Provisions

SEC. 13551. PAYMENTS FOR CLINICAL DIAGNOSTIC LABORATORY TESTS.

    (a) UPDATE FREEZE- Section 1833(h)(2)(A)(ii) (42 U.S.C. 1395l(h)(2)(A)(ii)) is amended--

      (1) by striking ‘and’ at the end of subclause (II),

      (2) by striking the period at the end of subclause (III) and inserting ‘, and’, and

      (3) by adding at the end the following new subclause:

      ‘(IV) the annual adjustment in the fee schedules determined under clause (i) for each of the years 1994 and 1995 shall be 0 percent.’.

    (b) LOWER CAP- Section 1833(h)(4)(B) (42 U.S.C. 1395l(h)(4)(B)) is amended--

      (1) by striking ‘and’ at the end of clause (iii),

      (2) by striking clause (iv) and inserting the following:

      ‘(iv) after December 31, 1990, and before January 1, 1994, is equal to 88 percent of such median,

      ‘(v) after December 31, 1993, and before January 1, 1995, is equal to 84 percent of such median,

      ‘(vi) after December 31, 1994, and before January 1, 1996, is equal to 80 percent of such median, and

      ‘(vii) after December 31, 1995, is equal to 76 percent of such median.’.

SEC. 13552. EXTENSION OF ALZHEIMER’S DISEASE DEMONSTRATION PROJECTS.

    Section 9342 of OBRA-1986, as amended by section 4164(a)(2) of OBRA-1990, is amended--

      (1) in subsection (c)(1), by striking ‘4 years’ and inserting ‘5 years’; and

      (2) in subsection (f)--

        (A) by striking ‘$55,000,000’ and inserting ‘$58,000,000’, and

        (B) by striking ‘$3,000,000’ and inserting ‘$5,000,000’.

SEC. 13553. ORAL CANCER DRUGS.

    (a) NEW COVERAGE OF CERTAIN SELF-ADMINISTERED ANTICANCER DRUGS- Section 1861(s)(2) (42 U.S.C. 1395(s)(2)) is amended--

      (1) by striking ‘and’ at the end of subparagraph (O);

      (2) by adding ‘and’ at the end of subparagraph (P); and

      (3) by adding at the end the following new subparagraph:

      ‘(Q) an oral drug (which is approved by the Federal Food and Drug Administration) prescribed for use as an anticancer chemotherapeutic agent for a given indication, and containing an active ingredient (or ingredients), which is the same indication and active ingredient (or ingredients) as a drug which the carrier determines would be covered pursuant to subparagraph (A) or (B) if the drug could not be self-administered;’.

    (b) UNIFORM COVERAGE OF ‘OFF-LABEL’ ANTICANCER DRUGS- Section 1861(t) (42 U.S.C. 1395x(t)) is amended--

      (1) by inserting ‘(1)’ after ‘(t)’;

      (2) by striking ‘(m)(5) of this section’ and inserting ‘(m)(5) and paragraph (2)’; and

      (3) by adding at the end the following new paragraph:

    ‘(2)(A) For purposes of paragraph (1), the term ‘drugs’ also includes any drugs or biologicals used in an anticancer chemotherapeutic regimen for a medically accepted indication (as described in subparagraph (B)).

    ‘(B) In subparagraph (A), the term ‘medically accepted indication’, with respect to the use of a drug, includes any use which has been approved by the Food and Drug Administration for the drug, and includes another use of the drug if--

      ‘(i) the drug has been approved by the Food and Drug Administration; and

      ‘(ii)(I) such use is supported by one or more citations which are included (or approved for inclusion) in one or more of the following compendia: the American Hospital Formulary Service-Drug Information, the American Medical Association Drug Evaluations, the United States Pharmacopoeia-Drug Information, and other authoritative compendia as identified by the Secretary, unless the Secretary has determined that the use is not medically appropriate or the use is identified as not indicated in one or more such compendia, or

      ‘(II) the carrier involved determines, based upon guidance provided by the Secretary to carriers for determining accepted uses of drugs, that such use is medically accepted based on supportive clinical evidence in peer reviewed medical literature appearing in publications which have been identified for purposes of this subclause by the Secretary.

    The Secretary may revise the list of compendia in clause (ii)(I) as is appropriate for identifying medically accepted indications for drugs.’.

    (c) EFFECTIVE DATE- The amendments made by subsections (a) and (b) shall apply to items furnished on or after January 1, 1994.

SEC. 13554. CLARIFICATION OF COVERAGE OF CERTIFIED NURSE-MIDWIFE SERVICES PERFORMED OUTSIDE THE MATERNITY CYCLE.

    (a) IN GENERAL- Section 1861(gg)(2) (42 U.S.C. 1395x(gg)(2)) is amended by striking ‘, and performs services’ and all that follows and inserting a period.

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to services furnished on or after January 1, 1994.

SEC. 13555. INCREASE IN ANNUAL CAP ON AMOUNT OF MEDICARE PAYMENT FOR OUTPATIENT PHYSICAL THERAPY AND OCCUPATIONAL THERAPY SERVICES.

    (a) INCREASE IN ANNUAL LIMITATION- Section 1833(g) (42 U.S.C. 1395l(g)) is amended by striking ‘$750’ and inserting ‘$900’ each place it appears.

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to services furnished on or after January 1, 1994.

SEC. 13556. RURAL HEALTH CLINICS AND FEDERALLY QUALIFIED HEALTH CENTERS.

    (a) IN GENERAL- Paragraph (4) of section 1861(aa) (42 U.S.C. 1395x(aa)) is amended--

      (1) by striking ‘or’ at the end of subparagraph (B);

      (2) by striking the period at the end of subparagraph (C) and inserting ‘; or’; and

      (3) by adding at the end the following new subparagraph:

      ‘(D) is an outpatient health program or facility operated by a tribe or tribal organization under the Indian Self-Determination Act or by an urban Indian organization receiving funds under title V of the Indian Health Care Improvement Act.’.

    (b) EFFECTIVE DATE- The amendments made by subsection (a) shall take effect as if included in the enactment of section 4161(a)(2)(C) of OBRA-1990.

SEC. 13557. EXTENSION OF MUNICIPAL HEALTH SERVICE DEMONSTRATION PROJECTS.

    Section 9215 of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended by section 6135 of OBRA-1989, is amended--

      (1) by striking ‘December 31, 1993’ and inserting ‘December 31, 1997’, and

      (2) in the second sentence, by inserting after ‘beneficiary costs,’ the following: ‘costs to the medicaid program and other payers, access to care, outcomes, beneficiary satisfaction, utilization differences among the different populations served by the projects,’.

PART III--PROVISIONS RELATING TO PARTS A AND B

SEC. 13561. MEDICARE AS SECONDARY PAYER.

    (a) EXTENSION OF AND MODIFICATIONS TO DATA MATCH PROGRAM-

      (1) Section 1862(b)(5)(C)(iii) (42 U.S.C. 1395y(b)(5)(C)(iii)) is amended by striking ‘1995’ and inserting ‘1998’.

      (2) Section 6103(l)(12) of the Internal Revenue Code of 1986 is amended--

        (A) in subparagraph (B)(i), by inserting ‘, above an amount (if any) specified by the Secretary of Health and Human Services,’ after ‘section 3401(a))’;

        (B) in subparagraph (B)(ii), in the matter preceding subclause (I) by inserting ‘, above an amount (if any) specified by the Secretary of Health and Human Services,’ after ‘wages’; and

        (C) in subparagraph (F)--

          (i) in clause (i), by striking ‘1995’ and inserting ‘1998’,

          (ii) in clause (ii)(I), by striking ‘1994’ and inserting ‘1997’, and

          (iii) in clause (ii)(II), by striking ‘1995’ and inserting ‘1998’.

    (b) EXTENSION OF MEDICARE SECONDARY PAYER TO DISABLED BENEFICIARIES- Section 1862(b)(1)(B)(iii) (42 U.S.C. 1395y(b)(1)(B)(iii)) is amended by striking ‘1995’ and inserting ‘1998’.

    (c) EXTENSION OF 18-MONTH RULE FOR ESRD BENEFICIARIES- Section 1862(b)(1) (42 U.S.C. 1395y(b)(1)) is amended--

      (1) in the second sentence of subparagraph (C), by striking ‘on or before January 1, 1996’ and inserting ‘before October 1, 1998’;

      (2) in each of subparagraphs (A)(iv) and (B)(ii)--

        (A) by striking ‘Clause (i) shall not apply’ and inserting ‘Subparagraph (C) shall apply instead of clause (i)’, and

        (B) by inserting ‘(without regard to entitlement under section 226)’ after ‘individual is, or’; and

      (3) in subparagraph (C), by striking ‘benefits under this title solely by reason of’ and inserting ‘or eligible for benefits under this title under’ each place it appears.

    (d) APPLICATION OF AGGREGATION RULES-

      (1) IN GENERAL- Section 1862(b)(1) (42 U.S.C. 1395y(b)(1)) is amended by adding at the end the following new subparagraph:

        ‘(E) GENERAL PROVISIONS- For purposes of this subsection:

          ‘(i) AGGREGATION RULES-

            ‘(I) All employers treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as a single employer.

            ‘(II) All employees of the members of an affiliated service group (as defined in section 414(m) of such Code) shall be treated as employed by a single employer.