H.R. 4849 (111th): Small Business and Infrastructure Jobs Tax Act of 2010

111th Congress, 2009–2010. Text as of Mar 26, 2010 (Referred to Senate Committee).

Status & Summary | PDF | Source: GPO

IIB

111th CONGRESS

2d Session

H. R. 4849

IN THE SENATE OF THE UNITED STATES

March 25, 2010

Received

March 26 (legislative day, March 25), 2010

Read twice and referred to the Committee on Finance

AN ACT

To amend the Internal Revenue Code of 1986 to provide tax incentives for small business job creation, extend the Build America Bonds program, provide other infrastructure job creation tax incentives, and for other purposes.

1.

Short title; etc

(a)

Short title

This Act may be cited as the Small Business and Infrastructure Jobs Tax Act of 2010.

(b)

Amendment of 1986 Code

Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

(c)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title; etc.

Title I—Small business tax incentives

Subtitle A—General provisions

Sec. 101. Temporary exclusion of 100 percent of gain on certain small business stock.

Subtitle B—Limitations and reporting on certain penalties

Sec. 111. Limitation on penalty for failure to disclose certain information.

Sec. 112. Annual reports on penalties and certain other enforcement actions.

Subtitle C—Other provisions

Sec. 121. Nonrecourse small business investment company loans from the Small Business Administration treated as amounts at risk.

Sec. 122. Increase in amount allowed as deduction for start-up expenditures.

Title II—Infrastructure incentives

Sec. 201. Extension of Build America Bonds.

Sec. 202. Exempt-facility bonds for sewage and water supply facilities.

Sec. 203. Extension of exemption from alternative minimum tax treatment for certain tax-exempt bonds.

Sec. 204. Elective payments in lieu of low income housing credits.

Sec. 205. Extension and additional allocations of recovery zone bond authority.

Sec. 206. Allowance of new markets tax credit against alternative minimum tax.

Title III—Revenue provisions

Sec. 301. Limitation on treaty benefits for certain deductible payments.

Sec. 302. Treatment of securities of a controlled corporation exchanged for assets in certain reorganizations.

Sec. 303. Repeal of special rules for interest and dividends received from persons meeting the 80-percent foreign business requirements.

Sec. 304. Information reporting for rental property expense payments.

Sec. 305. Application of levy to payments to Federal vendors relating to property.

Sec. 306. Application of continuous levy to tax liabilities of certain Federal contractors.

Sec. 307. Required minimum 10-year term, etc., for grantor retained annuity trusts.

Sec. 308. Increase in information return penalties.

Sec. 309. Crude tall oil ineligible for cellulosic biofuel producer credit.

Sec. 310. Time for payment of corporate estimated taxes.

Title IV—Extension of Emergency Contingency Fund for State Temporary Assistance for Needy Families Programs

Sec. 401. One-year extension of the Emergency Contingency Fund for State Temporary Assistance for Needy Families Programs.

I

Small business tax incentives

A

General provisions

101.

Temporary exclusion of 100 percent of gain on certain small business stock

(a)

In general

Subsection (a) of section 1202 is amended by adding at the end the following new paragraph:

(4)

Special 100 percent exclusion

In the case of qualified small business stock acquired after March 15, 2010, and before January 1, 2012—

(A)

paragraph (1) shall be applied by substituting 100 percent for 50 percent,

(B)

paragraph (2) shall not apply, and

(C)

paragraph (7) of section 57(a) shall not apply.

.

(b)

Conforming amendments

Paragraph (3) of section 1202(a) is amended—

(1)

by striking after the date of the enactment of this paragraph and before January 1, 2011 and inserting after February 17, 2009, and before March 16, 2010; and

(2)

by striking Special rules for 2009 and 2010 in the heading and inserting Special 75 percent exclusion.

(c)

Effective date

The amendments made by this section shall apply to stock acquired after March 15, 2010.

B

Limitations and reporting on certain penalties

111.

Limitation on penalty for failure to disclose certain information

(a)

In general

Subsection (b) of section 6707A is amended to read as follows:

(b)

Amount of penalty

(1)

In general

Except as otherwise provided in this subsection, the amount of the penalty under subsection (a) with respect to any reportable transaction shall be 75 percent of the decrease in tax shown on the return as a result of such transaction (or which would have resulted from such transaction if such transaction were respected for Federal tax purposes).

(2)

Maximum penalty

The amount of the penalty under subsection (a) with respect to any reportable transaction for any taxable year shall not exceed—

(A)

in the case of a listed transaction, $200,000 ($100,000 in the case of a natural person), or

(B)

in the case of any other reportable transaction, $50,000 ($10,000 in the case of a natural person).

(3)

Minimum penalty

The amount of the penalty under subsection (a) with respect to any transaction for any taxable year shall not be less than $10,000 ($5,000 in the case of a natural person).

.

(b)

Effective date

The amendment made by this section shall apply to penalties assessed after December 31, 2006.

112.

Annual reports on penalties and certain other enforcement actions

(a)

In general

The Commissioner of Internal Revenue, in consultation with the Secretary of the Treasury, shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate an annual report on the penalties assessed by the Internal Revenue Service during the preceding year under each of the following provisions of the Internal Revenue Code of 1986:

(1)

Section 6662A (relating to accuracy-related penalty on understatements with respect to reportable transactions).

(2)

Section 6700(a) (relating to promoting abusive tax shelters).

(3)

Section 6707 (relating to failure to furnish information regarding reportable transactions).

(4)

Section 6707A (relating to failure to include reportable transaction information with return).

(5)

Section 6708 (relating to failure to maintain lists of advisees with respect to reportable transactions).

(b)

Additional information

The report required under subsection (a) shall also include information on the following with respect to each year:

(1)

Any action taken under section 330(b) of title 31, United States Code, with respect to any reportable transaction (as defined in section 6707A(c) of the Internal Revenue Code of 1986).

(2)

Any extension of the time for assessment of tax enforced, or assessment of any amount under such an extension, under paragraph (10) of section 6501(c) of the Internal Revenue Code of 1986.

(c)

Date of report

The first report required under subsection (a) shall be submitted not later than December 31, 2010.

C

Other provisions

121.

Nonrecourse small business investment company loans from the Small Business Administration treated as amounts at risk

(a)

In general

Subparagraph (B) of section 465(b)(6) is amended to read as follows:

(B)

Qualified nonrecourse financing

For purposes of this paragraph—

(i)

In general

The term qualified nonrecourse financing means any financing—

(I)

which is qualified real property financing or qualified SBIC financing,

(II)

except to the extent provided in regulations, with respect to which no person is personally liable for repayment, and

(III)

which is not convertible debt.

(ii)

Qualified real property financing

The term qualified real property financing means any financing which—

(I)

is borrowed by the taxpayer with respect to the activity of holding real property,

(II)

is secured by real property used in such activity, and

(III)

is borrowed by the taxpayer from a qualified person or represents a loan from any Federal, State, or local government or instrumentality thereof, or is guaranteed by any Federal, State, or local government.

(iii)

Qualified SBIC financing

The term qualified SBIC financing means any financing which—

(I)

is borrowed by a small business investment company (within the meaning of section 301 of the Small Business Investment Act of 1958), and

(II)

is borrowed from, or guaranteed by, the Small Business Administration under the authority of section 303(b) of such Act.

.

(b)

Conforming amendments

Subparagraph (A) of section 465(b)(6) is amended—

(1)

by striking in the case of an activity of holding real property,; and

(2)

by striking which is secured by real property used in such activity.

(c)

Effective date

The amendments made by this section shall apply to loans and guarantees made after the date of the enactment of this Act.

122.

Increase in amount allowed as deduction for start-up expenditures

(a)

In general

Subsection (b) of section 195 is amended by adding at the end the following new paragraph:

(3)

Increased limitation for taxable years beginning in 2010 or 2011

In the case of any taxable year beginning in 2010 or 2011, paragraph (1)(A)(ii) shall be applied—

(A)

by substituting $20,000 for $5,000, and

(B)

by substituting $75,000 for $50,000.

.

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2009.

II

Infrastructure incentives

201.

Extension of Build America Bonds

(a)

In general

Subparagraph (B) of section 54AA(d)(1) is amended by striking January 1, 2011 and inserting April 1, 2013.

(b)

Extension of payments to issuers

(1)

In general

Subsection (a) of section 6431 is amended by striking January 1, 2011 and inserting April 1, 2013.

(2)

Conforming amendments

Subsection (g) of section 54AA is amended—

(A)

by striking January 1, 2011 and inserting April 1, 2013; and

(B)

by striking qualified bonds issued before 2011 in the heading and inserting certain qualified bonds.

(c)

Reduction in percentage of payments to issuers

Subsection (b) of section 6431 is amended—

(1)

by striking The Secretary and inserting the following:

(1)

In general

The Secretary

;

(2)

by striking 35 percent and inserting the applicable percentage; and

(3)

by adding at the end the following new paragraph:

(2)

Applicable percentage

For purposes of this subsection, the term applicable percentage means the percentage determined in accordance with the following table:

In the case of a qualified bond issued during calendar year:The applicable percentage is:
2009 or 201035 percent
201133 percent
201231 percent
201330 percent

.

(d)

Current refundings permitted

Subsection (g) of section 54AA is amended by adding at the end the following new paragraph:

(3)

Treatment of current refunding bonds

(A)

In general

For purposes of this subsection, the term qualified build America bond includes any bond (or series of bonds) issued to refund a qualified build America bond if—

(i)

the average maturity date of the issue of which the refunding bond is a part is not later than the average maturity date of the bonds to be refunded by such issue,

(ii)

the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and

(iii)

the refunded bond is redeemed not later than 90 days after the date of the issuance of the refunding bond.

(B)

Applicable percentage

In the case of a refunding bond referred to in subparagraph (A), the applicable percentage with respect to such bond under section 6431(b) shall be the lowest percentage specified in paragraph (2) of such section.

(C)

Determination of average maturity

For purposes of subparagraph (A)(i), average maturity shall be determined in accordance with section 147(b)(2)(A).

.

(e)

Clarification related to levees and flood control projects

Subparagraph (A) of section 54AA(g)(2) is amended by inserting (including capital expenditures for levees and other flood control projects) after capital expenditures.

202.

Exempt-facility bonds for sewage and water supply facilities

(a)

Bonds for water and sewage facilities exempt from volume cap on private activity bonds

(1)

In general

Paragraph (3) of section 146(g) is amended by inserting (4), (5), after (2),.

(2)

Conforming amendment

Paragraphs (2) and (3)(B) of section 146(k) are both amended by striking (4), (5), (6), and inserting (6).

(b)

Tax-exempt issuance by Indian tribal governments

(1)

In general

Subsection (c) of section 7871 is amended by adding at the end the following new paragraph:

(4)

Exception for bonds for water and sewage facilities

Paragraph (2) shall not apply to an exempt facility bond 95 percent or more of the net proceeds (as defined in section 150(a)(3)) of which are to be used to provide facilities described in paragraph (4) or (5) of section 142(a).

.

(2)

Conforming amendment

Paragraph (2) of section 7871(c) is amended by striking paragraph (3) and inserting paragraphs (3) and (4).

(c)

Effective date

The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.

203.

Extension of exemption from alternative minimum tax treatment for certain tax-exempt bonds

(a)

In general

Clause (vi) of section 57(a)(5)(C) is amended—

(1)

by striking January 1, 2011 in subclause (I) and inserting January 1, 2012; and

(2)

by striking and 2010 in the heading and inserting , 2010, and 2011.

(b)

Adjusted current earnings

Clause (iv) of section 56(g)(4)(B) is amended—

(1)

by striking January 1, 2011 in subclause (I) and inserting January 1, 2012; and

(2)

by striking and 2010 in the heading and inserting , 2010, and 2011.

(c)

Effective date

The amendments made by this section shall apply to obligations issued after December 31, 2010.

204.

Elective payments in lieu of low income housing credits

(a)

In general

Chapter 65 (relating to abatements, credits, and refunds) is amended by adding at the end the following new subchapter:

C

Direct payment provisions

Sec. 6451. Elective payments in lieu of low income housing credit for bond-financed buildings.

6451.

Elective payments in lieu of low income housing credit for bond-financed buildings

(a)

In general

Any person making an election under this section with respect to any qualified bond-financed low-income building originally placed in service by such person during the taxable year shall be treated as making a payment, against the tax imposed by subtitle A for the taxable year, equal to the direct payment amount with respect to such building. Such payment shall be treated as made on the later of the due date of the return of such tax or the date on which such return is filed.

(b)

Qualified bond-financed low-income building

For purposes of this section, the term qualified bond-financed low-income building means any qualified low-income building to which paragraph (1) of section 42(h) does not apply by reason of paragraph (4)(B) of such section.

(c)

Direct payment amount

For purposes of this section, the term direct payment amount means, with respect to any building, 25.5 percent of the qualified basis of such building.

(d)

Special rules for certain non-taxpayers

(1)

Denial of payment

Subsection (a) shall not apply with respect to any building placed in service by—

(A)

any governmental entity, or

(B)

any organization described in section 501(c) or 401(a) and exempt from tax under section 501(a).

(2)

Special rules for partnerships and S corporations

In the case of property originally placed in service by a partnership or an S corporation—

(A)

the election under subsection (a) may be made only by such partnership or S corporation,

(B)

such partnership or S corporation shall be treated as making the payment referred to in subsection (a) only to the extent of the proportionate share of such partnership or S corporation as is owned by persons who would be treated as making such payment if the building were placed in service by such persons, and

(C)

the return required to be made by such partnership or S corporation under section 6031 or 6037 (as the case may be) shall be treated as a return of tax for purposes of subsection (a).

For purposes of subparagraph (B), rules similar to the rules of section 168(h)(6) (other than subparagraph (F) thereof) shall apply.
(e)

Coordination with low income housing credit

In the case of any property with respect to which an election is made under this section, no credit shall be determined under section 42 with respect to such building for any taxable year.

(f)

Other definitions and special rules

For purposes of this section—

(1)

Other definitions

Terms used in this section which are also used in section 42 shall have the same meaning for purposes of this section as when used in such section.

(2)

Application of recapture rules, etc

Except as otherwise provided by the Secretary, rules similar to the rules of section 42 shall apply, including the recapture rules of section 42(j).

(3)

Provision of information

A person shall not be treated as having elected the application of this section unless the taxpayer provides such information as the Secretary may require for purposes of verifying the proper amount to be treated as a payment under subsection (a) and evaluating the effectiveness of this section.

(4)

Exclusion from gross income

Any credit or refund allowed or made by reason of this section shall not be includible in gross income or alternative minimum taxable income.

(g)

Termination

Subsection (a) shall not apply with respect to any building placed in service during a taxable year beginning after December 31, 2010.

.

(b)

Conforming amendments

(1)

Subparagraph (A) of section 6211(b)(4) is amended by inserting and subchapter C of chapter 65 (including any payment treated as made under such subchapter) after 6431.

(2)

Subparagraph (B) of section 6425(c)(1) is amended—

(A)

by striking the credits and inserting

the sum of—

(i)

the credits

;

(B)

by striking the period at the end of clause (i) thereof (as amended by this paragraph) and inserting , plus; and

(C)

by adding at the end the following new clause:

(ii)

the credits allowed (and payments treated as made) under subchapter C.

.

(3)

Paragraph (3) of section 6654(f) is amended—

(A)

by striking the credits and inserting

the sum of—

(A)

the credits

;

(B)

by striking the period at the end of subparagraph (A) thereof (as amended by this paragraph) and inserting , and; and

(C)

by adding at the end the following new subparagraph:

(B)

the credits allowed (and payments treated as made) under subchapter C of chapter 65.

.

(4)

Subparagraph (B) of section 6655(g)(1) is amended—

(A)

by striking the credits and inserting

the sum of—

(i)

the credits

;

(B)

by striking the period at the end of clause (i) thereof (as amended by this paragraph) and inserting , plus; and

(C)

by adding at the end the following new clause:

(ii)

the credits allowed (and payments treated as made) under subchapter C of chapter 65.

.

(5)

Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting , or from the provisions of subchapter C of chapter 65 of such Code before the period at the end.

(6)

The table of subchapters for chapter 65 is amended by adding at the end the following new item:

Subchapter C. Direct payment provisions

(c)

Effective date

The amendments made by this section shall apply to buildings placed in service after the date of the enactment of this Act.

205.

Extension and additional allocations of recovery zone bond authority

(a)

Extension of recovery zone bond authority

Section 1400U–2(b)(1) and section 1400U–3(b)(1)(B) are each amended by striking January 1, 2011 and inserting January 1, 2012.

(b)

Additional allocations of recovery zone bond authority based on unemployment

Section 1400U–1 is amended by adding at the end the following new subsection:

(c)

Allocation of 2010 recovery zone bond limitations based on unemployment

(1)

In general

The Secretary shall allocate the 2010 national recovery zone economic development bond limitation and the 2010 national recovery zone facility bond limitation among the States in the proportion that each such State’s 2009 unemployment number bears to the aggregate of the 2009 unemployment numbers for all of the States.

(2)

Minimum allocation

The Secretary shall adjust the allocations under paragraph (1) for each State to the extent necessary to ensure that no State (prior to any reduction under paragraph (3)) receives less than 0.9 percent of the 2010 national recovery zone economic development bond limitation and 0.9 percent of the 2010 national recovery zone facility bond limitation.

(3)

Allocations by States

(A)

In general

Each State with respect to which an allocation is made under paragraph (1) shall reallocate such allocation among the counties and large municipalities (as defined in subsection (a)(3)(B)) in such State in the proportion that each such county’s or municipality’s 2009 unemployment number bears to the aggregate of the 2009 unemployment numbers for all the counties and large municipalities (as so defined) in such State.

(B)

2010 allocation reduced by amount of previous allocation

Each State shall reduce (but not below zero)—

(i)

the amount of the 2010 national recovery zone economic development bond limitation allocated to each county or large municipality (as so defined) in such State by the amount of the national recovery zone economic development bond limitation allocated to such county or large municipality under subsection (a)(3)(A) (determined without regard to any waiver thereof), and

(ii)

the amount of the 2010 national recovery zone facility bond limitation allocated to each county or large municipality (as so defined) in such State by the amount of the national recovery zone facility bond limitation allocated to such county or large municipality under subsection (a)(3)(A) (determined without regard to any waiver thereof).

(C)

Waiver of suballocations

A county or municipality may waive any portion of an allocation made under this paragraph. A State may by law treat a county or municipality as waiving any portion of an allocation made under this paragraph if there is a reasonable expectation that such allocation would not otherwise be used.

(D)

Special rule for a municipality in a county

In the case of any large municipality any portion of which is in a county, such portion shall be treated as part of such municipality and not part of such county.

(4)

2009 unemployment number

For purposes of this subsection, the term 2009 unemployment number means, with respect to any State, county or municipality, the number of individuals in such State, county, or municipality who were determined to be unemployed by the Bureau of Labor Statistics for December 2009.

(5)

2010 national limitations

(A)

Recovery zone economic development bonds

The 2010 national recovery zone economic development bond limitation is $10,000,000,000. Any allocation of such limitation under this subsection shall be treated for purposes of section 1400U–2 in the same manner as an allocation of national recovery zone economic development bond limitation.

(B)

Recovery zone facility bonds

The 2010 national recovery zone facility bond limitation is $15,000,000,000. Any allocation of such limitation under this subsection shall be treated for purposes of section 1400U–3 in the same manner as an allocation of national recovery zone facility bond limitation.

.

(c)

Authority of State to waive certain 2009 allocations

Subparagraph (A) of section 1400U–1(a)(3) is amended by adding at the end the following: A State may by law treat a county or municipality as waiving any portion of an allocation made under this subparagraph if there is a reasonable expectation that such allocation would not otherwise be used..

206.

Allowance of new markets tax credit against alternative minimum tax

(a)

In general

Subparagraph (B) of section 38(c)(4) is amended by redesignating clauses (v) through (viii) as clauses (vi) through (ix), respectively, and by inserting after clause (iv) the following new clause:

(v)

the credit determined under section 45D, but only with respect to credits determined with respect to qualified equity investments (as defined in section 45D(b)) initially made before January 1, 2012,

.

(b)

Effective date

The amendments made by this section shall apply to qualified equity investments (as defined in section 45D(b) of the Internal Revenue Code of 1986) initially made after March 15, 2010.

III

Revenue provisions

301.

Limitation on treaty benefits for certain deductible payments

(a)

In general

Section 894 (relating to income affected by treaty) is amended by adding at the end the following new subsection:

(d)

Limitation on treaty benefits for certain deductible payments

(1)

In general

In the case of any deductible related-party payment, any withholding tax imposed under chapter 3 (and any tax imposed under subpart A or B of this part) with respect to such payment may not be reduced under any treaty of the United States unless any such withholding tax would be reduced under a treaty of the United States if such payment were made directly to the foreign parent corporation.

(2)

Deductible related-party payment

For purposes of this subsection, the term deductible related-party payment means any payment made, directly or indirectly, by any person to any other person if the payment is allowable as a deduction under this chapter and both persons are members of the same foreign controlled group of entities.

(3)

Foreign controlled group of entities

For purposes of this subsection—

(A)

In general

The term foreign controlled group of entities means a controlled group of entities the common parent of which is a foreign corporation.

(B)

Controlled group of entities

The term controlled group of entities means a 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 therein, and

(ii)

the determination shall be made without regard to subsections (a)(4) and (b)(2) of section 1563.

A partnership or any other entity (other than a corporation) shall be treated as a member of a controlled group of entities if such entity is controlled (within the meaning of section 954(d)(3)) by members of such group (including any entity treated as a member of such group by reason of this sentence).
(4)

Foreign parent corporation

For purposes of this subsection, the term foreign parent corporation means, with respect to any deductible related-party payment, the common parent of the foreign controlled group of entities referred to in paragraph (3)(A).

(5)

Regulations

The Secretary may prescribe such regulations or other guidance as are necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance which provide for—

(A)

the treatment of two or more persons as members of a foreign controlled group of entities if such persons would be the common parent of such group if treated as one corporation, and

(B)

the treatment of any member of a foreign controlled group of entities as the common parent of such group if such treatment is appropriate taking into account the economic relationships among such entities.

.

(b)

Effective date

The amendment made by this section shall apply to payments made after the date of the enactment of this Act.

302.

Treatment of securities of a controlled corporation exchanged for assets in certain reorganizations

(a)

In general

Section 361 (relating to nonrecognition of gain or loss to corporations; treatment of distributions) is amended by adding at the end the following new subsection:

(d)

Special rules for transactions involving section 355 distributions

In the case of a reorganization described in section 368(a)(1)(D) with respect to which stock or securities of the corporation to which the assets are transferred are distributed in a transaction which qualifies under section 355—

(1)

this section shall be applied by substituting stock other than nonqualified preferred stock (as defined in section 351(g)(2)) for stock or securities in subsections (a) and (b)(1), and

(2)

the first sentence of subsection (b)(3) shall apply only to the extent that the sum of the money and the fair market value of the other property transferred to such creditors does not exceed the adjusted bases of such assets transferred (reduced by the amount of the liabilities assumed (within the meaning of section 357(c))).

.

(b)

Conforming amendment

Paragraph (3) of section 361(b) is amended by striking the last sentence.

(c)

Effective date

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to exchanges after the date of the enactment of this Act.

(2)

Transition rule

The amendments made by this section shall not apply to any exchange pursuant to a transaction which is—

(A)

made pursuant to an agreement which was binding on March 15, 2010, and at all times thereafter;

(B)

described in a ruling request submitted to the Internal Revenue Service on or before such date; or

(C)

described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission.

303.

Repeal of special rules for interest and dividends received from persons meeting the 80-percent foreign business requirements

(a)

Repeal of special rule treating interest as United States source

Paragraph (1) of section 861(a) is amended by striking subparagraph (A) and by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively.

(b)

Repeal of exception to tax on dividends received by nonresident aliens

Paragraph (2) of section 871(i) is amended by striking subparagraph (B) and by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively.

(c)

Conforming amendments

(1)

Section 861 is amended by striking subsection (c) and by redesignating subsections (d), (e), and (f) as subsections (c), (d), and (e), respectively.

(2)

Paragraph (9) of section 904(h) is amended to read as follows:

(9)

Treatment of certain domestic corporations

In the case of any dividend treated as not from sources with the United States under section 861(a)(2)(A), the corporation paying such dividend shall be treated for purposes of this subsection as a United States-owned foreign corporation.

.

(3)

Subsection (c) of section 2104 is amended in the last sentence by striking or to a debt obligation of a domestic corporation and all that follows and inserting a period.

(d)

Effective date

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2010.

(2)

Grandfather rule for outstanding debt obligations

(A)

In general

The amendments made by this section shall not apply to payments of interest on obligations issued before the date of the enactment of this Act.

(B)

Exception for related party debt

Subparagraph (A) shall not apply to any interest which is payable to a related person (determined under rules similar to the rules of section 954(d)(3)).

(C)

Significant modifications treated as new issues

For purposes of subparagraph (A), a significant modification of the terms of any obligation (including any extension of the term of such obligation) shall be treated as a new issue.

304.

Information reporting for rental property expense payments

(a)

In general

Section 6041 is amended by adding at the end the following new subsection:

(h)

Treatment of rental property expense payments

(1)

In general

For purposes of subsection (a), a person receiving rental income from real estate (other than a qualified residence) shall be considered to be engaged in a trade or business of renting property.

(2)

Qualified residence

For purposes of paragraph (1), the term qualified residence means—

(A)

the principal residence (within the meaning of section 121) of the taxpayer, and

(B)

1 other residence of the taxpayer which is selected by the taxpayer for purposes of this subsection for the taxable year and which is used by the taxpayer as a residence (within the meaning of section 280A(d)(1)).

.

(b)

Effective date

The amendment made by this section shall apply to payments made after December 31, 2010.

305.

Application of levy to payments to Federal vendors relating to property

(a)

In general

Section 6331(h)(3) is amended by striking goods or services and inserting property, goods, or services.

(b)

Effective date

The amendment made by this section shall apply to levies approved after the date of the enactment of this Act.

306.

Application of continuous levy to tax liabilities of certain Federal contractors

(a)

In general

Subsection (f) of section 6330 is amended by striking or at the end of paragraph (2), by inserting or at the end of paragraph (3), and by inserting after paragraph (3) the following new paragraph:

(4)

the Secretary has served a Federal contractor levy,

.

(b)

Federal contractor levy

Subsection (h) of section 6330 is amended—

(1)

by striking all that precedes any levy in connection with the collection and inserting the following:

(h)

Definitions related to exceptions

For purposes of subsection (f)—

(1)

Disqualified employment tax levy

A disqualified employment tax levy is

; and

(2)

by adding at the end the following new paragraph:

(2)

Federal contractor levy

A Federal contractor levy is any levy if the person whose property is subject to the levy (or any predecessor thereof) is a Federal contractor.

.

(c)

Conforming amendment

The heading of subsection (f) of section 6330 is amended by striking Jeopardy and State refund collection and inserting Exceptions.

(d)

Effective date

The amendments made by this section shall apply to levies issued after December 31, 2010.

307.

Required minimum 10-year term, etc., for grantor retained annuity trusts

(a)

In general

Subsection (b) of section 2702 is amended—

(1)

by redesignating paragraphs (1), (2) and (3) as subparagraphs (A), (B), and (C), respectively, and by moving such subparagraphs (as so redesignated) 2 ems to the right;

(2)

by striking For purposes of and inserting the following:

(1)

In general

For purposes of

;

(3)

by striking paragraph (1) or (2) in paragraph (1)(C) (as so redesignated) and inserting subparagraph (A) or (B); and

(4)

by adding at the end the following new paragraph:

(2)

Additional requirements with respect to grantor retained annuities

For purposes of subsection (a), in the case of an interest described in paragraph (1)(A) (determined without regard to this paragraph) which is retained by the transferor, such interest shall be treated as described in such paragraph only if—

(A)

the right to receive the fixed amounts referred to in such paragraph is for a term of not less than 10 years,

(B)

such fixed amounts, when determined on an annual basis, do not decrease relative to any prior year during the first 10 years of the term referred to in subparagraph (A), and

(C)

the remainder interest has a value greater than zero determined as of the time of the transfer.

.

(b)

Effective date

The amendments made by this section shall apply to transfers made after the date of the enactment of this Act.

308.

Increase in information return penalties

(a)

Failure to file correct information returns

(1)

In general

Subsections (a)(1), (b)(1)(A), and (b)(2)(A) of section 6721 are each amended by striking $50 and inserting $100.

(2)

Aggregate annual limitation

Subsections (a)(1), (d)(1)(A), and (e)(3)(A) of section 6721 are each amended by striking $250,000 and inserting $1,500,000.

(b)

Reduction where correction within 30 days

(1)

In general

Subparagraph (A) of section 6721(b)(1) is amended by striking $15 and inserting $30.

(2)

Aggregate annual limitation

Subsections (b)(1)(B) and (d)(1)(B) of section 6721 are each amended by striking $75,000 and inserting $250,000.

(c)

Reduction where correction on or before August 1

(1)

In general

Subparagraph (A) of section 6721(b)(2) is amended by striking $30 and inserting $60.

(2)

Aggregate annual limitation

Subsections (b)(2)(B) and (d)(1)(C) of section 6721 are each amended by striking $150,000 and inserting $500,000.

(d)

Aggregate annual limitations for persons with gross receipts of not more than $5,000,000

Paragraph (1) of section 6721(d) is amended—

(1)

by striking $100,000 in subparagraph (A) and inserting $500,000;

(2)

by striking $25,000 in subparagraph (B) and inserting $75,000; and

(3)

by striking $50,000 in subparagraph (C) and inserting $200,000.

(e)

Penalty in case of intentional disregard

Paragraph (2) of section 6721(e) is amended by striking $100 and inserting $250.

(f)

Adjustment for inflation

Section 6721 is amended by adding at the end the following new subsection:

(f)

Adjustment for inflation

(1)

In general

For each fifth calendar year beginning after 2012, each of the dollar amounts under subsections (a), (b), (d) (other than paragraph (2)(A) thereof), and (e) shall be increased by such dollar amount multiplied by the cost-of-living adjustment determined under section 1(f)(3) determined by substituting calendar year 2011 for calendar year 1992 in subparagraph (B) thereof.

(2)

Rounding

If any amount adjusted under paragraph (1)—

(A)

is not less than $75,000 and is not a multiple of $500, such amount shall be rounded to the next lowest multiple of $500, and

(B)

is not described in subparagraph (A) and is not a multiple of $10, such amount shall be rounded to the next lowest multiple of $10.

.

(g)

Effective Date

The amendments made by this section shall apply with respect to information returns required to be filed on or after January 1, 2011.

309.

Crude tall oil ineligible for cellulosic biofuel producer credit

(a)

In general

Section 40(B)(6)(E) of the Internal Revenue Code of 1986 is amended by adding at the end the following new clause:

(iv)

Exclusion of certain processed fuels with a high acid content

The term cellulosic biofuel shall not include any processed fuel with an acid number greater than 25. For purposes of the preceding sentence, the term processed fuel means any fuel other than a fuel—

(I)

more than 4 percent of which (determined by weight) is any combination of water and sediment, or

(II)

the ash content of which is more than 1 percent (determined by weight).

.

(b)

Effective date

The amendment made by this section shall apply to fuels sold or used on or after January 1, 2010.

310.

Time for payment of corporate estimated taxes

(a)

Shift from 2015 to 2014

The percentage under paragraph (1) of section 202(b) of the Corporate Estimated Tax Shift Act of 2009 in effect on the date of the enactment of this Act is increased by 4.5 percentage points.

(b)

Shift from 2016 to 2015

The percentage under paragraph (2) of section 561 of the Hiring Incentives to Restore Employment Act in effect on the date of the enactment of this Act is increased by 3.5 percentage points.

(c)

Shift from 2020 to 2019

The percentage under paragraph (3) of section 561 of the Hiring Incentives to Restore Employment Act in effect on the date of the enactment of this Act is increased by 1.25 percentage points.

IV

Extension of Emergency Contingency Fund for State Temporary Assistance for Needy Families Programs

401.

One-year extension of the Emergency Contingency Fund for State Temporary Assistance for Needy Families Programs

(a)

In general

Section 403(c) of the Social Security Act (42 U.S.C. 603(c)) is amended—

(1)

in paragraph (2)(A), by inserting , and for fiscal year 2011, $2,500,000,000 before for payment;

(2)

by striking paragraph (2)(B) and inserting the following:

(B)

Availability and use of funds

(i)

Fiscal years 2009 and 2010

The amounts appropriated to the Emergency Fund under subparagraph (A) for fiscal year 2009 shall remain available through fiscal year 2010 and shall be used to make grants to States in each of fiscal years 2009 and 2010 in accordance with the requirements of paragraph (3).

(ii)

Fiscal year 2011

Subject to clause (iii), the amounts appropriated to the Emergency Fund under subparagraph (A) for fiscal year 2011 shall remain available through fiscal year 2012 and shall be used to make grants to States based on expenditures in fiscal year 2011 for benefits and services provided in fiscal year 2011 in accordance with the requirements of paragraph (3).

(iii)

Reservation of funds

Of the amounts appropriated to the Emergency Fund under subparagraph (A) for fiscal year 2011, $500,000 shall be placed in reserve for use in fiscal year 2012, and shall be used to award grants for any expenditures described in this subsection incurred by States after September 30, 2011.

;

(3)

in paragraph (2)(C), by striking 2010 and inserting 2012;

(4)

in paragraph (3)—

(A)

in clause (i) of each of subparagraphs (A), (B), and (C)—

(i)

by striking year 2009 or 2010 and inserting years 2009 through 2011;

(ii)

by striking and at the end of subclause (I);

(iii)

by striking the period at the end of subclause (II) and inserting ; and; and

(iv)

by adding at the end the following:

(III)

if the quarter is in fiscal year 2011, has provided the Secretary with such information as the Secretary may find necessary in order to make the determinations, or take any other action, described in paragraph (5)(C).

; and

(B)

in subparagraph (C), by adding at the end the following:

(iv)

Limitation on expenditures for subsidized employment

An expenditure for subsidized employment shall be taken into account under clause (ii) only if the expenditure is used to subsidize employment for—

(I)

a member of a needy family (without regard to whether the family is receiving assistance under the State program funded under this part); or

(II)

an individual who has exhausted (or, within 60 days, will exhaust) all rights to receive unemployment compensation under Federal and State law, and who is a member of a needy household (regardless of whether the household includes a child).

;

(5)

by striking paragraph (5) and inserting the following:

(5)

Limitations on payments; adjustment authority

(A)

Fiscal years 2009 and 2010

The total amount payable to a single State under subsection (b) and this subsection for fiscal years 2009 and 2010 combined shall not exceed 50 percent of the annual State family assistance grant.

(B)

Fiscal year 2011

Subject to subparagraph (C), the total amount payable to a single State under subsection (b) and this subsection for fiscal year 2011 shall not exceed 30 percent of the annual State family assistance grant.

(C)

Adjustment authority

If the Secretary determines that the Emergency Fund is at risk of being depleted before September 30, 2011, or that funds are available to accommodate additional State requests under this subsection, the Secretary may, through program instructions issued without regard to the requirements of section 553 of title 5, United States Code—

(i)

specify priority criteria for awarding grants to States during fiscal year 2011; and

(ii)

adjust the percentage limitation applicable under subparagraph (B) with respect to the total amount payable to a single State for fiscal year 2011.

; and

(6)

in paragraph (6), by inserting or for expenditures described in paragraph (3)(C)(iv) before the period.

(b)

Conforming amendments

Section 2101 of division B of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5) is amended—

(1)

in subsection (a)(2)—

(A)

by striking 2010 and inserting 2011; and

(B)

by striking all that follows repealed and inserting a period; and

(2)

in subsection (d)(1), by striking 2010 and inserting 2011.

(c)

Program guidance

The Secretary of Health and Human Services shall issue program guidance, without regard to the requirements of section 553 of title 5, United States Code, which ensures that the funds provided under the amendments made by this section for subsidized employment do not support any subsidized employment position the annual salary of which is greater than, at State option—

(1)

200 percent of the poverty line (within the meaning of section 673(2) of the Omnibus Budget Reconciliation Act of 1981, including any revision required by such section 673(2)) for a family of 4; or

(2)

the median wage in any jurisdiction operating a program with funds provided pursuant to the amendments.

Passed the House of Representatives March 24, 2010.

Lorraine C. Miller,

Clerk.