Text: H.R.5970 — 109th Congress (2005-2006)All Bill Information (Except Text)

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[Congressional Bills 109th Congress]
[From the U.S. Government Printing Office]
[H.R. 5970 Engrossed in House (EH)]


  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
109th CONGRESS
  2d Session
                                H. R. 5970

_______________________________________________________________________

                                 AN ACT


 
  To amend the Internal Revenue Code of 1986 to increase the unified 
credit against the estate tax to an exclusion equivalent of $5,000,000, 
 to repeal the sunset provision for the estate and generation-skipping 
   taxes, and to extend expiring provisions, and for other purposes.

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

SECTION 1. SHORT TITLE, ETC.

    (a) Short Title.--This Act may be cited as the ``Estate Tax and 
Extension of Tax Relief Act of 2006''.
    (b) Reference.--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--REFORM AND EXTENSION OF ESTATE TAX AFTER 2009

Sec. 101. Reform and extension of estate tax after 2009.
Sec. 102. Unified credit increased by unused unified credit of deceased 
                            spouse.
   TITLE II--EXTENSION AND EXPANSION OF CERTAIN TAX RELIEF PROVISIONS

      Subtitle A--Extension and Modification of Certain Provisions

Sec. 201. Deduction for qualified tuition and related expenses.
Sec. 202. Extension and modification of new markets tax credit.
Sec. 203. Election to deduct State and local general sales taxes.
Sec. 204. Extension and modification of research credit.
Sec. 205. Work opportunity tax credit and welfare-to-work credit.
Sec. 206. Election to include combat pay as earned income for purposes 
                            of earned income credit.
Sec. 207. Extension and modification of qualified zone academy bonds.
Sec. 208. Above-the-line deduction for certain expenses of elementary 
                            and secondary school teachers.
Sec. 209. Extension and expansion of expensing of brownfields 
                            remediation costs.
Sec. 210. Tax incentives for investment in the District of Columbia.
Sec. 211. Indian employment tax credit.
Sec. 212. Accelerated depreciation for business property on Indian 
                            reservations.
Sec. 213. Fifteen-year straight-line cost recovery for qualified 
                            leasehold improvements and qualified 
                            restaurant property.
Sec. 214. Cover over of tax on distilled spirits.
Sec. 215. Parity in application of certain limits to mental health 
                            benefits.
Sec. 216. Corporate donations of scientific property used for research 
                            and of computer technology and equipment.
Sec. 217. Availability of medical savings accounts.
Sec. 218. Taxable income limit on percentage depletion for oil and 
                            natural gas produced from marginal 
                            properties.
Sec. 219. American Samoa economic development credit.
Sec. 220. Restructuring of New York Liberty Zone tax credits.
Sec. 221. Extension of bonus depreciation for certain qualified Gulf 
                            Opportunity Zone property.
Sec. 222. Authority for undercover operations.
Sec. 223. Disclosures of certain tax return information.
                      Subtitle B--Other Provisions

Sec. 231. Deduction allowable with respect to income attributable to 
                            domestic production activities in Puerto 
                            Rico.
Sec. 232. Credit for prior year minimum tax liability made refundable 
                            after period of years.
Sec. 233. Returns required in connection with certain options.
Sec. 234. Partial expensing for advanced mine safety equipment.
Sec. 235. Mine rescue team training tax credit.
Sec. 236. Whistleblower reforms.
Sec. 237. Frivolous tax submissions.
Sec. 238. Addition of meningococcal and human papillomavirus vaccines 
                            to list of taxable vaccines.
Sec. 239. Clarification of taxation of certain settlement funds made 
                            permanent.
Sec. 240. Modification of active business definition under section 355 
                            made permanent.
Sec. 241. Revision of State veterans limit made permanent.
Sec. 242. Capital gains treatment for certain self-created musical 
                            works made permanent.
Sec. 243. Reduction in minimum vessel tonnage which qualifies for 
                            tonnage tax made permanent.
Sec. 244. Modification of special arbitrage rule for certain funds made 
                            permanent.
Sec. 245. Great Lakes domestic shipping to not disqualify vessel from 
                            tonnage tax.
Sec. 246. Use of qualified mortgage bonds to finance residences for 
                            veterans without regard to first-time 
                            homebuyer requirement.
Sec. 247. Exclusion of gain from sale of a principal residence by 
                            certain employees of the intelligence 
                            community.
Sec. 248. Treatment of coke and coke gas.
Sec. 249. Sale of property by judicial officers.
Sec. 250. Premiums for mortgage insurance.
Sec. 251. Modification of refunds for kerosene used in aviation.
Sec. 252. Deduction for qualified timber gain.
Sec. 253. Credit to holders of rural renaissance bonds.
Sec. 254. Restoration of deduction for travel expenses of spouse, etc. 
                            accompanying taxpayer on business travel.
Sec. 255. Technical corrections.
  TITLE III--SURFACE MINING CONTROL AND RECLAMATION ACT AMENDMENTS OF 
                                  2006

Sec. 301. Short title.
               Subtitle A--MINING CONTROL AND RECLAMATION

Sec. 311. Abandoned Mine Reclamation Fund and purposes.
Sec. 312. Reclamation fee.
Sec. 313. Objectives of Fund.
Sec. 314. Reclamation of rural land.
Sec. 315. Liens.
Sec. 316. Certification.
Sec. 317. Remining incentives.
Sec. 318. Extension of limitation on application of prohibition on 
                            issuance of permit.
Sec. 319. Tribal regulation of surface coal mining and reclamation 
                            operations.
          Subtitle B--Coal Industry Retiree Health Benefit Act

Sec. 321. Certain related persons and successors in interest relieved 
                            of liability if premiums prepaid.
Sec. 322. Transfers to funds; premium relief.
Sec. 323. Other provisions.
                   TITLE IV--INCREASE IN MINIMUM WAGE

Sec. 401. Minimum Wage.
Sec. 402. Tipped Wage Fairness.

         TITLE I--REFORM AND EXTENSION OF ESTATE TAX AFTER 2009

SEC. 101. REFORM AND EXTENSION OF ESTATE TAX AFTER 2009.

    (a) Restoration of Unified Credit Against Gift Tax.--Paragraph (1) 
of section 2505(a) (relating to general rule for unified credit against 
gift tax), after the application of subsection (g), is amended by 
striking ``(determined as if the applicable exclusion amount were 
$1,000,000)''.
    (b) Exclusion Equivalent of Unified Credit Increased to 
$5,000,000.--Subsection (c) of section 2010 (relating to unified credit 
against estate tax) is amended to read as follows:
    ``(c) Applicable Credit Amount.--
            ``(1) In general.--For purposes of this section, the 
        applicable credit amount is the amount of the tentative tax 
        which would be determined under the rate schedule set forth in 
        section 2001(c) if the amount with respect to which such 
        tentative tax is to be computed were the applicable exclusion 
        amount.
            ``(2) Applicable exclusion amount.--
                    ``(A) In general.--For purposes of this subsection, 
                the applicable exclusion amount is as follows:
                            ``(i) For calendar year 2010, $3,750,000.
                            ``(ii) For calendar year 2011, $4,000,000.
                            ``(iii) For calendar year 2012, $4,250,000.
                            ``(iv) For calendar year 2013, $4,500,000.
                            ``(v) For calendar year 2014, $4,750,000.
                            ``(vi) For calendar year 2015 and 
                        thereafter, $5,000,000.
                    ``(B) Inflation adjustment.--In the case of any 
                decedent dying in a calendar year after 2015, the 
                $5,000,000 amount in subparagraph (A)(vi) shall be 
                increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for such 
                        calendar year by substituting `calendar year 
                        2014' for `calendar year 1992' in subparagraph 
                        (B) thereof.
                If any amount as adjusted under the preceding sentence 
                is not a multiple of $100,000, such amount shall be 
                rounded to the nearest multiple of $100,000.''.
    (c) Rate Schedule.--
            (1) In general.--Subsection (c) of section 2001 (relating 
        to rate schedule) is amended to read as follows:
    ``(c) Rate Schedule.--
            ``(1) In general.--The tentative tax is equal to the sum 
        of--
                    ``(A) the product of the rate specified in section 
                1(h)(1)(C) in effect on the date of the decedent's 
                death multiplied by so much of the sum described in 
                subsection (b)(1) as does not exceed $25,000,000, and
                    ``(B) the applicable percentage effective on the 
                date of the decedent's death of so much of the sum 
                described in subsection (b)(1) as exceeds $25,000,000.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1)(B), the applicable percentage is--
                    ``(A) in the case the decedent's death is in 2010, 
                40 percent,
                    ``(B) in the case the decedent's death is in 2011, 
                38 percent,
                    ``(C) in the case the decedent's death is in 2012, 
                36 percent,
                    ``(D) in the case the decedent's death is in 2013, 
                34 percent,
                    ``(E) in the case the decedent's death is in 2014, 
                32 percent, and
                    ``(F) in the case the decedent's death is in 2015 
                or thereafter, 30 percent.
            ``(3) Inflation adjustment.--In the case of any decedent 
        dying in a calendar year after 2015, each $25,000,000 amount in 
        subparagraphs (A) and (B) of paragraph (1) shall be increased 
        by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for such calendar year by 
                substituting `calendar year 2014' for `calendar year 
                1992' in subparagraph (B) thereof.
        If any amount as adjusted under the preceding sentence is not a 
        multiple of $100,000, such amount shall be rounded to the 
        nearest multiple of $100,000.''.
            (2) Conforming amendment.--Section 2502(a) (relating to 
        computation of tax), after the application of subsection (g), 
        is amended by adding at the end the following flush sentence:
``In computing the tentative tax under section 2001(c) for purposes of 
this subsection, `the last day of the calendar year in which the gift 
was made' shall be substituted for `the date of the decedent's death' 
each place it appears in such section.''.
    (d) Modifications of Estate and Gift Taxes to Reflect Differences 
in Unified Credit Resulting From Different Tax Rates.--
            (1) Estate tax.--
                    (A) In general.--Section 2001(b)(2) (relating to 
                computation of tax) is amended by striking ``if the 
                provisions of subsection (c) (as in effect at the 
                decedent's death)'' and inserting ``if the 
                modifications described in subsection (g)''.
                    (B) Modifications.--Section 2001 is amended by 
                adding at the end the following new subsection:
    ``(g) Modifications to Gift Tax Payable to Reflect Different Tax 
Rates.--For purposes of applying subsection (b)(2) with respect to 1 or 
more gifts, the rates of tax under subsection (c) in effect on the date 
of the decedent's death shall, in lieu of the rates of tax in effect at 
the time of such gifts, be used both to compute--
            ``(1) the tax imposed by chapter 12 with respect to such 
        gifts, and
            ``(2) the credit allowed against such tax under section 
        2505, including in computing--
                    ``(A) the applicable credit amount under section 
                2505(a)(1), and
                    ``(B) the sum of the amounts allowed as a credit 
                for all preceding periods under section 2505(a)(2).
        For purposes of paragraph (2)(A), the applicable credit amount 
        for any calendar year before 1998 is the amount which would be 
        determined under section 2010(c) if the applicable exclusion 
        amount were the dollar amount under section 6018(a)(1) for such 
        year.''.
            (2) Gift tax.--Section 2505(a) (relating to unified credit 
        against gift tax), after the application of subsection (g), is 
        amended by adding at the end the following new flush sentence:
``For purposes of applying paragraph (2) for any calendar year, the 
rate schedule under section 2001(c) used in computing the applicable 
credit amount under paragraph (1) for such calendar year shall, in lieu 
of the rates of tax in effect for preceding calendar periods, be used 
in determining the amounts allowable as a credit under this section for 
all preceding calendar periods.''.
    (e) Repeal of Deduction for State Death Taxes.--
            (1) In general.--Section 2058 (relating to State death 
        taxes) is amended by adding at the end the following:
    ``(c) Termination.--This section shall not apply to the estates of 
decedents dying after December 31, 2009.''.
            (2) Conforming amendment.--Section 2106(a)(4) is amended by 
        adding at the end the following new sentence: ``This paragraph 
        shall not apply to the estates of decedents dying after 
        December 31, 2009.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, generation-skipping transfers, and 
gifts made, after December 31, 2009.
    (g) Additional Modifications to Estate Tax.--
            (1) In general.--The following provisions of the Economic 
        Growth and Tax Relief Reconciliation Act of 2001, and the 
        amendments made by such provisions, are hereby repealed:
                    (A) Subtitles A and E of title V.
                    (B) Subsection (d), and so much of subsection 
                (f)(3) as relates to subsection (d), of section 511.
                    (C) Paragraph (2) of subsection (b), and paragraph 
                (2) of subsection (e), of section 521.
        The Internal Revenue Code of 1986 shall be applied as if such 
        provisions and amendments had never been enacted.
            (2) Sunset not to apply.--Section 901 of the Economic 
        Growth and Tax Relief Reconciliation Act of 2001 shall not 
        apply to title V (other than subtitles F, G, and H thereof) of 
        such Act.
            (3) Repeal of deadwood.--
                    (A) Sections 2011, 2057, and 2604 of the Internal 
                Revenue Code of 1986 are hereby repealed.
                    (B) The table of sections for part II of subchapter 
                A of chapter 11 of such Code is amended by striking the 
                item relating to section 2011.
                    (C) The table of sections for part IV of subchapter 
                A of chapter 11 of such Code is amended by striking the 
                item relating to section 2057.
                    (D) The table of sections for subchapter A of 
                chapter 13 of such Code is amended by striking the item 
                relating to section 2604.

SEC. 102. UNIFIED CREDIT INCREASED BY UNUSED UNIFIED CREDIT OF DECEASED 
              SPOUSE.

    (a) In General.--Subsection (c) of section 2010 (defining 
applicable credit amount), as amended by section 101(b), is amended by 
striking paragraph (2) and inserting the following new paragraphs:
            ``(2) Applicable exclusion amount.--For purposes of this 
        subsection, the applicable exclusion amount is the sum of--
                    ``(A) the basic exclusion amount, and
                    ``(B) in the case of a surviving spouse, the 
                aggregate deceased spousal unused exclusion amount.
            ``(3) Basic exclusion amount.--
                    ``(A) In general.--For purposes of this subsection, 
                the basic exclusion amount is as follows:
                            ``(i) For calendar year 2010, $3,750,000.
                            ``(ii) For calendar year 2011, $4,000,000.
                            ``(iii) For calendar year 2012, $4,250,000.
                            ``(iv) For calendar year 2013, $4,500,000.
                            ``(v) For calendar year 2014, $4,750,000.
                            ``(vi) For calendar year 2015 and 
                        thereafter, $5,000,000.
                    ``(B) Inflation adjustment.--In the case of any 
                decedent dying in a calendar year after 2015, the 
                $5,000,000 amount in subparagraph (A)(vi) shall be 
                increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for such 
                        calendar year by substituting `calendar year 
                        2014' for `calendar year 1992' in subparagraph 
                        (B) thereof.
                If any amount as adjusted under the preceding sentence 
                is not a multiple of $100,000, such amount shall be 
                rounded to the nearest multiple of $100,000.
            ``(4) Aggregate deceased spousal unused exclusion amount.--
        For purposes of this subsection, the term `aggregate deceased 
        spousal unused exclusion amount' means the lesser of--
                    ``(A) the basic exclusion amount, or
                    ``(B) the sum of the deceased spousal unused 
                exclusion amounts of the surviving spouse.
            ``(5) Deceased spousal unused exclusion amount.--For 
        purposes of this subsection, the term `deceased spousal unused 
        exclusion amount' means, with respect to the surviving spouse 
        of any deceased spouse dying after December 31, 2009, the 
        excess (if any) of--
                    ``(A) the applicable exclusion amount of the 
                deceased spouse, over
                    ``(B) the amount with respect to which the 
                tentative tax is determined under section 2001(b)(1) on 
                the estate of such deceased spouse.
            ``(6) Special rules.--
                    ``(A) Election required.--A deceased spousal unused 
                exclusion amount may not be taken into account by a 
                surviving spouse under paragraph (5) unless the 
                executor of the estate of the deceased spouse files an 
                estate tax return on which such amount is computed and 
                makes an election on such return that such amount may 
                be so taken into account. Such election, once made, 
                shall be irrevocable. No election may be made under 
                this subparagraph if such return is filed after the 
                time prescribed by law (including extensions) for 
                filing such return.
                    ``(B) Examination of prior returns after expiration 
                of period of limitations with respect to deceased 
                spousal unused exclusion amount.--Notwithstanding any 
                period of limitation in section 6501, after the time 
                has expired under section 6501 within which a tax may 
                be assessed under chapter 11 or 12 with respect to a 
                deceased spousal unused exclusion amount, the Secretary 
                may examine a return of the deceased spouse to make 
                determinations with respect to such amount for purposes 
                of carrying out this subsection.
            ``(7) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary or appropriate to carry out 
        this subsection.''.
    (b) Conforming Amendments.--
            (1) Paragraph (1) of section 2505(a), as amended by section 
        101, is amended to read as follows:
            ``(1) the applicable credit amount under section 2010(c) 
        which would apply if the donor died as of the end of the 
        calendar year, reduced by''.
            (2) Section 2631(c) is amended by striking ``the applicable 
        exclusion amount'' and inserting ``the basic exclusion 
        amount''.
            (3) Section 6018(a)(1), after the application of section 
        101(g), is amended by striking ``applicable exclusion amount'' 
        and inserting ``basic exclusion amount''.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, generation-skipping transfers, and 
gifts made, after December 31, 2009.

   TITLE II--EXTENSION AND EXPANSION OF CERTAIN TAX RELIEF PROVISIONS

      Subtitle A--Extension and Modification of Certain Provisions

SEC. 201. DEDUCTION FOR QUALIFIED TUITION AND RELATED EXPENSES.

    (a) In General.--Section 222(e) is amended by striking ``2005''and 
inserting ``2007''.
    (b) Conforming Amendments.--Section 222(b)(2)(B) is amended--
            (1) by striking ``a taxable year beginning in 2004 or 
        2005'' and inserting ``any taxable year beginning after 2003'', 
        and
            (2) by striking ``2004 and 2005'' in the heading and 
        inserting ``After 2003''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 202. EXTENSION AND MODIFICATION OF NEW MARKETS TAX CREDIT.

    (a) Extension.--Section 45D(f)(1)(D) is amended by striking ``and 
2007'' and inserting ``, 2007, and 2008''.
    (b) Regulations Regarding Non-Metropolitan Counties.--Section 
45D(i) 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) which ensure that non-metropolitan counties receive a 
        proportional allocation of qualified equity investments.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 203. ELECTION TO DEDUCT STATE AND LOCAL GENERAL SALES TAXES.

    (a) In General.--Section 164(b)(5)(I) is amended by striking 
``2006'' and inserting ``2008''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 204. EXTENSION AND MODIFICATION OF RESEARCH CREDIT.

    (a) Extension.--
            (1) In general.--Section 41(h)(1)(B) is amended by striking 
        ``2005'' and inserting ``2007''.
            (2) Conforming amendment.--Section 45C(b)(1)(D) is amended 
        by striking ``2005'' and inserting ``2007''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to amounts paid or incurred after December 31, 
        2005.
    (b) Increase in Rates of Alternative Incremental Credit.--
            (1) In general.--Subparagraph (A) of section 41(c)(4) 
        (relating to election of alternative incremental credit) is 
        amended--
                    (A) by striking ``2.65 percent'' and inserting ``3 
                percent'',
                    (B) by striking ``3.2 percent'' and inserting ``4 
                percent'', and
                    (C) by striking ``3.75 percent'' and inserting ``5 
                percent''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to amounts paid or incurred after December 31, 
        2006.
    (c) Alternative Simplified Credit for Qualified Research 
Expenses.--
            (1) In general.--Subsection (c) of section 41 (relating to 
        base amount) is amended by redesignating paragraphs (5) and (6) 
        as paragraphs (6) and (7), respectively, and by inserting after 
        paragraph (4) the following new paragraph:
            ``(5) Election of alternative simplified credit.--
                    ``(A) In general.--At the election of the taxpayer, 
                the credit determined under subsection (a)(1) shall be 
                equal to 12 percent of so much of the qualified 
                research expenses for the taxable year as exceeds 50 
                percent of the average qualified research expenses for 
                the 3 taxable years preceding the taxable year for 
                which the credit is being determined.
                    ``(B) Special rule in case of no qualified research 
                expenses in any of 3 preceding taxable years.--
                            ``(i) Taxpayers to which subparagraph 
                        applies.--The credit under this paragraph shall 
                        be determined under this subparagraph if the 
                        taxpayer has no qualified research expenses in 
                        any one of the 3 taxable years preceding the 
                        taxable year for which the credit is being 
                        determined.
                            ``(ii) Credit rate.--The credit determined 
                        under this subparagraph shall be equal to 6 
                        percent of the qualified research expenses for 
                        the taxable year.
                    ``(C) Election.--An election under this paragraph 
                shall apply to the taxable year for which made and all 
                succeeding taxable years unless revoked with the 
                consent of the Secretary. An election under this 
                paragraph may not be made for any taxable year to which 
                an election under paragraph (4) applies.''.
            (2) Coordination with election of alternative incremental 
        credit.--
                    (A) In general.--Section 41(c)(4)(B) (relating to 
                election) is amended by adding at the end the 
                following: ``An election under this paragraph may not 
                be made for any taxable year to which an election under 
                paragraph (5) applies.''.
                    (B) Transition rule.--In the case of an election 
                under section 41(c)(4) of the Internal Revenue Code of 
                1986 which applies to the taxable year which includes 
                the date of the enactment of this Act, such election 
                shall be treated as revoked with the consent of the 
                Secretary of the Treasury if the taxpayer makes an 
                election under section 41(c)(5) of such Code (as added 
                by subsection (c)) for such year.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to amounts paid or incurred after December 31, 
        2006.

SEC. 205. WORK OPPORTUNITY TAX CREDIT AND WELFARE-TO-WORK CREDIT.

    (a) In General.--Sections 51(c)(4)(B) and 51A(f) are each amended 
by striking ``2005'' and inserting ``2007''.
    (b) Eligibility of Ex-Felons Determined Without Regard to Family 
Income.--Paragraph (4) of section 51(d) is amended by adding ``and'' at 
the end of subparagraph (A), by striking ``, and'' at the end of 
subparagraph (B) and inserting a period, and by striking all that 
follows subparagraph (B).
    (c) Increase in Maximum Age for Eligibility of Food Stamp 
Recipients.--Clause (i) of section 51(d)(8)(A) is amended by striking 
``25'' and inserting ``40''.
    (d) Extension of Paperwork Filing Deadline.--Section 
51(d)(12)(A)(ii)(II) is amended by striking ``21st day'' and inserting 
``28th day''.
    (e) Consolidation of Work Opportunity Credit With Welfare-to-Work 
Credit.--
            (1) In general.--Paragraph (1) of section 51(d) is amended 
        by striking ``or'' at the end of subparagraph (G), by striking 
        the period at the end of subparagraph (H) and inserting ``, 
        or'', and by adding at the end the following new subparagraph:
                    ``(I) a long-term family assistance recipient.''.
            (2) Long-term family assistance recipient.--Subsection (d) 
        of section 51 is amended by redesignating paragraphs (10) 
        through (12) as paragraphs (11) through (13), respectively, and 
        by inserting after paragraph (9) the following new paragraph:
            ``(10) Long-term family assistance recipient.--The term 
        `long-term family assistance recipient' means any individual 
        who is certified by the designated local agency--
                    ``(A) as being a member of a family receiving 
                assistance under a IV-A program (as defined in 
                paragraph (2)(B)) for at least the 18-month period 
                ending on the hiring date,
                    ``(B)(i) as being a member of a family receiving 
                such assistance for 18 months beginning after August 5, 
                1997, and
                    ``(ii) as having a hiring date which is not more 
                than 2 years after the end of the earliest such 18-
                month period, or
                    ``(C)(i) as being a member of a family which ceased 
                to be eligible for such assistance by reason of any 
                limitation imposed by Federal or State law on the 
                maximum period such assistance is payable to a family, 
                and
                    ``(ii) as having a hiring date which is not more 
                than 2 years after the date of such cessation.''.
            (3) Increased credit for employment of long-term family 
        assistance recipients.--Section 51 is amended by inserting 
        after subsection (d) the following new subsection:
    ``(e) Credit for Second-Year Wages for Employment of Long-Term 
Family Assistance Recipients.--
            ``(1) In general.--With respect to the employment of a 
        long-term family assistance recipient--
                    ``(A) the amount of the work opportunity credit 
                determined under this section for the taxable year 
                shall include 50 percent of the qualified second-year 
                wages for such year, and
                    ``(B) in lieu of applying subsection (b)(3), the 
                amount of the qualified first-year wages, and the 
                amount of qualified second-year wages, which may be 
                taken into account with respect to such a recipient 
                shall not exceed $10,000 per year.
            ``(2) Qualified second-year wages.--For purposes of this 
        subsection, the term `qualified second-year wages' means 
        qualified wages--
                    ``(A) which are paid to a long-term family 
                assistance recipient, and
                    ``(B) which are attributable to service rendered 
                during the 1-year period beginning on the day after the 
                last day of the 1-year period with respect to such 
                recipient determined under subsection (b)(2).
            ``(3) Special rules for agricultural and railway labor.--If 
        such recipient is an employee to whom subparagraph (A) or (B) 
        of subsection (h)(1) applies, rules similar to the rules of 
        such subparagraphs shall apply except that--
                    ``(A) such subparagraph (A) shall be applied by 
                substituting `$10,000' for `$6,000', and
                    ``(B) such subparagraph (B) shall be applied by 
                substituting `$833.33' for `$500'.''.
            (4) Repeal of separate welfare-to-work credit.--
                    (A) In general.--Section 51A is hereby repealed.
                    (B) Clerical amendment.--The table of sections for 
                subpart F of part IV of subchapter A of chapter 1 is 
                amended by striking the item relating to section 51A.
    (f) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to individuals who 
        begin work for the employer after December 31, 2005.
            (2) Consolidation.--The amendments made by subsections (b), 
        (c), (d), and (e) shall apply to individuals who begin work for 
        the employer after December 31, 2006.

SEC. 206. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME FOR PURPOSES 
              OF EARNED INCOME CREDIT.

    (a) In General.--Section 32(c)(2)(B)(vi)(II) is amended by striking 
``2007'' and inserting ``2008''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2006.

SEC. 207. EXTENSION AND MODIFICATION OF QUALIFIED ZONE ACADEMY BONDS.

    (a) In General.--Paragraph (1) of section 1397E(e) is amended by 
striking ``and 2005'' and inserting ``2005, 2006, and 2007''.
    (b) Special Rules Relating to Expenditures, Arbitrage, and 
Reporting.--
            (1) In general.--Section 1397E is amended--
                    (A) in subsection (d)(1), by striking ``and'' at 
                the end of subparagraph (C)(iii), by striking the 
                period at the end of subparagraph (D) and inserting ``, 
                and'', and by adding at the end the following new 
                subparagraph:
                    ``(E) the issue meets the requirements of 
                subsections (f), (g), and (h).'', and
                    (B) by redesignating subsections (f), (g), (h), and 
                (i) as subsection (i), (j), (k), and (l), respectively, 
                and by inserting after subsection (e) the following new 
                subsections:
    ``(f) Special Rules Relating to Expenditures.--
            ``(1) In general.--An issue shall be treated as meeting the 
        requirements of this subsection if, as of the date of issuance, 
        the issuer reasonably expects--
                    ``(A) at least 95 percent of the proceeds from the 
                sale of the issue are to be spent for 1 or more 
                qualified purposes with respect to qualified zone 
                academies within the 5-year period beginning on the 
                date of issuance of the qualified zone academy bond,
                    ``(B) a binding commitment with a third party to 
                spend at least 10 percent of the proceeds from the sale 
                of the issue will be incurred within the 6-month period 
                beginning on the date of issuance of the qualified zone 
                academy bond, and
                    ``(C) such purposes will be completed with due 
                diligence and the proceeds from the sale of the issue 
                will be spent with due diligence.
            ``(2) Extension of period.--Upon submission of a request 
        prior to the expiration of the period described in paragraph 
        (1)(A), the Secretary may extend such period if the issuer 
        establishes that the failure to satisfy the 5-year requirement 
        is due to reasonable cause and the related purposes will 
        continue to proceed with due diligence.
            ``(3) Failure to spend required amount of bond proceeds 
        within 5 years.--To the extent that less than 95 percent of the 
        proceeds of such issue are expended by the close of the 5-year 
        period beginning on the date of issuance (or if an extension 
        has been obtained under paragraph (2), by the close of the 
        extended period), the issuer shall redeem all of the 
        nonqualified bonds within 90 days after the end of such period. 
        For purposes of this paragraph, the amount of the nonqualified 
        bonds required to be redeemed shall be determined in the same 
        manner as under section 142.
    ``(g) Special Rules Relating to Arbitrage.--An issue shall be 
treated as meeting the requirements of this subsection if the issuer 
satisfies the arbitrage requirements of section 148 with respect to 
proceeds of the issue.
    ``(h) Reporting.--Issuers of qualified academy zone bonds shall 
submit reports similar to the reports required under section 149(e).''.
            (2) Conforming amendments.--Sections 54(l)(3)(B) and 
        1400N(l)(7)(B)(ii) are each amended by striking ``section 
        1397E(i)'' and inserting ``section 1397E(l)''.
    (c) Effective Dates.--
            (1) Extension.--The amendment made by subsection (a) shall 
        apply to obligations issued after December 31, 2005.
            (2) Special rules.--The amendments made by subsection (b) 
        shall apply to obligations issued after the date of the 
        enactment of this Act pursuant to allocations of the national 
        zone academy bond limitation for calendar years after 2005.

SEC. 208. ABOVE-THE-LINE DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY 
              AND SECONDARY SCHOOL TEACHERS.

    (a) In General.--Subparagraph (D) of section 62(a)(2) is amended by 
striking ``or 2005'' and inserting ``2005, 2006, or 2007''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2005.

SEC. 209. EXTENSION AND EXPANSION OF EXPENSING OF BROWNFIELDS 
              REMEDIATION COSTS.

    (a) Extension.--Subsection (h) of section 198 is amended by 
striking ``2005'' and inserting ``2007''.
    (b) Expansion.--Section 198(d)(1) (defining hazardous substance) 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 the following new subparagraph:
                    ``(C) any petroleum product (as defined in section 
                4612(a)(3)).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures paid or incurred after December 31, 2005.

SEC. 210. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF COLUMBIA.

    (a) Designation of Zone.--
            (1) In general.--Subsection (f) of section 1400 is amended 
        by striking ``2005'' both places it appears and inserting 
        ``2007''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to periods beginning after December 31, 2005.
    (b) Tax-Exempt Economic Development Bonds.--
            (1) In general.--Subsection (b) of section 1400A is amended 
        by striking ``2005'' and inserting ``2007''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to bonds issued after December 31, 2005.
    (c) Zero Percent Capital Gains Rate.--
            (1) In general.--Subsection (b) of section 1400B is amended 
        by striking ``2006'' each place it appears and inserting 
        ``2008''.
            (2) Conforming amendments.--
                    (A) Section 1400B(e)(2) is amended--
                            (i) by striking ``2010'' and inserting 
                        ``2012'', and
                            (ii) by striking ``2010'' in the heading 
                        thereof and inserting ``2012''.
                    (B) Section 1400B(g)(2) is amended by striking 
                ``2010'' and inserting ``2012''.
                    (C) Section 1400F(d) is amended by striking 
                ``2010'' and inserting ``2012''.
            (3) Effective dates.--
                    (A) Extension.--The amendments made by paragraph 
                (1) shall apply to acquisitions after December 31, 
                2005.
                    (B) Conforming amendments.--The amendments made by 
                paragraph (2) shall take effect on the date of the 
                enactment of this Act.
    (d) First-Time Homebuyer Credit.--
            (1) In general.--Subsection (i) of section 1400C is amended 
        by striking ``2006'' and inserting ``2008''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to property purchased after December 31, 2005.

SEC. 211. INDIAN EMPLOYMENT TAX CREDIT.

    (a) In General.--Section 45A(f) is amended by striking ``2005'' and 
inserting ``2007''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2005.

SEC. 212. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON INDIAN 
              RESERVATIONS.

    (a) In General.--Section 168(j)(8) is amended by striking ``2005'' 
and inserting ``2007''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2005.

SEC. 213. FIFTEEN-YEAR STRAIGHT-LINE COST RECOVERY FOR QUALIFIED 
              LEASEHOLD IMPROVEMENTS AND QUALIFIED RESTAURANT PROPERTY.

    (a) In General.--Clauses (iv) and (v) of section 168(e)(3)(E) are 
each amended by striking ``2006'' and inserting ``2008''.
    (b) Treatment of Restaurant Property to Include New Construction.--
Paragraph (7) of section 168(e) (relating to classification of 
property) is amended to read as follows:
            ``(7) Qualified restaurant property.--The term `qualified 
        restaurant property' means any section 1250 property which is a 
        building or an improvement to a building if more than 50 
        percent of the building's square footage is devoted to 
        preparation of, and seating for on-premises consumption of, 
        prepared meals.''.
    (c) Effective Dates.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall apply to property placed in service after December 31, 
        2005.
            (2) Subsection (b).--The amendment made by subsection (b) 
        shall apply to property placed in service after the date of the 
        enactment of this Act.

SEC. 214. COVER OVER OF TAX ON DISTILLED SPIRITS.

    (a) In General.--Section 7652(f)(1) is amended by striking ``2006'' 
and inserting ``2008''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to articles brought into the United States after December 31, 
2005.

SEC. 215. PARITY IN APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH 
              BENEFITS.

    (a) Amendment to the Internal Revenue Code of 1986.--Section 
9812(f)(3) is amended by striking ``2006'' and inserting ``2007''.
    (b) Amendment to the Employee Retirement Income Security Act of 
1974.--Section 712(f) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1185a(f)) is amended by striking ``2006'' and inserting 
``2007''.
    (c) Amendment to the Public Health Service Act.--Section 2705(f) of 
the Public Health Service Act (42 U.S.C. 300gg-5(f)) is amended by 
striking ``2006''and inserting ``2007''.

SEC. 216. CORPORATE DONATIONS OF SCIENTIFIC PROPERTY USED FOR RESEARCH 
              AND OF COMPUTER TECHNOLOGY AND EQUIPMENT.

    (a) Extension of Computer Technology and Equipment Donation.--
            (1) In general.--Section 170(e)(6)(G) is amended by 
        striking ``2005'' and inserting ``2007''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to contributions made in taxable years beginning 
        after December 31, 2005.
    (b) Expansion of Charitable Contribution Allowed for Scientific 
Property Used for Research and for Computer Technology and Equipment 
Used for Educational Purposes.--
            (1) Scientific property used for research.--
                    (A) In general.--Clause (ii) of section 
                170(e)(4)(B) (defining qualified research 
                contributions) is amended by inserting ``or assembled'' 
                after ``constructed''.
                    (B) Conforming amendment.--Clause (iii) of section 
                170(e)(4)(B) is amended by inserting ``or assembly'' 
                after ``construction''.
            (2) Computer technology and equipment for educational 
        purposes.--
                    (A) In general.--Clause (ii) of section 
                170(e)(6)(B) is amended by inserting ``or assembled'' 
                after ``constructed'' and ``or assembling'' after 
                ``construction''.
                    (B) Conforming amendment.--Subparagraph (D) of 
                section 170(e)(6) is amended by inserting ``or 
                assembled'' after ``constructed'' and ``or assembly'' 
                after ``construction''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 2005.

SEC. 217. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.

    (a) In General.--Paragraphs (2) and (3)(B) of section 220(i) are 
each amended by striking ``2005'' each place it appears in the text and 
headings and inserting ``2007''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 220(j) is amended--
                    (A) in the text by striking ``or 2004'' each place 
                it appears and inserting ``2004, 2005, or 2006'', and
                    (B) in the heading by striking ``or 2004'' and 
                inserting ``2004, 2005, or 2006''.
            (2) Subparagraph (A) of section 220(j)(4) is amended by 
        striking ``and 2004'' and inserting ``2004, 2005, and 2006''.
    (c) Time for Filing Reports, etc.--
            (1) The report required by section 220(j)(4) of the 
        Internal Revenue Code of 1986 to be made on August 1, 2005, 
        shall be treated as timely if made before the close of the 90-
        day period beginning on the date of the enactment of this Act.
            (2) The determination and publication required by section 
        220(j)(5) of such Code with respect to calendar year 2005 shall 
        be treated as timely if made before the close of the 120-day 
        period beginning on the date of the enactment of this Act. If 
        the determination under the preceding sentence is that 2005 is 
        a cut-off year under section 220(i) of such Code, the cut-off 
        date under such section 220(i) shall be the last day of such 
        120-day period.

SEC. 218. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR OIL AND 
              NATURAL GAS PRODUCED FROM MARGINAL PROPERTIES.

    (a) In General.--Section 613A(c)(6)(H) is amended by striking 
``2006'' and inserting ``2008''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2005.

SEC. 219. AMERICAN SAMOA ECONOMIC DEVELOPMENT CREDIT.

    (a) In General.--For purposes of section 30A of the Internal 
Revenue Code of 1986, a domestic corporation shall be treated as a 
qualified domestic corporation to which such section applies if such 
corporation--
            (1) is an existing credit claimant with respect to American 
        Samoa, and
            (2) elected the application of section 936 of the Internal 
        Revenue Code of 1986 for its last taxable year beginning before 
        January 1, 2006.
    (b) Special Rules for Application of Section.--The following rules 
shall apply in applying section 30A of the Internal Revenue Code of 
1986 for purposes of this section:
            (1) Amount of credit.--Notwithstanding section 30A(a)(1) of 
        such Code, the amount of the credit determined under section 
        30A(a)(1) of such Code for any taxable year shall be the amount 
        determined under section 30A(d) of such Code, except that 
        section 30A(d) shall be applied without regard to paragraph (3) 
        thereof.
            (2) Separate application.--In applying section 30A(a)(3) of 
        such Code in the case of a corporation treated as a qualified 
        domestic corporation by reason of this section, section 30A of 
        such Code (and so much of section 936 of such Code as relates 
        to such section 30A) shall be applied separately with respect 
        to American Samoa.
            (3) Foreign tax credit allowed.--Notwithstanding section 
        30A(e) of such Code, the provisions of section 936(c) of such 
        Code shall not apply with respect to the credit allowed by 
        reason of this section.
    (c) Definitions.--For purposes of this section, any term which is 
used in this section which is also used in section 30A or 936 of such 
Code shall have the same meaning given such term by such section 30A or 
936.
    (d) Application of Section.--Notwithstanding section 30A(h) or 
section 936(j) of such Code, this section (and so much of section 30A 
and section 936 of such Code as relates to this section) shall apply to 
the first two taxable years of a corporation to which subsection (a) 
applies which begin after December 31, 2005, and before January 1, 
2008.

SEC. 220. RESTRUCTURING OF NEW YORK LIBERTY ZONE TAX CREDITS.

    (a) In General.--Part I of subchapter Y of chapter 1 is amended by 
redesignating section 1400L as 1400K and by adding at the end the 
following new section:

``SEC. 1400L. NEW YORK LIBERTY ZONE TAX CREDITS.

    ``(a) In General.--In the case of a New York Liberty Zone 
governmental unit, there shall be allowed as a credit against any taxes 
imposed for any payroll period by section 3402 for which such 
governmental unit is liable under section 3403 an amount equal to so 
much of the portion of the qualifying project expenditure amount 
allocated under subsection (b)(3) to such governmental unit for the 
calendar year as is allocated by such governmental unit to such period 
under subsection (b)(4).
    ``(b) Qualifying Project Expenditure Amount.--For purposes of this 
section--
            ``(1) In general.--The term `qualifying project expenditure 
        amount' means, with respect to any calendar year, the sum of--
                    ``(A) the total expenditures paid or incurred 
                during such calendar year by all New York Liberty Zone 
                governmental units and the Port Authority of New York 
                and New Jersey for any portion of qualifying projects 
                located wholly within the City of New York, New York, 
                and
                    ``(B) any such expenditures--
                            ``(i) paid or incurred in any preceding 
                        calendar year which begins after the date of 
                        enactment of this section, and
                            ``(ii) not previously allocated under 
                        paragraph (3).
            ``(2) Qualifying project.--The term `qualifying project' 
        means any transportation infrastructure project, including 
        highways, mass transit systems, railroads, airports, ports, and 
        waterways, in or connecting with the New York Liberty Zone (as 
        defined in section 1400K(h)), which is designated as a 
        qualifying project under this section jointly by the Governor 
        of the State of New York and the Mayor of the City of New York, 
        New York.
            ``(3) General allocation.--
                    ``(A) In general.--The Governor of the State of New 
                York and the Mayor of the City of New York, New York, 
                shall jointly allocate to each New York Liberty Zone 
                governmental unit the portion of the qualifying project 
                expenditure amount which may be taken into account by 
                such governmental unit under subsection (a) for any 
                calendar year in the credit period.
                    ``(B) Aggregate limit.--The aggregate amount which 
                may be allocated under subparagraph (A) for all 
                calendar years in the credit period shall not exceed 
                $1,750,000,000.
                    ``(C) Annual limit.--
                            ``(i) In general.--The aggregate amount 
                        which may be allocated under subparagraph (A) 
                        for any calendar year in the credit period 
                        shall not exceed the sum of--
                                    ``(I) the applicable limit, plus
                                    ``(II) the aggregate amount 
                                authorized to be allocated under this 
                                paragraph for all preceding calendar 
                                years in the credit period which was 
                                not so allocated.
                            ``(ii) Applicable limit.--For purposes of 
                        clause (i), the applicable limit for any 
                        calendar year is--
                                    ``(I) in the case of calendar years 
                                2007 through 2016, $100,000,000,
                                    ``(II) in the case of calendar year 
                                2017 or 2018, $200,000,000,
                                    ``(III) in the case of calendar 
                                year 2019, $150,000,000,
                                    ``(IV) in the case of calendar year 
                                2020 or 2021, $100,000,000, and
                                    ``(V) in the case of any calendar 
                                year after 2021, zero.
                    ``(D) Unallocated amounts at end of credit 
                period.--If, as of the close of the credit period, the 
                amount under subparagraph (B) exceeds the aggregate 
                amount allocated under subparagraph (A) for all 
                calendar years in the credit period, the Governor of 
                the State of New York and the Mayor of the City of New 
                York, New York, may jointly allocate to New York 
                Liberty Zone governmental units for any calendar year 
                in the 5-year period following the credit period an 
                amount equal to--
                            ``(i) the lesser of--
                                    ``(I) such excess, or
                                    ``(II) the qualifying project 
                                expenditure amount for such calendar 
                                year, reduced by
                            ``(ii) the aggregate amount allocated under 
                        this subparagraph for all preceding calendar 
                        years.
            ``(4) Allocation to payroll periods.--Each New York Liberty 
        Zone governmental unit which has been allocated a portion of 
        the qualifying project expenditure amount under paragraph (3) 
        for a calendar year may allocate such portion to payroll 
        periods beginning in such calendar year as such governmental 
        unit determines appropriate.
    ``(c) Carryover of Unused Allocations.--
            ``(1) In general.--Except as provided in paragraph (2), if 
        the amount allocated under subsection (b)(3) to a New York 
        Liberty Zone governmental unit for any calendar year exceeds 
        the aggregate taxes imposed by section 3402 for which such 
        governmental unit is liable under section 3403 for periods 
        beginning in such year, such excess shall be carried to the 
        succeeding calendar year and added to the allocation of such 
        governmental unit for such succeeding calendar year. No amount 
        may be carried under the preceding sentence to a calendar year 
        after 2026.
            ``(2) Reallocation.--If a New York Liberty Zone 
        governmental unit does not use an amount allocated to it under 
        subsection (b)(3) within the time prescribed by the Governor of 
        the State of New York and the Mayor of the City of New York, 
        New York, then such amount shall after such time be treated for 
        purposes of subsection (b)(3) in the same manner as if it had 
        never been allocated.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Credit period.--The term `credit period' means the 
        15-year period beginning on January 1, 2007.
            ``(2) New york liberty zone governmental unit.--The term 
        `New York Liberty Zone governmental unit' means--
                    ``(A) the State of New York,
                    ``(B) the City of New York, New York, and
                    ``(C) any agency or instrumentality of such State 
                or City.
            ``(3) Treatment of funds.--Any expenditure for a qualifying 
        project taken into account for purposes of the credit under 
        this section shall be considered State and local funds for the 
        purpose of any Federal program.
            ``(4) Treatment of credit amounts for purposes of 
        withholding taxes.--For purposes of this title, a New York 
        Liberty Zone governmental unit shall be treated as having paid 
        to the Secretary, on the day on which wages are paid to 
        employees, an amount equal to the amount of the credit allowed 
        to such entity under subsection (a) with respect to such wages, 
        but only if such governmental unit deducts and withholds wages 
        for such payroll period under section 3401 (relating to wage 
        withholding).
    ``(e) Reporting.--The Governor of the State of New York and the 
Mayor of the City of New York, New York, shall jointly submit to the 
Secretary an annual report--
            ``(1) which certifies--
                    ``(A) the qualifying project expenditure amount for 
                the calendar year, and
                    ``(B) the amount allocated to each New York Liberty 
                Zone governmental unit under subsection (b)(3) for the 
                calendar year, and
            ``(2) includes such other information as the Secretary may 
        require to carry out this section.
    ``(f) Guidance.--The Secretary may prescribe such guidance as may 
be necessary or appropriate to ensure compliance with the purposes of 
this section.
    ``(g) Termination.--No credit shall be allowed under subsection (a) 
for any calender year after 2026.''.
    (b) Termination of Certain New York Liberty Zone Benefits.--
            (1) Special allowance and expensing.--Section 
        1400K(b)(2)(A)(v), as redesignated by subsection (a), is 
        amended by striking ``the termination date'' and inserting 
        ``the date of the enactment of the Estate Tax and Extension of 
        Tax Relief Act of 2006 or the termination date if pursuant to a 
        binding contract in effect on such enactment date''.
            (2) Leasehold.--Section 1400K(c)(2)(B), as so redesignated, 
        is amended by striking ``before January 1, 2007'' and inserting 
        ``on or before the date of the enactment of the Estate Tax and 
        Extension of Tax Relief Act of 2006 or before January 1, 2007, 
        if pursuant to a binding contract in effect on such enactment 
        date''.
    (c) Conforming Amendments.--
            (1) Section 38(c)(3)(B) is amended by striking ``section 
        1400L(a)'' and inserting ``section 1400K(a)''.
            (2) Section 168(k)(2)(D)(ii) is amended by striking 
        ``section 1400L(c)(2)'' and inserting ``1400K(c)(2)''.
            (3) The table of sections for part I of subchapter Y of 
        chapter 1 is amended by striking ``1400L'' and inserting 
        ``1400K''.
    (d) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to periods 
        beginning after December 31, 2006.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall take effect as if included in section 301 of the Job 
        Creation and Worker Assistance Act of 2002.

SEC. 221. EXTENSION OF BONUS DEPRECIATION FOR CERTAIN QUALIFIED GULF 
              OPPORTUNITY ZONE PROPERTY.

    (a) In General.--Subsection (d) of section 1400N is amended by 
adding at the end the following new paragraph:
            ``(6) Extension for certain property.--
                    ``(A) In general.--In the case of any specified 
                Gulf Opportunity Zone extension property, paragraph 
                (2)(A) shall be applied without regard to clause (v) 
                thereof.
                    ``(B) Specified gulf opportunity zone extension 
                property.--For purposes of this paragraph, the term 
                `specified Gulf Opportunity Zone extension property' 
                means property--
                            ``(i) substantially all of the use of which 
                        is in one or more specified portions of the GO 
                        Zone, and
                            ``(ii) which is--
                                    ``(I) nonresidential real property 
                                or residential rental property which is 
                                placed in service by the taxpayer on or 
                                before December 31, 2009, or
                                    ``(II) in the case of a taxpayer 
                                who places a building described in 
                                subclause (I) in service on or before 
                                December 31, 2009, property described 
                                in section 168(k)(2)(A)(i) if 
                                substantially all of the use of such 
                                property is in such building and such 
                                property is placed in service by the 
                                taxpayer not later than 90 days after 
                                such building is placed in service.
                    ``(C) Specified portions of the go zone.--For 
                purposes of this paragraph, the term `specified 
                portions of the GO Zone' means those portions of the GO 
                Zone which are in any county or parish which is 
                identified by the Secretary as being a county or parish 
                in which hurricanes occurring during 2005 damaged (in 
                the aggregate) more than 40 percent of the housing 
                units in such county or parish which were occupied 
                (determined according to the 2000 Census).''.
    (b) Extension Not Applicable to Increased Section 179 Expensing.--
Paragraph (2) of section 1400N(e) is amended by inserting ``without 
regard to subsection (d)(6)'' after ``subsection (d)(2)''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in section 101 of the Gulf Opportunity Zone Act 
of 2005.

SEC. 222. AUTHORITY FOR UNDERCOVER OPERATIONS.

    Paragraph (6) of section 7608(c) (relating to application of 
section) is amended by striking ``2007'' both places it appears and 
inserting ``2008''.

SEC. 223. DISCLOSURES OF CERTAIN TAX RETURN INFORMATION.

    (a) Disclosures To Facilitate Combined Employment Tax Reporting.--
            (1) In general.--Subparagraph (B) of section 6103(d)(5) 
        (relating to termination) is amended by striking ``2006'' and 
        inserting ``2007''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to disclosures after December 31, 2006.
    (b) Disclosures Relating to Terrorist Activities.--
            (1) In general.--Clause (iv) of section 6103(i)(3)(C) and 
        subparagraph (E) of section 6103(i)(7) are each amended by 
        striking ``2006'' and inserting ``2007''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to disclosures after December 31, 2006.
    (c) Disclosures Relating to Student Loans.--
            (1) In general.--Subparagraph (D) of section 6103(l)(13) 
        (relating to termination) is amended by striking ``2006'' and 
        inserting ``2007''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to requests made after December 31, 2006.

                      Subtitle B--Other Provisions

SEC. 231. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO 
              DOMESTIC PRODUCTION ACTIVITIES IN PUERTO RICO.

    (a) In General.--Subsection (d) of section 199 (relating to 
definitions and special rules) is amended by redesignating paragraph 
(8) as paragraph (9) and by inserting after paragraph (7) the following 
new paragraph:
            ``(8) Treatment of activities in puerto rico.--
                    ``(A) In general.--In the case of any taxpayer with 
                gross receipts for any taxable year from sources within 
                the Commonwealth of Puerto Rico, if all of such 
                receipts are taxable under section 1 or 11 for such 
                taxable year, then for purposes of determining the 
                domestic production gross receipts of such taxpayer for 
                such taxable year under subsection (c)(4), the term 
                `United States' shall include the Commonwealth of 
                Puerto Rico.
                    ``(B) Special rule for applying wage limitation.--
                In the case of any taxpayer described in subparagraph 
                (A), for purposes of applying the limitation under 
                subsection (b) for any taxable year, the determination 
                of W-2 wages of such taxpayer shall be made without 
                regard to any exclusion under section 3401(a)(8) for 
                remuneration paid for services performed in Puerto 
                Rico.
                    ``(C) Termination.--This paragraph shall apply only 
                with respect to the first 2 taxable years of the 
                taxpayer beginning after December 31, 2005, and before 
                January 1, 2008.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to taxable years beginning after December 31, 2005.

SEC. 232. CREDIT FOR PRIOR YEAR MINIMUM TAX LIABILITY MADE REFUNDABLE 
              AFTER PERIOD OF YEARS.

    (a) In General.--Section 53 (relating to credit for prior year 
minimum tax liability) is amended by adding at the end the following 
new subsection:
    ``(e) Special Rule for Individuals With Long-Term Unused Credits.--
            ``(1) In general.--If an individual has a long-term unused 
        minimum tax credit for any taxable year beginning before 
        January 1, 2013, the amount determined under subsection (c) for 
        such taxable year shall not be less than the AMT refundable 
        credit amount for such taxable year.
            ``(2) Amt refundable credit amount.--For purposes of 
        paragraph (1)--
                    ``(A) In general.--The term `AMT refundable credit 
                amount' means, with respect to any taxable year, the 
                amount equal to the greater of--
                            ``(i) the lesser of--
                                    ``(I) $5,000, or
                                    ``(II) the amount of long-term 
                                unused minimum tax credit for such 
                                taxable year, or
                            ``(ii) 20 percent of the amount of such 
                        credit.
                    ``(B) Phaseout of amt refundable credit amount.--
                            ``(i) In general.--In the case of an 
                        individual whose adjusted gross income for any 
                        taxable year exceeds the threshold amount 
                        (within the meaning of section 151(d)(3)(C)), 
                        the AMT refundable credit amount determined 
                        under subparagraph (A) for such taxable year 
                        shall be reduced by the applicable percentage 
                        (within the meaning of section 151(d)(3)(B)).
                            ``(ii) Adjusted gross income.--For purposes 
                        of clause (i), adjusted gross income shall be 
                        determined without regard to sections 911, 931, 
                        and 933.
            ``(3) Long-term unused minimum tax credit.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `long-term unused minimum tax credit' means, 
                with respect to any taxable year, the portion of the 
                minimum tax credit determined under subsection (b) 
                attributable to the adjusted net minimum tax for 
                taxable years before the 3rd taxable year immediately 
                preceding such taxable year.
                    ``(B) First-in, first-out ordering rule.--For 
                purposes of subparagraph (A), credits shall be treated 
                as allowed under subsection (a) on a first-in, first-
                out basis.
            ``(4) Credit refundable.--For purposes of this title (other 
        than this section), the credit allowed by reason of this 
        subsection shall be treated as if it were allowed under subpart 
        C.''.
    (b) Conforming Amendments.--
            (1) Section 6211(b)(4)(A) is amended by striking ``and 34'' 
        and inserting ``34, and 53(e)''.
            (2) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``or 53(e)'' after 
        ``section 35''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 233. RETURNS REQUIRED IN CONNECTION WITH CERTAIN OPTIONS.

    (a) In General.--So much of section 6039(a) as follows paragraph 
(2) is amended to read as follows:
``shall, for such calendar year, make a return at such time and in such 
manner, and setting forth such information, as the Secretary may by 
regulations prescribe.''.
    (b) Statements to Persons With Respect to Whom Information Is 
Furnished.--Section 6039 is amended by redesignating subsections (b) 
and (c) as subsection (c) and (d), respectively, and by inserting after 
subsection (a) the following new subsection:
    ``(b) Statements to Be Furnished to Persons With Respect to Whom 
Information Is Reported.--Every corporation making a return under 
subsection (a) shall furnish to each person whose name is set forth in 
such return a written statement setting forth such information as the 
Secretary may by regulations prescribe. The written statement required 
under the preceding sentence shall be furnished to such person on or 
before January 31 of the year following the calendar year for which the 
return under subsection (a) was made.''.
    (c) Conforming Amendments.--
            (1) Section 6724(d)(1)(B) is amended by striking ``or'' at 
        the end of clause (xvii), by striking ``and'' at the end of 
        clause (xviii) and inserting ``or'', and by adding at the end 
        the following new clause:
                            ``(xix) section 6039(a) (relating to 
                        returns required with respect to certain 
                        options), and''.
            (2) Section 6724(d)(2)(B) is amended by striking ``section 
        6039(a)'' and inserting ``section 6039(b)''.
            (3) The heading of section 6039 and the item relating to 
        such section in the table of sections of subpart A of part III 
        of subchapter A of chapter 61 of such Code are each amended by 
        striking ``Information'' and inserting ``Returns''.
            (4) The heading of subsection (a) of section 6039 is 
        amended by striking ``Furnishing of Information'' and inserting 
        ``Requirement of Reporting''.
    (d) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning after the date of the enactment of 
this Act.

SEC. 234. PARTIAL EXPENSING FOR ADVANCED MINE SAFETY EQUIPMENT.

    (a) In General.--Part VI of subchapter B of chapter 1 is amended by 
inserting after section 179D the following new section:

``SEC. 179E. ELECTION TO EXPENSE ADVANCED MINE SAFETY EQUIPMENT.

    ``(a) Treatment as Expenses.--A taxpayer may elect to treat 50 
percent of the cost of any qualified advanced mine safety equipment 
property as an expense which is not chargeable to capital account. Any 
cost so treated shall be allowed as a deduction for the taxable year in 
which the qualified advanced mine safety equipment property is placed 
in service.
    ``(b) Election.--
            ``(1) In general.--An election under this section for any 
        taxable year shall be made on the taxpayer's return of the tax 
        imposed by this chapter for the taxable year. Such election 
        shall specify the advanced mine safety equipment property to 
        which the election applies and shall be made in such manner as 
        the Secretary may by regulations prescribe.
            ``(2) Election irrevocable.--Any election made under this 
        section may not be revoked except with the consent of the 
        Secretary.
    ``(c) Qualified Advanced Mine Safety Equipment Property.--For 
purposes of this section, the term `qualified advanced mine safety 
equipment property' means any advanced mine safety equipment property 
for use in any underground mine located in the United States--
            ``(1) the original use of which commences with the 
        taxpayer, and
            ``(2) which is placed in service by the taxpayer after the 
        date of the enactment of this section.
    ``(d) Advanced Mine Safety Equipment Property.--For purposes of 
this section, the term `advanced mine safety equipment property' means 
any of the following:
            ``(1) Emergency communication technology or device which is 
        used to allow a miner to maintain constant communication with 
        an individual who is not in the mine.
            ``(2) Electronic identification and location device which 
        allows an individual who is not in the mine to track at all 
        times the movements and location of miners working in or at the 
        mine.
            ``(3) Emergency oxygen-generating, self-rescue device which 
        provides oxygen for at least 90 minutes.
            ``(4) Pre-positioned supplies of oxygen which (in 
        combination with self-rescue devices) can be used to provide 
        each miner on a shift, in the event of an accident or other 
        event which traps the miner in the mine or otherwise 
        necessitates the use of such a self-rescue device, the ability 
        to survive for at least 48 hours.
            ``(5) Comprehensive atmospheric monitoring system which 
        monitors the levels of carbon monoxide, methane, and oxygen 
        that are present in all areas of the mine and which can detect 
        smoke in the case of a fire in a mine.
    ``(e) Coordination With Section 179.--No expenditures shall be 
taken into account under subsection (a) with respect to the portion of 
the cost of any property specified in an election under section 179.
    ``(f) Reporting.--No deduction shall be allowed under subsection 
(a) to any taxpayer for any taxable year unless such taxpayer files 
with the Secretary a report containing such information with respect to 
the operation of the mines of the taxpayer as the Secretary shall 
require.
    ``(g) Termination.--This section shall not apply to property placed 
in service after December 31, 2008.''.
    (b) Conforming Amendments.--
            (1) Section 263(a)(1) is amended by striking ``or'' at the 
        end of subparagraph (J), by striking the period at the end of 
        subparagraph (K) and inserting ``, or'', and by inserting after 
        subparagraph (K) the following new subparagraph:
                    ``(L) expenditures for which a deduction is allowed 
                under section 179E.''.
            (2) Section 312(k)(3)(B) is amended by striking ``or 179D'' 
        each place it appears in the heading and text thereof and 
        inserting ``179D, or 179E''.
            (3) Paragraphs (2)(C) and (3)(C) of section 1245(a) are 
        each amended by inserting ``179E,'' after ``179D,''.
            (4) The table of sections for part VI of subchapter B of 
        chapter 1 is amended by inserting after the item relating to 
        section 179D the following new item:

``Sec. 179E. Election to expense advanced mine safety equipment.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred after the date of the enactment of this 
Act.

SEC. 235. MINE RESCUE TEAM TRAINING TAX CREDIT.

    (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. 45N. MINE RESCUE TEAM TRAINING CREDIT.

    ``(a) Amount of Credit.--For purposes of section 38, the mine 
rescue team training credit determined under this section with respect 
to each qualified mine rescue team employee of an eligible employer for 
any taxable year is an amount equal to the lesser of--
            ``(1) 20 percent of the amount paid or incurred by the 
        taxpayer during the taxable year with respect to the training 
        program costs of such qualified mine rescue team employee 
        (including wages of such employee while attending such 
        program), or
            ``(2) $10,000.
    ``(b) Qualified Mine Rescue Team Employee.--For purposes of this 
section, the term `qualified mine rescue team employee' means with 
respect to any taxable year any full-time employee of the taxpayer who 
is--
            ``(1) a miner eligible for more than 6 months of such 
        taxable year to serve as a mine rescue team member as a result 
        of completing, at a minimum, an initial 20-hour course of 
        instruction as prescribed by the Mine Safety and Health 
        Administration's Office of Educational Policy and Development, 
        or
            ``(2) a miner eligible for more than 6 months of such 
        taxable year to serve as a mine rescue team member by virtue of 
        receiving at least 40 hours of refresher training in such 
        instruction.
    ``(c) Eligible Employer.--For purposes of this section, the term 
`eligible employer' means any taxpayer which employs individuals as 
miners in underground mines in the United States.
    ``(d) Wages.--For purposes of this section, 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).
    ``(e) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2008.''.
    (b) Credit Made Part of General Business Credit.--Section 38(b) is 
amended by striking ``and'' at the end of paragraph (29), by striking 
the period at the end of paragraph (30) and inserting ``, plus'', and 
by adding at the end the following new paragraph:
            ``(31) the mine rescue team training credit determined 
        under section 45N(a).''.
    (c) No Double Benefit.--Section 280C is amended by adding at the 
end the following new subsection:
    ``(e) Mine Rescue Team Training Credit.--No deduction shall be 
allowed for that portion of the expenses otherwise allowable as a 
deduction for the taxable year which is equal to the amount of the 
credit determined for the taxable year under section 45N(a).''.
    (d) 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. 45N. Mine rescue team training credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 236. WHISTLEBLOWER REFORMS.

    (a) Awards to Whistleblowers.--
            (1) In general.--Section 7623 (relating to expenses of 
        detection of underpayments and fraud, etc.) is amended--
                    (A) by striking ``The Secretary'' and inserting 
                ``(a) In General.--The Secretary'',
                    (B) by striking ``and'' at the end of paragraph (1) 
                and inserting ``or'',
                    (C) by striking ``(other than interest)'', and
                    (D) by adding at the end the following new 
                subsection:
    ``(b) Awards to Whistleblowers.--
            ``(1) In general.--If the Secretary proceeds with any 
        administrative or judicial action described in subsection (a) 
        based on information brought to the Secretary's attention by an 
        individual, such individual shall, subject to paragraph (2), 
        receive as an award at least 15 percent but not more than 30 
        percent of the collected proceeds (including penalties, 
        interest, additions to tax, and additional amounts) resulting 
        from the action (including any related actions) or from any 
        settlement in response to such action. The determination of the 
        amount of such award by the Whistleblower Office shall depend 
        upon the extent to which the individual substantially 
        contributed to such action.
            ``(2) Award in case of less substantial contribution.--
                    ``(A) In general.--In the event the action 
                described in paragraph (1) is one which the 
                Whistleblower Office determines to be based principally 
                on disclosures of specific allegations (other than 
                information provided by the individual described in 
                paragraph (1)) resulting from a judicial or 
                administrative hearing, from a governmental report, 
                hearing, audit, or investigation, or from the news 
                media, the Whistleblower Office may award such sums as 
                it considers appropriate, but in no case more than 10 
                percent of the collected proceeds (including penalties, 
                interest, additions to tax, and additional amounts) 
                resulting from the action (including any related 
                actions) or from any settlement in response to such 
                action, taking into account the significance of the 
                individual's information and the role of such 
                individual and any legal representative of such 
                individual in contributing to such action.
                    ``(B) Nonapplication of paragraph where individual 
                is original source of information.--Subparagraph (A) 
                shall not apply if the information resulting in the 
                initiation of the action described in paragraph (1) was 
                originally provided by the individual described in 
                paragraph (1).
            ``(3) Reduction in or denial of award.--If the 
        Whistleblower Office determines that the claim for an award 
        under paragraph (1) or (2) is brought by an individual who 
        planned and initiated the actions that led to the underpayment 
        of tax or actions described in subsection (a)(2), then the 
        Whistleblower Office may appropriately reduce such award. If 
        such individual is convicted of criminal conduct arising from 
        the role described in the preceding sentence, the Whistleblower 
        Office shall deny any award.
            ``(4) Appeal of award determination.--Any determination 
        regarding an award under paragraph (1), (2), or (3) may, within 
        30 days of such determination, be appealed to the Tax Court 
        (and the Tax Court shall have jurisdiction with respect to such 
        matter).
            ``(5) Application of this subsection.--This subsection 
        shall apply with respect to any action--
                    ``(A) against any taxpayer, but in the case of any 
                individual, only if such individual's gross income 
                exceeds $200,000 for any taxable year subject to such 
                action, and
                    ``(B) if the tax, penalties, interest, additions to 
                tax, and additional amounts in dispute exceed 
                $2,000,000.
            ``(6) Additional rules.--
                    ``(A) No contract necessary.--No contract with the 
                Internal Revenue Service is necessary for any 
                individual to receive an award under this subsection.
                    ``(B) Representation.--Any individual described in 
                paragraph (1) or (2) may be represented by counsel.
                    ``(C) Submission of information.--No award may be 
                made under this subsection based on information 
                submitted to the Secretary unless such information is 
                submitted under penalty of perjury.''.
            (2) Assignment to special trial judges.--
                    (A) In general.--Section 7443A(b) (relating to 
                proceedings which may be assigned to special trial 
                judges) is amended by striking ``and'' at the end of 
                paragraph (4), by redesignating paragraph (5) as 
                paragraph (6), and by inserting after paragraph (4) the 
                following new paragraph:
            ``(5) any proceeding under section 7623(b)(4), and''.
                    (B) Conforming amendment.--Section 7443A(c) is 
                amended by striking ``or (4)'' and inserting ``(4), or 
                (5)''.
            (3) Deduction allowed whether or not taxpayer itemizes.--
        Subsection (a) of section 62 (relating to general rule defining 
        adjusted gross income) is amended by inserting after paragraph 
        (20) the following new paragraph:
            ``(21) Attorneys fees relating to awards to 
        whistleblowers.--Any deduction allowable under this chapter for 
        attorney fees and court costs paid by, or on behalf of, the 
        taxpayer in connection with any award under section 7623(b) 
        (relating to awards to whistleblowers). The preceding sentence 
        shall not apply to any deduction in excess of the amount 
        includible in the taxpayer's gross income for the taxable year 
        on account of such award.''.
    (b) Whistleblower Office.--
            (1) In general.--Not later than the date which is 12 months 
        after the date of the enactment of this Act, the Secretary of 
        the Treasury shall issue guidance for the operation of a 
        whistleblower program to be administered in the Internal 
        Revenue Service by an office to be known as the ``Whistleblower 
        Office'' which--
                    (A) shall at all times operate at the direction of 
                the Commissioner of Internal Revenue and coordinate and 
                consult with other divisions in the Internal Revenue 
                Service as directed by the Commissioner of Internal 
                Revenue,
                    (B) shall analyze information received from any 
                individual described in section 7623(b) of the Internal 
                Revenue Code of 1986 and either investigate the matter 
                itself or assign it to the appropriate Internal Revenue 
                Service office, and
                    (C) in its sole discretion, may ask for additional 
                assistance from such individual or any legal 
                representative of such individual.
            (2) Request for assistance.--The guidance issued under 
        paragraph (1) shall specify that any assistance requested under 
        paragraph (1)(C) shall be under the direction and control of 
        the Whistleblower Office or the office assigned to investigate 
        the matter under paragraph (1)(A). No individual or legal 
        representative whose assistance is so requested may by reason 
        of such request represent himself or herself as an employee of 
        the Federal Government.
    (c) Report by Secretary.--The Secretary of the Treasury shall each 
year conduct a study and report to Congress on the use of section 7623 
of the Internal Revenue Code of 1986, including--
            (1) an analysis of the use of such section during the 
        preceding year and the results of such use, and
            (2) any legislative or administrative recommendations 
        regarding the provisions of such section and its application.
    (d) Effective Date.--The amendments made by subsection (a) shall 
apply to information provided on or after the date of the enactment of 
this Act.

SEC. 237. FRIVOLOUS TAX SUBMISSIONS.

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

``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.

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

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

SEC. 238. ADDITION OF MENINGOCOCCAL AND HUMAN PAPILLOMAVIRUS VACCINES 
              TO LIST OF TAXABLE VACCINES.

    (a) Meningococcal Vaccine.--Section 4132(a)(1) (defining taxable 
vaccine) is amended by adding at the end the following new 
subparagraph:
                    ``(O) Any meningococcal vaccine.''.
    (b) Human Papillomavirus Vaccine.--Section 4132(a)(1), as amended 
by subsection (a), is amended by adding at the end the following new 
subparagraph:
                    ``(P) Any vaccine against the human 
                papillomavirus.''.
    (c) Effective Date.--
            (1) Sales, etc.--The amendments made by this section shall 
        apply to sales and uses on or after the first day of the first 
        month which begins more than 4 weeks after the date of the 
        enactment of this Act.
            (2) Deliveries.--For purposes of paragraph (1) and section 
        4131 of the Internal Revenue Code of 1986, in the case of sales 
        on or before the effective date described in such paragraph for 
        which delivery is made after such date, the delivery date shall 
        be considered the sale date.

SEC. 239. CLARIFICATION OF TAXATION OF CERTAIN SETTLEMENT FUNDS MADE 
              PERMANENT.

    (a) In General.--Subsection (g) of section 468B, as amended by 
section 201 of the Tax Increase Prevention and Reconciliation Act of 
2005, is amended by striking paragraph (3).
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 201 of the Tax Increase Prevention and 
Reconciliation Act of 2005.

SEC. 240. MODIFICATION OF ACTIVE BUSINESS DEFINITION UNDER SECTION 355 
              MADE PERMANENT.

    (a) In General.--Subparagraphs (A) and (D) of section 355(b)(3), as 
amended by section 202 of the Tax Increase Prevention and 
Reconciliation Act of 2005, are each amended by striking ``and on or 
before December 31, 2010''.
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in section 202 of the Tax Increase Prevention and 
Reconciliation Act of 2005.

SEC. 241. REVISION OF STATE VETERANS LIMIT MADE PERMANENT.

    (a) In General.--Subparagraph (B) of section 143(l)(3), as amended 
by section 203 of the Tax Increase Prevention and Reconciliation Act of 
2005, is amended by striking clause (iv).
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 203 of the Tax Increase Prevention and 
Reconciliation Act of 2005.

SEC. 242. CAPITAL GAINS TREATMENT FOR CERTAIN SELF-CREATED MUSICAL 
              WORKS MADE PERMANENT.

    (a) In General.--Paragraph (3) of section 1221(b), as amended by 
section 204 of the Tax Increase Prevention and Reconciliation Act of 
2005, is amended by striking ``before January 1, 2011,''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 204 of the Tax Increase Prevention and 
Reconciliation Act of 2005.

SEC. 243. REDUCTION IN MINIMUM VESSEL TONNAGE WHICH QUALIFIES FOR 
              TONNAGE TAX MADE PERMANENT.

    (a) In General.--Paragraph (4) of section 1355(a), as amended by 
section 205 of the Tax Increase Prevention and Reconciliation Act of 
2005, is amended by striking ``10,000 (6,000, in the case of taxable 
years beginning after December 31, 2005, and ending before January 1, 
2011)'' and inserting ``6,000''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 205 of the Tax Increase Prevention and 
Reconciliation Act of 2005.

SEC. 244. MODIFICATION OF SPECIAL ARBITRAGE RULE FOR CERTAIN FUNDS MADE 
              PERMANENT.

    (a) In General.--Section 206 of the Tax Increase Prevention and 
Reconciliation Act of 2005 is amended by striking ``and before August 
31, 2009''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 206 of the Tax Increase Prevention and 
Reconciliation Act of 2005.

SEC. 245. GREAT LAKES DOMESTIC SHIPPING TO NOT DISQUALIFY VESSEL FROM 
              TONNAGE TAX.

    (a) In General.--Section 1355 (relating to definitions and special 
rules) is amended by redesignating subsection (g) as subsection (h) and 
by inserting after subsection (f) the following new subsection:
    ``(g) Great Lakes Domestic Shipping to Not Disqualify Vessel.--
            ``(1) In general.--If the electing corporation elects (at 
        such time and in such manner as the Secretary may require) to 
        apply this subsection for any taxable year to any qualifying 
        vessel which is used in qualified zone domestic trade during 
        the taxable year--
                    ``(A) solely for purposes of subsection (a)(4), 
                such use shall be treated as use in United States 
                foreign trade (and not as use in United States domestic 
                trade), and
                    ``(B) subsection (f) shall not apply with respect 
                to such vessel for such taxable year.
            ``(2) Effect of temporarily operating vessel in united 
        states domestic trade.--In the case of a qualifying vessel to 
        which this subsection applies--
                    ``(A) In general.--An electing corporation shall be 
                treated as using such vessel in qualified zone domestic 
                trade during any period of temporary use in the United 
                States domestic trade (other than qualified zone 
                domestic trade) if the electing corporation gives 
                timely notice to the Secretary stating--
                            ``(i) that it temporarily operates or has 
                        operated in the United States domestic trade 
                        (other than qualified zone domestic trade) a 
                        qualifying vessel which had been used in the 
                        United States foreign trade or qualified zone 
                        domestic trade, and
                            ``(ii) its intention to resume operation of 
                        the vessel in the United States foreign trade 
                        or qualified zone domestic trade.
                    ``(B) Notice.--Notice shall be deemed timely if 
                given not later than the due date (including 
                extensions) for the corporation's tax return for the 
                taxable year in which the temporary cessation begins.
                    ``(C) Period disregard in effect.--The period of 
                temporary use under subparagraph (A) continues until 
                the earlier of the date of which--
                            ``(i) the electing corporation abandons its 
                        intention to resume operations of the vessel in 
                        the United States foreign trade or qualified 
                        zone domestic trade, or
                            ``(ii) the electing corporation resumes 
                        operation of the vessel in the United States 
                        foreign trade or qualified zone domestic trade.
                    ``(D) No disregard if domestic trade use exceeds 30 
                days.--Subparagraph (A) shall not apply to any 
                qualifying vessel which is operated in the United 
                States domestic trade (other than qualified zone 
                domestic trade) for more than 30 days during the 
                taxable year.
            ``(3) Allocation of income and deductions to qualifying 
        shipping activities.--In the case of a qualifying vessel to 
        which this subsection applies, the Secretary shall prescribe 
        rules for the proper allocation of income, expenses, losses, 
        and deductions between the qualified shipping activities and 
        the other activities of such vessel.
            ``(4) Qualified zone domestic trade.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified zone 
                domestic trade' means the transportation of goods or 
                passengers between places in the qualified zone if such 
                transportation is in the United States domestic trade.
                    ``(B) Qualified zone.--The term `qualified zone' 
                means the Great Lakes Waterway and the St. Lawrence 
                Seaway.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 246. USE OF QUALIFIED MORTGAGE BONDS TO FINANCE RESIDENCES FOR 
              VETERANS WITHOUT REGARD TO FIRST-TIME HOMEBUYER 
              REQUIREMENT.

    (a) In General.--Section 143(d)(2) (relating to exceptions to 3-
year requirement) is amended by striking ``and'' at the end of 
subparagraph (B), by adding ``and'' at the end of subparagraph (C), and 
by inserting after subparagraph (C) the following new subparagraph:
                    ``(D) in the case of bonds issued after the date of 
                the enactment of this subparagraph and before January 
                1, 2008, financing of any residence for a veteran (as 
                defined in section 101 of title 38, United States 
                Code), if such veteran has not previously qualified for 
                and received such financing by reason of this 
                subparagraph,''.
    (b) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.

SEC. 247. EXCLUSION OF GAIN FROM SALE OF A PRINCIPAL RESIDENCE BY 
              CERTAIN EMPLOYEES OF THE INTELLIGENCE COMMUNITY.

    (a) In General.--Subparagraph (A) of section 121(d)(9) (relating to 
exclusion of gain from sale of principal residence) is amended by 
striking ``duty'' and all that follows and inserting ``duty--
                            ``(i) as a member of the uniformed 
                        services,
                            ``(ii) as a member of the Foreign Service 
                        of the United States, or
                            ``(iii) as an employee of the intelligence 
                        community.''.
    (b) Employee of Intelligence Community Defined.--Subparagraph (C) 
of section 121(d)(9) is amended by redesignating clause (iv) as clause 
(v) and by inserting after clause (iii) the following new clause:
                            ``(iv) Employee of intelligence 
                        community.--The term `employee of the 
                        intelligence community' means an employee (as 
                        defined by section 2105 of title 5, United 
                        States Code) of--
                                    ``(I) the Office of the Director of 
                                National Intelligence,
                                    ``(II) the Central Intelligence 
                                Agency,
                                    ``(III) the National Security 
                                Agency,
                                    ``(IV) the Defense Intelligence 
                                Agency,
                                    ``(V) the National Geospatial-
                                Intelligence Agency,
                                    ``(VI) the National Reconnaissance 
                                Office,
                                    ``(VII) any other office within the 
                                Department of Defense for the 
                                collection of specialized national 
                                intelligence through reconnaissance 
                                programs,
                                    ``(VIII) any of the intelligence 
                                elements of the Army, the Navy, the Air 
                                Force, the Marine Corps, the Federal 
                                Bureau of Investigation, the Department 
                                of Treasury, the Department of Energy, 
                                and the Coast Guard,
                                    ``(IX) the Bureau of Intelligence 
                                and Research of the Department of 
                                State, or
                                    ``(X) any of the elements of the 
                                Department of Homeland Security 
                                concerned with the analyses of foreign 
                                intelligence information.''.
    (c) Special Rule.--Subparagraph (C) of section 121(d)(9), as 
amended by subsection (b), is amended by adding at the end the 
following new clause:
                            ``(vi) Special rule relating to 
                        intelligence community.--An employee of the 
                        intelligence community shall not be treated as 
                        serving on qualified extended duty unless such 
                        duty is at a duty station located outside the 
                        United States.''.
    (d) Conforming Amendment.--The heading for section 121(d)(9) is 
amended to read as follows: ``Uniformed services, foreign service, and 
intelligence community''.
    (e) Effective Date.--The amendments made by this section shall 
apply to sales or exchanges after the date of the enactment of this Act 
and before January 1, 2011.

SEC. 248. TREATMENT OF COKE AND COKE GAS.

    (a) Nonapplication of Phaseout.--Section 45K(g)(2) is amended by 
adding at the end the following new subparagraph:
                    ``(D) Nonapplication of phaseout.--Subsection 
                (b)(1) shall not apply.''.
    (b) Clarification of Qualifying Facility.--Section 45K(g)(1) is 
amended by inserting ``(other than from petroleum based products)'' 
after ``coke or coke gas''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in section 1321 of the Energy Policy Act of 2005.

SEC. 249. SALE OF PROPERTY BY JUDICIAL OFFICERS.

    (a) In General.--Section 1043(b) (relating to the sale of property 
to comply with conflict-of-interest requirements) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A), by inserting ``, or a 
                judicial officer,'' after ``an officer or employee of 
                the executive branch''; and
                    (B) in subparagraph (B), by inserting ``judicial 
                canon,'' after ``any statute, regulation, rule,'';
            (2) in paragraph (2)--
                    (A) in subparagraph (A), by inserting ``judicial 
                canon,'' after ``any Federal conflict of interest 
                statute, regulation, rule,''; and
                    (B) in subparagraph (B), by inserting after ``the 
                Director of the Office of Government Ethics,'' the 
                following: ``in the case of executive branch officers 
                or employees, or by the Judicial Conference of the 
                United States (or its designee), in the case of 
                judicial officers,''; and
            (3) in paragraph (5)(B), by inserting ``judicial canon,'' 
        after ``any statute, regulation, rule,''.
    (b) Judicial Officer Defined.--Section 1043(b) is amended by adding 
at the end the following new paragraph:
            ``(6) Judicial officer.--The term `judicial officer' means 
        the Chief Justice of the United States, the Associate Justices 
        of the Supreme Court, and the judges of the United States 
        courts of appeals, United States district courts, including the 
        district courts in Guam, the Northern Mariana Islands, and the 
        Virgin Islands, Court of Appeals for the Federal Circuit, Court 
        of International Trade, Tax Court, Court of Federal Claims, 
        Court of Appeals for Veterans Claims, United States Court of 
        Appeals for the Armed Forces, and any court created by Act of 
        Congress, the judges of which are entitled to hold office 
        during good behavior.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales after the date of enactment of this Act.

SEC. 250. PREMIUMS FOR MORTGAGE INSURANCE.

    (a) In General.--Section 163(h)(3) (relating to qualified residence 
interest) is amended by adding at the end the following new 
subparagraph:
                    ``(E) Mortgage insurance premiums treated as 
                interest.--
                            ``(i) In general.--Premiums paid or accrued 
                        for qualified mortgage insurance by a taxpayer 
                        during the taxable year in connection with 
                        acquisition indebtedness with respect to a 
                        qualified residence of the taxpayer shall be 
                        treated for purposes of this section as 
                        interest which is qualified residence interest.
                            ``(ii) Phaseout.--The amount otherwise 
                        treated as interest under clause (i) shall be 
                        reduced (but not below zero) by 10 percent of 
                        such amount for each $1,000 ($500 in the case 
                        of a married individual filing a separate 
                        return) (or fraction thereof) that the 
                        taxpayer's adjusted gross income for the 
                        taxable year exceeds $100,000 ($50,000 in the 
                        case of a married individual filing a separate 
                        return).
                            ``(iii) Limitation.--Clause (i) shall not 
                        apply with respect to any mortgage insurance 
                        contracts issued before January 1, 2007.
                            ``(iv) Termination.--Clause (i) shall not 
                        apply to amounts--
                                    ``(I) paid or accrued after 
                                December 31, 2007, or
                                    ``(II) properly allocable to any 
                                period after such date.''.
    (b) Definition and Special Rules.--Section 163(h)(4) (relating to 
other definitions and special rules) is amended by adding at the end 
the following new subparagraphs:
                    ``(E) Qualified mortgage insurance.--The term 
                `qualified mortgage insurance' means--
                            ``(i) mortgage insurance provided by the 
                        Veterans Administration, the Federal Housing 
                        Administration, or the Rural Housing 
                        Administration, and
                            ``(ii) private mortgage insurance (as 
                        defined by section 2 of the Homeowners 
                        Protection Act of 1998 (12 U.S.C. 4901), as in 
                        effect on the date of the enactment of this 
                        subparagraph).
                    ``(F) Special rules for prepaid qualified mortgage 
                insurance.--Any amount paid by the taxpayer for 
                qualified mortgage insurance that is properly allocable 
                to any mortgage the payment of which extends to periods 
                that are after the close of the taxable year in which 
                such amount is paid shall be chargeable to capital 
                account and shall be treated as paid in such periods to 
                which so allocated. No deduction shall be allowed for 
                the unamortized balance of such account if such 
                mortgage is satisfied before the end of its term. The 
                preceding sentences shall not apply to amounts paid for 
                qualified mortgage insurance provided by the Veterans 
                Administration or the Rural Housing Administration.''.
    (c) Information Returns Relating to Mortgage Insurance.--Section 
6050H (relating to returns relating to mortgage interest received in 
trade or business from individuals) is amended by adding at the end the 
following new subsection:
    ``(h) Returns Relating to Mortgage Insurance Premiums.--
            ``(1) In general.--The Secretary may prescribe, by 
        regulations, that any person who, in the course of a trade or 
        business, receives from any individual premiums for mortgage 
        insurance aggregating $600 or more for any calendar year, shall 
        make a return with respect to each such individual. Such return 
        shall be in such form, shall be made at such time, and shall 
        contain such information as the Secretary may prescribe.
            ``(2) Statement to be furnished to individuals with respect 
        to whom information is required.--Every person required to make 
        a return under paragraph (1) shall furnish to each individual 
        with respect to whom a return is made a written statement 
        showing such information as the Secretary may prescribe. Such 
        written statement shall be furnished on or before January 31 of 
        the year following the calendar year for which the return under 
        paragraph (1) was required to be made.
            ``(3) Special rules.--For purposes of this subsection--
                    ``(A) rules similar to the rules of subsection (c) 
                shall apply, and
                    ``(B) the term `mortgage insurance' means--
                            ``(i) mortgage insurance provided by the 
                        Veterans Administration, the Federal Housing 
                        Administration, or the Rural Housing 
                        Administration, and
                            ``(ii) private mortgage insurance (as 
                        defined by section 2 of the Homeowners 
                        Protection Act of 1998 (12 U.S.C. 4901), as in 
                        effect on the date of the enactment of this 
                        subsection).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to amounts paid or accrued after December 31, 2006.

SEC. 251. MODIFICATION OF REFUNDS FOR KEROSENE USED IN AVIATION.

    (a) In General.--Paragraph (4) of section 6427(l) (relating to 
nontaxable uses of diesel fuel and kerosene) is amended to read as 
follows:
            ``(4) Refunds for kerosene used in aviation.--
                    ``(A) Kerosene used in commercial aviation.--In the 
                case of kerosene used in commercial aviation (as 
                defined in section 4083(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 4041 or 4081, as the case 
                may be, as is attributable to--
                            ``(i) the Leaking Underground Storage Tank 
                        Trust Fund financing rate imposed by such 
                        section, and
                            ``(ii) so much of the rate of tax specified 
                        in section 4041(c) or 4081(a)(2)(A)(iii), as 
                        the case may be, as does not exceed 4.3 cents 
                        per gallon.
                    ``(B) Kerosene used in noncommercial aviation.--In 
                the case of kerosene used in aviation that is not 
                commercial aviation (as so defined) (other than any use 
                which is exempt from the tax imposed by section 4041(c) 
                other than by reason of a prior imposition of tax), 
                paragraph (1) shall not apply to--
                            ``(i) any tax imposed by section 4041(c), 
                        and
                            ``(ii) so much of the tax imposed by 
                        section 4081 as is attributable to--
                                    ``(I) the Leaking Underground 
                                Storage Tank Trust Fund financing rate 
                                imposed by such section, and
                                    ``(II) so much of the rate of tax 
                                specified in section 4081(a)(2)(A)(iii) 
                                as does not exceed the rate specified 
                                in section 4081(a)(2)(C)(ii).
                    ``(C) Payments to ultimate, registered vendor.--
                            ``(i) In general.--With respect to any 
                        kerosene used in aviation (other than kerosene 
                        described in clause (ii) or kerosene to which 
                        paragraph (5) applies), if the ultimate 
                        purchaser of such kerosene waives (at such time 
                        and in such form and manner as the Secretary 
                        shall prescribe) the right to payment under 
                        paragraph (1) and assigns such right to the 
                        ultimate vendor, then the Secretary shall pay 
                        the amount which would be paid under paragraph 
                        (1) to such ultimate vendor, but only if such 
                        ultimate vendor--
                                    ``(I) is registered under section 
                                4101, and
                                    ``(II) meets the requirements of 
                                subparagraph (A), (B), or (D) of 
                                section 6416(a)(1).
                            ``(ii) Payments for kerosene used in 
                        noncommercial aviation.--The amount which would 
                        be paid under paragraph (1) with respect to any 
                        kerosene to which subparagraph (B) applies 
                        shall be paid only to the ultimate vendor of 
                        such kerosene. A payment shall be made to such 
                        vendor 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).''.
    (b) Conforming Amendments.--
            (1) Section 6427(l) is amended by striking paragraph (5) 
        and by redesignating paragraph (6) as paragraph (5).
            (2) Section 4082(d)(2)(B) is amended by striking ``section 
        6427(l)(6)(B)'' and inserting ``section 6427(l)(5)(B)''.
            (3) Section 6427(i)(4)(A) is amended--
                    (A) by striking ``paragraph (4)(B), (5), or (6)'' 
                each place it appears and inserting ``paragraph (4)(C) 
                or (5)'', and
                    (B) by striking ``(l)(5), and (l)(6)'' and 
                inserting ``(l)(4)(C)(ii), and (l)(5)''.
            (4) Section 6427(l)(1) is amended by striking ``paragraph 
        (4)(B)'' and inserting ``paragraph (4)(C)(i)''.
            (5) Section 9502(d) is amended--
                    (A) in paragraph (2), by striking ``and (l)(5)'', 
                and
                    (B) in paragraph (3), by striking ``or (5)''.
            (6) Section 9503(c)(7) is amended--
                    (A) by amending subparagraphs (A) and (B) to read 
                as follows:
                    ``(A) 4.3 cents per gallon of kerosene subject to 
                section 6427(l)(4)(A) with respect to which a payment 
                has been made by the Secretary under section 6427(l), 
                and
                    ``(B) 21.8 cents per gallon of kerosene subject to 
                section 6427(l)(4)(B) with respect to which a payment 
                has been made by the Secretary under section 
                6427(l).'', and
                    (B) in the matter following subparagraph (B), by 
                striking ``or (5)''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to kerosene sold after September 30, 2005.
            (2) Special rule for pending claims.--In the case of 
        kerosene sold for use in aviation (other than kerosene to which 
        section 6427(l)(4)(C)(ii) of the Internal Revenue Code of 1986 
        (as added by subsection (a)) applies or kerosene to which 
        section 6427(l)(5) of such Code (as redesignated by subsection 
        (b)) applies) after September 30, 2005, and before the date of 
        the enactment of this Act, the ultimate purchaser shall be 
        treated as having waived the right to payment under section 
        6427(l)(1) of such Code and as having assigned such right to 
        the ultimate vendor if such ultimate vendor has met the 
        requirements of subparagraph (A), (B), or (D) of section 
        6416(a)(1) of such Code.
    (d) Special Rule for Kerosene Used in Aviation on a Farm for 
Farming Purposes.--
            (1) Refunds for purchases after december 31, 2004, and 
        before october 1, 2005.--The Secretary of the Treasury shall 
        pay to the ultimate purchaser of any kerosene which is used in 
        aviation on a farm for farming purposes and which was purchased 
        after December 31, 2004, and before October 1, 2005, an amount 
        equal to the aggregate amount of tax imposed on such fuel under 
        section 4041 or 4081 of the Internal Revenue Code of 1986, as 
        the case may be, reduced by any payment to the ultimate vendor 
        under section 6427(l)(5)(C) of such Code (as in effect on the 
        day before the date of the enactment of the Safe, Accountable, 
        Flexible, Efficient Transportation Equity Act: a Legacy for 
        Users).
            (2) Use on a farm for farming purposes.--For purposes of 
        paragraph (1), kerosene shall be treated as used on a farm for 
        farming purposes if such kerosene is used for farming purposes 
        (within the meaning of section 6420(c)(3) of the Internal 
        Revenue Code of 1986) in carrying on a trade or business on a 
        farm situated in the United States. For purposes of the 
        preceding sentence, rules similar to the rules of section 
        6420(c)(4) of such Code shall apply.
            (3) Time for filing claims.--No claim shall be allowed 
        under paragraph (1) unless the ultimate purchaser files such 
        claim before the date that is 3 months after the date of the 
        enactment of this Act.
            (4) No double benefit.--No amount shall be paid under 
        paragraph (1) or section 6427(l) of the Internal Revenue Code 
        of 1986 with respect to any kerosene described in paragraph (1) 
        to the extent that such amount is in excess of the tax imposed 
        on such kerosene under section 4041 or 4081 of such Code, as 
        the case may be.
            (5) Applicable laws.--For purposes of this subsection, 
        rules similar to the rules of section 6427(j) of the Internal 
        Revenue Code of 1986 shall apply.

SEC. 252. DEDUCTION FOR QUALIFIED TIMBER GAIN.

    (a) In General.--Part I of subchapter P of chapter 1 is amended by 
adding at the end the following new section:

``SEC. 1203. DEDUCTION FOR QUALIFIED TIMBER GAIN.

    ``(a) In General.--In the case of a taxpayer which elects the 
application of this section for a taxable year, there shall be allowed 
a deduction against gross income equal to 60 percent of the lesser of--
            ``(1) the taxpayer's qualified timber gain for such year, 
        or
            ``(2) the taxpayer's net capital gain for such year.
    ``(b) Qualified Timber Gain.--For purposes of this section, the 
term `qualified timber gain' means, with respect to any taxpayer for 
any taxable year, the excess (if any) of--
            ``(1) the sum of the taxpayer's gains described in 
        subsections (a) and (b) of section 631 for such year, over
            ``(2) the sum of the taxpayer's losses described in such 
        subsections for such year.
    ``(c) Special Rules for Pass-Thru Entities.--In the case of any 
qualified timber gain of a pass-thru entity (as defined in section 
1(h)(10))--
            ``(1) the election under this section shall be made 
        separately by each taxpayer subject to tax on such gain, and
            ``(2) the Secretary may prescribe such regulations as are 
        appropriate to apply this section to such gain.
    ``(d) Termination.--No disposition of timber after December 31, 
2007, shall be taken into account under subsection (b).''.
    (b) Coordination With Maximum Capital Gains Rates.--
            (1) Taxpayers other than corporations.--Paragraph (2) of 
        section 1(h) is amended to read as follows:
            ``(2) Reduction of net capital gain.--For purposes of this 
        subsection, the net capital gain for any taxable year shall be 
        reduced (but not below zero) by the sum of--
                    ``(A) the amount which the taxpayer takes into 
                account as investment income under section 
                163(d)(4)(B)(iii), and
                    ``(B) in the case of a taxable year with respect to 
                which an election is in effect under section 1203, the 
                lesser of--
                            ``(i) the amount described in paragraph (1) 
                        of section 1203(a), or
                            ``(ii) the amount described in paragraph 
                        (2) of such section.''.
            (2) Corporations.--Section 1201 is amended by redesignating 
        subsection (b) as subsection (c) and inserting after subsection 
        (a) the following new subsection:
    ``(b) Qualified Timber Gain Not Taken Into Account.--For purposes 
of this section, in the case of a corporation with respect to which an 
election is in effect under section 1203, the net capital gain for any 
taxable year shall be reduced (but not below zero) by the corporation's 
qualified timber gain (as defined in section 1203(b)).''.
    (c) Deduction Allowed Whether or Not Individual Itemizes Other 
Deductions.--Subsection (a) of section 62, as amended by this Act, is 
amended by inserting before the last sentence the following new 
paragraph:
            ``(22) Qualified timber gains.--The deduction allowed by 
        section 1203.''.
    (d) Deduction Allowed in Computing Adjusted Current Earnings.--
Subparagraph (C) of section 56(g)(4) is amended by adding at the end 
the following new clause:
                            ``(vii) Deduction for qualified timber 
                        gain.--Clause (i) shall not apply to any 
                        deduction allowed under section 1203.''.
    (e) Deduction Allowed in Computing Taxable Income of Electing Small 
Business Trusts.--Subparagraph (C) of section 641(c)(2) is amended by 
inserting after clause (iii) the following new clause:
                            ``(iv) The deduction allowed under section 
                        1203.''.
    (f) Conforming Amendments.--
            (1) Subparagraph (B) of section 172(d)(2) is amended to 
        read as follows:
                    ``(B) the exclusion under section 1202 and the 
                deduction under section 1203 shall not be allowed.''.
            (2) Paragraph (4) of section 642(c) is amended by striking 
        the first sentence and inserting the following: ``To the extent 
        that the amount otherwise allowable as a deduction under this 
        subsection consists of gain described in section 1202(a) or 
        qualified timber gain (as defined in section 1203(b)), proper 
        adjustment shall be made for any exclusion allowable to the 
        estate or trust under section 1202 and for any deduction 
        allowable to the estate or trust under section 1203.''.
            (3) Paragraph (3) of section 643(a) is amended by striking 
        the last sentence and inserting the following: ``The exclusion 
        under section 1202 and the deduction under section 1203 shall 
        not be taken into account.''.
            (4) Subparagraph (C) of section 643(a)(6) is amended to 
        read as follows:
                    ``(C) Paragraph (3) shall not apply to a foreign 
                trust. In the case of such a trust--
                            ``(i) there shall be included gains from 
                        the sale or exchange of capital assets, reduced 
                        by losses from such sales or exchanges to the 
                        extent such losses do not exceed gains from 
                        such sales or exchanges, and
                            ``(ii) the deduction under section 1203 
                        shall not be taken into account.''.
            (5) Paragraph (4) of section 691(c) is amended by inserting 
        ``1203,'' after ``1202,''.
            (6) Paragraph (2) of section 871(a) is amended by striking 
        ``section 1202'' and inserting ``sections 1202 and 1203''.
            (7) The table of sections for part I of subchapter P of 
        chapter 1 is amended by adding at the end the following new 
        item:

``Sec. 1203. Deduction for qualified timber gain.''.
    (g) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxable years ending after the date of the enactment 
        of this Act.
            (2) Taxable years which include date of enactment.--In the 
        case of any taxable year which includes the date of the 
        enactment of this Act, for purposes of the Internal Revenue 
        Code of 1986, the taxpayer's qualified timber gain shall not 
        exceed the excess that would be described in section 1203(b) of 
        such Code, as added by this section, if only dispositions of 
        timber after such date were taken into account.

SEC. 253. CREDIT TO HOLDERS OF RURAL RENAISSANCE BONDS.

    (a) In General.--Subpart H of part IV of subchapter A of chapter 1 
(relating to credits against tax) is amended by adding at the end the 
following new section:

``SEC. 54A. CREDIT TO HOLDERS OF RURAL RENAISSANCE BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
rural renaissance bond on a credit allowance date of such bond, which 
occurs during the taxable year, there shall be allowed as a credit 
against the tax imposed by this chapter for such taxable year an amount 
equal to the sum of the credits determined under subsection (b) with 
respect to credit allowance dates during such year on which the 
taxpayer holds such bond.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a rural renaissance bond is 25 percent of the annual credit 
        determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any rural renaissance bond is the product of--
                    ``(A) the credit rate determined by the Secretary 
                under paragraph (3) for the day on which such bond was 
                sold, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Determination.--For purposes of paragraph (2), with 
        respect to any rural renaissance bond, the Secretary shall 
        determine daily or caused to be determined daily a credit rate 
        which shall apply to the first day on which there is a binding, 
        written contract for the sale or exchange of the bond. The 
        credit rate for any day is the credit rate which the Secretary 
        or the Secretary's designee estimates will permit the issuance 
        of rural renaissance bonds with a specified maturity or 
        redemption date without discount and without interest cost to 
        the qualified issuer.
            ``(4) Credit allowance date.--For purposes of this section, 
        the term `credit allowance date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term also includes the last day on which the bond is 
        outstanding.
            ``(5) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        date shall be a ratable portion of the credit otherwise 
        determined based on the portion of the 3-month period during 
        which the bond is outstanding. A similar rule shall apply when 
        the bond is redeemed or matures.
    ``(c) Limitation Based on Amount of Tax.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess of--
            ``(1) the sum of the regular tax liability (as defined in 
        section 26(b)) plus the tax imposed by section 55, over
            ``(2) the sum of the credits allowable under this part 
        (other than subpart C and this section).
    ``(d) Rural Renaissance Bond.--For purposes of this section--
            ``(1) In general.--The term `rural renaissance bond' means 
        any bond issued as part of an issue if--
                    ``(A) the bond is issued by a qualified issuer,
                    ``(B) 95 percent or more of the proceeds from the 
                sale of such issue are to be used for capital 
                expenditures incurred for 1 or more qualified projects,
                    ``(C) the qualified issuer designates such bond for 
                purposes of this section and the bond is in registered 
                form, and
                    ``(D) the issue meets the requirements of 
                subsections (e) and (h).
            ``(2) Qualified project; special use rules.--
                    ``(A) In general.--The term `qualified project' 
                means 1 or more projects described in subparagraph (B) 
                located in a rural area.
                    ``(B) Projects described.--A project described in 
                this subparagraph is--
                            ``(i) a water or waste treatment project,
                            ``(ii) an affordable housing project,
                            ``(iii) a community facility project, 
                        including hospitals, fire and police stations, 
                        and nursing and assisted-living facilities,
                            ``(iv) a value-added agriculture or 
                        renewable energy facility project for 
                        agricultural producers or farmer-owned 
                        entities, including any project to promote the 
                        production, processing, or retail sale of 
                        ethanol (including fuel at least 85 percent of 
                        the volume of which consists of ethanol), 
                        biodiesel, animal waste, biomass, raw 
                        commodities, or wind as a fuel,
                            ``(v) a distance learning or telemedicine 
                        project,
                            ``(vi) a rural utility infrastructure 
                        project, including any electric or telephone 
                        system,
                            ``(vii) a project to expand broadband 
                        technology,
                            ``(viii) a rural teleworks project, and
                            ``(ix) any project described in any 
                        preceding clause carried out by the Delta 
                        Regional Authority.
                    ``(C) Special rules.--For purposes of this 
                paragraph--
                            ``(i) any project described in subparagraph 
                        (B)(iv) for a farmer-owned entity may be 
                        considered a qualified project if such entity 
                        is located in a rural area, or in the case of a 
                        farmer-owned entity the headquarters of which 
                        are located in a nonrural area, if the project 
                        is located in a rural area, and
                            ``(ii) any project for a farmer-owned 
                        entity which is a facility described in 
                        subparagraph (B)(iv) for agricultural producers 
                        may be considered a qualified project 
                        regardless of whether the facility is located 
                        in a rural or nonrural area.
            ``(3) Special use rules.--
                    ``(A) Refinancing rules.--For purposes of paragraph 
                (1)(B), a qualified project may be refinanced with 
                proceeds of a rural renaissance bond only if the 
                indebtedness being refinanced (including any obligation 
                directly or indirectly refinanced by such indebtedness) 
                was originally incurred after the date of the enactment 
                of this section.
                    ``(B) Reimbursement.--For purposes of paragraph 
                (1)(B), a rural renaissance bond may be issued to 
                reimburse a borrower for amounts paid after the date of 
                the enactment of this section with respect to a 
                qualified project, but only if--
                            ``(i) prior to the payment of the original 
                        expenditure, the borrower declared its intent 
                        to reimburse such expenditure with the proceeds 
                        of a rural renaissance bond,
                            ``(ii) not later than 60 days after payment 
                        of the original expenditure, the qualified 
                        issuer adopts an official intent to reimburse 
                        the original expenditure with such proceeds, 
                        and
                            ``(iii) the reimbursement is made not later 
                        than 18 months after the date the original 
                        expenditure is paid.
                    ``(C) Treatment of changes in use.--For purposes of 
                paragraph (1)(B), the proceeds of an issue shall not be 
                treated as used for a qualified project to the extent 
                that a borrower takes any action within its control 
                which causes such proceeds not to be used for a 
                qualified project. The Secretary shall prescribe 
                regulations specifying remedial actions that may be 
                taken (including conditions to taking such remedial 
                actions) to prevent an action described in the 
                preceding sentence from causing a bond to fail to be a 
                rural renaissance bond.
    ``(e) Maturity Limitations.--
            ``(1) Duration of term.--A bond shall not be treated as a 
        rural renaissance bond if the maturity of such bond exceeds the 
        maximum term determined by the Secretary under paragraph (2) 
        with respect to such bond.
            ``(2) Maximum term.--During each calendar month, the 
        Secretary shall determine the maximum term permitted under this 
        paragraph for bonds issued during the following calendar month. 
        Such maximum term shall be the term which the Secretary 
        estimates will result in the present value of the obligation to 
        repay the principal on the bond being equal to 50 percent of 
        the face amount of such bond. Such present value shall be 
        determined without regard to the requirements of paragraph (3) 
        and using as a discount rate the average annual interest rate 
        of tax-exempt obligations having a term of 10 years or more 
        which are issued during the month. If the term as so determined 
        is not a multiple of a whole year, such term shall be rounded 
        to the next highest whole year.
            ``(3) Ratable principal amortization required.--A bond 
        shall not be treated as a rural renaissance bond unless it is 
        part of an issue which provides for an equal amount of 
        principal to be paid by the qualified issuer during each 
        calendar year that the issue is outstanding.
    ``(f) Limitation on Amount of Bonds Designated.--
            ``(1) National limitation.--There is a rural renaissance 
        bond limitation of $200,000,000.
            ``(2) Allocation by secretary.--The Secretary shall 
        allocate the amount described in paragraph (1) among qualified 
        projects in such manner as the Secretary determines 
        appropriate.
    ``(g) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section 
(determined without regard to subsection (c)) and the amount so 
included shall be treated as interest income.
    ``(h) Special Rules Relating to Expenditures.--
            ``(1) In general.--An issue shall be treated as meeting the 
        requirements of this subsection if, as of the date of issuance, 
        the qualified issuer reasonably expects--
                    ``(A) at least 95 percent of the proceeds from the 
                sale of the issue are to be spent for 1 or more 
                qualified projects within the 5-year period beginning 
                on the date of issuance of the rural renaissance bond,
                    ``(B) a binding commitment with a third party to 
                spend at least 10 percent of the proceeds from the sale 
                of the issue will be incurred within the 6-month period 
                beginning on the date of issuance of the rural 
                renaissance bond or, in the case of a rural renaissance 
                bond, the proceeds of which are to be loaned to 2 or 
                more borrowers, such binding commitment will be 
                incurred within the 6-month period beginning on the 
                date of the loan of such proceeds to a borrower, and
                    ``(C) such projects will be completed with due 
                diligence and the proceeds from the sale of the issue 
                will be spent with due diligence.
            ``(2) Extension of period.--Upon submission of a request 
        prior to the expiration of the period described in paragraph 
        (1)(A), the Secretary may extend such period if the qualified 
        issuer establishes that the failure to satisfy the 5-year 
        requirement is due to reasonable cause and the related projects 
        will continue to proceed with due diligence.
            ``(3) Failure to spend required amount of bond proceeds 
        within 5 years.--To the extent that less than 95 percent of the 
        proceeds of such issue are expended by the close of the 5-year 
        period beginning on the date of issuance (or if an extension 
        has been obtained under paragraph (2), by the close of the 
        extended period), the qualified issuer shall redeem all of the 
        nonqualified bonds within 90 days after the end of such period. 
        For purposes of this paragraph, the amount of the nonqualified 
        bonds required to be redeemed shall be determined in the same 
        manner as under section 142.
    ``(i) Special Rules Relating to Arbitrage.--A bond which is part of 
an issue shall not be treated as a rural renaissance bond unless, with 
respect to the issue of which the bond is a part, the qualified issuer 
satisfies the arbitrage requirements of section 148 with respect to 
proceeds of the issue.
    ``(j) Qualified Issuer.--For purposes of this section--
            ``(1) In general.--The term `qualified issuer' means any 
        not-for-profit cooperative lender which has as of the date of 
        the enactment of this section received a guarantee under 
        section 306 of the Rural Electrification Act and which meets 
        the requirement of paragraph (2).
            ``(2) User fee requirement.--The requirement of this 
        paragraph is met if the issuer of any rural renaissance bond 
        makes grants for qualified projects as defined under subsection 
        (d)(2) on a semi-annual basis every year that such bond is 
        outstanding in an annual amount equal to one-half of the rate 
        on United States Treasury Bills of the same maturity multiplied 
        by the outstanding principal balance of rural renaissance bonds 
        issued by such issuer.
    ``(k) Special Rules Relating to Pool Bonds.--No portion of a pooled 
financing bond may be allocable to a loan unless the borrower has 
entered into a written loan commitment for such portion prior to the 
issue date of such issue.
    ``(l) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Bond.--The term `bond' includes any obligation.
            ``(2) Pooled financing bond.--The term `pooled financing 
        bond' shall have the meaning given such term by section 
        149(f)(4)(A).
            ``(3) Rural area.--The term `rural area' means any area 
        other than--
                    ``(A) a city or town which has a population of 
                greater than 50,000 inhabitants, or
                    ``(B) the urbanized area contiguous and adjacent to 
                such a city or town.
            ``(4) Partnership; s corporation; and other pass-thru 
        entities.--
                    ``(A) In general.--Under regulations prescribed by 
                the Secretary, in the case of a partnership, trust, S 
                corporation, or other pass-thru entity, rules similar 
                to the rules of section 41(g) shall apply with respect 
                to the credit allowable under subsection (a).
                    ``(B) No basis adjustment.--In the case of a bond 
                held by a partnership or an S corporation, rules 
                similar to the rules under section 1397E(l) shall 
                apply.
            ``(5) Bonds held by regulated investment companies.--If any 
        rural renaissance bond is held by a regulated investment 
        company, the credit determined under subsection (a) shall be 
        allowed to shareholders of such company under procedures 
        prescribed by the Secretary.
            ``(6) Reporting.--Issuers of rural renaissance bonds shall 
        submit reports similar to the reports required under section 
        149(e).''.
    (b) Reporting.--Subsection (d) of section 6049 (relating to returns 
regarding payments of interest) is amended by adding at the end the 
following new paragraph:
            ``(9) Reporting of credit on rural renaissance bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 54A(f) and such amounts 
                shall be treated as paid on the credit allowance date 
                (as defined in section 54A(b)(4)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, in the case of any 
                interest described in subparagraph (A), subsection 
                (b)(4) shall be applied without regard to subparagraphs 
                (A), (H), (I), (J), (K), and (L)(i) of such subsection.
                    ``(C) Regulatory authority.--The Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require more 
                frequent or more detailed reporting.''.
    (c) Conforming Amendments.--
            (1) The table of sections for subpart H of part IV of 
        subchapter A of chapter 1 is amended by adding at the end the 
        following new item:

            ``Sec. 54A. Credit to holders of rural 
            renaissance bonds.''.
            (2) Section 54(c)(2) is amended by inserting ``, section 
        54A,'' after ``subpart C''.
            (3) Section 1400N(l)(3)(B) is amended by inserting ``, 
        section 54A,'' after ``subpart C''.
    (d) Issuance of Regulations.--The Secretary of Treasury shall issue 
regulations required under section 54A of the Internal Revenue Code of 
1986 (as added by this section) not later than 120 days after the date 
of the enactment of this Act.
    (e) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act and 
before January 1, 2010.

SEC. 254. RESTORATION OF DEDUCTION FOR TRAVEL EXPENSES OF SPOUSE, ETC. 
              ACCOMPANYING TAXPAYER ON BUSINESS TRAVEL.

    (a) In General.--Subsection (m) of section 274 (relating to 
additional limitations on travel expenses) is amended by adding at the 
end the following new paragraph:
            ``(4) Termination.--Paragraph (3) shall not apply to any 
        expense paid or incurred after the date of the enactment of 
        this paragraph and before January 1, 2008.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid or incurred after the date of the enactment of this 
Act.

SEC. 255. TECHNICAL CORRECTIONS.

    (a) Technical Correction Relating to Look-Through Treatment of 
Payments Between Related Controlled Foreign Corporations Under the 
Foreign Personal Holding Company Rules.--
            (1) In general.--
                    (A) The first sentence of section 954(c)(6)(A), as 
                amended by section 103(b) of the Tax Increase 
                Prevention and Reconciliation Act of 2005, is amended 
                by striking ``which is not subpart F income'' and 
                inserting ``which is neither subpart F income nor 
                income treated as effectively connected with the 
                conduct of a trade or business in the United States''.
                    (B) Section 954(c)(6)(A), as so amended, is amended 
                by striking the last sentence and inserting the 
                following: ``The Secretary shall prescribe such 
                regulations as may be necessary or appropriate to carry 
                out this paragraph, including such regulations as may 
                be necessary or appropriate to prevent the abuse of the 
                purposes of this paragraph.''
            (2) Effective date.--The amendments made by this subsection 
        shall take effect as if included in section 103(b) of the Tax 
        Increase Prevention and Reconciliation Act of 2005.
    (b) Technical Correction Regarding Authority to Exercise Reasonable 
Cause and Good Faith Exception.--
            (1) In general.--Section 903(d)(2)(B)(iii) of the American 
        Jobs Creation Act of 2004, as amended by section 303(a) of the 
        Gulf Opportunity Zone Act of 2005, is amended by inserting ``or 
        the Secretary's delegate'' after ``the Secretary of the 
        Treasury''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as if included in the provisions of the 
        American Jobs Creation Act of 2004 to which it relates.

  TITLE III--SURFACE MINING CONTROL AND RECLAMATION ACT AMENDMENTS OF 
                                  2006

SEC. 301. SHORT TITLE.

    This title may be cited as the ``Surface Mining Control and 
Reclamation Act Amendments of 2006''.

               Subtitle A--MINING CONTROL AND RECLAMATION

SEC. 311. ABANDONED MINE RECLAMATION FUND AND PURPOSES.

    (a) In General.--Section 401 of the Surface Mining Control and 
Reclamation Act of 1977 (30 U.S.C. 1231) is amended--
            (1) in subsection (c)--
                    (A) by striking paragraphs (2) and (6); and
                    (B) by redesignating paragraphs (3), (4), and (5) 
                and paragraphs (7) through (13) as paragraphs (2) 
                through (11), respectively;
            (2) by striking subsection (d) and inserting the following:
    ``(d) Availability of Moneys; No Fiscal Year Limitation.--
            ``(1) In general.--Moneys from the fund for expenditures 
        under subparagraphs (A) through (D) of section 402(g)(3) shall 
        be available only when appropriated for those subparagraphs.
            ``(2) No fiscal year limitation.--Appropriations described 
        in paragraph (1) shall be made without fiscal year limitation.
            ``(3) Other purposes.--Moneys from the fund shall be 
        available for all other purposes of this title without prior 
        appropriation as provided in subsection (f).'';
            (3) in subsection (e)--
                    (A) in the second sentence, by striking ``the needs 
                of such fund'' and inserting ``achieving the purposes 
                of the transfers under section 402(h)''; and
                    (B) in the third sentence, by inserting before the 
                period the following: ``for the purpose of the 
                transfers under section 402(h)''; and
            (4) by adding at the end the following:
    ``(f) General Limitation on Obligation Authority.--
            ``(1) In general.--From amounts deposited into the fund 
        under subsection (b), the Secretary shall distribute during 
        each fiscal year beginning after September 30, 2007, an amount 
        determined under paragraph (2).
            ``(2) Amounts.--
                    ``(A) For fiscal years 2008 through 2022.--For each 
                of fiscal years 2008 through 2022, the amount 
                distributed by the Secretary under this subsection 
                shall be equal to--
                            ``(i) the amounts deposited into the fund 
                        under paragraphs (1), (2), and (4) of 
                        subsection (b) for the preceding fiscal year 
                        that were allocated under paragraphs (1) and 
                        (5) of section 402(g); plus
                            ``(ii) the amount needed for the adjustment 
                        under section 402(g)(8) for the current fiscal 
                        year.
                    ``(B) Fiscal years 2023 and thereafter.--For fiscal 
                year 2023 and each fiscal year thereafter, to the 
                extent that funds are available, the Secretary shall 
                distribute an amount equal to the amount distributed 
                under subparagraph (A) during fiscal year 2022.
            ``(3) Distribution.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), for each fiscal year, of the amount 
                to be distributed to States and Indian tribes pursuant 
                to paragraph (2), the Secretary shall distribute--
                            ``(i) the amounts allocated under paragraph 
                        (1) of section 402(g), the amounts allocated 
                        under paragraph (5) of section 402(g), and any 
                        amount reallocated under section 411(h)(3) in 
                        accordance with section 411(h)(2), for grants 
                        to States and Indian tribes under section 
                        402(g)(5); and
                            ``(ii) the amounts allocated under section 
                        402(g)(8).
                    ``(B) Exclusion.--Beginning on October 1, 2007, 
                certified States shall be ineligible to receive amounts 
                under section 402(g)(1).
            ``(4) Availability.--Amounts in the fund available to the 
        Secretary for obligation under this subsection shall be 
        available until expended.
            ``(5) Addition.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                amount distributed under this subsection for each 
                fiscal year shall be in addition to the amount 
                appropriated from the fund during the fiscal year.
                    ``(B) Exceptions.--Notwithstanding paragraph (3), 
                the amount distributed under this subsection for the 
                first 4 fiscal years beginning on and after October 1, 
                2007, shall be equal to the following percentage of the 
                amount otherwise required to be distributed:
                            ``(i) 50 percent in fiscal year 2008.
                            ``(ii) 50 percent in fiscal year 2009.
                            ``(iii) 75 percent in fiscal year 2010.
                            ``(iv) 75 percent in fiscal year 2011.''.
    (b) Conforming Amendment.--Section 712(b) of the Surface Mining 
Control and Reclamation Act of 1977 (30 U.S.C. 1302(b)) is amended by 
striking ``section 401(c)(11)'' and inserting ``section 401(c)(9)''.

SEC. 312. RECLAMATION FEE.

    (a) Amounts.--
            (1) Fiscal years 2008-2012.--Effective October 1, 2007, 
        section 402(a) of the Surface Mining Control and Reclamation 
        Act of 1977 (30 U.S.C. 1232(a)) is amended--
                    (A) by striking ``35'' and inserting ``31.5'';
                    (B) by striking ``15'' and inserting ``13.5''; and
                    (C) by striking ``10 cents'' and inserting ``9 
                cents''.
            (2) Fiscal years 2013-2021.--Effective October 1, 2012, 
        section 402(a) of the Surface Mining Control and Reclamation 
        Act of 1977 (30 U.S.C. 1232(a)) (as amended by paragraph (1)) 
        is amended--
                    (A) by striking ``31.5'' and inserting ``28'';
                    (B) by striking ``13.5'' and inserting ``12''; and
                    (C) by striking ``9 cents'' and inserting ``8 
                cents''.
    (b) Duration.--Effective September 30, 2007, section 402(b) of the 
Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1232(b)) 
(as amended by section 7007 of the Emergency Supplemental 
Appropriations Act for Defense, the Global War on Terror, and Hurricane 
Recovery, 2006 (Public Law 109-234; 120 Stat. 484)) is amended by 
striking ``September 30, 2007'' and all that follows through the end of 
the sentence and inserting ``September 30, 2021.''.
    (c) Allocation of Funds.--Section 402(g) of the Surface Mining 
Control and Reclamation Act of 1977 (30 U.S.C. 1232(g)) is amended--
            (1) in paragraph (1)(D)--
                    (A) by inserting ``(except for grants awarded 
                during fiscal years 2008, 2009, and 2010 to the extent 
                not expended within 5 years)'' after ``this 
                paragraph''; and
                    (B) by striking ``in any area under paragraph (2), 
                (3), (4), or (5)'' and inserting ``under paragraph 
                (5)'';
            (2) by striking paragraph (2) and inserting:
    ``(2) In making the grants referred to in paragraph (1)(C) and the 
grants referred to in paragraph (5), the Secretary shall ensure strict 
compliance by the States and Indian tribes with the priorities 
described in section 403(a) until a certification is made under section 
411(a).'';
            (3) in paragraph (3)--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``paragraphs (2) and'' and inserting 
                ``paragraph'';
                    (B) in subparagraph (A), by striking ``401(c)(11)'' 
                and inserting ``401(c)(9)''; and
                    (C) by adding at the end the following:
            ``(E) For the purpose of paragraph (8).'';
            (4) in paragraph (5)--
                    (A) by inserting ``(A)'' after ``(5)'';
                    (B) in the first sentence, by striking ``40'' and 
                inserting ``60'';
                    (C) in the last sentence, by striking ``Funds 
                allocated or expended by the Secretary under paragraphs 
                (2), (3), or (4)'' and inserting ``Funds made available 
                under paragraph (3) or (4)''; and
                    (D) by adding at the end the following:
    ``(B) Any amount that is reallocated and available under section 
411(h)(3) shall be in addition to amounts that are allocated under 
subparagraph (A).''; and
            (5) by striking paragraphs (6) through (8) and inserting 
        the following:
    ``(6)(A) Any State with an approved abandoned mine reclamation 
program pursuant to section 405 may receive and retain, without regard 
to the 3-year limitation referred to in paragraph (1)(D), up to 30 
percent of the total of the grants made annually to the State under 
paragraphs (1) and (5) if those amounts are deposited into an acid mine 
drainage abatement and treatment fund established under State law, from 
which amounts (together with all interest earned on the amounts) are 
expended by the State for the abatement of the causes and the treatment 
of the effects of acid mine drainage in a comprehensive manner within 
qualified hydrologic units affected by coal mining practices.
    ``(B) In this paragraph, the term `qualified hydrologic unit' means 
a hydrologic unit--
            ``(i) in which the water quality has been significantly 
        affected by acid mine drainage from coal mining practices in a 
        manner that adversely impacts biological resources; and
            ``(ii) that contains land and water that are--
                    ``(I) eligible pursuant to section 404 and include 
                any of the priorities described in section 403(a); and
                    ``(II) the subject of expenditures by the State 
                from the forfeiture of bonds required under section 509 
                or from other States sources to abate and treat acid 
                mine drainage.
    ``(7) In complying with the priorities described in section 403(a), 
any State or Indian tribe may use amounts available in grants made 
annually to the State or tribe under paragraphs (1) and (5) for the 
reclamation of eligible land and water described in section 403(a)(3) 
before the completion of reclamation projects under paragraphs (1) and 
(2) of section 403(a) only if the expenditure of funds for the 
reclamation is done in conjunction with the expenditure before, on, or 
after the date of enactment of the Surface Mining Control and 
Reclamation Act Amendments of 2006 of funds for reclamation projects 
under paragraphs (1) and (2) of section 403(a).
    ``(8)(A) In making funds available under this title, the Secretary 
shall ensure that the grant awards total not less than $3,000,000 
annually to each State and each Indian tribe having an approved 
abandoned mine reclamation program pursuant to section 405 and eligible 
land and water pursuant to section 404, so long as an allocation of 
funds to the State or tribe is necessary to achieve the priorities 
stated in paragraphs (1) and (2) of section 403(a).
    ``(B) Notwithstanding any other provision of law, this paragraph 
applies to the States of Tennessee and Missouri.''.
    (d) Transfers of Interest Earned by Abandoned Mine Reclamation 
Fund.--Section 402 of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1232) is amended by striking subsection (h) and 
inserting the following:
    ``(h) Transfers of Interest Earned by Fund.--
            ``(1) In general.--
                    ``(A) Transfers to combined benefit fund.--As soon 
                as practicable after the beginning of fiscal year 2007 
                and each fiscal year thereafter, and before making any 
                allocation with respect to the fiscal year under 
                subsection (g), the Secretary shall use an amount not 
                to exceed the amount of interest that the Secretary 
                estimates will be earned and paid to the fund during 
                the fiscal year to make the transfer described in 
                paragraph (2)(A).
                    ``(B) Transfers to 1992 and 1993 plans.--As soon as 
                practicable after the beginning of fiscal year 2008 and 
                each fiscal year thereafter, and before making any 
                allocation with respect to the fiscal year under 
                subsection (g), the Secretary shall use an amount not 
                to exceed the amount of interest that the Secretary 
                estimates will be earned and paid to the fund during 
                the fiscal year (reduced by the amount used under 
                subparagraph (A)) to make the transfers described in 
                paragraphs (2)(B) and (2)(C).
            ``(2) Transfers described.--The transfers referred to in 
        paragraph (1) are the following:
                    ``(A) United mine workers of america combined 
                benefit fund.--A transfer to the United Mine Workers of 
                America Combined Benefit Fund equal to the amount that 
                the trustees of the Combined Benefit Fund estimate will 
                be expended from the fund for the fiscal year in which 
                the transfer is made, reduced by--
                            ``(i) the amount the trustees of the 
                        Combined Benefit Fund estimate the Combined 
                        Benefit Fund will receive during the fiscal 
                        year in--
                                    ``(I) required premiums; and
                                    ``(II) payments paid by Federal 
                                agencies in connection with benefits 
                                provided by the Combined Benefit Fund; 
                                and
                            ``(ii) the amount the trustees of the 
                        Combined Benefit Fund estimate will be expended 
                        during the fiscal year to provide health 
                        benefits to beneficiaries who are unassigned 
                        beneficiaries solely as a result of the 
                        application of section 9706(h)(1) of the 
                        Internal Revenue Code of 1986, but only to the 
                        extent that such amount does not exceed the 
                        amounts described in subsection (i)(1)(A) that 
                        the Secretary estimates will be available to 
                        pay such estimated expenditures.
                    ``(B) United mine workers of america 1992 benefit 
                plan.--A transfer to the United Mine Workers of America 
                1992 Benefit Plan, in an amount equal to the difference 
                between--
                            ``(i) the amount that the trustees of the 
                        1992 UMWA Benefit Plan estimate will be 
                        expended from the 1992 UMWA Benefit Plan during 
                        the next calendar year to provide the benefits 
                        required by the 1992 UMWA Benefit Plan on the 
                        date of enactment of this subparagraph; minus
                            ``(ii) the amount that the trustees of the 
                        1992 UMWA Benefit Plan estimate the 1992 UMWA 
                        Benefit Plan will receive during the next 
                        calendar year in--
                                    ``(I) required monthly per 
                                beneficiary premiums, including the 
                                amount of any security provided to the 
                                1992 UMWA Benefit Plan that is 
                                available for use in the provision of 
                                benefits; and
                                    ``(II) payments paid by Federal 
                                agencies in connection with benefits 
                                provided by the 1992 UMWA benefit plan.
                    ``(C) Multiemployer health benefit plan.--A 
                transfer to the Multiemployer Health Benefit Plan 
                established after July 20, 1992, by the parties that 
                are the settlors of the 1992 UMWA Benefit Plan referred 
                to in subparagraph (B) (referred to in this 
                subparagraph and subparagraph (D) as `the Plan'), in an 
                amount equal to the excess (if any) of--
                            ``(i) the amount that the trustees of the 
                        Plan estimate will be expended from the Plan 
                        during the next calendar year, to provide 
                        benefits no greater than those provided by the 
                        Plan as of December 31, 2006; over
                            ``(ii) the amount that the trustees 
                        estimated the Plan will receive during the next 
                        calendar year in payments paid by Federal 
                        agencies in connection with benefits provided 
                        by the Plan.
                Such excess shall be calculated by taking into account 
                only those beneficiaries actually enrolled in the Plan 
                as of December 31, 2006, who are eligible to receive 
                benefits under the Plan on the first day of the 
                calendar year for which the transfer is made.
                    ``(D) Individuals considered enrolled.--For 
                purposes of subparagraph (C), any individual who was 
                eligible to receive benefits from the Plan as of the 
                date of enactment of this subsection, even though 
                benefits were being provided to the individual pursuant 
                to a settlement agreement approved by order of a 
                bankruptcy court entered on or before September 30, 
                2004, will be considered to be actually enrolled in the 
                Plan and shall receive benefits from the Plan beginning 
                on December 31, 2006.
            ``(3) Adjustment.--If, for any fiscal year, the amount of a 
        transfer under subparagraph (A), (B), or (C) of paragraph (2) 
        is more or less than the amount required to be transferred 
        under that subparagraph, the Secretary shall appropriately 
        adjust the amount transferred under that subparagraph for the 
        next fiscal year.
            ``(4) Additional amounts.--
                    ``(A) Previously credited interest.--
                Notwithstanding any other provision of law, any 
                interest credited to the fund that has not previously 
                been transferred to the Combined Benefit Fund referred 
                to in paragraph (2)(A) under this section--
                            ``(i) shall be held in reserve by the 
                        Secretary until such time as necessary to make 
                        the payments under subparagraphs (A) and (B) of 
                        subsection (i)(1), as described in clause (ii); 
                        and
                            ``(ii) in the event that the amounts 
                        described in subsection (i)(1) are insufficient 
                        to make the maximum payments described in 
                        subparagraphs (A) and (B) of subsection (i)(1), 
                        shall be used by the Secretary to supplement 
                        the payments so that the maximum amount 
                        permitted under those paragraphs is paid.
                    ``(B) Previously allocated amounts.--All amounts 
                allocated under subsection (g)(2) before the date of 
                enactment of this subparagraph for the program 
                described in section 406, but not appropriated before 
                that date, shall be available to the Secretary to make 
                the transfers described in paragraph (2).
                    ``(C) Adequacy of previously credited interest.--
                The Secretary shall--
                            ``(i) consult with the trustees of the 
                        plans described in paragraph (2) at reasonable 
                        intervals; and
                            ``(ii) notify Congress if a determination 
                        is made that the amounts held in reserve under 
                        subparagraph (A) are insufficient to meet 
                        future requirements under subparagraph (A)(ii).
                    ``(D) Additional reserve amounts.--In addition to 
                amounts held in reserve under subparagraph (A), there 
                is authorized to be appropriated such sums as may be 
                necessary for transfer to the fund to carry out the 
                purposes of subparagraph (A)(ii).
                    ``(E) Inapplicability of cap.--The limitation 
                described in subsection (i)(3)(A) shall not apply to 
                payments made from the reserve fund under this 
                paragraph.
            ``(5) Limitations.--
                    ``(A) Availability of funds for next fiscal year.--
                The Secretary may make transfers under subparagraphs 
                (B) and (C) of paragraph (2) for a calendar year only 
                if the Secretary determines, using actuarial 
                projections provided by the trustees of the Combined 
                Benefit Fund referred to in paragraph (2)(A), that 
                amounts will be available under paragraph (1), after 
                the transfer, for the next fiscal year for making the 
                transfer under paragraph (2)(A).
                    ``(B) Rate of contributions of obligors.--
                            ``(i) In general.--
                                    ``(I) Rate.--A transfer under 
                                paragraph (2)(C) shall not be made for 
                                a calendar year unless the persons that 
                                are obligated to contribute to the plan 
                                referred to in paragraph (2)(C) on the 
                                date of the transfer are obligated to 
                                make the contributions at rates that 
                                are no less than those in effect on the 
                                date which is 30 days before the date 
                                of enactment of this subsection.
                                    ``(II) Application.--The 
                                contributions described in subclause 
                                (I) shall be applied first to the 
                                provision of benefits to those plan 
                                beneficiaries who are not described in 
                                paragraph (2)(C)(ii).
                            ``(ii) Initial contributions.--
                                    ``(I) In general.--From the date of 
                                enactment of the Surface Mining Control 
                                and Reclamation Act Amendments of 2006 
                                through December 31, 2010, the persons 
                                that, on the date of enactment of that 
                                Act, are obligated to contribute to the 
                                plan referred to in paragraph (2)(C) 
                                shall be obligated, collectively, to 
                                make contributions equal to the amount 
                                described in paragraph (2)(C), less the 
                                amount actually transferred due to the 
                                operation of subparagraph (C).
                                    ``(II) First calendar year.--
                                Calendar year 2006 is the first 
                                calendar year for which contributions 
                                are required under this clause.
                                    ``(III) Amount of contribution for 
                                2006.--Except as provided in subclause 
                                (IV), the amount described in paragraph 
                                (2)(C) for calendar year 2006 shall be 
                                calculated as if paragraph (2)(C) had 
                                been in effect during 2005.
                                    ``(IV) Limitation.--The 
                                contributions required under this 
                                clause for calendar year 2006 shall not 
                                exceed the amount necessary for 
                                solvency of the plan described in 
                                paragraph (2)(C), measured as of 
                                December 31, 2006 and taking into 
                                account all assets held by the plan as 
                                of that date.
                            ``(iii) Division.--The collective annual 
                        contribution obligation required under clause 
                        (ii) shall be divided among the persons subject 
                        to the obligation, and applied uniformly, based 
                        on the hours worked for which contributions 
                        referred to in clause (i) would be owed.
                    ``(C) Phase-in of transfers.--For each of calendar 
                years 2008 through 2010, the transfers required under 
                subparagraphs (B) and (C) of paragraph (2) shall equal 
                the following amounts:
                            ``(i) For calendar year 2008, the Secretary 
                        shall make transfers equal to 25 percent of the 
                        amounts that would otherwise be required under 
                        subparagraphs (B) and (C) of paragraph (2).
                            ``(ii) For calendar year 2009, the 
                        Secretary shall make transfers equal to 50 
                        percent of the amounts that would otherwise be 
                        required under subparagraphs (B) and (C) of 
                        paragraph (2).
                            ``(iii) For calendar year 2010, the 
                        Secretary shall make transfers equal to 75 
                        percent of the amounts that would otherwise be 
                        required under subparagraphs (B) and (C) of 
                        paragraph (2).
    ``(i) Funding.--
            ``(1) In general.--Subject to paragraph (3), out of any 
        funds in the Treasury not otherwise appropriated, the Secretary 
        of the Treasury shall transfer to the plans described in 
        subsection (h)(2) such sums as are necessary to pay the 
        following amounts:
                    ``(A) To the Combined Fund (as defined in section 
                9701(a)(5) of the Internal Revenue Code of 1986 and 
                referred to in this paragraph as the `Combined Fund'), 
                the amount that the trustees of the Combined Fund 
                estimate will be expended from premium accounts 
                maintained by the Combined Fund for the fiscal year to 
                provide benefits for beneficiaries who are unassigned 
                beneficiaries solely as a result of the application of 
                section 9706(h)(1) of the Internal Revenue Code of 
                1986, subject to the following limitations:
                            ``(i) For fiscal year 2008, the amount paid 
                        under this subparagraph shall equal--
                                    ``(I) the amount described in 
                                subparagraph (A); minus
                                    ``(II) the amounts required under 
                                section 9706(h)(3)(A) of the Internal 
                                Revenue Code of 1986.
                            ``(ii) For fiscal year 2009, the amount 
                        paid under this subparagraph shall equal--
                                    ``(I) the amount described in 
                                subparagraph (A); minus
                                    ``(II) the amounts required under 
                                section 9706(h)(3)(B) of the Internal 
                                Revenue Code of 1986.
                            ``(iii) For fiscal year 2010, the amount 
                        paid under this subparagraph shall equal--
                                    ``(I) the amount described in 
                                subparagraph (A); minus
                                    ``(II) the amounts required under 
                                section 9706(h)(3)(C) of the Internal 
                                Revenue Code of 1986.
                    ``(B) On certification by the trustees of any plan 
                described in subsection (h)(2) that the amount 
                available for transfer by the Secretary pursuant to 
                this section (determined after application of any 
                limitation under subsection (h)(5)) is less than the 
                amount required to be transferred, to the plan the 
                amount necessary to meet the requirement of subsection 
                (h)(2).
                    ``(C) To the Combined Fund, $9,000,000 on October 
                1, 2007, $9,000,000 on October 1, 2008, and $9,000,000 
                on October 1, 2009 (which amounts shall not be 
                exceeded) to provide a refund of any premium (as 
                described in section 9704(a) of the Internal Revenue 
                Code of 1986) paid on or before September 7, 2000, to 
                the Combined Fund, plus interest on the premium 
                calculated at the rate of 7.5 percent per year, on a 
                proportional basis and to be paid not later than 60 
                days after the date on which each payment is received 
                by the Combined Fund, to those signatory operators (to 
                the extent that the Combined Fund has not previously 
                returned the premium amounts to the operators), or any 
                related persons to the operators (as defined in section 
                9701(c) of the Internal Revenue Code of 1986), or their 
                heirs, successors, or assigns who have been denied the 
                refunds as the result of final judgments or settlements 
                if--
                            ``(i) prior to the date of enactment of 
                        this paragraph, the signatory operator (or any 
                        related person to the operator)--
                                    ``(I) had all of its beneficiary 
                                assignments made under section 9706 of 
                                the Internal Revenue Code of 1986 
                                voided by the Commissioner of the 
                                Social Security Administration; and
                                    ``(II) was subject to a final 
                                judgment or final settlement of 
                                litigation adverse to a claim by the 
                                operator that the assignment of 
                                beneficiaries under section 9706 of the 
                                Internal Revenue Code of 1986 was 
                                unconstitutional as applied to the 
                                operator; and
                            ``(ii) on or before September 7, 2000, the 
                        signatory operator (or any related person to 
                        the operator) had paid to the Combined Fund any 
                        premium amount that had not been refunded.
            ``(2) Payments to states and indian tribes.--Subject to 
        paragraph (3), out of any funds in the Treasury not otherwise 
        appropriated, the Secretary of the Treasury shall transfer to 
        the Secretary of the Interior for distribution to States and 
        Indian tribes such sums as are necessary to pay amounts 
        described in paragraphs (1)(A) and (2)(A) of section 411(h).
            ``(3) Limitations.--
                    ``(A) Cap.--The total amount transferred under this 
                subsection for any fiscal year shall not exceed 
                $490,000,000.
                    ``(B) Insufficient amounts.--In a case in which the 
                amount required to be transferred without regard to 
                this paragraph exceeds the maximum annual limitation in 
                subparagraph (A), the Secretary shall adjust the 
                transfers of funds so that--
                            ``(i) each transfer for the fiscal year is 
                        a percentage of the amount described;
                            ``(ii) the amount is determined without 
                        regard to subsection (h)(5)(A); and
                            ``(iii) the percentage transferred is the 
                        same for all transfers made under this 
                        subsection for the fiscal year.
            ``(4) Availability of funds.--Funds shall be transferred 
        under paragraph (1) and (2) beginning in fiscal year 2008 and 
        each fiscal year thereafter, and shall remain available until 
        expended.''.

SEC. 313. OBJECTIVES OF FUND.

    Section 403 of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1233) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) by striking ``(1) the protection'' and 
                        inserting the following:
            ``(1)(A) the protection;'';
                            (ii) in subparagraph (A) (as designated by 
                        clause (i)), by striking ``general welfare,''; 
                        and
                            (iii) by adding at the end the following:
            ``(B) the restoration of land and water resources and the 
        environment that--
                    ``(i) have been degraded by the adverse effects of 
                coal mining practices; and
                    ``(ii) are adjacent to a site that has been or will 
                be remediated under subparagraph (A);'';
                    (B) in paragraph (2)--
                            (i) by striking ``(2) the protection'' and 
                        inserting the following:
            ``(2)(A) the protection'';
                            (ii) in subparagraph (A) (as designated by 
                        clause (i), by striking ``health, safety, and 
                        general welfare'' and inserting ``health and 
                        safety''; and
                            (iii) by adding at the end the following:
            ``(B) the restoration of land and water resources and the 
        environment that--
                    ``(i) have been degraded by the adverse effects of 
                coal mining practices; and
                    ``(ii) are adjacent to a site that has been or will 
                be remediated under subparagraph (A); and'';
                    (C) in paragraph (3), by striking the semicolon at 
                the end and inserting a period; and
                    (D) by striking paragraphs (4) and (5);
            (2) in subsection (b)--
                    (A) by striking the subsection heading and 
                inserting ``Water Supply Restoration.--''; and
                    (B) in paragraph (1), by striking ``up to 30 
                percent of the''; and
            (3) in the second sentence of subsection (c), by inserting 
        ``, subject to the approval of the Secretary,'' after 
        ``amendments''.

SEC. 314. RECLAMATION OF RURAL LAND.

    (a) Administration.--Section 406(h) of the Surface Mining Control 
and Reclamation Act of 1977 (30 U.S.C. 1236(h)) is amended by striking 
``Soil Conservation Service'' and inserting ``Natural Resources 
Conservation Service''.
    (b) Authorization of Appropriations for Carrying Out Rural Land 
Reclamation.--Section 406 of the Surface Mining Control and Reclamation 
Act of 1977 (30 U.S.C. 1236) is amended by adding at the end the 
following:
    ``(i) There are authorized to be appropriated to the Secretary of 
Agriculture, from amounts in the Treasury other than amounts in the 
fund, such sums as may be necessary to carry out this section.''.

SEC. 315. LIENS.

    Section 408(a) of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1238) is amended in the last sentence by striking ``who 
owned the surface prior to May 2, 1977, and''.

SEC. 316. CERTIFICATION.

    Section 411 of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1240a) is amended--
            (1) in subsection (a)--
                    (A) by inserting ``(1)'' before the first sentence; 
                and
                    (B) by adding at the end the following:
    ``(2)(A) The Secretary may, on the initiative of the Secretary, 
make the certification referred to in paragraph (1) on behalf of any 
State or Indian tribe referred to in paragraph (1) if on the basis of 
the inventory referred to in section 403(c) all reclamation projects 
relating to the priorities described in section 403(a) for eligible 
land and water pursuant to section 404 in the State or tribe have been 
completed.
    ``(B) The Secretary shall only make the certification after notice 
in the Federal Register and opportunity for public comment.''; and
            (2) by adding at the end the following:
    ``(h) Payments to States and Indian Tribes.--
            ``(1) In general.--
                    ``(A) Payments.--
                            ``(i) In general.--Notwithstanding section 
                        401(f)(3)(B), from funds referred to in section 
                        402(i)(2), the Secretary shall make payments to 
                        States or Indian tribes for the amount due for 
                        the aggregate unappropriated amount allocated 
                        to the State or Indian tribe under subparagraph 
                        (A) or (B) of section 402(g)(1).
                            ``(ii) Conversion as equivalent payments.--
                        Amounts allocated under subparagraphs (A) or 
                        (B) of section 402(g)(1) shall be reallocated 
                        to the allocation established in section 
                        402(g)(5) in amounts equivalent to payments 
                        made to States or Indian tribes under this 
                        paragraph.
                    ``(B) Amount due.--In this paragraph, the term 
                `amount due' means the unappropriated amount allocated 
                to a State or Indian tribe before October 1, 2007, 
                under subparagraph (A) or (B) of section 402(g)(1).
                    ``(C) Schedule.--Payments under subparagraph (A) 
                shall be made in 7 equal annual installments, beginning 
                with fiscal year 2008.
                    ``(D) Use of funds.--
                            ``(i) Certified states and indian tribes.--
                        A State or Indian tribe that makes a 
                        certification under subsection (a) in which the 
                        Secretary concurs shall use any amounts 
                        provided under this paragraph for the purposes 
                        established by the State legislature or tribal 
                        council of the Indian tribe, with priority 
                        given for addressing the impacts of mineral 
                        development.
                            ``(ii) Uncertified states and indian 
                        tribes.--A State or Indian tribe that has not 
                        made a certification under subsection (a) in 
                        which the Secretary has concurred shall use any 
                        amounts provided under this paragraph for the 
                        purposes described in section 403.
            ``(2) Subsequent state and indian tribe share for certified 
        states and indian tribes.--
                    ``(A) In general.--Notwithstanding section 
                401(f)(3)(B), from funds referred to in section 
                402(i)(2), the Secretary shall pay to each certified 
                State or Indian tribe an amount equal to the sum of the 
                aggregate unappropriated amount allocated on or after 
                October 1, 2007, to the certified State or Indian tribe 
                under subparagraph (A) or (B) of section 402(g)(1).
                    ``(B) Certified state or indian tribe defined.--In 
                this paragraph the term `certified State or Indian 
                tribe' means a State or Indian tribe for which a 
                certification is made under subsection (a) in which the 
                Secretary concurs.
            ``(3) Manner of payment.--
                    ``(A) In general.--Subject to subparagraph (B), 
                payments to States or Indian tribes under this 
                subsection shall be made without regard to any 
                limitation in section 401(d) and concurrently with 
                payments to States under that section.
                    ``(B) Initial payments.--The first 3 payments made 
                to any State or Indian tribe shall be reduced to 25 
                percent, 50 percent, and 75 percent, respectively, of 
                the amounts otherwise required under paragraph (2)(A).
                    ``(C) Installments.--Amounts withheld from the 
                first 3 annual installments as provided under 
                subparagraph (B) shall be paid in 2 equal annual 
                installments beginning with fiscal year 2018.
            ``(4) Reallocation.--
                    ``(A) In general.--The amount allocated to any 
                State or Indian tribe under subparagraph (A) or (B) of 
                section 402(g)(1) that is paid to the State or Indian 
                tribe as a result of a payment under paragraph (1) or 
                (2) shall be reallocated and available for grants under 
                section 402(g)(5).
                    ``(B) Allocation.--The grants shall be allocated 
                based on the amount of coal historically produced 
                before August 3, 1977, in the same manner as under 
                section 402(g)(5).''.

SEC. 317. REMINING INCENTIVES.

    Title IV of the Surface Mining Control and Reclamation Act of 1977 
(30 U.S.C. 1231 et seq.) is amended by adding at the following:

``SEC. 415. REMINING INCENTIVES.

    ``(a) In General.--Notwithstanding any other provision of this Act, 
the Secretary may, after opportunity for public comment, promulgate 
regulations that describe conditions under which amounts in the fund 
may be used to provide incentives to promote remining of eligible land 
under section 404 in a manner that leverages the use of amounts from 
the fund to achieve more reclamation with respect to the eligible land 
than would be achieved without the incentives.
    ``(b) Requirements.--Any regulations promulgated under subsection 
(a) shall specify that the incentives shall apply only if the Secretary 
determines, with the concurrence of the State regulatory authority 
referred to in title V, that, without the incentives, the eligible land 
would not be likely to be remined and reclaimed.
    ``(c) Incentives.--
            ``(1) In general.--Incentives that may be considered for 
        inclusion in the regulations promulgated under subsection (a) 
        include, but are not limited to--
                    ``(A) a rebate or waiver of the reclamation fees 
                required under section 402(a); and
                    ``(B) the use of amounts in the fund to provide 
                financial assurance for remining operations in lieu of 
                all or a portion of the performance bonds required 
                under section 509.
            ``(2) Limitations.--
                    ``(A) Use.--A rebate or waiver under paragraph 
                (1)(A) shall be used only for operations that--
                            ``(i) remove or reprocess abandoned coal 
                        mine waste; or
                            ``(ii) conduct remining activities that 
                        meet the priorities specified in paragraph (1) 
                        or (2) of section 403(a).
                    ``(B) Amount.--The amount of a rebate or waiver 
                provided as an incentive under paragraph (1)(A) to 
                remine or reclaim eligible land shall not exceed the 
                estimated cost of reclaiming the eligible land under 
                this section.''.

SEC. 318. EXTENSION OF LIMITATION ON APPLICATION OF PROHIBITION ON 
              ISSUANCE OF PERMIT.

    Section 510(e) of the Surface Mining Control and Reclamation Act of 
1977 (30 U.S.C. 1260(e)) is amended by striking the last sentence.

SEC. 319. TRIBAL REGULATION OF SURFACE COAL MINING AND RECLAMATION 
              OPERATIONS.

    (a) In General.--Section 710 of the Surface Mining Control and 
Reclamation Act of 1977 (30 U.S.C. 1300) is amended by adding at the 
end the following:
    ``(j) Tribal Regulatory Authority.--
            ``(1) Tribal regulatory programs.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, an Indian tribe may apply for, and 
                obtain the approval of, a tribal program under section 
                503 regulating in whole or in part surface coal mining 
                and reclamation operations on reservation land under 
                the jurisdiction of the Indian tribe using the 
                procedures of section 504(e).
                    ``(B) References to state.--For purposes of this 
                subsection and the implementation and administration of 
                a tribal program under title V, any reference to a 
                `State' in this Act shall be considered to be a 
                reference to a `tribe'.
            ``(2) Conflicts of interest.--
                    ``(A) In general.--The fact that an individual is a 
                member of an Indian tribe does not in itself constitute 
                a violation of section 201(f).
                    ``(B) Employees of tribal regulatory authority.--
                Any employee of a tribal regulatory authority shall not 
                be eligible for a per capita distribution of any 
                proceeds from coal mining operations conducted on 
                Indian reservation lands under this Act.
            ``(3) Sovereign immunity.--To receive primary regulatory 
        authority under section 504(e), an Indian tribe shall waive 
        sovereign immunity for purposes of section 520 and paragraph 
        (4).
            ``(4) Judicial review.--
                    ``(A) Civil actions.--
                            ``(i) In general.--After exhausting all 
                        tribal remedies with respect to a civil action 
                        arising under a tribal program approved under 
                        section 504(e), an interested party may file a 
                        petition for judicial review of the civil 
                        action in the United States circuit court for 
                        the circuit in which the surface coal mining 
                        operation named in the petition is located.
                            ``(ii) Scope of review.--
                                    ``(I) Questions of law.--The United 
                                States circuit court shall review de 
                                novo any questions of law under clause 
                                (i).
                                    ``(II) Findings of fact.--The 
                                United States circuit court shall 
                                review findings of fact under clause 
                                (i) using a clearly erroneous standard.
                    ``(B) Criminal actions.--Any criminal action 
                brought under section 518 with respect to surface coal 
                mining or reclamation operations on Indian reservation 
                lands shall be brought in--
                            ``(i) the United States District Court for 
                        the District of Columbia; or
                            ``(ii) the United States district court in 
                        which the criminal activity is alleged to have 
                        occurred.
            ``(5) Grants.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), grants for developing, administering, 
                and enforcing tribal programs approved in accordance 
                with section 504(e) shall be provided to an Indian 
                tribe in accordance with section 705.
                    ``(B) Exception.--Notwithstanding subparagraph (A), 
                the Federal share of the costs of developing, 
                administering, and enforcing an approved tribal program 
                shall be 100 percent.
            ``(6) Report.--Not later than 18 months after the date on 
        which a tribal program is approved under subsection (e) of 
        section 504, the Secretary shall submit to the appropriate 
        committees of Congress a report, developed in cooperation with 
        the applicable Indian tribe, on the tribal program that 
        includes a recommendation of the Secretary on whether primary 
        regulatory authority under that subsection should be expanded 
        to include additional Indian lands.''.
    (b) Conforming Amendment.--Section 710(i) of the Surface Mining 
Control and Reclamation Act of 1977 (30 U.S.C. 1300(i)) is amended in 
the first sentence by striking ``, except'' and all that follows 
through ``section 503''.

          Subtitle B--Coal Industry Retiree Health Benefit Act

SEC. 321. CERTAIN RELATED PERSONS AND SUCCESSORS IN INTEREST RELIEVED 
              OF LIABILITY IF PREMIUMS PREPAID.

    (a) Combined Benefit Fund.--
            (1) In general.--Section 9704 of the Internal Revenue Code 
        of 1986 (relating to liability of assigned operators) is 
        amended by adding at the end the following new subsection:
    ``(j) Prepayment of Premium Liability.--
            ``(1) In general.--If--
                    ``(A) a payment meeting the requirements of 
                paragraph (3) is made to the Combined Fund by or on 
                behalf of--
                            ``(i) any assigned operator to which this 
                        subsection applies, or
                            ``(ii) any related person to any assigned 
                        operator described in clause (i), and
                    ``(B) the common parent of the controlled group of 
                corporations described in paragraph (2)(B) is jointly 
                and severally liable for any premium under this section 
                which (but for this subsection) would be required to be 
                paid by the assigned operator or related person,
        then such common parent (and no other person) shall be liable 
        for such premium.
            ``(2) Assigned operators to which subsection applies.--
                    ``(A) In general.--This subsection shall apply to 
                any assigned operator if--
                            ``(i) the assigned operator (or a related 
                        person to the assigned operator)--
                                    ``(I) made contributions to the 
                                1950 UMWA Benefit Plan and the 1974 
                                UMWA Benefit Plan for employment during 
                                the period covered by the 1988 
                                agreement; and
                                    ``(II) is not a 1988 agreement 
                                operator,
                            ``(ii) the assigned operator (and all 
                        related persons to the assigned operator) are 
                        not actively engaged in the production of coal 
                        as of July 1, 2005, and
                            ``(iii) the assigned operator was, as of 
                        July 20, 1992, a member of a controlled group 
                        of corporations described in subparagraph (B).
                    ``(B) Controlled group of corporations.--A 
                controlled group of corporations is described in this 
                subparagraph if the common parent of such group is a 
                corporation the shares of which are publicly traded on 
                a United States exchange.
                    ``(C) Coordination with repeal of assignments.--A 
                person shall not fail to be treated as an assigned 
                operator to which this subsection applies solely 
                because the person ceases to be an assigned operator by 
                reason of section 9706(h)(1) if the person otherwise 
                meets the requirements of this subsection and is liable 
                for the payment of premiums under section 9706(h)(3).
                    ``(D) Controlled group.--For purposes of this 
                subsection, the term `controlled group of corporations' 
                has the meaning given such term by section 52(a).
            ``(3) Requirements.--A payment meets the requirements of 
        this paragraph if--
                    ``(A) the amount of the payment is not less than 
                the present value of the total premium liability under 
                this chapter with respect to the Combined Fund of the 
                assigned operators or related persons described in 
                paragraph (1) or their assignees, as determined by the 
                operator's or related person's enrolled actuary (as 
                defined in section 7701(a)(35)) using actuarial methods 
                and assumptions each of which is reasonable and which 
                are reasonable in the aggregate, as determined by such 
                enrolled actuary;
                    ``(B) such enrolled actuary files with the 
                Secretary of Labor a signed actuarial report 
                containing--
                            ``(i) the date of the actuarial valuation 
                        applicable to the report; and
                            ``(ii) a statement by the enrolled actuary 
                        signing the report that, to the best of the 
                        actuary's knowledge, the report is complete and 
                        accurate and that in the actuary's opinion the 
                        actuarial assumptions used are in the aggregate 
                        reasonably related to the experience of the 
                        operator and to reasonable expectations; and
                    ``(C) 90 calendar days have elapsed after the 
                report required by subparagraph (B) is filed with the 
                Secretary of Labor, and the Secretary of Labor has not 
                notified the assigned operator in writing that the 
                requirements of this paragraph have not been satisfied.
            ``(4) Use of prepayment.--The Combined Fund shall--
                    ``(A) establish and maintain an account for each 
                assigned operator or related person by, or on whose 
                behalf, a payment described in paragraph (3) was made,
                    ``(B) credit such account with such payment (and 
                any earnings thereon), and
                    ``(C) use all amounts in such account exclusively 
                to pay premiums that would (but for this subsection) be 
                required to be paid by the assigned operator.
        Upon termination of the obligations for the premium liability 
        of any assigned operator or related person for which such 
        account is maintained, all funds remaining in such account (and 
        earnings thereon) shall be refunded to such person as may be 
        designated by the common parent described in paragraph 
        (1)(B).''.
    (b) Individual Employer Plans.--Section 9711(c) of the Internal 
Revenue Code of 1986 (relating to joint and several liability) is 
amended to read as follows:
    ``(c) Joint and Several Liability of Related Persons.--
            ``(1) In general.--Except as provided in paragraph (2), 
        each related person of a last signatory operator to which 
        subsection (a) or (b) applies shall be jointly and severally 
        liable with the last signatory operator for the provision of 
        health care coverage described in subsection (a) or (b).
            ``(2) Liability limited if security provided.--If--
                    ``(A) security meeting the requirements of 
                paragraph (3) is provided by or on behalf of--
                            ``(i) any last signatory operator which is 
                        an assigned operator described in section 
                        9704(j)(2), or
                            ``(ii) any related person to any last 
                        signatory operator described in clause (i), and
                    ``(B) the common parent of the controlled group of 
                corporations described in section 9704(j)(2)(B) is 
                jointly and severally liable for the provision of 
                health care under this section which, but for this 
                paragraph, would be required to be provided by the last 
                signatory operator or related person,
        then, as of the date the security is provided, such common 
        parent (and no other person) shall be liable for the provision 
        of health care under this section which the last signatory 
        operator or related person would otherwise be required to 
        provide. Security may be provided under this paragraph without 
        regard to whether a payment was made under section 9704(j).
            ``(3) Security.--Security meets the requirements of this 
        paragraph if--
                    ``(A) the security--
                            ``(i) is in the form of a bond, letter of 
                        credit, or cash escrow,
                            ``(ii) is provided to the trustees of the 
                        1992 UMWA Benefit Plan solely for the purpose 
                        of paying premiums for beneficiaries who would 
                        be described in section 9712(b)(2)(B) if the 
                        requirements of this section were not met by 
                        the last signatory operator, and
                            ``(iii) is in an amount equal to 1 year of 
                        liability of the last signatory operator under 
                        this section, determined by using the average 
                        cost of such operator's liability during the 
                        prior 3 calendar years;
                    ``(B) the security is in addition to any other 
                security required under any other provision of this 
                title; and
                    ``(C) the security remains in place for 5 years.
            ``(4) Refunds of security.--The remaining amount of any 
        security provided under this subsection (and earnings thereon) 
        shall be refunded to the last signatory operator as of the 
        earlier of--
                    ``(A) the termination of the obligations of the 
                last signatory operator under this section, or
                    ``(B) the end of the 5-year period described in 
                paragraph (4)(C).''.
    (c) 1992 UMWA Benefit Plan.--Section 9712(d)(4) of the Internal 
Revenue Code of 1986 (relating to joint and several liability) is 
amended by adding at the end the following new sentence: ``The 
provisions of section 9711(c)(2) shall apply to any last signatory 
operator described in such section (without regard to whether security 
is provided under such section, a payment is made under section 
9704(j), or both) and if security meeting the requirements of section 
9711(c)(3) is provided, the common parent described in section 
9711(c)(2)(B) shall be exclusively responsible for any liability for 
premiums under this section which, but for this sentence, would be 
required to be paid by the last signatory operator or any related 
person.''.
    (d) Successor in Interest.--Section 9701(c) of the Internal Revenue 
Code of 1986 (relating to terms relating to operators) is amended by 
adding at the end the following new paragraph:
            ``(8) Successor in interest.--
                    ``(A) Safe harbor.--The term `successor in 
                interest' shall not include any person who--
                            ``(i) is an unrelated person to an eligible 
                        seller described in subparagraph (C); and
                            ``(ii) purchases for fair market value 
                        assets, or all of the stock, of a related 
                        person to such seller, in a bona fide, arm's-
                        length sale.
                    ``(B) Unrelated person.--The term `unrelated 
                person' means a purchaser who does not bear a 
                relationship to the eligible seller described in 
                section 267(b).
                    ``(C) Eligible seller.--For purposes of this 
                paragraph, the term `eligible seller' means an assigned 
                operator described in section 9704(j)(2) or a related 
                person to such assigned operator.''.
    (e) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act, except that the 
amendment made by subsection (d) shall apply to transactions after the 
date of the enactment of this Act.

SEC. 322. TRANSFERS TO FUNDS; PREMIUM RELIEF.

    (a) Combined Fund.--
            (1) Federal transfers.--Section 9705(b) of the Internal 
        Revenue Code of 1986 (relating to transfers from Abandoned Mine 
        Reclamation Fund) is amended--
                    (A) in paragraph (1), by striking ``section 
                402(h)'' and inserting ``subsections (h) and (i) of 
                section 402'';
                    (B) by striking paragraph (2) and inserting the 
                following new paragraph:
            ``(2) Use of funds.--Any amount transferred under paragraph 
        (1) for any fiscal year shall be used to pay benefits and 
        administrative costs of beneficiaries of the Combined Fund or 
        for such other purposes as are specifically provided in the 
        Acts described in paragraph (1).''; and
                    (C) by striking ``From Abandoned Mine Reclamation 
                Fund''.
            (2) Modifications of premiums to reflect federal 
        transfers.--
                    (A) Elimination of unassigned beneficiaries 
                premium.--Section 9704(d) of such Code (establishing 
                unassigned beneficiaries premium) is amended to read as 
                follows:
    ``(d) Unassigned Beneficiaries Premium.--
            ``(1) Plan years ending on or before september 30, 2006.--
        For plan years ending on or before September 30, 2006, the 
        unassigned beneficiaries premium for any assigned operator 
        shall be equal to the applicable percentage of the product of 
        the per beneficiary premium for the plan year multiplied by the 
        number of eligible beneficiaries who are not assigned under 
        section 9706 to any person for such plan year.
            ``(2) Plan years beginning on or after october 1, 2006.--
                    ``(A) In general.--For plan years beginning on or 
                after October 1, 2006, subject to subparagraph (B), 
                there shall be no unassigned beneficiaries premium, and 
                benefit costs with respect to eligible beneficiaries 
                who are not assigned under section 9706 to any person 
                for any such plan year shall be paid from amounts 
                transferred under section 9705(b).
                    ``(B) Inadequate transfers.--If, for any plan year 
                beginning on or after October 1, 2006, the amounts 
                transferred under section 9705(b) are less than the 
                amounts required to be transferred to the Combined Fund 
                under subsection (h)(2)(A) or (i) of section 402 of the 
                Surface Mining Control and Reclamation Act of 1977 (30 
                U.S.C. 1232)), then the unassigned beneficiaries 
                premium for any assigned operator shall be equal to the 
                operator's applicable percentage of the amount required 
                to be so transferred which was not so transferred.''.
                    (B) Premium accounts.--
                            (i) Crediting of accounts.--Section 
                        9704(e)(1) of such Code (relating to premium 
                        accounts; adjustments) is amended by inserting 
                        ``and amounts transferred under section 
                        9705(b)'' after ``premiums received''.
                            (ii) Surpluses attributable to public 
                        funding.--Section 9704(e)(3)(A) of such Code is 
                        amended by adding at the end the following new 
                        sentence: ``Amounts credited to an account from 
                        amounts transferred under section 9705(b) shall 
                        not be taken into account in determining 
                        whether there is a surplus in the account for 
                        purposes of this paragraph.''.
                    (C) Applicable percentage.--Section 9704(f)(2) of 
                such Code (relating to annual adjustments) is amended 
                by adding at the end the following new subparagraph:
                    ``(C) In the case of plan years beginning on or 
                after October 1, 2007, the total number of assigned 
                eligible beneficiaries shall be reduced by the eligible 
                beneficiaries whose assignments have been revoked under 
                section 9706(h).''.
            (3) Assignments and reassignment.--Section 9706 of the 
        Internal Revenue Code of 1986 (relating to assignment of 
        eligible beneficiaries) is amended by adding at the end the 
        following:
    ``(h) Assignments as of October 1, 2007.--
            ``(1) In general.--Subject to the premium obligation set 
        forth in paragraph (3), the Commissioner of Social Security 
        shall--
                    ``(A) revoke all assignments to persons other than 
                1988 agreement operators for purposes of assessing 
                premiums for plan years beginning on and after October 
                1, 2007; and
                    ``(B) make no further assignments to persons other 
                than 1988 agreement operators, except that no 
                individual who becomes an unassigned beneficiary by 
                reason of subparagraph (A) may be assigned to a 1988 
                agreement operator.
            ``(2) Reassignment upon purchase.--This subsection shall 
        not be construed to prohibit the reassignment under subsection 
        (b)(2) of an eligible beneficiary.
            ``(3) Liability of persons during three fiscal years 
        beginning on and after october 1, 2007.--In the case of each of 
        the fiscal years beginning on October 1, 2007, 2008, and 2009, 
        each person other than a 1988 agreement operator shall pay to 
        the Combined Fund the following percentage of the amount of 
        annual premiums that such person would otherwise be required to 
        pay under section 9704(a), determined on the basis of 
        assignments in effect without regard to the revocation of 
        assignments under paragraph (1)(A):
                    ``(A) For the fiscal year beginning on October 1, 
                2007, 55 percent.
                    ``(B) For the fiscal year beginning on October 1, 
                2008, 40 percent.
                    ``(C) For the fiscal year beginning on October 1, 
                2009, 15 percent.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to plan years of the Combined Fund beginning after 
        September 30, 2006.
    (b) 1992 UMWA Benefit and Other Plans.--
            (1) Transfers to plans.--Section 9712(a) of the Internal 
        Revenue Code of 1986 (relating to the establishment and 
        coverage of the 1992 UMWA Benefit Plan) is amended by adding at 
        the end the following:
            ``(3) Transfers under other federal statutes.--
                    ``(A) In general.--The 1992 UMWA Benefit Plan shall 
                include any amount transferred to the plan under 
                subsections (h) and (i) of section 402 of the Surface 
                Mining Control and Reclamation Act of 1977 (30 U.S.C. 
                1232).
                    ``(B) Use of funds.--Any amount transferred under 
                subparagraph (A) for any fiscal year shall be used to 
                provide the health benefits described in subsection (c) 
                with respect to any beneficiary for whom no monthly per 
                beneficiary premium is paid pursuant to paragraph 
                (1)(A) or (3) of subsection (d).
            ``(4) Special rule for 1993 plan.--
                    ``(A) In general.--The plan described in section 
                402(h)(2)(C) of the Surface Mining Control and 
                Reclamation Act of 1977 (30 U.S.C. 1232(h)(2)(C)) shall 
                include any amount transferred to the plan under 
                subsections (h) and (i) of the Surface Mining Control 
                and Reclamation Act of 1977 (30 U.S.C. 1232).
                    ``(B) Use of funds.--Any amount transferred under 
                subparagraph (A) for any fiscal year shall be used to 
                provide the health benefits described in section 
                402(h)(2)(C)(i) of the Surface Mining Control and 
                Reclamation Act of 1977 (30 U.S.C. 1232(h)(2)(C)(i)) to 
                individuals described in section 402(h)(2)(C) of such 
                Act (30 U.S.C. 1232(h)(2)(C)).''.
            (2) Premium adjustments.--
                    (A) In general.--Section 9712(d)(1) of such Code 
                (relating to guarantee of benefits) is amended to read 
                as follows:
            ``(1) In general.--All 1988 last signatory operators shall 
        be responsible for financing the benefits described in 
        subsection (c) by meeting the following requirements in 
        accordance with the contribution requirements established in 
        the 1992 UMWA Benefit Plan:
                    ``(A) The payment of a monthly per beneficiary 
                premium by each 1988 last signatory operator for each 
                eligible beneficiary of such operator who is described 
                in subsection (b)(2) and who is receiving benefits 
                under the 1992 UMWA benefit plan.
                    ``(B) The provision of a security (in the form of a 
                bond, letter of credit, or cash escrow) in an amount 
                equal to a portion of the projected future cost to the 
                1992 UMWA Benefit Plan of providing health benefits for 
                eligible and potentially eligible beneficiaries 
                attributable to the 1988 last signatory operator.
                    ``(C) If the amounts transferred under subsection 
                (a)(3) are less than the amounts required to be 
                transferred to the 1992 UMWA Benefit Plan under 
                subsections (h) and (i) of section 402 of the Surface 
                Mining Control and Reclamation Act of 1977 (30 U.S.C. 
                1232), the payment of an additional backstop premium by 
                each 1988 last signatory operator which is equal to 
                such operator's share of the amounts required to be so 
                transferred but which were not so transferred, 
                determined on the basis of the number of eligible and 
                potentially eligible beneficiaries attributable to the 
                operator.''.
                    (B) Conforming amendments.--Section 9712(d) of such 
                Code is amended--
                            (i) in paragraph (2)(B), by striking 
                        ``prefunding'' and inserting ``backstop'', and
                            (ii) in paragraph (3), by striking 
                        ``paragraph (1)(B)'' and inserting ``paragraph 
                        (1) (A)''.
                    (C) Effective date.--The amendments made by this 
                paragraph shall apply to fiscal years beginning on or 
                after October 1, 2010.

SEC. 323. OTHER PROVISIONS.

    (a) Board of Trustees.--Section 9702(b) of the Internal Revenue 
Code of 1986 (relating to board of trustees of the Combined Fund) is 
amended to read as follows:
    ``(b) Board of Trustees.--
            ``(1) In general.--For purposes of subsection (a), the 
        board of trustees for the Combined Fund shall be appointed as 
        follows:
                    ``(A) 2 individuals who represent employers in the 
                coal mining industry shall be designated by the BCOA;
                    ``(B) 2 individuals designated by the United Mine 
                Workers of America; and
                    ``(C) 3 individuals selected by the individuals 
                appointed under subparagraphs (A) and (B).
            ``(2) Successor trustees.--Any successor trustee shall be 
        appointed in the same manner as the trustee being succeeded. 
        The plan establishing the Combined Fund shall provide for the 
        removal of trustees.
            ``(3) Special rule.--If the BCOA ceases to exist, any 
        trustee or successor under paragraph (1)(A) shall be designated 
        by the 3 employers who were members of the BCOA on the 
        enactment date and who have been assigned the greatest number 
        of eligible beneficiaries under section 9706.''.
    (b) Enforcement of Obligations.--
            (1) Failure to pay premiums.--Section 9707(a) of the 
        Internal Revenue Code of 1986 is amended to read as follows:
    ``(a) Failures to Pay.--
            ``(1) Premiums for eligible beneficiaries.--There is hereby 
        imposed a penalty on the failure of any assigned operator to 
        pay any premium required to be paid under section 9704 with 
        respect to any eligible beneficiary.
            ``(2) Contributions required under the mining laws.--There 
        is hereby imposed a penalty on the failure of any person to 
        make a contribution required under section 402(h)(5)(B)(ii) of 
        the Surface Mining Control and Reclamation Act of 1977 to a 
        plan referred to in section 402(h)(2)(C) of such Act. For 
        purposes of applying this section, each such required monthly 
        contribution for the hours worked of any individual shall be 
        treated as if it were a premium required to be paid under 
        section 9704 with respect to an eligible beneficiary.''.
            (2) Civil enforcement.--Section 9721 of such Code is 
        amended to read as follows:

``SEC. 9721. CIVIL ENFORCEMENT.

    ``The provisions of section 4301 of the Employee Retirement Income 
Security Act of 1974 shall apply, in the same manner as any claim 
arising out of an obligation to pay withdrawal liability under subtitle 
E of title IV of such Act, to any claim--
            ``(1) arising out of an obligation to pay any amount 
        required to be paid by this chapter; or
            ``(2) arising out of an obligation to pay any amount 
        required by section 402(h)(5)(B)(ii) of the Surface Mining 
        Control and Reclamation Act of 1977 (30 U.S.C. 
        1232(h)(5)(B)(ii)).''.

                   TITLE IV--INCREASE IN MINIMUM WAGE

SEC. 401. MINIMUM WAGE.

    Section 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 
206(a)(1)) is amended to read as follows:
            ``(1) except as otherwise provided in this section, not 
        less than--
                    ``(A) $5.15 an hour beginning September 1, 1997;
                    ``(B) $5.85 an hour, beginning on January 1, 2007;
                    ``(C) $6.55 an hour, beginning June 1, 2008; and
                    ``(D) $7.25 an hour, beginning June 1, 2009;''.

SEC. 402. TIPPED WAGE FAIRNESS.

    Section 3(m) of the Fair Labor Standards Act of 1938 (29 U.S.C. 
203(m)) is amended--
            (1) by redesignating paragraphs (1) and (2) as 
        subparagraphs (A) and (B), respectively;
            (2) by striking ```Wage' paid to any employee'' and 
        inserting ``(1) `Wage' paid to any employee'';
            (3) in subparagraph (B) (as so redesignated), by inserting 
        before the period the following: ``: Provided, That the tips 
        shall not be included as part of the wage paid to an employee 
        to the extent that they are excluded therefrom under the terms 
        of a bona fide collective bargaining agreement applicable to 
        the particular employee''; and
            (4) by adding at the end of the following:
    ``(2) Notwithstanding any other provision of this Act, any State or 
political subdivision of a State which on or after the date of 
enactment of the Estate Tax and Extension of Tax Relief Act of 2006 
excludes all of a tipped employee's tips from being considered as wages 
in determining if such tipped employee has been paid the applicable 
minimum wage rate, may not establish or enforce the minimum wage rate 
provisions of such law, ordinance, regulation, or order in such State 
or political subdivision thereof with respect to tipped employees 
unless such law, ordinance, regulation, or order is revised or amended 
to permit such employee to be paid a wage by the employee's employer in 
an amount not less than an amount equal to--
            ``(A) the cash wage paid such employee which is required 
        under such law, ordinance, regulation, or order on the date of 
        enactment of the Estate Tax and Extension of Tax Relief Act of 
        2006; and
            ``(B) an additional amount on account of tips received by 
        such employee which amount is equal to the difference between 
        the cash wage described in subparagraph (A) and the minimum 
        wage rate in effect under such law, ordinance, regulation, or 
        order, or the minimum wage rate in effect under section 6(a), 
        whichever is higher.''.

            Passed the House of Representatives July 29 (legislative 
      day, July 28), 2006.

            Attest:

                                                                 Clerk.
109th CONGRESS

  2d Session

                               H. R. 5970

_______________________________________________________________________

                                 AN ACT

  To amend the Internal Revenue Code of 1986 to increase the unified 
credit against the estate tax to an exclusion equivalent of $5,000,000, 
 to repeal the sunset provision for the estate and generation-skipping 
   taxes, and to extend expiring provisions, and for other purposes.