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American Association of Airport Executives &
Airports Council International - North America Legislative Affairs Representing the nation's airports in Washington, D.C. |
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H.R. 3448
H.R.3448
One Hundred Fourth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Wednesday,
the third day of January, one thousand nine hundred and ninety-six
An Act
To provide tax relief for small businesses, to protect jobs, to
create opportunities, to increase the take home pay of workers, to
amend the Portal-to-Portal Act of 1947 relating to the payment of
wages to employees who use employer owned vehicles, and to amend
the Fair Labor Standards Act of 1938 to increase the minimum wage
rate and to prevent job loss by providing flexibility to employers
in complying with minimum wage and overtime requirements under that
Act.
Be it enacted by the Senate and House of
Representatives of the United States of America in Congress
assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE- This Act may be cited as the `Small Business Job
Protection Act of 1996'.
(b) TABLE OF CONTENTS-
Sec. 1. Short title; table of contents.
TITLE I--SMALL BUSINESS AND OTHER TAX PROVISIONS
Sec. 1101. Amendment of 1986 Code.
Sec. 1102. Underpayments of estimated tax.
SUBTITLE A--EXPENSING; ETC.
Sec. 1111. Increase in expense treatment for small businesses.
Sec. 1112. Treatment of employee tips.
Sec. 1113. Treatment of storage of product samples.
Sec. 1114. Treatment of certain charitable risk pools.
Sec. 1115. Treatment of dues paid to agricultural or horticultural
organizations.
Sec. 1116. Clarification of employment tax status of certain
fishermen.
Sec. 1117. Modifications of tax-exempt bond rules for first-time
farmers.
Sec. 1118. Newspaper distributors treated as direct sellers.
Sec. 1119. Application of involuntary conversion rules to
presidentially declared disasters.
Sec. 1120. Class life for gas station convenience stores and
similar structures.
Sec. 1121. Treatment of abandonment of lessor improvements at
termination of lease.
Sec. 1122. Special rules relating to determination whether
individuals are employees for purposes of employment taxes.
Sec. 1123. Treatment of housing provided to employees by academic
health centers.
SUBTITLE B--EXTENSION OF CERTAIN EXPIRING PROVISIONS
Sec. 1201. Work opportunity tax credit.
Sec. 1202. Employer-provided educational assistance programs.
Sec. 1203. FUTA exemption for alien agricultural workers.
Sec. 1204. Research credit.
Sec. 1205. Orphan drug tax credit.
Sec. 1206. Contributions of stock to private foundations.
Sec. 1207. Extension of binding contract date for biomass and coal
facilities.
Sec. 1208. Moratorium for excise tax on diesel fuel sold for use or
used in diesel-powered motorboats.
SUBTITLE C--PROVISIONS RELATING TO S CORPORATIONS
Sec. 1301. S corporations permitted to have 75 shareholders.
Sec. 1302. Electing small business trusts.
Sec. 1303. Expansion of post-death qualification for certain trusts.
Sec. 1304. Financial institutions permitted to hold safe harbor debt.
Sec. 1305. Rules relating to inadvertent terminations and invalid
elections.
Sec. 1306. Agreement to terminate year.
Sec. 1307. Expansion of post-termination transition period.
Sec. 1308. S corporations permitted to hold subsidiaries.
Sec. 1309. Treatment of distributions during loss years.
Sec. 1310. Treatment of S corporations under subchapter C.
Sec. 1311. Elimination of certain earnings and profits.
Sec. 1312. Carryover of disallowed losses and deductions under
at-risk rules allowed.
Sec. 1313. Adjustments to basis of inherited S stock to reflect
certain items of income.
Sec. 1314. S corporations eligible for rules applicable to real
property subdivided for sale by noncorporate taxpayers.
Sec. 1315. Financial institutions.
Sec. 1316. Certain exempt organizations allowed to be shareholders.
Sec. 1317. Effective date.
SUBTITLE D--PENSION SIMPLIFICATION
CHAPTER 1--SIMPLIFIED DISTRIBUTION RULES
Sec. 1401. Repeal of 5-year income averaging for lump-sum
distributions.
Sec. 1402. Repeal of $5,000 exclusion of employees' death benefits.
Sec. 1403. Simplified method for taxing annuity distributions under
certain employer plans.
Sec. 1404. Required distributions.
CHAPTER 2--INCREASED ACCESS TO RETIREMENT PLANS
SUBCHAPTER A--SIMPLE SAVINGS PLANS
Sec. 1421. Establishment of savings incentive match plans for
employees of small employers.
Sec. 1422. Extension of simple plan to 401(k) arrangements.
SUBCHAPTER B--OTHER PROVISIONS
Sec. 1426. Tax-exempt organizations eligible under section 401(k).
Sec. 1427. Homemakers eligible for full IRA deduction.
CHAPTER 3--NONDISCRIMINATION PROVISIONS
Sec. 1431. Definition of highly compensated employees; repeal of
family aggregation.
Sec. 1432. Modification of additional participation requirements.
Sec. 1433. Nondiscrimination rules for qualified cash or deferred
arrangements and matching contributions.
Sec. 1434. Definition of compensation for section 415 purposes.
CHAPTER 4--MISCELLANEOUS PROVISIONS
Sec. 1441. Plans covering self-employed individuals.
Sec. 1442. Elimination of special vesting rule for multiemployer
plans.
Sec. 1443. Distributions under rural cooperative plans.
Sec. 1444. Treatment of governmental plans under section 415.
Sec. 1445. Uniform retirement age.
Sec. 1446. Contributions on behalf of disabled employees.
Sec. 1447. Treatment of deferred compensation plans of State and
local governments and tax-exempt organizations.
Sec. 1448. Trust requirement for deferred compensation plans of
State and local governments.
Sec. 1449. Transition rule for computing maximum benefits under
section 415 limitations.
Sec. 1450. Modifications of section 403(b).
Sec. 1451. Special rules relating to joint and survivor annuity
explanations.
Sec. 1452. Repeal of limitation in case of defined benefit plan and
defined contribution plan for same employee; excess distributions.
Sec. 1453. Tax on prohibited transactions.
Sec. 1454. Treatment of leased employees.
Sec. 1455. Uniform penalty provisions to apply to certain pension
reporting requirements.
Sec. 1456. Retirement benefits of ministers not subject to tax on
net earnings from self-employment.
Sec. 1457. Sample language for spousal consent and qualified
domestic relations forms.
Sec. 1458. Treatment of length of service awards to volunteers
performing fire fighting or prevention services, emergency medical
services, or ambulance services.
Sec. 1459. Alternative nondiscrimination rules for certain plans
that provide for early participation.
Sec. 1460. Clarification of application of ERISA to insurance
company general accounts.
Sec. 1461. Special rules for chaplains and self-employed ministers.
Sec. 1462. Definition of highly compensated employee for pre-ERISA
rules for church plans.
Sec. 1463. Rule relating to investment in contract not to apply to
foreign missionaries.
Sec. 1464. Waiver of excise tax on failure to pay liquidity
shortfall.
Sec. 1465. Date for adoption of plan amendments.
SUBTITLE E--FOREIGN SIMPLIFICATION
Sec. 1501. Repeal of inclusion of certain earnings invested in
excess passive assets.
SUBTITLE F--REVENUE OFFSETS
PART I--GENERAL PROVISIONS
Sec. 1601. Modifications of Puerto Rico and possession tax credit.
Sec. 1602. Repeal of exclusion for interest on loans used to
acquire employer securities.
Sec. 1603. Certain amounts derived from foreign corporations
treated as unrelated business taxable income.
Sec. 1604. Depreciation under income forecast method.
Sec. 1605. Repeal of exclusion for punitive damages and for damages
not attributable to physical injuries or sickness.
Sec. 1606. Repeal of diesel fuel tax rebate to purchasers of
diesel-powered automobiles and light trucks.
Sec. 1607. Extension and phasedown of luxury passenger automobile
tax.
Sec. 1608. Termination of future tax-exempt bond financing for
local furnishers of electricity and gas.
Sec. 1609. Extension of Airport and Airway Trust Fund excise taxes.
Sec. 1610. Basis adjustment to property held by corporation where
stock in corporation is replacement property under involuntary
conversion rules.
Sec. 1611. Treatment of certain insurance contracts on retired lives.
Sec. 1612. Treatment of modified guaranteed contracts.
Sec. 1613. Treatment of contributions in aid of construction.
Sec. 1614. Election to cease status as qualified scholarship
funding corporation.
Sec. 1615. Certain tax benefits denied to individuals failing to
provide taxpayer identification numbers.
Sec. 1616. Repeal of bad debt reserve method for thrift savings
associations.
Sec. 1617. Exclusion for energy conservation subsidies limited to
subsidies with respect to dwelling units.
PART II--FINANCIAL ASSET SECURITIZATION INVESTMENTS
Sec. 1621. Financial Asset Securitization Investment Trusts.
SUBTITLE G--TECHNICAL CORRECTIONS
Sec. 1701. Coordination with other subtitles.
Sec. 1702. Amendments related to Revenue Reconciliation Act of 1990.
Sec. 1703. Amendments related to Revenue Reconciliation Act of 1993.
Sec. 1704. Miscellaneous provisions.
SUBTITLE H--OTHER PROVISIONS
Sec. 1801. Exemption from diesel fuel dyeing requirements with
respect to certain States.
Sec. 1802. Treatment of certain university accounts.
Sec. 1803. Modifications to excise tax on ozone-depleting chemicals.
Sec. 1804. Tax-exempt bonds for sale of Alaska Power Administration
facility.
Sec. 1805. Nonrecognition treatment for certain transfers by common
trust funds to regulated investment companies.
Sec. 1806. Qualified State tuition programs.
Sec. 1807. Adoption assistance.
Sec. 1808. Removal of barriers to interethnic adoption.
Sec. 1809. 6-month delay of electronic fund transfer requirement.
SUBTITLE I--FOREIGN TRUST TAX COMPLIANCE
Sec. 1901. Improved information reporting on foreign trusts.
Sec. 1902. Comparable penalties for failure to file return relating
to transfers to foreign entities.
Sec. 1903. Modifications of rules relating to foreign trusts having
one or more United States beneficiaries.
Sec. 1904. Foreign persons not to be treated as owners under
grantor trust rules.
Sec. 1905. Information reporting regarding foreign gifts.
Sec. 1906. Modification of rules relating to foreign trusts which
are not grantor trusts.
Sec. 1907. Residence of trusts, etc.
SUBTITLE J--GENERALIZED SYSTEM OF PREFERENCES
Sec. 1951. Short title.
Sec. 1952. Generalized System of Preferences.
Sec. 1953. Effective date.
Sec. 1954. Conforming amendments.
TITLE II--PAYMENT OF WAGES
Sec. 2101. Short title.
Sec. 2102. Proper compensation for use of employer vehicles.
Sec. 2103. Effective date.
Sec. 2104. Minimum wage increase.
Sec. 2105. Fair Labor Standards Act Amendments.
TITLE I--SMALL BUSINESS AND OTHER TAX PROVISIONS
SEC. 1101. AMENDMENT OF 1986 CODE.
Except as otherwise expressly provided, whenever in this title an
amendment or repeal is expressed in terms of an amendment to, or
repeal of, a section or other provision, the reference shall be
considered to be made to a section or other provision of the
Internal Revenue Code of 1986.
SEC. 1102. UNDERPAYMENTS OF ESTIMATED TAX.
No addition to the tax shall be made under section 6654 or 6655
of the Internal Revenue Code of 1986 (relating to failure to pay
estimated tax) with respect to any underpayment of an installment
required to be paid before the date of the enactment of this Act to
the extent such underpayment was created or increased by any
provision of this title.
SUBTITLE A--EXPENSING; ETC.
SEC. 1111. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.
(a) GENERAL RULE- Paragraph (1) of section 179(b) (relating to
dollar limitation) is amended to read as follows:
`(1) DOLLAR LIMITATION- The aggregate cost which may be taken
into account under subsection (a) for any taxable year shall
not exceed the following applicable amount:
[Bold->] `If the taxable year [<-Bold]
-- [Bold->] The applicable [<-Bold]
[Bold->] begins in: [<-Bold]
-- [Bold->] amount is: [<-Bold]
1997
-- 18,000
1998
-- 18,500
1999
-- 19,000
2000
-- 20,000
2001 or 2002
-- 24,000
2003 or thereafter
-- 25,000.'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1996.
SEC. 1112. TREATMENT OF EMPLOYEE TIPS.
(a) EMPLOYEE CASH TIPS-
(1) REPORTING REQUIREMENT NOT CONSIDERED- Subparagraph (A) of
section 45B(b)(1) (relating to excess employer social security
tax) is amended by inserting `(without regard to whether such
tips are reported under section 6053)' after `section 3121(q)'.
(2) TAXES PAID- Subsection (d) of section 13443 of the
Revenue Reconciliation Act of 1993 is amended by inserting `,
with respect to services performed before, on, or after such
date' after `1993'.
(3) EFFECTIVE DATE- The amendments made by this subsection
shall take effect as if included in the amendments made by, and
the provisions of, section 13443 of the Revenue Reconciliation
Act of 1993.
(b) TIPS FOR EMPLOYEES DELIVERING FOOD OR BEVERAGES-
(1) IN GENERAL- Paragraph (2) of section 45B(b) is amended to
read as follows:
`(2) ONLY TIPS RECEIVED FOR FOOD OR BEVERAGES TAKEN INTO
ACCOUNT- In applying paragraph (1), there shall be taken into
account only tips received from customers in connection with
the providing, delivering, or serving of food or beverages for
consumption if the tipping of employees delivering or serving
food or beverages by customers is customary.'.
(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall
apply to tips received for services performed after December
31, 1996.
SEC. 1113. TREATMENT OF STORAGE OF PRODUCT SAMPLES.
(a) IN GENERAL- Paragraph (2) of section 280A(c) is amended by
striking `inventory' and inserting `inventory or product samples'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1995.
SEC. 1114. TREATMENT OF CERTAIN CHARITABLE RISK POOLS.
(a) GENERAL RULE- Section 501 (relating to exemption from tax on
corporations, certain trusts, etc.) is amended by redesignating
subsection (n) as subsection (o) and by inserting after subsection
(m) the following new subsection:
`(n) CHARITABLE RISK POOLS-
`(1) IN GENERAL- For purposes of this title--
`(A) a qualified charitable risk pool shall be treated as
an organization organized and operated exclusively for
charitable purposes, and
`(B) subsection (m) shall not apply to a qualified
charitable risk pool.
`(2) QUALIFIED CHARITABLE RISK POOL- For purposes of this
subsection, the term `qualified charitable risk pool' means any
organization--
`(A) which is organized and operated solely to pool
insurable risks of its members (other than risks related to
medical malpractice) and to provide information to its
members with respect to loss control and risk management,
`(B) which is comprised solely of members that are
organizations described in subsection (c)(3) and exempt
from tax under subsection (a), and
`(C) which meets the organizational requirements of
paragraph (3).
`(3) ORGANIZATIONAL REQUIREMENTS- An organization
(hereinafter in this subsection referred to as the `risk pool')
meets the organizational requirements of this paragraph if--
`(A) such risk pool is organized as a nonprofit
organization under State law provisions authorizing risk
pooling arrangements for charitable organizations,
`(B) such risk pool is exempt from any income tax imposed
by the State (or will be so exempt after such pool
qualifies as an organization exempt from tax under this
title),
`(C) such risk pool has obtained at least $1,000,000 in
startup capital from nonmember charitable organizations,
`(D) such risk pool is controlled by a board of directors
elected by its members, and
`(E) the organizational documents of such risk pool
require that--
`(i) each member of such pool shall at all times be
an organization described in subsection (c)(3) and
exempt from tax under subsection (a),
`(ii) any member which receives a final determination
that it no longer qualifies as an organization
described in subsection (c)(3) shall immediately notify
the pool of such determination and the effective date
of such determination, and
`(iii) each policy of insurance issued by the risk
pool shall provide that such policy will not cover the
insured with respect to events occurring after the date
such final determination was issued to the insured.
An organization shall not cease to qualify as a qualified
charitable risk pool solely by reason of the failure of any of
its members to continue to be an organization described in
subsection (c)(3) if, within a reasonable period of time after
such pool is notified as required under subparagraph (C)(ii),
such pool takes such action as may be reasonably necessary to
remove such member from such pool.
`(4) OTHER DEFINITIONS- For purposes of this subsection--
`(A) STARTUP CAPITAL- The term `startup capital' means
any capital contributed to, and any program-related
investments (within the meaning of section 4944(c)) made
in, the risk pool before such pool commences operations.
`(B) NONMEMBER CHARITABLE ORGANIZATION- The term
`nonmember charitable organization' means any organization
which is described in subsection (c)(3) and exempt from tax
under subsection (a) and which is not a member of the risk
pool and does not benefit (directly or indirectly) from the
insurance coverage provided by the pool to its members.'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 1115. TREATMENT OF DUES PAID TO AGRICULTURAL OR HORTICULTURAL
ORGANIZATIONS.
(a) GENERAL RULE- Section 512 (defining unrelated business
taxable income) is amended by adding at the end the following new
subsection:
`(d) TREATMENT OF DUES OF AGRICULTURAL OR HORTICULTURAL
ORGANIZATIONS-
`(1) IN GENERAL- If--
`(A) an agricultural or horticultural organization
described in section 501(c)(5) requires annual dues to be
paid in order to be a member of such organization, and
`(B) the amount of such required annual dues does not
exceed $100,
in no event shall any portion of such dues be treated as
derived by such organization from an unrelated trade or
business by reason of any benefits or privileges to which
members of such organization are entitled.
`(2) INDEXATION OF $100 AMOUNT- In the case of any taxable
year beginning in a calendar year after 1995, the $100 amount
in paragraph (1) shall be increased by an amount equal to--
`(A) $100, multiplied by
`(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, by substituting `calendar year 1994' for
`calendar year 1992' in subparagraph (B) thereof.
`(3) DUES- For purposes of this subsection, the term `dues'
means any payment (whether or not designated as dues) which
is required to be made in order to be recognized by the
organization as a member of the organization.'.
(b) EFFECTIVE DATES-
(1) IN GENERAL- The amendment made by this section shall
apply to taxable years beginning after December 31, 1986.
(2) TRANSITIONAL RULE- If--
(A) for purposes of applying part III of subchapter F of
chapter 1 of the Internal Revenue Code of 1986 to any
taxable year beginning before January 1, 1987, an
agricultural or horticultural organization did not treat
any portion of membership dues received by it as income
derived in an unrelated trade or business, and
(B) such organization had a reasonable basis for not
treating such dues as income derived in an unrelated trade
or business,
then, for purposes of applying such part III to any such
taxable year, in no event shall any portion of such dues be
treated as derived in an unrelated trade or business.
(3) REASONABLE BASIS- For purposes of paragraph (2), an
organization shall be treated as having a reasonable basis for
not treating membership dues as income derived in an unrelated
trade or business if the taxpayer's treatment of such dues was
in reasonable reliance on any of the following:
(A) Judicial precedent, published rulings, technical
advice with respect to the organization, or a letter ruling
to the organization.
(B) A past Internal Revenue Service audit of the
organization in which there was no assessment attributable
to the reclassification of membership dues for purposes of
the tax on unrelated business income.
(C) Long-standing recognized practice of agricultural or
horticultural organizations.
SEC. 1116. CLARIFICATION OF EMPLOYMENT TAX STATUS OF CERTAIN
FISHERMEN.
(a) CLARIFICATION OF EMPLOYMENT TAX STATUS-
(1) AMENDMENTS OF INTERNAL REVENUE CODE OF 1986-
(A) DETERMINATION OF SIZE OF CREW- Subsection (b) of
section 3121 (defining employment) is amended by adding at
the end the following new sentence:
`For purposes of paragraph (20), the operating crew of a boat shall
be treated as normally made up of fewer than 10 individuals if the
average size of the operating crew on trips made during the
preceding 4 calendar quarters consisted of fewer than 10
indi-viduals.'.
(B) CERTAIN CASH REMUNERATION PERMITTED- Subparagraph (A)
of section 3121(b)(20) is amended to read as follows:
`(A) such individual does not receive any cash
remuneration other than as provided in subparagraph (B) and
other than cash remuneration--
`(i) which does not exceed $100 per trip;
`(ii) which is contingent on a minimum catch; and
`(iii) which is paid solely for additional duties
(such as mate, engineer, or cook) for which additional
cash remuneration is traditional in the industry,'.
(C) CONFORMING AMENDMENT- Section 6050A(a) is amended by
striking `and' at the end of paragraph (3), by striking the
period at the end of paragraph (4) and inserting `; and',
and by adding at the end the following new paragraph:
`(5) any cash remuneration described in section
3121(b)(20)(A).'.
(2) AMENDMENT OF SOCIAL SECURITY ACT-
(A) DETERMINATION OF SIZE OF CREW- Subsection (a) of
section 210 of the Social Security Act is amended by adding
at the end the following new sentence:
`For purposes of paragraph (20), the operating crew of a boat shall
be treated as normally made up of fewer than 10 individuals if the
average size of the operating crew on trips made during the
preceding 4 calendar quarters consisted of fewer than 10
indi-viduals.'.
(B) CERTAIN CASH REMUNERATION PERMITTED- Subparagraph (A)
of section 210(a)(20) of such Act is amended to read as
follows:
`(A) such individual does not receive any additional
compensation other than as provided in subparagraph (B) and
other than cash remuneration--
`(i) which does not exceed $100 per trip;
`(ii) which is contingent on a minimum catch; and
`(iii) which is paid solely for additional duties
(such as mate, engineer, or cook) for which additional
cash remuneration is traditional in the industry,'.
(3) EFFECTIVE DATES-
(A) IN GENERAL- The amendments made by this subsection
shall apply to remuneration paid--
(i) after December 31, 1994, and
(ii) after December 31, 1984, and before January 1,
1995, unless the payor treated such remuneration (when
paid) as being subject to tax under chapter 21 of the
Internal Revenue Code of 1986.
(B) REPORTING REQUIREMENT- The amendment made by
paragraph (1)(C) shall apply to remuneration paid after
December 31, 1996.
(b) INFORMATION REPORTING-
(1) IN GENERAL- Subpart B of part III of subchapter A of
chapter 68 (relating to information concerning transactions
with other persons) is amended by inserting after section 6050Q
the following new section:
`SEC. 6050R. RETURNS RELATING TO CERTAIN PURCHASES OF FISH.
`(a) REQUIREMENT OF REPORTING- Every person--
`(1) who is engaged in the trade or business of purchasing
fish for resale from any person engaged in the trade or
business of catching fish; and
`(2) who makes payments in cash in the course of such trade
or business to such a person of $600 or more during any
calendar year for the purchase of fish,
shall make a return (at such times as the Secretary may prescribe)
described in subsection (b) with respect to each person to whom
such a payment was made during such calendar year.
`(b) RETURN- A return is described in this subsection if such
return--
`(1) is in such form as the Secretary may prescribe, and
`(2) contains--
`(A) the name, address, and TIN of each person to whom a
payment described in subsection (a)(2) was made during the
calendar year;
`(B) the aggregate amount of such payments made to such
person during such calendar year and the date and amount of
each such payment, and
`(C) such other information as the Secretary may require.
`(c) STATEMENT TO BE FURNISHED WITH RESPECT TO WHOM INFORMATION
IS REQUIRED- Every person required to make a return under
subsection (a) shall furnish to each person whose name is required
to be set forth in such return a written statement showing--
`(1) the name and address of the person required to make such
a return, and
`(2) the aggregate amount of payments to the person required
to be shown on the return.
The written statement required under the preceding sentence shall
be furnished to the person on or before January 31 of the year
following the calendar year for which the return under subsection
(a) is required to be made.
`(d) DEFINITIONS- For purposes of this section:
`(1) CASH- The term `cash' has the meaning given such term by
section 6050I(d).
`(2) FISH- The term `fish' includes other forms of aquatic
life.'.
(2) TECHNICAL AMENDMENTS-
(A) Subparagraph (A) of section 6724(d)(1) is amended by
striking `or' at the end of clause (vi), by striking `and'
at the end of clause (vii) and inserting `or', and by
adding at the end the following new clause:
`(viii) section 6050R (relating to returns relating
to certain purchases of fish), and'.
(B) Paragraph (2) of section 6724(d) is amended by
redesignating subparagraphs (R) through (U) as
subparagraphs (S) through (V), respectively, and by
inserting after subparagraph (Q) the following new
subparagraph:
`(R) section 6050R(c) (relating to returns relating to
certain purchases of fish),'.
(C) The table of sections for subpart B of part III of
subchapter A of chapter 68 is amended by inserting after
the item relating to 6050Q the following new item:
`Sec. 6050R. Returns relating to certain purchases of fish.'.
(3) EFFECTIVE DATE- The amendments made by this subsection
shall apply to payments made after December 31, 1997.
SEC. 1117. MODIFICATIONS OF TAX-EXEMPT BOND RULES FOR FIRST-TIME
FARMERS.
(a) ACQUISITION FROM RELATED PERSON ALLOWED- Section 147(c)(2)
(relating to exception for first-time farmers) is amended by adding
at the end the following new subparagraph:
`(G) ACQUISITION FROM RELATED PERSON- For purposes of
this paragraph and section 144(a), the acquisition by a
first-time farmer of land or personal property from a
related person (within the meaning of section 144(a)(3))
shall not be treated as an acquisition from a related
person, if--
`(i) the acquisition price is for the fair market
value of such land or property, and
`(ii) subsequent to such acquisition, the related
person does not have a financial interest in the
farming operation with respect to which the bond
proceeds are to be used.'.
(b) SUBSTANTIAL FARMLAND AMOUNT DOUBLED- Clause (i) of section
147(c)(2)(E) (defining substantial farmland) is amended by striking
`15 percent' and inserting `30 percent'.
(c) EFFECTIVE DATE- The amendments made by this section shall
apply to bonds issued after the date of the enactment of this Act.
SEC. 1118. NEWSPAPER DISTRIBUTORS TREATED AS DIRECT SELLERS.
(a) IN GENERAL- Section 3508(b)(2)(A) is amended by striking `or'
at the end of clause (i), by inserting `or' at the end of clause
(ii), and by inserting after clause (ii) the following new clause:
`(iii) is engaged in the trade or business of the
delivering or distribution of newspapers or shopping
news (including any services directly related to such
trade or business),'.
(b) EFFECTIVE DATE- The amendments made by this section shall
apply to services performed after December 31, 1995.
SEC. 1119. APPLICATION OF INVOLUNTARY CONVERSION RULES TO
PRESIDENTIALLY DECLARED DISASTERS.
(a) IN GENERAL- Section 1033(h) is amended by redesignating
paragraphs (2) and (3) as paragraphs (3) and (4), respectively, and
by inserting after paragraph (1) the following new paragraph:
`(2) TRADE OR BUSINESS AND INVESTMENT PROPERTY- If a
taxpayer's property held for productive use in a trade or
business or for investment is compulsorily or involuntarily
converted as a result of a Presidentially declared disaster,
tangible property of a type held for productive use in a trade
or business shall be treated for purposes of subsection (a) as
property similar or related in service or use to the property
so converted.'.
(b) CONFORMING AMENDMENTS- Section 1033(h) is amended--
(1) by striking `residence' in paragraph (3) (as redesignated
by subsection (a)) and inserting `property',
(2) by striking `PRINCIPAL RESIDENCES' in the heading and
inserting `PROPERTY', and
(3) by striking `(1) IN GENERAL- ' and inserting `(1)
PRINCIPAL RESIDENCES- '.
(c) EXPANSION OF OKLAHOMA CITY ENTERPRISE COMMUNITY-
Notwithstanding sections 1391 and 1392(a)(3)(D) of the Internal
Revenue Code of 1986, the boundaries of the enterprise community
for Oklahoma City, Oklahoma, designated by the Secretary of Housing
and Urban Development on December 21, 1994, may be extended with
respect to census tracts located in the area damaged due to the
bombing of the Alfred P. Murrah Federal Building in Oklahoma City
on April 19, 1995, primarily in the area bounded on the south by
Robert S. Kerr Avenue, on the north by North 13th Street, on the
east by Oklahoma Avenue, and on the west by Shartel Avenue.
(d) EFFECTIVE DATE-
(1) IN GENERAL- The amendments made by this section shall
apply to disasters declared after December 31, 1994, in taxable
years ending after such date.
(2) SUBSECTION (c)- Subsection (c) shall take effect on the
date of the enactment of this Act.
SEC. 1120. CLASS LIFE FOR GAS STATION CONVENIENCE STORES AND
SIMILAR STRUCTURES.
(a) IN GENERAL- Section 168(e)(3)(E) (classifying certain
property as 15-year property) is amended by striking `and' at the
end of clause (i), by striking the period at the end of clause (ii)
and inserting `, and', and by adding at the end the following new
clause:
`(iii) any section 1250 property which is a retail
motor fuels outlet (whether or not food or other
convenience items are sold at the outlet).'.
(b) CONFORMING AMENDMENT- Subparagraph (B) of section 168(g)(3)
is amended by inserting after the item relating to subparagraph
(E)(ii) in the table contained therein the following new item:
`(E)(III)................. 20'.
(c) EFFECTIVE DATE- The amendments made by this section shall
apply to property which is placed in service on or after the date
of the enactment of this Act and to which section 168 of the
Internal Revenue Code of 1986 applies after the amendment made by
section 201 of the Tax Reform Act of 1986. A taxpayer may elect (in
such form and manner as the Secretary of the Treasury may
prescribe) to have such amendments apply with respect to any
property placed in service before such date and to which such
section so applies.
SEC. 1121. TREATMENT OF ABANDONMENT OF LESSOR IMPROVEMENTS AT
TERMINATION OF LEASE.
(a) IN GENERAL- Paragraph (8) of section 168(i) is amended to
read as follows:
`(8) TREATMENT OF LEASEHOLD IMPROVEMENTS-
`(A) IN GENERAL- In the case of any building erected (or
improvements made) on leased property, if such building or
improvement is property to which this section applies, the
depreciation deduction shall be determined under the
provisions of this section.
`(B) TREATMENT OF LESSOR IMPROVEMENTS WHICH ARE ABANDONED
AT TERMINATION OF LEASE- An improvement--
`(i) which is made by the lessor of leased property
for the lessee of such property, and
`(ii) which is irrevocably disposed of or abandoned
by the lessor at the termination of the lease by such
lessee,
shall be treated for purposes of determining gain or loss
under this title as disposed of by the lessor when so
disposed of or abandoned.'.
(b) EFFECTIVE DATE- Subparagraph (B) of section 168(i)(8) of the
Internal Revenue Code of 1986, as added by the amendment made by
subsection (a), shall apply to improvements disposed of or
abandoned after June 12, 1996.
SEC. 1122. SPECIAL RULES RELATING TO DETERMINATION WHETHER
INDIVIDUALS ARE EMPLOYEES FOR PURPOSES OF EMPLOYMENT TAXES.
(a) IN GENERAL- Section 530 of the Revenue Act of 1978 is amended
by adding at the end the following new subsection:
`(e) SPECIAL RULES FOR APPLICATION OF SECTION-
`(1) NOTICE OF AVAILABILITY OF SECTION- An officer or
employee of the Internal Revenue Service shall, before or at
the commencement of any audit inquiry relating to the
employment status of one or more individuals who perform
services for the taxpayer, provide the taxpayer with a written
notice of the provisions of this section.
`(2) RULES RELATING TO STATUTORY STANDARDS- For purposes of
subsection (a)(2)--
`(A) a taxpayer may not rely on an audit commenced after
December 31, 1996, for purposes of subparagraph (B) thereof
unless such audit included an examination for employment
tax purposes of whether the individual involved (or any
individual holding a position substantially similar to the
position held by the individual involved) should be treated
as an employee of the taxpayer,
`(B) in no event shall the significant segment
requirement of subparagraph (C) thereof be construed to
require a reasonable showing of the practice of more than
25 percent of the industry (determined by not taking into
account the taxpayer), and
`(C) in applying the long-standing recognized practice
requirement of subparagraph (C) thereof--
`(i) such requirement shall not be construed as
requiring the practice to have continued for more than
10 years, and
`(ii) a practice shall not fail to be treated as
long-standing merely because such practice began after
1978.
`(3) AVAILABILITY OF SAFE HARBORS- Nothing in this section
shall be construed to provide that subsection (a) only applies
where the individual involved is otherwise an employee of the
taxpayer.
`(4) BURDEN OF PROOF-
`(A) IN GENERAL- If--
`(i) a taxpayer establishes a prima facie case that
it was reasonable not to treat an individual as an
employee for purposes of this section, and
`(ii) the taxpayer has fully cooperated with
reasonable requests from the Secretary of the Treasury
or his delegate,
then the burden of proof with respect to such treatment
shall be on the Secretary.
`(B) EXCEPTION FOR OTHER REASONABLE BASIS- In the case of
any issue involving whether the taxpayer had a reasonable
basis not to treat an individual as an employee for
purposes of this section, subparagraph (A) shall only apply
for purposes of determining whether the taxpayer meets the
requirements of subparagraph (A), (B), or (C) of subsection
(a)(2).
`(5) PRESERVATION OF PRIOR PERIOD SAFE HARBOR- If--
`(A) an individual would (but for the treatment referred
to in subparagraph (B)) be deemed not to be an employee of
the taxpayer under subsection (a) for any prior period, and
`(B) such individual is treated by the taxpayer as an
employee for employment tax purposes for any subsequent
period,
then, for purposes of applying such taxes for such prior period
with respect to the taxpayer, the individual shall be deemed
not to be an employee.
`(6) SUBSTANTIALLY SIMILAR POSITION- For purposes of this
section, the determination as to whether an individual holds a
position substantially similar to a position held by another
individual shall include consideration of the relationship
between the taxpayer and such individuals.'.
(b) EFFECTIVE DATES-
(1) IN GENERAL- The amendment made by this section shall
apply to periods after December 31, 1996.
(2) NOTICE BY INTERNAL REVENUE SERVICE- Section 530(e)(1) of
the Revenue Act of 1978 (as added by subsection (a)) shall
apply to audits which commence after December 31, 1996.
(3) BURDEN OF PROOF-
(A) IN GENERAL- Section 530(e)(4) of the Revenue Act of
1978 (as added by subsection (a)) shall apply to disputes
involving periods after December 31, 1996.
(B) NO INFERENCE- Nothing in the amendments made by this
section shall be construed to infer the proper treatment of
the burden of proof with respect to disputes involving
periods before January 1, 1997.
SEC. 1123. TREATMENT OF HOUSING PROVIDED TO EMPLOYEES BY ACADEMIC
HEALTH CENTERS.
(a) IN GENERAL- Paragraph (4) of section 119(d) (relating to
lodging furnished by certain educational institutions to employees)
is amended to read as follows:
`(4) EDUCATIONAL INSTITUTION, ETC- For purposes of this
subsection--
`(A) IN GENERAL- The term `educational institution' means--
`(i) an institution described in section
170(b)(1)(A)(ii) (or an entity organized under State
law and composed of public institutions so described), or
`(ii) an academic health center.
`(B) ACADEMIC HEALTH CENTER- For purposes of subparagraph
(A), the term `academic health center' means an entity--
`(i) which is described in section 170(b)(1)(A)(iii),
`(ii) which receives (during the calendar year in
which the taxable year of the taxpayer begins) payments
under subsection (d)(5)(B) or (h) of section 1886 of
the Social Security Act (relating to graduate medical
education), and
`(iii) which has as one of its principal purposes or
functions the providing and teaching of basic and
clinical medical science and research with the entity's
own faculty.'.
(b) EFFECTIVE DATE- The amendment made by this section shall
apply to taxable years beginning after December 31, 1995.
SUBTITLE B--EXTENSION OF CERTAIN EXPIRING PROVISIONS
SEC. 1201. WORK OPPORTUNITY TAX CREDIT.
(a) AMOUNT OF CREDIT- Subsection (a) of section 51 (relating to
amount of credit) is amended by striking `40 percent' and inserting
`35 percent'.
(b) MEMBERS OF TARGETED GROUPS- Subsection (d) of section 51 is
amended to read as follows:
`(d) MEMBERS OF TARGETED GROUPS- For purposes of this subpart--
`(1) IN GENERAL- An individual is a member of a targeted
group if such individual is--
`(A) a qualified IV-A recipient,
`(B) a qualified veteran,
`(C) a qualified ex-felon,
`(D) a high-risk youth,
`(E) a vocational rehabilitation referral,
`(F) a qualified summer youth employee, or
`(G) a qualified food stamp recipient.
`(2) QUALIFIED IV-A RECIPIENT-
`(A) IN GENERAL- The term `qualified IV-A recipient'
means any individual who is certified by the designated
local agency as being a member of a family receiving
assistance under a IV-A program for at least a 9-month
period ending during the 9-month period ending on the
hiring date.
`(B) IV-A PROGRAM- For purposes of this paragraph, the
term `IV-A program' means any program providing assistance
under a State plan approved under part A of title IV of the
Social Security Act (relating to assistance for needy
families with minor children) and any successor of such
program.
`(3) QUALIFIED VETERAN-
`(A) IN GENERAL- The term `qualified veteran' means any
veteran who is certified by the designated local agency as
being--
`(i) a member of a family receiving assistance under
a IV-A program (as defined in paragraph (2)(B)) for at
least a 9-month period ending during the 12-month
period ending on the hiring date, or
`(ii) a member of a family receiving assistance under
a food stamp program under the Food Stamp Act of 1977
for at least a 3-month period ending during the
12-month period ending on the hiring date.
`(B) VETERAN- For purposes of subparagraph (A), the term
`veteran' means any individual who is certified by the
designated local agency as--
`(i)(I) having served on active duty (other than
active duty for training) in the Armed Forces of the
United States for a period of more than 180 days, or
`(II) having been discharged or released from active
duty in the Armed Forces of the United States for a
service-connected disability, and
`(ii) not having any day during the 60-day period
ending on the hiring date which was a day of extended
active duty in the Armed Forces of the United States.
For purposes of clause (ii), the term `extended active
duty' means a period of more than 90 days during which the
individual was on active duty (other than active duty for
training).
`(4) QUALIFIED EX-FELON- The term `qualified ex-felon' means
any individual who is certified by the designated local agency--
`(A) as having been convicted of a felony under any
statute of the United States or any State,
`(B) as having a hiring date which is not more than 1
year after the last date on which such individual was so
convicted or was released from prison, and
`(C) as being a member of a family which had an income
during the 6 months immediately preceding the earlier of
the month in which such income determination occurs or the
month in which the hiring date occurs, which, on an annual
basis, would be 70 percent or less of the Bureau of Labor
Statistics lower living standard.
Any determination under subparagraph (C) shall be valid for the
45-day period beginning on the date such determination is made.
`(5) HIGH-RISK YOUTH-
`(A) IN GENERAL- The term `high-risk youth' means any
individual who is certified by the designated local agency--
`(i) as having attained age 18 but not age 25 on the
hiring date, and
`(ii) as having his principal place of abode within
an empowerment zone or enterprise community.
`(B) YOUTH MUST CONTINUE TO RESIDE IN ZONE- In the case
of a high-risk youth, the term `qualified wages' shall not
include wages paid or incurred for services performed while
such youth's principal place of abode is outside an
empowerment zone or enterprise community.
`(6) VOCATIONAL REHABILITATION REFERRAL- The term `vocational
rehabilitation referral' means any individual who is certified
by the designated local agency as--
`(A) having a physical or mental disability which, for
such individual, constitutes or results in a substantial
handicap to employment, and
`(B) having been referred to the employer upon completion
of (or while receiving) rehabilitative services pursuant to--
`(i) an individualized written rehabilitation plan
under a State plan for vocational rehabilitation
services approved under the Rehabilitation Act of 1973,
or
`(ii) a program of vocational rehabilitation carried
out under chapter 31 of title 38, United States Code.
`(7) QUALIFIED SUMMER YOUTH EMPLOYEE-
`(A) IN GENERAL- The term `qualified summer youth
employee' means any individual--
`(i) who performs services for the employer between
May 1 and September 15,
`(ii) who is certified by the designated local agency
as having attained age 16 but not 18 on the hiring date
(or if later, on May 1 of the calendar year involved),
`(iii) who has not been an employee of the employer
during any period prior to the 90-day period described
in subparagraph (B)(i), and
`(iv) who is certified by the designated local agency
as having his principal place of abode within an
empowerment zone or enterprise community.
`(B) SPECIAL RULES FOR DETERMINING AMOUNT OF CREDIT- For
purposes of applying this subpart to wages paid or incurred
to any qualified summer youth employee--
`(i) subsection (b)(2) shall be applied by
substituting `any 90-day period between May 1 and
September 15' for `the 1-year period beginning with the
day the individual begins work for the employer', and
`(ii) subsection (b)(3) shall be applied by
substituting `$3,000' for `$6,000'.
The preceding sentence shall not apply to an individual
who, with respect to the same employer, is certified as a
member of another targeted group after such individual has
been a qualified summer youth employee.
`(C) YOUTH MUST CONTINUE TO RESIDE IN ZONE- Paragraph
(5)(B) shall apply for purposes of subparagraph (A)(iv).
`(8) QUALIFIED FOOD STAMP RECIPIENT-
`(A) IN GENERAL- The term `qualified food stamp
recipient' means any individual who is certified by the
designated local agency--
`(i) as having attained age 18 but not age 25 on the
hiring date, and
`(ii) as being a member of a family--
`(I) receiving assistance under a food stamp program under the
Food Stamp Act of 1977 for the 6-month period ending on the hiring
date, or
`(II) receiving such assistance for at least 3 months of the
5-month period ending on the hiring date, in the case of a member
of a family who ceases to be eligible for such assistance under
section 6(o) of the Food Stamp Act of 1977.
`(B) PARTICIPATION INFORMATION- Notwithstanding any other
provision of law, the Secretary of the Treasury and the
Secretary of Agriculture shall enter into an agreement to
provide information to designated local agencies with
respect to participation in the food stamp program.
`(9) HIRING DATE- The term `hiring date' means the day the
individual is hired by the employer.
`(10) DESIGNATED LOCAL AGENCY- The term `designated local
agency' means a State employment security agency established in
accordance with the Act of June 6, 1933, as amended (29 U.S.C.
49-49n).
`(11) SPECIAL RULES FOR CERTIFICATIONS-
`(A) IN GENERAL- An individual shall not be treated as a
member of a targeted group unless--
`(i) on or before the day on which such individual
begins work for the employer, the employer has received
a certification from a designated local agency that
such individual is a member of a targeted group, or
`(ii)(I) on or before the day the individual is
offered employment with the employer, a pre-screening
notice is completed by the employer with respect to
such individual, and
`(II) not later than the 21st day after the
individual begins work for the employer, the employer
submits such notice, signed by the employer and the
individual under penalties of perjury, to the
designated local agency as part of a written request
for such a certification from such agency.
For purposes of this paragraph, the term `pre-screening
notice' means a document (in such form as the Secretary
shall prescribe) which contains information provided by the
individual on the basis of which the employer believes that
the individual is a member of a targeted group.
`(B) INCORRECT CERTIFICATIONS- If--
`(i) an individual has been certified by a designated
local agency as a member of a targeted group, and
`(ii) such certification is incorrect because it was
based on false information provided by such individual,
the certification shall be revoked and wages paid by the
employer after the date on which notice of revocation is
received by the employer shall not be treated as qualified
wages.
`(C) EXPLANATION OF DENIAL OF REQUEST- If a designated
local agency denies a request for certification of
membership in a targeted group, such agency shall provide
to the person making such request a written explanation of
the reasons for such denial.'.
(c) MINIMUM EMPLOYMENT PERIOD- Paragraph (3) of section 51(i)
(relating to certain individuals ineligible) is amended to read as
follows:
`(3) INDIVIDUALS NOT MEETING MINIMUM EMPLOYMENT PERIOD- No
wages shall be taken into account under subsection (a) with
respect to any individual unless such individual either--
`(A) is employed by the employer at least 180 days (20
days in the case of a qualified summer youth employee), or
`(B) has completed at least 400 hours (120 hours in the
case of a qualified summer youth employee) of services
performed for the employer.'.
(d) TERMINATION- Paragraph (4) of section 51(c) (relating to
wages defined) is amended to read as follows:
`(4) TERMINATION- The term `wages' shall not include any
amount paid or incurred to an individual who begins work for
the employer--
`(A) after December 31, 1994, and before October 1, 1996,
or
`(B) after September 30, 1997.'.
(e) REDESIGNATION OF CREDIT-
(1) Sections 38(b)(2), 41(b)(2)(D)(iii), 45A(b)(1)(B), 51 (a)
and (g), and 196(c) are each amended in the text by striking
`targeted jobs credit' each place it appears and inserting
`work opportunity credit'.
(2) The subpart heading for subpart F of part IV of
subchapter A of chapter 1 is amended by striking ` [Bold->]
Targeted Jobs Credit [<-Bold] ' and inserting ` [Bold->] Work
Opportunity Credit [<-Bold] '.
(3) The table of subparts for such part IV is amended by
striking `targeted jobs credit' and inserting `work opportunity
credit'.
(4) The headings for sections 41(b)(2)(D)(iii) and 1396(c)(3)
are each amended by striking `TARGETED JOBS CREDIT' and
inserting `WORK OPPORTUNITY CREDIT'.
(5) The heading for subsection (j) of section 51 is amended
by striking `TARGETED JOBS CREDIT' and inserting `WORK
OPPORTUNITY CREDIT'.
(f) TECHNICAL AMENDMENT- Paragraph (1) of section 51(c) is
amended by striking `, subsection (d)(8)(D),'.
(g) EFFECTIVE DATE- The amendments made by this section shall
apply to individuals who begin work for the employer after
September 30, 1996.
