Omnibus Budget Reconciliation Act of 1986 (P.L. 99-509)
Omnibus Budget Reconciliation Act of 1986 (P.L. 99-509)
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H.R. 5300, Enrolled Bill
OMNIBUS BUDGET RECONCILIATION ACT OF 1986
An Act to provide for reconciliation pursuant to section 2 of the concurrent resolution on the budget for fiscal year 1987.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.--This Act may be cited as the "Omnibus Budget Reconciliation Act of 1986".
(b) TABLE OF CONTENTS.--
Title I. Agriculture programs.
Title II. Banking and housing programs.
Title III. Energy and environmental programs.
Title IV. Transportation and related programs.
Title V. Maritime programs.
Title VI. Civil service, Postal Service, and governmental affairs generally.
Title VII. Fiscal procedures.
Title VIII. Revenues, trade, and related programs.
Title IX. Income security, Medicare, Medicaid, and maternal and child health programs.
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TITLE VIII--REVENUES, TRADE, AND RELATED PROGRAMS
Subtitle A--Revenue Provisions
PART I--INCREASES IN CERTAIN PENALTIES
SEC. 8001. INCREASE IN PENALTY FOR UNDERPAYMENTS OF TAX DEPOSITS.
(a) IN GENERAL.--Subsection (a) of section 6656 of the Internal Revenue Code of 1954 (relating to underpayment of deposits) is amended by striking out "5 percent" and inserting in lieu thereof "10 percent".
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall apply to penalties assessed after the date of the enactment of this Act.
SEC. 8002. INCREASE IN PENALTY FOR SUBSTANTIAL UNDERSTATEMENT OF LIABILITY.
(a) IN GENERAL.--Subsection (a) of section 6661 of the Internal Revenue Code of 1954 (relating to substantial understatement of liability) is amended to read as follows:
"(a) ADDITION TO TAX.--If there is a substantial understatement of income tax for any taxable year, there shall be added to the tax an amount equal to 25 percent of the amount of any underpayment attributable to such understatement."
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall apply to penalties assessed after the date of the enactment of this Act.
(c) REPEAL OF INCREASE IN PENALTY BY TAX REFORM ACT OF 1986.--Section 1504 of the Tax Reform Act of 1986 (relating to increase in penalty for substantial understatement of liability) is hereby repealed.
SEC. 8011. CERTAIN EXCISE TAX DEPOSITS ACCELERATED.
(a) TOBACCO.--
(1) IN GENERAL.--Paragraph (2) of section 5703(b) of the Internal Revenue Code of 1954 (relating to method of payment of tax) is amended to read as follows:
"(2) TIME FOR PAYMENT OF TAXES.--
"(A) IN GENERAL.--Except as otherwise provided in this paragraph, in the case of taxes on tobacco products and cigarette papers and tubes removed during any semi-monthly period under bond for deferred payment of tax, the last day for payment of such taxes shall be the 14th day after the last day of such semimonthly period.
"(B) IMPORTED ARTICLES.--In the case of tobacco products and cigarette papers and tubes which are imported into the United States--
"(i) IN GENERAL.--The last day for payment of tax shall be the 14th day after the date on which the article is entered into the customs territory of the United States.
"(ii) SPECIAL RULE FOR ENTRY FOR WAREHOUSING.--Except as provided in clause (iv), in the case of an entry for warehousing, the last day for payment of tax shall not be later than the 14th day after the date on which the article is removed from the 1st such warehouse.
"(iii) FOREIGN TRADE ZONES.--Except as provided in clause (iv) and in regulations prescribed by the Secretary, articles brought into a foreign trade zone shall, notwithstanding any other provision of law, be treated for purposes of this subsection as if such zone were a single customs warehouse.
"(iv) EXCEPTION FOR ARTICLES DESTINED FOR EXPORT.--Clauses (ii) and (iii) shall not apply to any article which is shown to the satisfaction of the Secretary to be destined for export.
"(C) TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES BROUGHT INTO THE UNITED STATES FROM PUERTO RICO.--In the case of tobacco products and cigarette papers and tubes which are brought into the United States from Puerto Rico, the last day for payment of tax shall be the 14th day after the date on which the article is brought into the United States.
"(D) SPECIAL RULE WHERE 14TH DAY FALLS ON SATURDAY, SUNDAY, OR HOLIDAY.--Notwithstanding section 7503, if, but for this subparagraph, the due date under this paragraph would fall on a Saturday, Sunday, or a legal holiday (as defined in section 7503), such due date shall be the immediately preceding day which is not a Saturday, Sunday, or such a holiday."
(2) TECHNICAL AMENDMENT.--Subsection (c) of section 5704 of such Code (relating to tobacco products and cigarette papers and tubes released in bond from customs custody) is amended by striking out "to a manufacturer of tobacco products or cigarette papers and tubes or".
(b) DISTILLED SPIRITS, WINES, AND BEER.--
(1) IN GENERAL.--Subsection (d) of section 5061 of such Code (relating to method of collecting tax) is amended to read as follows:
"(d) TIME FOR COLLECTING TAX ON DISTILLED SPIRITS, WINES, AND BEER.--
"(1) IN GENERAL.--Except as otherwise provided in this subsection, in the case of distilled spirits, wines, and beer to which this part applies (other than subsection (b) of this section) which are withdrawn under bond for deferred payment of tax, the last day for payment of such tax shall be the 14th day after the last day of the semimonthly period during which the withdrawal occurs.
"(2) IMPORTED ARTICLES.--In the case of distilled spirits, wines, and beer which are imported into the United States (other than in bulk containers)--
"(A) IN GENERAL.--The last day for payment of tax shall be the 14th day after the date on which the article is entered into the customs territory of the United States.
"(B) SPECIAL RULE FOR ENTRY FOR WAREHOUSING.--Except as provided in subparagraph (D), in the case of an entry for warehousing, the last day for payment of tax shall not be later than the 14th day after the date on which the article is removed from the 1st such warehouse.
"(C) FOREIGN TRADE ZONES.--Except as provided in subparagraph (D) and in regulations prescribed by the Secretary, articles brought into a foreign trade zone shall, notwithstanding any other provision of law, be treated for purposes of this subsection as if such zone were a single customs warehouse.
"(D) EXCEPTION FOR ARTICLES DESTINED FOR EXPORT.--Subparagraph (B) and (C) shall not apply to any article which is shown to the satisfaction of the Secretary to be destined for export.
"(3) DISTILLED SPIRITS, WINES, AND BEER BROUGHT INTO THE UNITED STATES FROM PUERTO RICO.--In the case of distilled spirits, wines, and beer which are brought into the United States (other than in bulk containers) from Puerto Rico, the last day for payment of tax shall be the 14th day after the date on which the article is brought into the United States.
"(4) SPECIAL RULE WHERE 14TH DAY FALLS ON SATURDAY, SUNDAY, OR HOLIDAY.--Notwithstanding section 7503, if, but for this paragraph, the due date under this subsection for payment of tax would fall on a Saturday, Sunday, or a legal holiday (within the meaning of section 7503), such due date shall be the immediately preceding day which is not a Saturday, Sunday, or such a holiday."
(2) TECHNICAL AMENDMENT.--Paragraph (2) of section 5054(a) of such Code (relating to determination and collection of tax on beer) is amended by striking out all that follows "or," and inserting in lieu thereof "if entered for warehousing, at the time of removal from the 1st such warehouse".
(c) EFFECTIVE DATES.--
(1) IN GENERAL.--Except as provided in paragraph (2), the amendments made by this section shall apply to removals during semimonthly periods ending on or after December 31, 1986.
(2) IMPORTED ARTICLES, ETC.--Subparagraphs (B) and (C) of section 5703(b)(2) of the Internal Revenue Code of 1954 (as added by this section), paragraphs (2) and (3) of section 5061(d) of such Code (as amended by this section), and the amendments made by subsections (a)(2) and (b)(2) shall apply to articles imported, entered for warehousing, or brought into the United States or a foreign trade zone after December 15, 1986.
(3) SPECIAL RULE FOR DISTILLED SPIRITS AND TOBACCO FOR SEMIMONTHLY PERIOD ENDING DECEMBER 15, 1986.--With respect to remittances of--
(A) taxes imposed on distilled spirits by section 5001 or 7652 of such Code, and
(B) taxes imposed on tobacco products and cigarette papers and tubes by section 5701 or 7652 of such Code,
for the semimonthly period ending December 15, 1986, the last day for payment of such remittances shall be January 14, 1987.
(4) TREATMENT OF SMOKELESS TOBACCO IN INVENTORY ON JUNE 30, 1986.--The tax imposed by section 5701(e) of the Internal Revenue Code of 1954 shall not apply to any smokeless tobacco which--
(A) on June 30, 1986, was in the inventory of the manufacturer or importer, and
(B) on such date was in a form ready for sale.
SEC. 8021. TAX TREATMENT OF CONRAIL PUBLIC SALE.
(a) TREATMENT AS NEW CORPORATION.--
(1) IN GENERAL.--For periods after the public sale, for purposes of the Internal Revenue Code of 1954, Conrail shall be treated as a new corporation which purchased all of its assets as of the beginning of the day after the date of the public sale for an amount equal to the deemed purchase price.
(2) ALLOCATION AMONG ASSETS.--The deemed purchase price shall be allocated among the assets of Conrail in accordance with the temporary regulations prescribed under section 338 of the Internal Revenue Code of 1954 (as such regulations were in effect on the date of the enactment of this Act). The Secretary shall establish specific guidelines for carrying out the preceding sentence so that the basis of each asset will be clearly ascertainable. For purposes of applying the regulations referred to in the first sentence, accounts receivable and materials and supplies shall be treated as cash equivalents.
(3) DEEMED PURCHASE PRICE.--For purposes of this subsection, the deemed purchase price is an amount equal to the gross amount received pursuant to the public sale, multiplied by a fraction--
(A) the numerator of which is 100 percent, and
(B) the denominator of which is the percentage (by value) of the stock of Conrail sold in the public sale.
The amount determined under the preceding sentence shall be adjusted under regulations prescribed by the Secretary for liabilities of Conrail and other relevant items.
(b) NO INCOME FROM CANCELLATION OF DEBT OR PREFERRED STOCK.--No amount shall be included in the gross income of any person by reason of any cancellation of any obligation (or preferred stock) of Conrail in connection with the public sale.
(c) DISALLOWANCE OF CERTAIN DEDUCTIONS.--No deduction shall be allowed to Conrail for any amount which is paid after the date of the public sale to employees of Conrail for services performed on or before the date of the public sale.
(d) WAIVER OF CERTAIN EMPLOYEE STOCK OWNERSHIP PLAN PROVISIONS.--For purposes of determining whether the employee stock ownership plans of Conrail meet the qualifications of sections 401 and 501 of the Internal Revenue Code of 1954--
(1) the limits of section 415 of such Code (relating to limitations on benefits and contributions under qualified plans) shall not apply with respect to interests in stock transferred pursuant to this Act or a law heretofore enacted, and
(2) the 2-year waiting period for withdrawals shall not apply to withdrawals of amounts (or shares) in participants accounts in connection with the public sale.
(e) DEFINITIONS.--For purposes of this section--
(1) CONRAIL.--The term "Conrail" means the Consolidated Rail Corporation. Such term includes any corporation which was a subsidiary of Conrail immediately before the public sale.
(2) PUBLIC SALE.--The term "public sale" means the sale of stock in Conrail pursuant to a public offering under the Conrail Privatization Act. If there is more than 1 public offering under such Act, such term means the sale pursuant to the initial public offering under such Act.
(3) SECRETARY.--The term "Secretary" means the Secretary of the Treasury or his delegate.
Subpart A--Tax Provisions if Superfund Amendments Not Enacted
SEC. 8031. TAX ON PETROLEUM.
(a) IN GENERAL.--Subsections (a) and (b) of section 4611 of the Internal Revenue Code of 1954 (relating to environmental tax on petroleum) are each amended by striking out "of 0.79 cent a barrel" and inserting in lieu thereof "at the rate specified in subsection (c)".
(b) INCREASE IN TAX.--Section 4611 of such Code is amended by redesignating subsections (c) and (d) as subsections (d) and (e), respectively, and by inserting after subsection (b) the following new subsection:
"(c) RATE OF TAX.--
"(1) IN GENERAL.--The rate of the taxes imposed by this section is the sum of--
"(A) the Hazardous Substance Superfund financing rate, and
"(B) the Oil Spill Liability Trust Fund financing rate.
"(2) RATES.--For purposes of paragraph (1)--
"(A) the Hazardous Substance Superfund financing rate is 0.79 cent a barrel, and
"(B) the Oil Spill Liability Trust Fund financing rate is 1.3 cents a barrel."
"(c) CREDIT AGAINST PORTION OF TAX ATTRIBUTABLE TO OIL SPILL RATE.--There shall be allowed as a credit against so much of the tax imposed by section 4611 as is attributable to the Oil Spill Liability Trust Fund financing rate for any period an amount equal to the excess of--
"(1) the sum of--
"(A) the aggregate amounts paid by the taxpayer before January 1, 1987, into the Deepwater Port Liability Trust Fund and the Offshore Oil Pollution Compensation Fund, and
"(B) the interest accrued on such amounts before such date, over
"(2) the amount of such payments taken into account under this subsection for all prior periods."
(d) CONFORMING AMENDMENTS.--
(1) Subsection (e) of section 4611 of such Code (relating to application of taxes), as redesignated by subsection (b), is amended to read as follows:
"(e) APPLICATION OF TAXES.--
"(1) SUPERFUND RATE.--The Hazardous Substance Superfund financing rate under subsection (c) shall not apply after September 30, 1985.
"(2) OIL SPILL RATE.--
"(A) IN GENERAL.--Except as provided in subparagraph (C), the Oil Spill Liability Trust Fund financing rate under subsection (c) shall apply on and after the commencement date and before January 1, 1992.
"(B) COMMENCEMENT DATE.--
"(i) IN GENERAL.--For purposes of this paragraph, the term 'commencement date' means the later of--
"(I) February 1, 1987, or
"(II) the 1st day of the 1st calendar month beginning more than 30 days after the date of the enactment of qualified authorizing legislation.
"(ii) QUALIFIED AUTHORIZING LEGISLATION.--For purposes of clause (i), the term 'qualified authorizing legislation' means any law enacted before September 1, 1987, which is substantially identical to subtitle E of title VI, or subtitle D of title VIII, or H.R. 5300 of the 99th Congress as passed the House of Representatives.
"(C) NO TAX IF AMOUNTS COLLECTED EXCEED $300,000,000.--
"(i) ESTIMATES BY SECRETARY.--The Secretary as of the close of each calendar quarter (and at such other times as the Secretary determines appropriate) shall make an estimate of the amount of taxes which will be collected under this section (to the extent attributable to the Oil Spill Liability Trust Fund financing rate) during the period beginning on the commencement date and ending on December 31, 1991.
"(ii) TERMINATION IF $300,000,000 CREDITED BEFORE JANUARY 1, 1992.--If the Secretary estimates under clause (i) that more than $300,000,000 will be credited to the Fund before January 1, 1992, the Oil Spill Liability Trust Fund financing rate shall not apply after the date on which (as estimated by the Secretary) $300,000,000 will be so credited to the Fund."
"(c) TERMINATION.--The tax imposed by this section shall not apply after September 30, 1985."
(3) Paragraph (1) of section 221(b) of the Hazardous Substance Response Revenue Act of 1980 (relating to transfers to Response Trust Fund) is amended by adding at the end thereof the following:
"In the case of the tax imposed by section 4611, subparagraph (A) shall apply only to so much of such tax as is attributable to the Hazardous Substance Superfund financing rate under section 4611(c)."
(e) EFFECTIVE DATE.--
(1) IN GENERAL.--Except as provided in paragraph (2), the amendments made by this section shall take effect on the commencement date (as defined in section 4611(e)(2) of the Internal Revenue Code of 1954, as added by this section).
(2) COORDINATION WITH SUPERFUND REAUTHORIZATION.--The amendments made by this section shall not take effect if the Superfund Amendments and Reauthorization Act of 1986 is enacted.
SEC. 8032. INCREASE IN ENVIRONMENTAL TAX ON PETROLEUM.
(a) IN GENERAL.--Subsection (c) of section 4611 of the Internal Revenue Code of 1954 (relating to environmental tax on petroleum), as amended by the Superfund Amendments and Reauthorization Act of 1986, is amended to read as follows:
"(c) RATE OF TAX.--
"(1) IN GENERAL.--The rate of the taxes imposed by this section is the sum of--
"(A) the Hazardous Substance Superfund financing rate, and
"(B) the Oil Spill Liability Trust Fund financing rate.
"(2) RATES.--For purposes of paragraph (1)--
"(A) the Hazardous Substance Superfund financing rate is--
"(i) except as provided in clause (ii), 8.2 cents a barrel, and
"(ii) 11.7 cents a barrel in the case of the tax imposed by subsection (a)(2), and
"(B) the Oil Spill Liability Trust Fund financing rate is 1.3 cents a barrel."
"(d) CREDIT AGAINST PORTION OF TAX ATTRIBUTABLE TO OIL SPILL RATE.--There shall be allowed as a credit against so much of the tax imposed by section 4611 as is attributable to the Oil Spill Liability Trust Fund financing rate for any period an amount equal to the excess of--
"(1) the sum of--
"(A) the aggregate amounts paid by the taxpayer before January 1, 1987, into the Deepwater Port Liability Trust Fund and the Offshore Oil Pollution Compensation Fund, and
"(B) the interest accrued on such amounts before such date, over
"(2) the amount of such payments taken into account under this subsection for all prior periods."
(c) CONFORMING AMENDMENTS.--
(1) Subsection (e) of section 4611 of such Code (relating to application of taxes), as so amended, is amended--
(A) in the subsection heading by striking out "TAXES" and inserting in lieu thereof "HAZARDOUS SUBSTANCE SUPERFUND FINANCING RATE",
(B) in paragraph (1) by striking out "the taxes imposed by this section" and inserting in lieu thereof "the Hazardous Substance Superfund financing rate under this section",
(C) in paragraphs (2) and (3)(A) after "this section" by inserting "(to the extent attributable to the Hazardous Substance Superfund financing rate)", and
(D) in paragraph (3)(B) by striking out "no tax shall be imposed under this section" and inserting in lieu thereof "the Hazardous Substance Superfund financing rate under this section shall not apply".
(2) Section 4611 of such Code, as so amended, is amended by adding at the end thereof the following new subsection:
"(f) APPLICATION OF OIL SPILL LIABILITY TRUST FUND FINANCING RATE.--
"(1) IN GENERAL.--Except as provided in paragraph (3), the Oil Spill Liability Trust Fund financing rate under subsection (c) shall apply on and after the commencement date and before January 1, 1992.
"(2) COMMENCEMENT DATE.--
"(A) IN GENERAL.--For purposes of this subsection, the term 'commencement date' means the later of--
"(i) February 1, 1987, or
"(ii) the 1st day of the 1st calendar month beginning more than 30 days after the date of the enactment of qualified authorizing legislation.
"(B) QUALIFIED AUTHORIZING LEGISLATION.--For purposes of subparagraph (A), the term 'qualified authorizing legislation' means any law enacted before September 1, 1987, which is substantially identical to subtitle E of title VI, or subtitle D of title VIII, of H.R. 5300 of the 99th Congress as passed the House of Representatives.
"(3) NO TAX IF AMOUNTS COLLECTED EXCEED $300,000,000.--
"(A) ESTIMATES BY SECRETARY.--The Secretary as of the close of each calendar quarter (and at such other times as the Secretary determines appropriate) shall make an estimate of the amount of taxes which will be collected under this section (to the extent attributable to the Oil Spill Liability Trust Fund financing rate) during the period beginning on the commencement date and ending on December 31, 1991.
"(B) TERMINATION IF $300,000,000 CREDITED BEFORE JANUARY 1, 1992.--If the Secretary estimates under subparagraph (A) that more than $300,000,000 will be credited to the Fund before January 1, 1992, the Oil Spill Liability Trust Fund financing rate shall not apply after the date on which (as estimated by the Secretary) $300,000,000 will be so credited to the Fund."
(3) Sections 4661(c) and 4671(e) of such Code (relating to termination of environmental taxes) are each amended by striking out "no tax is imposed under section 4611(a)" and inserting in lieu thereof "the Hazardous Substance Superfund financing rate under section 4611 does not apply".
(4) Subsection (b) of section 9507 of such Code (relating to transfers to Superfund) is amended by adding at the end thereof the following:
"In the case of the tax imposed by section 4611, paragraph (1) shall apply only to so much of such tax as is attributable to the Hazardous Substance Superfund financing rate under section 4611(c)."
(d) EFFECTIVE DATE.--
(1) IN GENERAL.--Except as provided in paragraph (2), the amendments made by this section shall take effect on the commencement date (as defined in section 4611(f)(2) of the Internal Revenue Code of 1954, as added by this section).
(2) COORDINATION WITH SUPERFUND REAUTHORIZATION.--The amendments made by this section shall take effect only if the Superfund Amendments and Reauthorization Act of 1986 is enacted.
SEC. 8033. OIL SPILL LIABILITY TRUST FUND.
(a) IN GENERAL.--Subchapter A of chapter 98 of the Internal Revenue Code of 1954 (relating to establishment of trust funds) is amended by adding after section 9506 the following new section:
"SEC. 9507. OIL SPILL LIABILITY TRUST FUND.
"(a) CREATION OF TRUST FUND.--There is established in the Treasury of the United States a trust fund to be known as the 'Oil Spill Liability Trust Fund', consisting of such amounts as may be appropriated or credited to such Trust Fund as provided in this section or section 9602(b).
"(b) TRANSFERS TO TRUST FUND.--There are hereby appropriated to the Oil Spill Liability Trust Fund amounts equivalent to--
"(1) taxes received in the Treasury under section 4611 (relating to environmental tax on petroleum) to the extent attributable to the Oil Spill Liability Trust Fund financing rate under section 4611(c),
"(2) amounts recovered, collected, or received under subtitle A of the Comprehensive Oil Pollution Liability and Compensation Act,
"(3) amounts remaining (on the 1st day the Oil Spill Liability Trust Fund financing rate under section 4611(c) applies) in the Deep Water Port Liability Fund established by section 18(f) of the Deep Water Port Act of 1974,
"(4) amounts remaining (on such date) in the Offshore Oil Pollution Compensation Fund established under section 302 of the Outer Continental Shelf Lands Act Amendments of 1978, and
"(5) amounts credited to such trust fund under section 311(s) of the Federal Water Pollution Control Act.
"(c) EXPENDITURES.--
"(1) GENERAL EXPENDITURE PURPOSES.--
"(A) IN GENERAL.--Amounts in the Oil Spill Liability Trust Fund shall be available, as provided in appropriation Acts, only for purposes of making expenditures for--
"(i) the payment of removal costs described in the Comprehensive Oil Pollution Liability and Compensation Act,
"(ii) the payment of claims under the Comprehensive Oil Pollution Liability and Compensation Act for damage which is not otherwise compensated.
"(iii) carrying out subsections (c), (d), (i), and (l) of section 311 of the Federal Water Pollution Control Act with respect to any discharge of oil (as defined in such section),
"(iv) carrying out section 5 of the Intervention on the High Seas Act relating to oil pollution or the substantial threat of oil pollution,
"(v) the payment of all expenses of administration incurred by the Federal Government under the Comprehensive Oil Pollution Liability and Compensation Act, and
"(vi) the payment of contributions to the International Fund under such Act.
For purposes of this subparagraph, references to the Comprehensive Oil Pollution Liability and Compensation Act shall be treated as references to qualified authorizing legislation (as defined in section 4611).
"(B) SPECIAL RULES.--
"(i) PAYMENTS TO GOVERNMENTS ONLY FOR REMOVAL COSTS AND NATURAL RESOURCE DAMAGE ASSESSMENTS AND CLAIMS.--Except in the case of payments described in subparagraph (A)(v), amounts shall be available under subparagraph (A) for payments to any government only for--
"(I) removal costs and natural resource damage assessments and claims, and
"(II) administrative expenses related to such costs, assessments, or claims.
"(ii) RESTRICTIONS ON CONTRIBUTIONS TO INTERNATIONAL FUND.--Under regulations prescribed by the Secretary, amounts shall be available under subparagraph (A) with respect to any contribution to the International Fund only in proportion to the portion of such fund used for a purpose for which amounts may be paid from the Oil Spill Liability Trust Fund.
"(A) $500,000,000 PER INCIDENT, ETC.--The maximum amount which may be paid from the Oil Spill Liability Trust Fund with respect to--
"(i) any single incident shall not exceed $500,000,000, and
"(ii) natural resource damage assessments and claims in connection with any single incident shall not exceed $250,000,000.
"(B) $30,000,000 MINIMUM BALANCE.--Except in the case of payments described in paragraph (1)(A)(i), a payment may be made from such Trust Fund only if the amount in such Trust Fund after such payment will not be less than $30,000,000.
"(1) IN GENERAL.--There are authorized to be appropriated to the Oil Spill Liability Trust Fund, as repayable advances, such sums as may be necessary to carry out the purposes of such Trust Fund.
"(2) LIMITATION ON AMOUNT OUTSTANDING.--The maximum aggregate amount of repayable advances to the Oil Spill Liability Trust Fund which is outstanding at any one time shall not exceed $500,000,000.
"(3) REPAYMENT OF ADVANCES.--
"(A) IN GENERAL.--Advances made to the Oil Spill Liability Trust Fund shall be repaid, and interest on such advances shall be paid, to the general fund of the Treasury when the Secretary determines that moneys are available for such purposes in such Fund.
"(B) FINAL REPAYMENT.--No advance shall be made to the Oil Spill Liability Trust Fund after December 31, 1991, and all advances to such Fund shall be repaid on or before such date.
"(C) RATE OF INTEREST.--Interest on advances made pursuant to this subsection shall be--
"(i) at a rate determined by the Secretary of the Treasury (as of the close of the calendar month preceding the month in which the advance is made) to be equal to the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the anticipated period during which the advance will be outstanding, and
"(ii) compounded annually.
"(1) GENERAL RULE.--Any claim filed against the Oil Spill Liability Trust Fund may be paid only out of such Trust Fund.
"(2) COORDINATION WITH OTHER PROVISIONS.--Nothing in the Comprehensive Oil Pollution Liability and Compensation Act (or in any amendment made by such Act) shall authorize the payment by the United States Government of any amount with respect to any such claim out of any source other than the Oil Spill Liability Trust Fund.
"(3) ORDER IN WHICH UNPAID CLAIMS ARE TO BE PAID.--If at any time the Oil Spill Liability Trust Fund has insufficient funds (or is unable by reason of subsection (c)(2)) to pay all of the claims out of such Trust Fund at such time, such claims shall, to the extent permitted under paragraph (1) and such subsection, be paid in full in the order in which they were finally determined."
(b) CLERICAL AMENDMENT.--The table of sections for subchapter A of chapter 98 of such Code is amended by adding after the item relating to section 9506 the following new item:
"Sec. 9507. Oil Spill Liability Trust Fund."
(c) EFFECTIVE DATE.--
(1) IN GENERAL.--The amendments made by this section shall take effect on the commencement date (as defined in section 4611 of the Internal Revenue Code of 1954, as amended by this part).
(2) COORDINATION WITH SUPERFUND REAUTHORIZATION.--If the Superfund Amendments and Reauthorization Act of 1986 is enacted--
(A) subsection (a) of this section shall be applied by substituting "section 9508" for "section 9506",
(B) section 9507 of the Internal Revenue Code of 1954, as added by this section, is hereby redesignated as section 9509 of such Code, and
(C) in lieu of the amendment made by subsection (b), the table of sections for subchapter A of chapter 98 of such Code is amended by adding after the item relating to section 9508 the following new item:
PART V--DENIAL OF CERTAIN TAX BENEFITS WITH RESPECT TO ACTIVITIES IN CERTAIN FOREIGN COUNTRIES
SEC. 8041. DENIAL OF CERTAIN TAX BENEFITS WITH RESPECT TO ACTIVITIES IN CERTAIN FOREIGN COUNTRIES.
(a) DENIAL OF FOREIGN TAX CREDIT.--Section 901 of the Internal Revenue Code of 1954 (relating to taxes of foreign countries and of possessions of the United States), as amended by the Tax Reform Act of 1986, is amended by redesignating subsection (j) as subsection (k) and by inserting after subsection (i) the following new subsection:
"(j) DENIAL OF FOREIGN TAX CREDIT, ETC., WITH RESPECT TO CERTAIN FOREIGN COUNTRIES.--
"(1) IN GENERAL.--Notwithstanding any other provision of this part--
"(A) no credit shall be allowed under subsection (a) for any income, war profits, or excess profits taxes paid or accrued (or deemed paid under section 902 or 960) to any country if such taxes are with respect to income attributable to a period to which this subsection applies to such country, and
"(B) subsections (a), (b), and (c) of section 904 and sections 902 and 960 shall be applied separately with respect to income attributable to such a period from sources within any country so identified.
"(2) COUNTRIES TO WHICH SUBSECTION APPLIES.--
"(A) IN GENERAL.--This subsection shall apply to any foreign country--
"(i) the government of which the United States does not recognize, unless such government is otherwise eligible to purchase defense articles or services under the Arms Export Control Act,
"(ii) with respect to which the United States has severed diplomatic relations,
"(iii) with respect to which the United States has not severed diplomatic relations but does not conduct such relations, or
"(iv) which the Secretary of State has, pursuant to section 6(j) of the Export Administration Act of 1979, as amended, designated as a foreign country which repeatedly provides support for acts of international terrorism.
"(B) PERIOD FOR WHICH SUBSECTION APPLIES.--This subsection shall apply to any foreign country described in subparagraph (A) during the period--
"(i) beginning on the later of--
"(I) January 1, 1987, or
"(II) 6 months after such country becomes a country described in subparagraph (A), and
"(ii) ending on the date the Secretary of State certifies to the Secretary of the Treasury that such country is no longer described in subparagraph (A).
"(4) REGULATIONS.--The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection, including regulations which treat income paid through 1 or more entities as derived from a foreign country to which this subsection applies if such income was, without regard to such entities, derived from such country."
(b) DENIAL OF DEFERRAL OF INCOME.--
(1) GENERAL RULE.--Section 952(a) of such Code (defining subpart F income) is amended--
(A) by striking out "and" at the end of paragraph (3), by striking out the period at the end of paragraph (4) and inserting in lieu thereof ",and", and by inserting immediately after paragraph (4) the following new paragraph:
"(5) the income of such corporation derived from any foreign country during any period during which section 901(j) applies to such foreign country.", and
(B) by adding at the end thereof the following sentence:
(2) INCOME DERIVED FROM FOREIGN COUNTRY.--Section 952 of such Code (defining subpart F income), as amended by the Tax Reform Act of 1986, is amended by adding at the end thereof the following new subsection:
"(d) INCOME DERIVED FROM FOREIGN COUNTRY.--The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of subsection (a)(5), including regulations which treat income paid through 1 or more entities as derived from a foreign country to which section 901(j) applies if such income was, without regard to such entities, derived from such country."
(c) EFFECTIVE DATE.--The amendments made by this section shall take effect on January 1, 1987.
SEC. 8051. APPROPRIATIONS FOR IRS ENFORCEMENT.
For purposes of reconciliation, in order to provide for an accurate estimate of revenue raised by increased appropriations for the Internal Revenue Service, the enacted appropriations measure providing funding for the Internal Revenue Service for the fiscal year ending September 30, 1987, will include the following funding levels: for "Salaries and Expenses", $95,147,000; for "Processing Tax Returns", $1,332,902,000; for "Examinations and Appeals", $1,623,162,000; and for "Investigation, Collection, and Taxpayer Service", $1,196,581,000; Provided, That the allocation to the Senate Committee on Appropriations pursuant to section 302(a) of the Budget Act, as amended, under Senate Concurrent Resolution 120, the concurrent resolution on the budget for fiscal year 1987, is increased by $300,000,000 in both new budget authority and outlays.
PART VII--STUDY OF COMMUNICATION SERVICES NOT SUBJECT TO FEDERAL EXCISE TAX
SEC. 8061. STUDY OF COMMUNICATION SERVICES NOT SUBJECT TO FEDERAL EXCISE TAX.
(a) IN GENERAL.--The Secretary of the Treasury or his delegate shall conduct a study of communication services which are exempt from the tax imposed by section 4251 of the Internal Revenue Code of 1954 by reason of being a private communication service (as defined in section 4252(d) of such Code) or by reason of a specific exemption from such tax under section 4253 of such Code. Such study shall include an estimate of the reduction in tax revenues by reason of each such exemption, shall describe the types of persons which benefit from each such exemption, and a method under which such tax could be extended to private communication services (as so defined). In conducting such study, the Secretary of the Treasury or his delegate shall consult with the Secretary of Commerce and the Chairman of the Federal Communications Commission.
(b) REPORT.--The report of the study under subsection (a) shall be submitted, not later than June 30, 1987, to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.
SEC. 8071. TREATMENT OF CERTAIN TRUCKS, ETC.
Subsection (a) of section 204 of the Tax Reform Act of 1986 (relating to additional transitional rules) is amended by adding at the end thereof the following new paragraph:
(a) IN GENERAL.--Paragraph (1) of section 42(k) of the Internal Revenue Code of 1986 (relating to low-income housing credit), as added by the Tax Reform Act of 1986, is amended by striking out "subparagraph (D)(iv)(I)" and inserting in lieu thereof "subparagraphs (D)(ii)(II) and (D)(iv)(I)".
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall take effect as if included in the amendment made by section 252(a) of the Tax Reform Act of 1986.
SEC. 8073. TREATMENT OF CERTAIN RURAL HOUSING FOR PURPOSES OF TRANSITIONAL RULE FOR LOW-INCOME HOUSING.
(a) IN GENERAL.--Subsection (d) of section 502 of the Tax Reform Act of 1986 (defining qualified investor) is amended by adding at the end thereof the following new paragraph:
"(4) SPECIAL RULE FOR CERTAIN RURAL HOUSING.--In the case of any interest in a qualified low-income housing project which--
"(A) is assisted under section 515 of the Housing Act of 1949 (relating to the Farmers' Home Administration Program), and
"(B) is located in a town with a population of less than 10,000 and which is not part of a metropolitan statistical area,
paragraph (1)(B) shall be applied by substituting '35 percent' for '50 percent' and subsection (b)(1) shall be applied by substituting '5th taxable year' for '6th taxable year'. The preceding sentence shall not apply to any interest unless, on December 31, 1986, at least one-half of the number of payments required with respect to such interest remain to be paid."
(b) EFFECTIVE DATE.--The amendment made by subsection (a) shall take effect as if included in section 502 of the Tax Reform Act of 1986 on the date of its enactment.
SEC. 8081. COORDINATION WITH OTHER PROVISIONS.
Nothing in any provision of this Act (other than this title) shall be construed as--
(2) establishing any trust fund, or
(3) authorizing amounts to be expended from any trust fund.
Subtitle B--Provisions relating to public assistance
Subtitle C--Older Americans pension benefits
Subtitle D--Provisions relating to Medicare
Subtitle E--Medicaid and maternal and child health
Subtitle F--Provision relating to access to health care
SEC. 9001. ELIMINATION OF 3-PERCENT TRIGGER FOR COST-OF-LIVING INCREASES.
(a) ELIMINATION OF TRIGGER.--Section 215(i)(1)(B) of the Social Security Act is amended by striking out "with respect to which the applicable increase percentage is 3 percent or more" and inserting in lieu thereof "with respect to which the applicable increase percentage is greater than zero".
(b) CONFORMING AMENDMENTS.--
(1) IN CURRENT LAW.--Section 215(i) of such Act is further amended--
(A)(i) by striking out clause (i) in paragraph (2)(C) and redesignating clauses (ii) and (iii) of such paragraph as clauses (i) and (ii), respectively; and
(ii) by striking out "under clause (ii)" in clause (ii) of such paragraph as so redesignated and inserting in lieu thereof "under clause (i)";
(B) by inserting "and by section 9001 of the Omnibus Budget Reconciliation Act of 1986" after "Social Security Amendments of 1983" in paragraph (4); and
(C) by striking out "because the wage increase percentage was less than 3 percent" in paragraph (5)(A)(i) and inserting in lieu thereof "because there was no wage increase percentage greater than zero".
(2) IN APPLICABLE FORMER LAW.--Section 215(i) of such Act, as in effect in December 1978 and applied in certain cases under the provisions of such Act in effect after December 1978, is amended--
(A) by striking out ",by not less than 3 per centum," in paragraph (1)(B); and
(B) by striking out "(C)(i) Whenever" and all that follows down through "(ii) Whenever" in paragraph (2)(C) and inserting in lieu thereof "(C) Whenever".
(1) Except as provided in paragraphs (2) and (3), the amendments made by this section shall apply with respect to cost-of-living increases determined under section 215(i) of the Social Security Act (as currently in effect, and as in effect in December 1978 and applied in certain cases under the provisions of such Act in effect after December 1978) in 1986 and subsequent years.
(2) The amendments made by paragraphs (1)(A) and (2)(B) of subsection (b) shall apply with respect to months after September 1986.
(3) The amendment made by subsection (c) shall apply with respect to monthly premiums (under section 1839 of the Social Security Act) for months after December 1986.
(a) RETURNS AND PAYMENTS.--
(1) Subchapter C of chapter 21 of the Internal Revenue Code of 1954 is amended by redesignating section 3126 as section 3127, and by inserting after section 3125 the following new section:
"If the employer is a State or political subdivision thereof, or an agency or instrumentality of any one or more of the foregoing, the return of the amount deducted and withheld upon any wages under section 3101 and the amount of the tax imposed by section 3111 may be made by any officer or employee of such State or political subdivision or such agency or instrumentality, as the case may be, having control of the payment of such wages, or appropriately designated for that purpose.".
(2) The table of sections for subchapter C of chapter 21 of such Code is amended by striking out the last item and inserting in lieu thereof the following:
"Sec. 3127. Short title.".
(b) TREATMENT OF SERVICE UNDER SECTION 218 AGREEMENTS AS EMPLOYMENT PERFORMED BY EMPLOYEES.--
(1) SERVICE TREATED AS EMPLOYMENT.--
(A) Section 3121(b)(7) of such Code is amended--
(i) by striking out "; or" at the end of subparagraph (C) and inserting in lieu thereof a comma;
(ii) by striking out the semicolon at the end of subparagraph (D) and inserting in lieu thereof ",or"; and
(iii) by adding after subparagraph (D) the following new subparagraph:
"(E) service included under an agreement entered into pursuant to section 218 of the Social Security Act;".
(B) Section 1402(b) of such Code is amended by striking out "under an agreement entered into pursuant to the provisions of section 218 of the Social Security Act (relating to coverage of State employees), or" in the flush sentence immediately following paragraph (2).
(2) INDIVIDUAL PERFORMING SERVICES TREATED AS EMPLOYEE.--
(A) Section 3121(d) of such Code is amended by redesignating paragraph (3) as paragraph (4), and by inserting after paragraph (2) the following new paragraph (2) the following new paragraph:
"(3) any individual who performs services that are included under an agreement entered into pursuant to section 218 of the Social Security Act; or".
(B) Section 3306(i) of such Code is amended by striking out "subparagraphs (B) and (C) of paragraph (3)" and inserting in lieu thereof "paragraph (3) and subparagraphs (B) and (C) of paragraph (4)".
(2)(A) Section 205(c)(1)(D)(i) of such Act is amended by inserting "(as in effect prior to December 31, 1986)" after "section 218(e)".
(B) Section 205(c)(5)(F)(iii) of such Act is amended--
(i) by inserting "(as in effect prior to December 31, 1986)" after "section 218"; and
(ii) by inserting "(as so in effect)" after "subsection (q) of such section".
(C) Section 218(d)(6) of such Act is amended--
(i) by striking out "subsection (f)" in subparagraph (A) and inserting in lieu thereof "subsection (e)"; and
(ii) by striking out "subsection (f)(1)" in subparagraph (F) and inserting in lieu thereof "subsection (e)(1)".
(D) Section 218(d)(8)(D) of such Act is amended by striking out "subsection (p)" and inserting in lieu thereof "subsection (1)".
(E) Section 218(e)(1) of such Act (as redesignated by paragraph (1) of this subsection) is amended by striking out "Except as provided in subsection (e)(2), any agreement" and inserting in lieu thereof "Any agreement".
(F) Section 224(a)(2)(B) of such Act is amended by striking out "section 218(k)" and inserting in lieu thereof "section 218(g)".
SEC. 9202. BENEFIT ACCRUAL BEYOND NORMAL RETIREMENT AGE.
(a) ERISA AMENDMENTS.--
(1) IN GENERAL.--Subsection (a) of section 204 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1054(a)) is amended to read as follows:
"(a) Each pension plan shall satisfy the requirements of subsection (b)(3), and--
"(1) in the case of a defined benefit plan, shall satisfy the requirements of subsection (b)(1); and
"(2) in the case of a defined contribution plan, shall satisfy the requirements of subsection (b)(2).".
(2) DEFINED BENEFIT PLANS.--Section 204(b)(1) of such Act is amended by adding at the end thereof the following new subparagraph:
"(H)(i) Notwithstanding the preceding subparagraphs, a defined benefit plan shall be treated as not satisfying the requirements of this paragraph if, under the plan, an employee's benefit accrual is ceased, or the rate of an employee's benefit accrual is reduced, because of the attainment of any age.
"(ii) A plan shall not be treated as failing to meet the requirements of this subparagraph solely because the plan imposes (without regard to age) a limitation on the amount of benefits that the plan provides or a limitation on the number of years of service or years of participation which are taken into account for purposes of determining benefit accrual under the plan.
"(iii) In the case of any employee who, as of the end of any plan year under a defined benefit plan, has attained normal retirement age under such plan--
"(I) if distribution of benefits under such plan with respect to such employee has commenced as of the end of such plan year, then any requirement of this subparagraph for continued accrual of benefits under such plan with respect to such employee during such plan year shall be treated as satisfied to the extent of the actuarial equivalent of in-service distribution of benefits, and
"(II) if distribution of benefits under such plan with respect to such employee has not commenced as of the end of such year in accordance with section 206(a)(3), and the payment of benefits under such plan with respect to such employee is not suspended during such plan year pursuant to section 203(a)(3)(B), then any requirement of this subparagraph for continued accrual of benefits under such plan with respect to such employee during such plan year shall be treated as satisfied to the extent of any adjustment in the benefit payable under the plan during such plan year attributable to the delay in the distribution of benefits after the attainment of normal retirement age.
The preceding provisions of this clause shall apply in accordance with regulations of the Secretary of the Treasury. Such regulations may provide for the application of the preceding provisions of this clause, in the case of any such employee, with respect to any period of time within a plan year.
"(iv) Clause (i) shall not apply with respect to any employee who is a highly compensated employee (within the meaning of section 414(q) of the Internal Revenue Code of 1986) to the extent provided in regulations prescribed by the Secretary of the Treasury for purposes of precluding discrimination in favor of highly compensated employees within the meaning of subchapter D of chapter 1 of the Internal Revenue Code of 1986.
"(v) A plan shall not be treated as failing to meet the requirements of clause (i) solely because the subsidized portion of any early retirement benefit is disregarded in determining benefit accruals.
"(vi) Any regulations prescribed by the Secretary of the Treasury pursuant to clause (v) of section 411(b)(1)(H) of the Internal Revenue Code of 1986 shall apply with respect to the requirements of this subparagraph in the same manner and to the same extent as such regulations apply with respect to the requirements of such section 411(b)(1)(H).".
(A) by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively; and
(B) by inserting after paragraph (1) the following new paragraph:
"(2)(A) A defined contribution plan satisfies the requirements of this paragraph if, under the plan, allocations to the employee's account are not ceased, and the rate at which amounts are allocated to the employee's account is not reduced, because of the attainment of any age.
"(B) Subparagraph (A) shall not apply with respect to any employee who is a highly compensated employee (within the meaning of section 414(q) of the Internal Revenue Code of 1986) to the extent provided in regulations prescribed by the Secretary of the Treasury for purposes of precluding discrimination in favor of highly compensated employees within the meaning of subchapter D of chapter 1 of the Internal Revenue Code of 1986.
"(C) A plan shall not be treated as failing to meet the requirements of subparagraph (A) solely because the subsidized portion of any early retirement benefit is disregarded in determining benefit accruals.
"(D) Any regulations prescribed by the Secretary of the Treasury pursuant to subparagraphs (C) and (D) of section 411(b)(2) of the Internal Revenue Code of 1986 shall apply with respect to the requirements of this paragraph in the same manner and to the same extent as such regulations apply with respect to the requirements of such section 411(b)(2).".
(1) DEFINED BENEFIT PLANS.--Section 411(b)(1) of the Internal Revenue Code of 1986 (relating to accrued benefit requirements) is amended--
(A) by striking out "GENERAL RULES.--" and inserting in lieu thereof "DEFINED BENEFIT PLANS.--"; AND
(B) by adding at the end thereof the following new subparagraph:
"(H) CONTINUED ACCRUAL BEYOND NORMAL RETIREMENT AGE.--
"(i) IN GENERAL.--Notwithstanding the preceding subparagraphs, a defined benefit plan shall be treated as not satisfying the requirements of this paragraph if, under the plan, an employee's benefit accrual is ceased, or the rate of an employee's benefit accrual is reduced, because of the attainment of any age.
"(ii) CERTAIN LIMITATIONS PERMITTED.--A plan shall not be treated as failing to meet the requirements of this subparagraph solely because the plan imposes (without regard to age) a limitation on the amount of benefits that the plan provides or a limitation on the number of years of service or years of participation which are taken into account for purposes of determining benefit accrual under the plan.
"(iii) ADJUSTMENTS UNDER PLAN FOR DELAYED RETIREMENT TAKEN INTO ACCOUNT.--In the case of any employee who, as of the end of any plan year under a defined benefit plan, has attained normal retirement age under such plan--
"(I) if distribution of benefits under such plan with respect to such employee has commenced as of the end of such plan year, then any requirement of this subparagraph for continued accrual of benefits under such plan with respect to such employee during such plan year shall be treated as satisfied to the extent of the actuarial equivalent of in-service distribution of benefits, and
"(II) if distribution of benefits under such plan with respect to such employee has not commenced as of the end of such year in accordance with section 401(a)(14)(C), and the payment of benefits under such plan with respect to such employee is not suspended during such plan year pursuant to subsection (a)(3)(B), then any requirement of this subparagraph for continued accrual of benefits under such plan with respect to such employee during such plan year shall be treated as satisfied to the extent of any adjustment in the benefit payable under the plan during such plan year attributable to the delay in the distribution of benefits after the attainment of normal retirement age.
The preceding provisions of this clause shall apply in accordance with regulations of the Secretary. Such regulations may provide for the application of the preceding provisions of this clause, in the case of any such employee, with respect to any period of time within a plan year.
"(iv) DISREGARD OF SUBSIDIZED PORTION OF EARLY RETIREMENT BENEFIT.--A plan shall not be treated as failing to meet the requirements of clause (i) solely because the subsidized portion of any early retirement benefit is disregarded in determining benefit accruals.
"(v) COORDINATION WITH OTHER REQUIREMENTS.--The Secretary shall provide by regulation for the coordination of the requirements of this subparagraph with the requirements of subsection (a), section 404, 410, and 415, and the provisions of this subchapter precluding discrimination in favor of highly compensated employees.".
(A) by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively; and
"(B) by inserting after paragraph (1) the following new paragraph:
"(2) DEFINED CONTRIBUTION PLANS.--
"(A) IN GENERAL.--A defined contribution plan satisfies the requirements of this paragraph if, under the plan, allocations to the employee's account are not ceased, and the rate at which amounts are allocated to the employee's account is not reduced, because of the attainment of any age.
"(B) DISREGARD OF SUBSIDIZED PORTION OF EARLY RETIREMENT BENEFIT.--A plan shall not be treated as failing to meet the requirements of subparagraph (A) solely because the subsidized portion of any early retirement benefit is disregarded in determining benefit accruals.
"(C) APPLICATION TO TARGET BENEFIT PLANS.--The Secretary shall provide by regulation for the application of the requirements of this paragraph to target benefit plans.
"(D) COORDINATION WITH OTHER REQUIREMENTS.--The Secretary may provide by regulation for the coordination of the requirements of this subparagraph with the requirements of subsection (a), sections 404, 410, and 415, and the provisions of this subchapter precluding discrimination in favor of highly compensated employees.".
(3) CONFORMING AMENDMENT.--The first sentence of section 411(a) of such Code (relating to minimum vesting standards) is amended by striking out "paragraph (2) of subsection (b), and" and all that follows through the end thereof and inserting in lieu thereof "subsection (b)(3), and also satisfies, in the case of a defined benefit plan, the requirements of subsection (b)(1) and, in the case of a defined contribution plan, the requirements of subsection (b)(2).".
(a) REPEAL OF PROVISIONS PERMITTING CERTAIN PLANS TO EXCLUDE OLDER EMPLOYEES FROM PLAN PARTICIPATION ON THE BASIS OF AGE.--
(1) ERISA AMENDMENT.--Section 202(a)(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1052(a)(2)) is amended by striking out "unless--" and all that follows and inserting in lieu thereof a period.
(2) IRC AMENDMENT.--Section 410(a)(2) of the Internal Revenue Code of 1986 (relating to maximum age conditions) is amended by striking out "unless--" and all that follows and inserting in lieu thereof a period.
(b) DELAYED NORMAL RETIREMENT AGE FOR INDIVIDUALS COMMENCING PLAN PARTICIPATION WITHIN 5 YEARS OF ATTAINING NORMAL RETIREMENT AGE UNDER THE PLAN.--
(1) ERISA AMENDMENT.--Subparagraph (B) of section 3(24) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(24)(B)) is amended to read as follows:
"(B) the latest of--
"(i) the time a plan participant attains age 65,
"(ii) in the case of a plan participant who commences participation in the plan within 5 years before attaining normal retirement age under the plan, the 5th anniversary of the time the plan participant commences participation in the plan, or
"(iii) in the case of a plan participant not described in clause (ii), the 10th anniversary of the time the plan participant commences participation in the plan.".
"(B) the latest of--
"(i) the time a plan participant attains age 65,
"(ii) in the case of a plan participant who commences participation in the plan within 5 years before attaining normal retirement age under the plan, the 5th anniversary of the time the plan participant commences participation in the plan, or
"(iii) in the case of a plan participant not described in clause (ii), the 10th anniversary of the time the plan participant commences participation in the plan.".
SEC. 9501. CONTINUATION COVERAGE FOR RETIREES IN CASES OF BANKRUPTCIES.
(a) LOSS OF COVERAGE OF RETIREE THROUGH BANKRUPTCY AS QUALIFYING EVENT.--
(1) IRC AMENDMENT.--Paragraph (3) of section 162(k) of the Internal Revenue Code of 1986 (relating to qualifying event with respect to continuation coverage requirements under group health plans) is amended by adding at the end the following:
"(F) A proceeding in a case under title 11, United States Code, commencing on or after July 1, 1986, with respect to the employer from whose employment the covered employee retired at any time.
In the case of an event described in subparagraph (F), a loss of coverage includes a substantial elimination of coverage with respect to a qualified beneficiary described in paragraph (7)(B)(iv) within one year before or after the date of commencement of the proceeding."
(2) ERISA AMENDMENT.--Section 603 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1163) is amended by adding at the end of the following:
"(6) A proceeding in a case under title 11, United States Code, commencing on or after July 1, 1986, with respect to the employer from whose employment the covered employee retired at any time.
In the case of an event described in paragraph (6), a loss of coverage includes a substantial elimination of coverage with respect to a qualified beneficiary described in section 607(3)(C) within one year before or after the date of commencement of the proceeding."
(b) PERIOD OF CONTINUATION COVERAGE.--
(1) LIFE OF COVERED EMPLOYEE OR WIDOW AND ADDITIONAL 36 MONTHS FOR SURVIVING SPOUSE AND DEPENDENTS.--
(A) IRC AMENDMENTS.--Clause (i) of section 162(k)(2)(B) of the Internal Revenue Code of 1986 (relating to maximum period), as amended by section 1895(d)(2)(A) of the Tax Reform Act of 1986, is amended--
(i) in subclause (II), by inserting "(other than a qualifying event described in paragraph (3)(F))" after "qualifying event" the first place it appears,
(ii) in subclause (III), by inserting "or (3)(F)" after "(3)(B)",
(iii) by redesignating subclause (III) as subclause (IV), and
(iv) by inserting after subclause (II) the following new subclause:
"(III) SPECIAL RULE FOR CERTAIN BANKRUPTCY PROCEEDINGS.--In the case of a qualifying event described in paragraph (3)(F) (relating to bankruptcy proceedings), the date of the death of the covered employee or qualified beneficiary (described in paragraph (7)(B)(iv)(III), or in the case of the surviving spouse or dependent children of the covered employee, 36 months after the date of the death of the covered employee."
(i) in clause (ii), by inserting "(other than a qualifying event described in section 603(6))" after "qualifying event" the first place it appears,
(ii) in clause (iii), by inserting "or 603(6)" after "603(2)",
(iii) by redesignating clause (iii) as clause (iv), and
(iv) by inserting after clause (ii) the following new clause:
"(iii) SPECIAL RULE FOR CERTAIN BANKRUPTCY PROCEEDINGS.--In the case of a qualifying event described in 603(6) (relating to bankruptcy proceedings), the date of the death of the covered employee or qualified beneficiary (described in section 607(3)(C)(iii)), or in the case of the surviving spouse or dependent children of the covered employee, 36 months after the date of the death of the covered employee."
(A) IRC AMENDMENT.--Subclause (II) of section 162(k)(2)(B)(iv) of the Internal Revenue Code of 1986 (relating to reemployment or Medicare eligibility) is amended by inserting "in the case of a qualified beneficiary other than a qualified beneficiary described in paragraph (7)(B)(iv)," before "entitled".
(B) ERISA AMENDMENT.--Clause (ii) of section 602(2)(D) of the Employee Retirement Income Security Act of 1974 (29) U.S.C. 1162(2)(D)) is amended by inserting "in the case of a qualified beneficiary other than a qualified beneficiary described in section 607(3)(C)," before "entitled".
(1) IRC AMENDMENT.--Section 162(k)(7)(B) of the Internal Revenue Code of 1986, as amended by section 1895(d)(7) of the Tax Reform Act of 1986 (relating to special rule for termination and reduced employment in definition of qualified beneficiary), is amended by adding at the end the following new clause:
"(I) as the spouse of the covered employee,
"(II) as the dependent child of the employee, or
"(III) as the surviving spouse of the covered employee.".
"(C) SPECIAL RULE FOR RETIREES AND WIDOWS.--In the case of a qualifying event described in section 603(6), the term 'qualified beneficiary' includes a covered employee who had retired on or before the date of substantial elimination of coverage and any other individual who, on the day before such qualifying event, is a beneficiary under the plan--
"(i) as the spouse of the covered employee,
"(ii) as the dependent child of the employee, or
"(iii) as the surviving spouse of the covered employee.".
(1) IRC AMENDMENT.--Subparagraphs (B) and (D)(i) of section 162(k)(6) of the Internal Revenue Code of 1986 (relating to notice requirements) are amended by striking "or (D)" each place it appears and inserting in lieu thereof "(D), or (F)".
(2) ERISA AMENDMENT.--Paragraphs (2) and (4)(A) of section 606 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1166) (relating to notice requirements) are amended by striking "or (4)" each place it appears and inserting in lieu thereof "(4), or (6)".
(e) EFFECTIVE DATE.--
(1) IN GENERAL.--The amendments made by this section shall take effect as if included in title X of the Consolidated Omnibus Budget Reconciliation Act of 1985.
(2) TREATMENT OF CERTAIN BANKRUPTCY PROCEEDINGS.--Notwithstanding paragraph (1), section 10001(e) of the Consolidated Omnibus Budget Reconciliation Act of 1985, and section 10002(d) of such Act, the amendments made by this section and by sections 10001 and 10002 of such Act shall apply in the case of plan years ending during the 12-month period beginning July 1, 1986, but only with respect to--
(A) a qualifying event described in section 162(k)(3)(F) of the Internal Revenue Code of 1986 or section 603(6) of the Employee Retirement Income Security Act of 1974, and
(B) a qualifying event described in section 162(k)(3)(A) of the Internal Revenue Code of 1986 or section 603(1) of the Employee Retirement Income Security Act of 1974 relating to the death of a retired employee occurring after the date of the qualifying event described in subparagraph (A).
(3) TREATMENT OF CURRENT RETIREES.--Section 162(k)(3)(F) of the Internal Revenue Code of 1986 and section 603(6) of the Employee Retirement Income Security Act of 1974 apply to covered employees who retired before, on, or after the date of the enactment of this Act.
(4) NOTICE.--In the case of a qualifying event described in section 603(6) of the Employee Retirement Income Security Act of 1974 that occurred before the date of the enactment of this Act, the notice required under section 606(2) of such Act (and under section 162(k)(6)(B) of the Internal Revenue Code of 1986) with respect to such event shall be provided no later than 30 days after the date of the enactment of this Act.
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