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H.R. 5376 - Build Back Better Act - Rules Committee Print 117-17

OCT. 28, 2021

H.R. 5376; Build Back Better Act; Rules Committee Print 117-17

DATED OCT. 28, 2021
DOCUMENT ATTRIBUTES
Citations: H.R. 5376; Build Back Better Act; Rules Committee Print 117-17
[Editor's Note:

Asterisks indicate omitted text.

]

RULES COMMITTEE PRINT 117-17

TEXT OF H.R. 5376, BUILD BACK BETTER ACT

[Showing the text of H.R. 5376, as reported by the Committee on the Budget, with modifications.]

* * *

"SEC. 1354. ALLOCATIONS.

"(a) APPROPRIATION. — In addition to amounts otherwise available, there is appropriated, out of any money in the Treasury not otherwise appropriated, $10,000,000,000 for 2023 and each subsequent year through 2025 to provide allocations for States under subsection (b) and payments under section 1353(b).

"(b) ALLOCATIONS. —

"(1) PAYMENT. —

"(A) IN GENERAL. — From amounts appropriated under subsection (a) for a year, the Secretary shall, with respect to a State not described in section 1353(b) for such year and not later than the date specified under subparagraph (B) for such year, allocate for such State the amount determined for such State and year under paragraph (2).

"(B) SPECIFIED DATE. — For purposes of subparagraph (A), the date specified in this subparagraph is —

"(i) for 2023, the date that is 90 days after the date of the enactment of this part; and

"(ii) for 2024 or 2025, January 1 of the previous year.

"(C) NOTIFICATIONS OF ALLOCATION AMOUNTS. — For 2024 and 2025, the Secretary shall notify each State of the amount determined for such State under paragraph (2) for such year by not later than January 1 of the previous year.

"(2) ALLOCATION AMOUNT DETERMINATIONS. —

"(A) IN GENERAL. — For purposes of paragraph (1), the amount determined under this paragraph for a year for a State described in paragraph (1)(A) for such year is the amount equal to —

"(i) the amount that the Secretary estimates would be expended under this part for such year on attachment range claims of individuals residing in such State if such State used such funds only for the purpose described in paragraph (1) of section 1352(a) at the dollar amounts and percentage specified under subparagraph (B) for such year; minus

"(ii) the amount, if any, by which the Secretary determines —

"(I) the estimated amount of premium tax credits under section 36B of the Internal Revenue Code of 1986 that would be attributable to individuals residing in such State for such year without application of this part; exceeds

"(II) the estimated amount of premium tax credits under section 36B of the Internal Revenue Code of 1986 that would be attributable to individuals residing in such State for such year if section 1353(b) applied for such year and applied with respect to such State for such year.

For purposes of the previous sentence and section 1353(b)(3), the term 'attachment range claims' means, with respect to an individual, the claims for such individual that exceed a dollar amount specified by the Secretary for a year, but do not exceed a ceiling dollar amount specified by the Secretary for such year, under subparagraph (B).

"(B) SPECIFICATIONS. — For purposes of subparagraph (A) and section 1353(b)(3), the Secretary shall determine the dollar amounts and the percentage to be specified under this subparagraph for a year in a manner to ensure that the total amount of expenditures under this part for such year is estimated to equal the total amount appropriated for such year under subsection (a) if such expenditures were used solely for the purpose described in paragraph

(1) of section 1352(a) for attachment range claims at the dollar amounts and percentage so specified for such year.

"(3) AVAILABILITY. — Funds allocated to a State under this subsection for a year shall remain available through the end of the subsequent year.".

(b) BASIC HEALTH PROGRAM FUNDING ADJUSTMENTS. — Section 1331 of the Patient Protection and Affordable Care Act (42 U.S.C. 18051) is amended —

(1) in subsection (a), by adding at the end the following new paragraph:

"(3) PROVISION OF INFORMATION ON QUALIFIED HEALTH PLAN PREMIUMS. —

"(A) IN GENERAL. — For plan years beginning on or after January 1, 2023, the program described in paragraph (1) shall provide that a State may not establish a basic health program unless such State furnishes to the Secretary, with respect to each qualified health plan offered in such State during a year that receives any reinsurance payment from funds made available under part 6 for such year, the adjusted premium amount (as defined in subparagraph (B)) for each such plan and year.

"(B) ADJUSTED PREMIUM AMOUNT DEFINED. — For purposes of subparagraph (A), the term 'adjusted premium amount' means, with respect to a qualified health plan and a year, the monthly premium for such plan and year that would have applied had such plan not received any payments described in subparagraph (A) for such year."; and

(2) in subsection (d)(3)(A)(ii), by adding at the end the following new sentence: "In making such determination, the Secretary shall calculate the value of such premium tax credits that would have been provided to such individuals enrolled through a basic health program established by a State during a year using the adjusted premium amounts (as defined in subsection (a)(3)(B)) for qualified health plans offered in such State during such year.".

(c) IMPLEMENTATION AUTHORITY. — The Secretary of Health and Human Services may implement the provisions of, and the amendments made by, this section by subregulatory guidance or otherwise.

SEC. 30603. FUNDING FOR THE PROVISION OF HEALTH INSURANCE CONSUMER INFORMATION.

Section 2793(e) of the Public Health Service Act (42 U.S.C. 300gg-93(e)) is amended by adding at the end the following new paragraph:

"(3) FUNDING FOR 2022 THROUGH 2025. — In addition to amounts otherwise available, there is appropriated, out of any money in the Treasury not otherwise appropriated, $100,000,000 for 2022, to remain available until expended, of which $25,000,000 shall be used for each of 2022 through 2025 to carry out this section.".

SEC. 30605. COST-SHARING REDUCTIONS FOR INDIVIDUALS RECEIVING UNEMPLOYMENT COMPENSATION.

Section 1402(f) of the Patient Protection and Affordable Care Act (42 U.S.C. 18071(f)) is amended —

(1) in the header, by striking "2021" and inserting "CERTAIN YEARS";

(2) in the matter preceding paragraph (1), by striking "2021" and inserting "any of years 2021 through 2025"; and

(3) in paragraph (2), by striking "133 percent" and inserting "150 percent".

Subtitle F — Medicaid

PART 1 — INVESTMENTS IN HOME AND COMMUNITY-BASED SERVICES

SEC. 30711. HCBS IMPROVEMENT PLANNING GRANTS.

(a) FUNDING. —

(1) IN GENERAL. — In addition to amounts otherwise available, there is appropriated to the Secretary for fiscal year 2022, out of any money in the Treasury not otherwise appropriated, $130,000,000, to remain available until expended, for carrying out this section.

(2) TECHNICAL ASSISTANCE AND GUIDANCE. —  In addition to amounts otherwise available, there is appropriated to the Secretary for fiscal year 2022, out of any money in the Treasury not otherwise appropriated, $5,000,000, for purposes of issuing guidance and providing technical assistance to States intending to apply for, or which are awarded, a planning grant under this section, and for other administrative expenses related to awarding planning grants under this section.

(b) AWARD AND USE OF GRANTS. —

(1) DEADLINE FOR AWARD OF GRANTS. — From the amount appropriated under subsection (a)(1), the Secretary, not later than 12 months after the date of enactment of this Act, shall solicit State requests for HCBS improvement planning grants and award such grants to all States that meet such requirements as determined by the Secretary.

(2) USE OF FUNDS. — Subject to paragraph (3), a State awarded a planning grant under this section shall use the grant to carry out planning activities for purposes of developing and submitting to the Secretary an HCBS improvement plan for the State that meets the requirements of subsections (c) and (d). A State may use planning grant funds to support activities related to the implementation of the HCBS improvement plan for the State, collect and report information described in subsection (c), identify areas for improvement to the service delivery systems for home and community-based services, carry out activities related to evaluating payment rates for home and community-based services and identifying improvements to update the rate setting process, and make related infrastructure investments (such as case management or other information technology systems).

(3) LIMITATION ON USE OF FUNDS. — None of the funds awarded to a State under this section may be used by a State as the source of the non-Federal share of expenditures under the State plan (or waiver of such plan).

(c) HCBS IMPROVEMENT PLAN REQUIREMENTS. —  In order to meet the requirements of this subsection, an HCBS improvement plan developed using funds awarded to a State under this section shall include, with respect to the State and subject to subsection (d), the following:

(1) EXISTING MEDICAID HCBS LANDSCAPE. —

(A) ELIGIBILITY AND BENEFITS. — A description of the existing standards, pathways, and methodologies for eligibility for home and community-based services pursuant to the State plan (or waiver of such plan), including limits on assets and income, the home and community-based services available under the State Medicaid program and the types of settings in which they may be provided, and utilization management standards for such services.

(B) ACCESS. —

(i) BARRIERS. — A description of the barriers to accessing home and community-based services in the State identified by Medicaid eligible individuals, the families of such individuals, and direct care workers and home care agencies, or other similar organizations.

(ii) AVAILABILITY; UNMET NEED. — A summary, in accordance with guidance issued by the Secretary and as able to be practicably determined by the State, of the extent to which home and community-based services are available to all individuals in the State who would be eligible for such services under the State Medicaid program (including individuals who are on a waiting list for such services).

(C) UTILIZATION. — An assessment of the utilization of home and community-based services in the State (including the number of individuals receiving such services) during such period specified by the Secretary.

(D) SERVICE DELIVERY STRUCTURES AND SUPPORTS. — A description of the service delivery structures for providing home and community-based services in the State.

(E) WORKFORCE. — A description of the direct care workforce, including estimates of the number of full- and part-time direct care workers, the average and range of direct care worker wages, the benefits provided to direct care workers, and the turnover and vacancy rates of direct care worker positions.

(F) PAYMENT RATES. —

(i) IN GENERAL. — A description of the payment rates for home and community-based services, including, to the extent applicable, how payments for such services are factored into the development of managed care capitation rates, when the State last updated payment rates for home and community-based services, and an estimate of the portion of the payment rate that goes toward direct care worker compensation.

(ii) ASSESSMENT. — An assessment of the relationship between payment rates for such services and workforce shortages, average beneficiary wait times for such services, and provider-to-beneficiary ratios in the geographic region.

(G) QUALITY. — A description of how the quality of home and community-based services is measured and monitored.

(H) LONG-TERM SERVICES AND SUPPORTS PROVIDED IN INSTITUTIONAL SETTINGS. — A description of the number of individuals enrolled in the State Medicaid program in a year who receive items and services furnished by an institution for greater than 30 days in an institutional setting.

(I) HCBS SHARE OF OVERALL MEDICAID LTSS SPENDING. — For the most recent State fiscal year for which complete data is available, the percentage of expenditures made by the State under the State Medicaid program for long-term services and supports that are for home and community-based services.

(J) DEMOGRAPHIC DATA. — To the extent available and as applicable with respect to the information required under subparagraphs (B), (C), and (H), demographic data for such information, disaggregated by age groups, primary disability, income brackets, gender, race, ethnicity, geography, primary language, and type of service setting.

(2) GOALS FOR HCBS IMPROVEMENTS. — A description of how the State will do the following:

(A) Conduct the activities required under subsection (jj) of section 1905 of the Social Security Act (as added under section 30712).

(B) Reduce barriers to and disparities in access or utilization of home and community-based services in the State.

(C) Monitor and report on access to home and community-based services under the State Medicaid program, disparities in access to such services, and the utilization of such services.

(D) Monitor and report the amount of State Medicaid expenditures for home and community-based services under the State Medicaid program as a proportion of the total amount of State expenditures under the State Medicaid program for long-term services and supports.

(E) Monitor and report on wages, benefits, and vacancy and turnover rates for direct care workers.

(F) Assess and monitor the sufficiency of payment rates under the State Medicaid program, in a manner specified by the Secretary, for the specific types of home and community-based services available under such program for purposes of supporting direct care worker recruitment and retention and ensuring the availability of home and community-based services.

(G) Coordinate implementation of the HCBS improvement plan among the State Medicaid agency, agencies serving individuals with disabilities, and agencies serving the elderly.

(d) DEVELOPMENT AND APPROVAL REQUIREMENTS. —

(1) DEVELOPMENT REQUIREMENTS. — In order to meet the requirements of this subsection, a State awarded a planning grant under this section shall develop an HCBS improvement plan for the State through a public notice and comment process that includes consultation with Medicaid eligible individuals who are recipients of home and community-based services, family caregivers of such recipients, providers, health plans, direct care workers, chosen representatives of direct care workers, and aging, disability, and workforce advocates.

(2) AUTHORITY TO ADJUST CERTAIN PLAN CONTENT REQUIREMENTS. — The Secretary may modify the requirements for any of the information specified in subsection (c)(1) if a State requests a modification and demonstrates to the satisfaction of the Secretary that it is impracticable for the State to collect and submit the information.

(3) SUBMISSION AND APPROVAL. — Not later than 24 months after the date on which a State is awarded a planning grant under this section, the State shall submit an HCBS improvement plan for approval by the Secretary, along with assurances by the State that the State will implement the plan in accordance with the requirements of the HCBS Improvement Program established under subsection (jj) of section 1905 of the Social Security Act (42 U.S.C. 1396d) (as added by section 30712). The Secretary shall approve and make publicly available the HCBS improvement plan for a State after the plan and such assurances are submitted to the Secretary for approval and the Secretary determines the plan meets the requirements of subsection (c). A State may amend its HCBS improvement plan, subject to the approval of the Secretary that the plan as so amended meets the requirements of subsection (c). The Secretary may withhold or recoup funds provided under this section to a State, if the State fails to comply with the requirements of this section.

(e) DEFINITIONS. — In the part:

(1) DIRECT CARE WORKER. — The term "direct care worker" means, with respect to a State, any of the following individuals who are paid to provide directly to Medicaid eligible individuals home and community-based services available under the State Medicaid program:

(A) A registered nurse, licensed practical nurse, nurse practitioner, or clinical nurse specialist, or a licensed nursing assistant who provides such services under the supervision of a registered nurse, licensed practical nurse, nurse practitioner, or clinical nurse specialist.

(B) A direct support professional.

(C) A personal care attendant.

(D) A home health aide.

(E) Any other paid health care professional or worker determined to be appropriate by the State and approved by the Secretary.

(2) HCBS PROGRAM IMPROVEMENT STATE. —  The term "HCBS program improvement State" means a State that is awarded a planning grant under subsection (b) and has an HCBS improvement plan approved by the Secretary under subsection (d)(3).

(3) HEALTH PLAN. — The term "health plan" means any of the following entities that provide or arrange for home and community-based services for Medicaid eligible individuals who are enrolled with the entities under a contract with a State:

(A) A medicaid managed care organization, as defined in section 1903(m)(1)(A) of the Social Security Act (42 U.S.C. 1396b(m)(1)(A)).

(B) A prepaid inpatient health plan or prepaid ambulatory health plan, as defined in section 438.2 of title 42, Code of Federal Regulations (or any successor regulation).

(4) HOME AND COMMUNITY-BASED SERVICES. — The term "home and community-based services" means any of the following (whether provided on a fee-for-service, risk, or other basis):

(A) Home health care services authorized under paragraph (7) of section 1905(a) of the Social Security Act (42 U.S.C. 1396d(a)).

(B) Private duty nursing services authorized under paragraph (8) of such section, when such services are provided in a Medicaid eligible individual's home.

(C) Personal care services authorized under paragraph (24) of such section.

(D) PACE services authorized under paragraph (26) of such section.

(E) Home and community-based services authorized under subsections (b), (c), (i), (j), and (k) of section 1915 of such Act (42 U.S.C. 1396n), authorized under a waiver under section 1115 of such Act (42 U.S.C. 1315), or provided through coverage authorized under section 1937 of such Act (42 U.S.C. 1396u-7).

(F) Case management services authorized under section 1905(a)(19) of the Social Security Act (42 U.S.C. 1396d(a)(19)) and section 1915(g) of such Act (42 U.S.C. 1396n(g)).

(G) Rehabilitative services, including those related to behavioral health, described in section 1905(a)(13) of such Act (42 U.S.C. 1396d(a)(13)).

(H) Such other services specified by the Secretary.

(5) INSTITUTIONAL SETTING. — The term "institutional setting" means —

(A) a skilled nursing facility (as defined in section 1819(a) of the Social Security Act (42 U.S.C. 1395i-3(a)));

(B) a nursing facility (as defined in section 1919(a) of such Act (42 U.S.C. 1396r(a)));

(C) a long-term care hospital (as described in section 1886(d)(1)(B)(iv) of such Act (42 U.S.C. 1395ww(d)(1)(B)(iv)));

(D) a facility described in section 1905(d) of such Act (42 U.S.C. 1396d(d)));

(E) an institution which is a psychiatric hospital (as defined in section 1861(f) of such Act (42 U.S.C. 1395x(f))) or that provides in-patient psychiatric services in a residential setting specified by the Secretary; and

(F) an institution described in section 1905(i) of such Act (42 U.S.C. 1396d(i)).

(6) MEDICAID ELIGIBLE INDIVIDUAL. — The term "Medicaid eligible individual" means an individual who is eligible for and receiving medical assistance under a State Medicaid plan or a waiver of such plan. Such term includes an individual who is on a waiting list and who would become eligible for medical assistance and enrolled under a State Medicaid plan, or waiver of such plan, upon receipt of home and community-based services.

(7) STATE MEDICAID PROGRAM. — The term "State Medicaid program" means, with respect to a State, the State program under title XIX of the Social Security Act (42 U.S.C. 1396 through 1396w6) (including any waiver or demonstration under such title or under section 1115 of such Act (42 U.S.C. 1315) relating to such title).

(8) SECRETARY. — The term "Secretary" means the Secretary of Health and Human Services.

(9) STATE. — The term "State" means each of the 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa.

SEC. 30712. HCBS IMPROVEMENT PROGRAM.

(a) INCREASED FMAP FOR HCBS PROGRAM IMPROVEMENT STATES. — Section 1905 of the Social Security Act (42 U.S.C. 1396d) is amended —

(1) in subsection (b), by striking "and (ii)" and inserting "(ii), and (jj)"; and

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

"(jj) ADDITIONAL SUPPORT FOR HCBS PROGRAM IMPROVEMENT STATES. —

"(1) IN GENERAL. —

"(A) ADDITIONAL SUPPORT. — Subject to paragraph (5), in the case of a State that is an HCBS program improvement State, for each fiscal quarter that begins on or after the first date on which the State is an HCBS program improvement State —

"(i) and for which the State meets the requirements described in paragraphs (2) and (4), notwithstanding subsection (b) or (ff), subject to subparagraph (B), with respect to amounts expended during the quarter by such State for medical assistance for home and community-based services, the Federal medical assistance percentage for such State and quarter (as determined for the State under subsection (b) and, if applicable, increased under subsection (y), (z), (aa), or (ii), section 6008(a) of the Families First Coronavirus Response Act), or section 1915(k)(2) shall be increased by 6 percentage points in addition to any percentage point increases pursuant to either such subsection (y), (z), (aa), or (ii), such section 6008(a), or such section 1915(k)(2); and

"(ii) with respect to the State meeting the requirements described in paragraphs (2) and (4), notwithstanding sections 1903(a)(7) and 1903(a)(3), with respect to amounts expended during the quarter and before October 1, 2031, for administrative costs for expanding and enhancing home and community-based services, including for enhancing Medicaid data and technology infrastructure, modifying rate setting processes, adopting or improving training programs for direct care workers and family caregivers, home and community-based services ombudsman office activities, developing processes to identify direct care workers and assign such workers unique identifiers, and adopting, carrying out, or enhancing programs that register direct care workers or connect beneficiaries to direct care workers, the per centum specified in such sections 1903(a)(7) and 1903(a)(3) shall be increased to 80 percent.

In no case may the application of clause (i) result in the Federal medical assistance percentage determined for a State being more than 95 percent with respect to such expenditures. In no case shall the application of clause (ii) result in a reduction to the per centum otherwise specified without application of such clause. Any increase pursuant to clause (ii) shall be available to a State before the State meets the requirements of paragraphs (2) and (4).

"(B) ADDITIONAL HCBS IMPROVEMENT EFFORTS. — Subject to paragraph (5), in addition to the increase to the Federal medical assistance percentage under subparagraph (A)(i) for amounts expended during a quarter for medical assistance for home and community-based services by an HCBS program improvement State that meets the requirements of paragraphs (2) and (4) for the quarter, the Federal medical assistance percentage for amounts expended by the State during the quarter for medical assistance for home and community-based services shall be further increased by 2 percentage points (but not to exceed 95 percent) during the first 6 fiscal quarters throughout which the State has implemented and has in effect a program that meets the requirements of paragraph (3).

"(C) NONAPPLICATION OF TERRITORIAL FUNDING CAPS. — Any payment made to Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, or American Samoa for expenditures that are subject to an increase in the Federal medical assistance percentage under subparagraph (A)(i) or (B), or an increase in an applicable Federal matching percentage under subparagraph (A)(ii), shall not be taken into account for purposes of applying payment limits under subsections (f) and (g) of section 1108.

"(D) NONAPPLICATION TO CHIP EFMAP. — Any increase described in subparagraph (A) (or payment made for expenditures on medical assistance that are subject to such increase) shall not be taken into account in calculating the enhanced FMAP of a State under section 2105.

"(2) REQUIREMENTS. — Subject to the last sentence of paragraph (1)(A), as conditions for receipt of the increase under paragraph (1) to the Federal medical assistance percentage determined for a State, with respect to a fiscal year quarter, the State shall meet each of the following requirements:

"(A) NONSUPPLANTATION. — The State uses the Federal funds attributable to the increase in the Federal medical assistance percentage for amounts expended during a quarter for medical assistance for home and community-based services under paragraph (1)(A) and paragraph (1)(B) (if applicable) to supplement, and not supplant, the level of State funds expended for home and community-based services for eligible individuals through programs in effect as of the date the State is awarded a planning grant under section 30711 of the Act titled 'An Act to provide for reconciliation pursuant to title II of S. Con. Res. 14'. In applying this subparagraph, the Secretary shall provide that a State shall have a 3-year period, as specified by the Secretary, to spend any accumulated unspent State funds attributable to the increase described in clause (i) in the Federal medical assistance percentage.

"(B) MAINTENANCE OF EFFORT. —

"(i) IN GENERAL. — The State does not —

"(I) reduce the amount, duration, or scope of home and community-based services available under the State plan (or waiver of such plan) relative to the home and community-based services available under the plan or a waiver of such plan as of the date on which the State was awarded a planning grant under section 30711 of the Act titled 'An Act to provide for reconciliation pursuant to title II of S. Con. Res. 14';

"(II) reduce payment rates for home and community-based services lower than such rates that were in place as of the date described in subclause (I), including, to the extent applicable, assumed payment rates for such services that are included in managed care capitation rates as such rates are being prospectively built; or

"(III) except to the extent permitted under clause (ii), adopt more restrictive standards, methodologies, or procedures for determining eligibility for or the scope of medical assistance of home and community-based services, including with respect to cost-sharing, than the standards, methodologies, or procedures applicable as of the date described in subclause (I).

"(ii) CONDITIONS FOR FLEXIBILITY. — A State may make modifications that would otherwise violate the maintenance of effort described in clause (i) if the State demonstrates to the satisfaction of the Secretary that such modifications shall not result in —

"(I) home and community-based services that are less comprehensive or lower in amount, duration, or scope;

"(II) fewer individuals (overall and within particular eligibility groups) receiving home and community-based services, the calculation of which may be adjusted for demographic changes since the date described in clause (i)(I); or

"(III) increased cost-sharing (other than resulting from the rate of inflation) for home and community-based services.

"(C) ACCESS TO SERVICES. — Not later than an implementation date as specified by the Secretary (which may vary for each of the following clauses) after the first day of the first fiscal quarter for which a State receives an increase to the Federal medical assistance percentage or other applicable Federal matching percentage under paragraph (1), the State does all of the following to improve access to services:

"(i) Reduce access barriers and disparities in access or utilization of home and community-based services, as described in the State HCBS improvement plan.

"(ii) Provides coverage of personal care services authorized under subsection (a)(24) for all individuals eligible for and enrolled in medical assistance in the State.

"(iii) Provides for navigation of home and community-based services through 'no wrong door' programs, provides expedited eligibility for home and community-based services, and improves home and community-based services counseling and education programs.

"(iv) Expands access to behavioral health services furnished in home and community-based settings.

"(v) Improves coordination of home and community-based services with employment, housing, and transportation supports.

"(vi) Provides supports to family caregivers.

"(vii) Newly provides coverage under, or expands existing eligibility criteria for, 1 or more of the eligibility categories authorized under subclause (XIII), (XV), or (XVI) of section 1902(a)(10)(A)(ii).

"(D) WORKFORCE. —

"(i) IN GENERAL. — The State strengthens and expands the direct care workforce that provides home and community-based services by —

"(I) adopting processes to ensure that payment rates for home and community-based services are sufficient (as defined by the Secretary) to ensure that care and services are available to the extent described in the State HCBS improvement plan; and

"(II) updating qualification standards as appropriate, and developing and adopting training opportunities for direct care workers and family caregivers, at such time as the Secretary shall prescribe.

"(ii) PAYMENT RATES. — In carrying out clause (i)(I), the State shall —

"(I) update and, as appropriate, increase payment rates for home and community-based services to support recruitment and retention of the direct care workforce by not later than 2 years after approval of the HCBS improvement plan and, at least every 3 years thereafter, using, through existing or other processes to determine provider payment, a transparent process involving meaningful input from nongovernmental stakeholders; and

"(II) ensure that increases in the payment rates for home and community-based services —

"(aa) at a minimum, result in a proportionate increase to payments for direct care workers and in a manner that is deter mined with input from the stakeholders described in subclause (I); and

"(bb) are incorporated into provider payment rates for home and community-based services provided under this title by a health plan, under a contract and paid through capitation rates with the State.

"(3) SELF-DIRECTED MODELS FOR THE DELIVERY OF SERVICES. — As conditions for receipt of the increase under paragraph (1)(B) to the Federal medical assistance percentage determined for a State, with respect to a fiscal year quarter, the State shall establish directly, or by contract with 1 or more entities, including an agency with choice or a similar service delivery model, a program for the performance of all of the following functions to facilitate beneficiary use of self-directed care in the case the State covers home and community-based services under authorities that permit self-direction:

"(A) Registering qualified direct care workers and assisting beneficiaries in finding direct care workers.

"(B) Undertaking activities to recruit and train independent providers to enable beneficiaries to direct their own care, including by providing or coordinating training for beneficiaries on self-directed care.

"(C) Ensuring the safety of, and supporting the quality of, care provided to beneficiaries.

"(D) Facilitating coordination between State and local agencies and direct care workers for matters of public health, training opportunities, changes in program requirements, workplace health and safety, or related matters.

"(E) Supporting beneficiary hiring, if selected by the beneficiary, of independent providers of home and community-based services, including by processing applicable tax information, collecting and processing timesheets, submitting claims and processing payments to such providers.

"(F) To the extent a State permits beneficiaries to hire a family member or individual with whom they have an existing relationship to provide home and community-based services, providing support to beneficiaries who wish to hire a caregiver who is a family member or individual with whom they have an existing relationship.

"(G) Ensuring that the program under this paragraph does not promote or prevent the ability of workers to form a labor organization or discriminate against workers who may join or decline to join such an organization.

"(4) REPORTING AND OVERSIGHT. — As conditions for receipt of the increase under paragraph (1) to the Federal medical assistance percentage determined for a State, with respect to a fiscal year quarter, the State shall meet each of the following requirements:

"(A) The State designates (by a date specified by the Secretary) an HCBS ombudsman (or a long-term care ombudsman program office) that —

"(i) operates independently from the State Medicaid agency and managed care entities;

"(ii) provides direct assistance to recipients of home and community-based services available under the State Medicaid program and their families; and

"(iii) identifies and reports systemic problems to State officials, the public, and the Secretary.

"(B) Beginning with the last day of the 5th fiscal quarter for which the state is an HCBS program improvement State, and annually thereafter, the State reports to the Secretary, in a manner the Secretary shall prescribe, on the progress of implementation of the activities described in subparagraphs (C) and

(D) of paragraph (2), paragraph (3) (if applicable), the use of enhanced Federal funding provided under this subsection, and progress with respect to service availability, utilization, disparities in access and use of services, spending on HCBS, and the status of the direct care workforce.

"(5) BENCHMARKS FOR DEMONSTRATING IMPROVEMENTS. — An HCBS program improvement State shall cease to be eligible for an increase in the Federal medical assistance percentage under paragraph (1)(A)(i) or (1)(B) or an increase in an applicable Federal matching percentage under paragraph (1)(A)(ii) on or after the first date on which a State is an HCBS program improvement State if the State is found to be out of compliance with the requirements of this subsection and unless, at the end of the 29th fiscal quarter, the State demonstrates the following in the annual report required in paragraph (4) for such quarter:

"(A) Increased availability (above a marginal increase) of home and community-based services in the State relative to such availability as reported in the State HCBS improvement plan and adjusted for demographic changes in the State since the submission of such plan.

"(B) With respect to the percentage of expenditures made by the State for long-term services and supports that are for home and community-based services, in the case of an HCBS program improvement State for which such percentage (as reported in the State HCBS improvement plan) was —

"(i) less than 50 percent, the State demonstrates that the percentage of such expenditures has increased to at least 50 percent since the plan was approved; and

"(ii) at least 50 percent, the State demonstrates that such percentage has not decreased since the plan was approved.

"(6) DEFINITIONS. — In this subsection, the terms 'State Medicaid plan', 'direct care worker', 'HCBS program improvement State', 'health plan'; and 'home and community-based services' have the meaning given those terms in section 30711(e) of the Act titled 'An Act to provide for reconciliation pursuant to title II of S. Con. Res. 14'.".

* * *

"(1) APPROPRIATION. — Out of any money in the Treasury not otherwise appropriated, in addition to amounts otherwise available, there are appropriated to the Secretary $500,000,000 for fiscal year 2023, to remain available for the purposes of this subsection through fiscal year 2028.

"(2) GRANTS. — Within 2 years after the date of the enactment of this section, the Secretary shall establish and administer a program of grants to States to support the adoption of evidence-based approaches to establishing or improving and maintaining real-time linkages between health and social services and supports for vulnerable elders or in conjunction with authorized representatives of vulnerable elders, including through the following:

"(A) MEDICAL-LEGAL PARTNERSHIPS. — The establishment and support of medical-legal partnerships, the incorporation of the partnerships in the elder justice framework and health and human services safety net, and the implementation and operation of such a partnership by an eligible grantee —

"(i) at the option of a State, in conjunction with an area agency on aging;

"(ii) in a solo provider practice in a health professional shortage area (as defined in section 332(a) of the Public Health Service Act), a medically underserved community (as defined in section 399V of such Act), or a rural area (as defined in section 330J of such Act);

"(iii) in a minority-serving institution of higher learning with health, law, and social services professional programs;

"(iv) in a federally qualified health center, as described in section 330 of the Public Health Service Act, or look-alike, as described in section 1905(l)(2)(B) of this Act; or

"(v) in certain hospitals that are critical access hospitals, Medicare-dependent hospitals, sole community hospitals, rural emergency hospitals, or that serve a high proportion of Medicare or Medicaid patients.

"(B) LEGAL HOTLINES DEVELOPMENT OR EXPANSION. — The provision of incentives to develop, enhance, and integrate platforms, such as legal assistance hotlines, that help to facilitate the identification of older adults who could benefit from linkages to available legal services such as those described in subparagraph (A).

"(3) STATE REPORTS. — Each State to which a grant is made under this subsection shall submit to the Secretary biannual reports on the activities carried out by the State pursuant to this subsection, which shall include assessments of the effectiveness of the activities with respect to —

"(A) the number of unique individuals identified through the mechanism outlined in paragraph (2)(B) who are referred to services described in paragraph (2)(A), and the average time period associated with resolving issues;

"(B) the success rate for referrals to community-based resources; and

"(C) other factors determined relevant by the Secretary.

"(4) EVALUATION. — The Secretary shall, by grant, contract, or interagency agreement, evaluate the activities conducted pursuant to this subsection, which shall include a comparison among the States.

"(5) SUPPLEMENT NOT SUPPLANT. — Support provided to area agencies on aging, State units on aging, eligible entities, or other community-based organizations pursuant to this subsection shall be used to supplement and not supplant any other Federal, State, or local funds expended to provide the same or comparable services described in this subsection.

"(b) GRANTS AND TRAINING TO SUPPORT AREA AGENCIES ON AGING OR OTHER COMMUNITY-BASED ORGANIZATIONS TO ADDRESS SOCIAL ISOLATION AMONG VULNERABLE OLDER ADULTS AND PEOPLE WITH DISABILITIES. —

"(1) APPROPRIATION. — Out of any money in the Treasury not otherwise appropriated, in addition to amounts otherwise available, there are appropriated to the Secretary $250,000,000 for fiscal year 2023, to remain available for the purposes of this subsection through fiscal year 2028.

"(2) GRANTS. — The Secretary shall make grants to eligible area agencies on aging or other community-based organizations for the purpose of — "(A) conducting outreach to individuals at risk for, or already experiencing, social isolation or loneliness, through established screening tools or other methods identified by the Secretary;

"(B) developing community-based interventions for the purposes of mitigating loneliness or social isolation (including evidence-based programs, as defined by the Secretary, developed with multi-stakeholder input for the purposes of promoting social connection, mitigating social isolation or loneliness, or preventing social isolation or loneliness) among at-risk individuals;

"(C) connecting at-risk individuals with community social and clinical supports; and

"(D) evaluating the effect of programs developed and implemented under subparagraphs (B) and (C).

"(3) TRAINING. — The Secretary shall establish programs to provide and improve training for area agencies on aging or community-based organizations with respect to addressing and preventing social isolation and loneliness among older adults and people with disabilities.

"(4) EVALUATION. — Not later than 3 years after the date of the enactment of this section and at least once after fiscal year 2025, the Secretary shall submit to the Congress a written report which assesses the extent to which the programs established under this subsection address social isolation and loneliness among older adults and people with disabilities.

"(5) COORDINATION. — The Secretary shall coordinate with resource centers, grant programs, or other funding mechanisms established under section 411(a)(18) of the Older Americans Act (42 U.S.C. 3032(a)(18)), section 417(a)(1) of such Act (42 U.S.C. 3032F(a)(1)), or other programs as determined by the Secretary.

"(c) DEFINITIONS. — In this section:

"(1) AREA AGENCY ON AGING. — The term 'area agency on aging' means an area agency on aging designated under section 305 of the Older Americans Act of 1965.

"(2) SOCIAL ISOLATION. — The term 'social isolation' means objectively being alone, or having few relationships or infrequent social contact.

"(3) LONELINESS. — The term 'loneliness' means subjectively feeling alone, or the discrepancy between one's desired level of social connection and one's actual level of social connection.

"(4) SOCIAL CONNECTION. — The term 'social connection' means the variety of ways one can connect to others socially, through physical, behavioral, social-cognitive, and emotional channels.

"(5) COMMUNITY-BASED ORGANIZATION. — The term 'community-based organization' includes, except as otherwise provided by the Secretary, a non-profit community-based organization, a consortium of nonprofit community-based organizations, a national nonprofit organization acting as an intermediary for a community-based organization, or a community-based organization that has a fiscal sponsor that allows the organization to function as an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code.".

(e) TECHNICAL AMENDMENT. — Section 2011(12)(A) of the Social Security Act (42 U.S.C. 1397j(12)(A)) is amended by striking "450b" and inserting "5304".

SEC. 134202. APPROPRIATION FOR ASSESSMENTS.

Out of any money in the Treasury not otherwise appropriated, in addition to amounts otherwise available, there are appropriated to the Secretary of Health and Human Services $5,000,000 for each of fiscal years 2023 through 2026 to prepare and submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate, not later than 3 years after the date of enactment of this Act, and at least once after fiscal year 2025, reports on the programs, coordinating bodies, registries, and activities established or authorized under subtitle B of title XX of the Social Security Act or section 6703(b) of the Patient Protection and Affordable Care Act (42 U.S.C. 1395i-3a), which shall assess the extent to which such programs, coordinating bodies, registries, and activities have improved access to, and the quality of, resources available to aging Americans and their caregivers to ultimately prevent, detect, and treat abuse, neglect, and exploitation, and shall include, as appropriate, recommendations to Congress on funding levels and policy changes to help these programs, coordinating bodies, registries, and activities better prevent, detect, and treat abuse, neglect, and exploitation of aging Americans.

PART 3 — SKILLED NURSING FACILITIES 

SEC. 134301. FUNDING TO IMPROVE THE ACCURACY AND RELIABILITY OF CERTAIN SKILLED NURSING FACILITY DATA.

Section 1888 of the Social Security Act (42 U.S.C. 1395yy) is amended —

(1) in subsection (h)(12) —

(A) in subparagraph (A), by striking "and the data submitted under subsection (e)(6) a process to validate such measures and data" and inserting ", the data submitted under subsection (e)(6), and, during the period beginning with fiscal year 2024 and ending with fiscal year 2031, the resident assessment data described in section 1819(b)(3) and the direct care staffing information described in section 1128I(g) a process to validate such measures, data, and information"; and

(B) in subparagraph (B) —

(i) by striking "FUNDING. — For purposes" and inserting "FUNDING. —

"(i) FISCAL YEARS 2023 THROUGH 2025. — For purposes"; and

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

"(ii) FISCAL YEARS 2026 THROUGH 2031. — There is appropriated to the Secretary, out of any monies in the Treasury not otherwise appropriated, $50,000,000 for the period of fiscal years 2026 through 2031 for purposes of carrying out this paragraph."; and

(2) in subsection (e)(6)(A) —

(A) in the header, by striking "FOR FAILURE TO REPORT"; and

(B) in clause (i) —

(i) by striking "For fiscal years beginning with fiscal year 2018, in the case of a skilled nursing facility that does not submit" and inserting the following:

"(I) FAILURE TO REPORT. — For fiscal years beginning with fiscal year 2018, in the case of a skilled nursing facility that does not submit quality measure data specified by the Secretary and"; and

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

"(II) REPORTING OF INACCURATE INFORMATION. — For fiscal years during the period beginning with fiscal year 2026 and ending with fiscal year 2031, in the case of a skilled nursing facility that submits data under this paragraph, measures under subsection (h), resident assessment data described in section 1819(b)(3), or direct care staffing information described in section 1128I(g) with respect to such fiscal year that is inaccurate (as determined by the Secretary through the validation process described in section 1888(h)(12) or otherwise), after determining the percentage described in paragraph (5)(B)(i), and after application of clauses (ii) and (iii) of paragraph (5)(B) and of subclause (I) of this clause (if applicable), the Secretary shall reduce such percentage for payment rates during such fiscal year by 2 percentage points.".

SEC. 134302. ENSURING ACCURATE INFORMATION ON COST REPORTS.

Section 1888(f) of the Social Security Act (42 U.S.C. 1395yy(f)) is amended by adding at the end the following new paragraph:

"(5) AUDIT OF COST REPORTS. — There is appropriated to the Secretary, out of any monies in the Treasury not otherwise appropriated, $250,000,000 for fiscal year 2023 to remain available until expended, for purposes of conducting an annual audit (beginning with 2023 and ending with 2031) of cost reports submitted under this title for a representative sample of skilled nursing facilities.".

SEC. 134303. SURVEY IMPROVEMENTS.

Section 1819 of the Social Security Act (42 U.S.C. 1395i-3) is amended by adding at the end the following new subsection:

"(l) SURVEY IMPROVEMENTS. —

"(1) IN GENERAL. — There is appropriated to the Secretary, out of any monies in the Treasury not otherwise appropriated, $325,000,000, for the period of fiscal years 2023 through 2031, for purposes of —

"(A) conducting reviews and identifying plans under paragraph (2); and

"(B) providing training, tools, technical assistance, and financial support in accordance with paragraph (3).

"(2) REVIEW. — The Secretary shall conduct reviews, during the period specified in paragraph (1), of (and, as appropriate, identify plans to improve) the following:

"(A) The extent to which surveys conducted under subsection (g) and the enforcement process under subsection (h) result in increased compliance with requirements under this section and subpart B of part 483 of title 42, Code of Federal Regulations, with respect to skilled nursing facilities (in this subsection referred to as 'facilities').

"(B) The timeliness and thoroughness of State agency verification of deficiency corrections at facilities.

"(C) The accuracy of the identification and appropriateness of the scope and severity of deficiencies cited at facilities.

"(D) The accuracy of the identification and appropriateness of the scoping and severity of life safety, infection control, and emergency preparedness deficiencies cited at facilities.

"(E) The timeliness of State agency investigations of —

"(i) complaints at facilities;

"(ii) facility-reported incidents at facilities; and

"(iii) reported allegations of abuse, neglect, and exploitation at facilities.

"(F) The consistency of facility reporting of substantiated complaints to law enforcement.

"(G) The ability of the State agency to sufficiently hire, train, and retain individuals who conduct surveys.

"(H) Any other area related to surveys of facilities, or the individuals conducting such surveys, determined appropriate by the Secretary.

"(3) SUPPORT. — Based on the review under paragraph (2), the Secretary shall, during the period specified in paragraph (1), provide training, tools, technical assistance, and financial support to State and Federal agencies that perform surveys of facilities for the purpose of improving the surveys conducted under subsection (g) and the enforcement process under subsection (h) with respect to the areas reviewed under paragraph (2).".

SEC. 134304. NURSE STAFFING REQUIREMENTS.

Section 1819(d) of the Social Security Act (42 U.S.C. 1395i-3(d)) is amended —

(1) in paragraph (4)(A), by inserting "and any regulations promulgated under paragraph (5)(C)" after "section 1124"; and

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

"(5) NURSE STAFFING REQUIREMENTS. —

"(A) FUNDING. — There is appropriated to the Secretary, out of any monies in the Treasury not otherwise appropriated, $50,000,000 for the period of fiscal years 2023 through 2031 for purposes of carrying out this paragraph.

"(B) STUDY. — Not later than 3 years after the date of the enactment of this paragraph, and not less frequently than once every 5 years thereafter, the Secretary shall, out of funds appropriated under subparagraph (A), conduct a study and submit to Congress a report on the appropriateness of establishing minimum staff to resident ratios for nursing staff for skilled nursing facilities. Each such report shall include —

"(i) with respect to the first such report, recommendations regarding appropriate minimum ratios of registered nurses (and, if practicable, licensed practical nurses (or licensed vocational nurses) and certified nursing assistants) to residents at such skilled nursing facilities; and

"(ii) with respect to each subsequent such report, recommendations regarding appropriate minimum ratios of registered nurses, licensed practical nurses (or licensed vocational nurses), and certified nursing assistants to residents at such skilled nursing facilities.

"(C) PROMULGATION OF REGULATIONS. —

"(i) IN GENERAL. — Not later than 1 year after the Secretary first submits a report under subparagraph (B), the Secretary shall, out of funds appropriated under subparagraph (A) —

"(I) specify through regulations, consistent with such report, appropriate minimum ratios (if any) of registered nurses (and, if practicable, licensed practical nurses (or licensed vocational nurses) and certified nursing assistants) to residents at skilled nursing facilities; and

"(II) except as provided in clause (ii), require such skilled nursing facilities to comply with such ratios.

"(ii) EXCEPTION. —

"(I) IN GENERAL. — In addition to the authority to waive the application of clause (i)(II) under section 1135, the Secretary may waive the application of such clause with respect to a skilled nursing facility if the Secretary finds that —

"(aa) the facility is located in a rural area and the supply of skilled nursing facility services in such area is not sufficient to meet the needs of individuals residing therein;

"(bb) the Secretary provides notice of the waiver to the State long-term care ombudsman (established under section 307(a)(12) of the Older Americans Act of 1965) and the protection and advocacy system in the State for the mentally ill; and

"(cc) the facility that is granted such a waiver notifies residents of the facility (or, where appropriate, the guardians or legal representatives of such residents) and members of their immediate families of the waiver.

"(II) RENEWAL. — Any waiver in effect under this clause shall be subject to annual renewal.

"(iii) UPDATE. — Not later than 1 year after the submission of each subsequent report under subparagraph (B), the Secretary shall, out of funds appropriated under subparagraph (A) and consistent with such report, update the regulations described in clause (i)(I) to reflect appropriate minimum ratios (if any) of registered nurses, licensed practical nurses (or licensed vocational nurses), and certified nursing assistants to residents at skilled nursing facilities.".

Subtitle B — Infrastructure Financing and Community Development

SEC. 135001. AMENDMENT OF 1986 CODE.

Except as otherwise expressly provided, whenever in this subtitle 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. 135002. POSSESSIONS ECONOMIC ACTIVITY CREDIT.

(a) IN GENERAL. — Subpart D of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is amended by adding at the end the following new section:

"SEC. 45V. POSSESSIONS ECONOMIC ACTIVITY CREDIT.

"(a) ALLOWANCE OF CREDIT. — For purposes of section 38, in the case of a qualified domestic corporation the possessions economic activity credit determined under this section for a taxable year is an amount equal to 20 percent of the sum of the qualified possession wages and allocable employee fringe benefit expenses paid or incurred by the taxpayer for the taxable year.

"(b) QUALIFIED DOMESTIC CORPORATION; QUALIFIED CORPORATION. — For purposes of this section —

"(1) IN GENERAL. — The term 'qualified domestic corporation' means any domestic corporation which is —

"(A) a qualified corporation, or

"(B) a United States shareholder of a foreign corporation which —

"(i) is a qualified corporation, and

"(ii) is wholly owned by the United States shareholder together with any corporations which are members of the same affiliated group (within the meaning of section 1504(a)) as such United States shareholder.

"(2) QUALIFIED CORPORATION. — The term 'qualified corporation' means any corporation if such corporation meets the following requirements:

"(A) SOURCE QUALIFICATION. — 80 percent or more of the gross income of the corporation for the 3-year period immediately preceding the close of the taxable year (or for such part of such period immediately preceding the close of such taxable year as may be applicable) was derived from sources within a possession of the United States (determined without regard to section 904(f)).

"(B) TRADE OR BUSINESS QUALIFICATION. — 75 percent or more of the gross income of the corporation for such period or such part thereof was derived from the active conduct of a trade or business within a possession of the United States.

"(3) SPECIAL RULE FOR SEPARATE AND CLEARLY IDENTIFIED UNITS OF FOREIGN CORPORATIONS. —

"(A) IN GENERAL. — In the case of a United States shareholder of a foreign corporation which —

"(i) is not a qualified corporation but with respect to which the ownership requirements of paragraph (1)(B)(ii) are met, and

"(ii) has an eligible foreign business unit which, if such unit were a corporation, would be a qualified corporation with respect to which such ownership requirements would be met, then, for purposes of this section, the United States shareholder may elect to treat such unit as a separate foreign corporation which meets the requirements of paragraph (1)(B) and with respect to which such shareholder is a United States shareholder.

"(B) ELIGIBLE FOREIGN BUSINESS UNIT. — For purposes of this paragraph, the term 'eligible foreign business unit' means a separate and clearly identified foreign unit of a trade or business, including a partnership or an entity treated as disregarded as a separate entity from its owner (under section 7701 or other provision under this title), which maintains separate books and records.

"(C) SPECIAL ELECTION FOR AFFILIATED GROUPS. — In the case of an affiliated group described in paragraph (1)(B)(ii), the election under subparagraph (A) with respect to any eligible foreign business unit shall be made by the common parent of such group and shall apply uniformly to all members of such group which are United States shareholders with respect to the foreign corporation which has such unit.

"(c) QUALIFIED POSSESSION WAGES. — For purposes of this section —

"(1) IN GENERAL. — The term 'qualified possession wages' means wages paid or incurred by the qualified corporation during the taxable year in connection with the active conduct of a trade or business within a possession of the United States to any employee for services performed in such possession, but only if such services are performed while the principal place of employment of such employee is within such possession.

"(2) LIMITATION ON AMOUNT OF WAGES TAKEN INTO ACCOUNT. —

"(A) IN GENERAL. — The amount of wages which may be taken into account under paragraph (1) with respect to any employee for any taxable year shall not exceed $50,000.

"(B) TREATMENT OF PART-TIME EMPLOYEES, ETC. — If —

"(i) any employee is not employed by the qualified corporation on a substantially full-time basis at all times during the taxable year, or

"(ii) the principal place of employment of any employee with the qualified corporation is not within a possession at all times during the taxable year, the limitation applicable under paragraph (1) with respect to such employee shall be the appropriate portion (as determined by the Secretary) of the limitation which would otherwise be in effect under paragraph (1).

"(C) WAGES. —

"(i) IN GENERAL. — Except as provided in clause (ii), the term 'wages' has the meaning given to such term by subsection (b) of section 3306 (determined without regard to any dollar limitation contained in such section). For purposes of the preceding sentence, such subsection (b) shall be applied as if the term 'United States' included all possessions of the United States.

"(ii) SPECIAL RULE FOR AGRICULTURAL LABOR AND RAILWAY LABOR. — In any case to which subparagraph (A) or (B) of paragraph (1) of section 51(h) applies, the term 'wages' has the meaning given to such term by section 51(h)(2).

"(3) ALLOCABLE EMPLOYEE FRINGE BENEFIT EXPENSES. —

"(A) IN GENERAL. — The allocable employee fringe benefit expenses of any qualified corporation for any taxable year is an amount which bears the same ratio to the amount determined under subparagraph (B) for such taxable year as —

"(i) the aggregate amount of the qualified corporation's qualified possession wages for such taxable year, bears to

"(ii) the aggregate amount of the wages paid or incurred by such qualified corporation during such taxable year. In no event shall the amount determined under the preceding sentence exceed 15 percent of the amount referred to in clause (i).

"(B) EXPENSES TAKEN INTO ACCOUNT. — For purposes of subparagraph (A), the amount determined under this subparagraph for any taxable year is the aggregate amount allowable (or, in the case of a foreign corporation, which would be allowable if such foreign corporation were a domestic corporation) as a deduction under this chapter to the qualified corporation for such taxable year with respect to —

"(i) employer contributions under a stock bonus, pension, profit-sharing, or annuity plan,

"(ii) employer-provided coverage under any accident or health plan for employees, and

"(iii) the cost of life or disability insurance provided to employees. Any amount treated as wages under paragraph (2)(C) shall not be taken into account under this subparagraph.

"(d) SPECIAL RULE FOR QUALIFIED SMALL DOMESTIC CORPORATION. — For purposes of this section —

"(1) INCREASED CREDIT PERCENTAGE. — In the case of a qualified small domestic corporation, subsection (a) shall be applied by substituting '50 percent' for '20 percent'.

"(2) QUALIFIED SMALL DOMESTIC CORPORATION. —

"(A) IN GENERAL. — The term 'qualified small domestic corporation' means a qualified domestic corporation that meets the requirements of subparagraphs (B) and (C).

"(B) FULL-TIME EMPLOYMENT. — A qualified domestic corporation meets the requirements of this subparagraph if the qualified corporation which is the qualified domestic corporation under subsection (b)(1)(A) or the foreign corporation under subsection (b)(1)(B)(i) —

"(i) has at least 5 full-time employees in a possession of the United States for each year in the 3-year period immediately preceding the close of the taxable year (or for such part of such period immediately preceding the close of such taxable year as may be applicable), and

"(ii) has not more than a total of 30 full-time employees for each year in such 3-year period.

"(C) GROSS RECEIPTS. — A qualified domestic corporation meets the requirements of this subparagraph if the annual gross receipts of the qualified domestic corporation (and all persons related thereto) for each year in such 3-year period is not more than $50,000,000.

"(3) RELATED PERSONS. — In determining whether the limitations under subparagraphs (B)(ii) and (C) of paragraph (2) are met, all persons who are treated as a single employer for purposes of subsection (a) or (b) of section 52 shall be taken into account.

"(4) AMOUNT OF WAGES TAKEN INTO ACCOUNT. — Subsection (c)(2)(A) shall be applied by substituting '$142,800' for '$50,000'.

"(e) POSSESSION OF THE UNITED STATES. —

"(1) IN GENERAL. — The term 'possession of the United States' means American Samoa, the Commonwealth of the Northern Mariana Islands, the Commonwealth of Puerto Rico, Guam, and the Virgin Islands.

"(2) MIRROR CODE POSSESSIONS. — In the case of any possession of the United States with a mirror code tax system (as defined in section 24(k)), this section shall not be treated as part of the income tax laws of the United States for purposes of determining the income tax law of such possession unless such possession elects to have this section be so treated.

"(f) SEPARATE APPLICATION TO EACH POSSESSION. — For purposes of determining the amount of the credit allowed under this section, this section shall be applied separately with respect to each possession of the United States.

"(g) TERMINATION. — No credit shall be allowed under this section for any taxable year beginning after December 31, 2031.".

(b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT. — Subsection (b) of section 38, as amended by the preceding provisions of this Act, is amended by striking "plus" at the end of paragraph (34), by striking the period at the end of paragraph (35) and inserting ", plus", and by adding at the end the following new paragraph:

"(36) the possessions economic activity credit determined under section 45V.".

(c) CLERICAL AMENDMENT. — The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by adding at the end the following:

"Sec. 45V. Possessions Economic Activity Credit.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act, and in the case of a qualified corporation that is a foreign corporation, to taxable years beginning after the date of enactment and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.

SEC. 135003. TAX TREATMENT OF ASSISTANCE TO CERTAIN FARM LOAN BORROWERS.

(a) IN GENERAL. — For purposes of the Internal Revenue Code of 1986, in the case of any payment described in section 1005(b) of the American Rescue Plan Act of 2021 (as amended by this Act) —

(1) such payment shall not be included in the gross income of the person on whose behalf, or to whom, such payment is made,

(2) no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by paragraph (1), and

(3) in the case of a partnership or S corporation on whose behalf, or to whom, such a payment is made —

(A) any amount excluded from income by reason of paragraph (1) shall be treated as tax exempt income for purposes of sections 705 and 1366 of such Code, and

(B) except as provided by the Secretary of the Treasury (or the Secretary's delegate), any increase in the adjusted basis of a partner's interest in a partnership under section 705 of such Code with respect to any amount described in subparagraph (A) shall equal the partner's distributive share of deductions resulting from interest that is part of such payment and the partner's share, as determined under section 752 of such Code, of principal that is part of such payment.

(b) AUTHORITY TO WAIVE CERTAIN INFORMATION REPORTING REQUIREMENTS. — The Secretary of the Treasury (or the Secretary's delegate) may provide an exception from any requirement to file an information return otherwise required by chapter 61 of the Internal Revenue Code of 1986 with respect to any amount excluded from gross income by reason of subsection (a).

Subtitle C — Affordable Health Care Coverage

SEC. 30601. ENSURING AFFORDABILITY OF COVERAGE FOR CERTAIN LOW-INCOME POPULATIONS.

(a) REDUCING COST SHARING UNDER QUALIFIED HEALTH PLANS. — Section 1402 of the Patient Protection and Affordable Care Act (42 U.S.C. 18071) is amended —

(1) in subsection (b) —

(A) in paragraph (2), by inserting "(or, with respect to plan years 2023, 2024, and 2025, whose household income does not exceed 400 percent of the poverty line for a family of the size involved)" before the period; and

(B) in the matter following paragraph (2), by adding at the end the following new sentence: "In the case of an individual with a household income that does not exceed 138 percent of the poverty line for a family of the size involved for any month occurring during 2022, such individual shall, for each month during 2022, be treated as having household income equal to 100 percent for purposes of applying this section."; and

(2) in subsection (c) —

(A) in paragraph (1)(A), in the matter preceding clause (i), by inserting ", with respect to eligible insureds (other than, with respect to plan years 2023, 2024, and 2025, specified enrollees (as defined in paragraph (6)(C)))," after "first be achieved";

(B) in paragraph (2), in the matter preceding subparagraph (A), by inserting "with respect to eligible insureds (other than, with respect to plan years 2023, 2024, and 2025, specified enrollees)" after "under the plan";

(C) in paragraph (3) —

(i) in subparagraph (A), by striking "this subsection" and inserting "paragraph (1) or (2)"; and

(ii) in subparagraph (B), by striking "this section" and inserting "paragraphs (1) and (2)"; and

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

"(6) SPECIAL RULE FOR SPECIFIED ENROLLEES. —

"(A) IN GENERAL. — The Secretary shall establish procedures under which the issuer of a qualified health plan to which this section applies shall reduce cost-sharing under the plan with respect to months occurring during plan years 2023, 2024, and 2025 for enrollees who are specified enrollees (as defined in subparagraph (C)) in a manner sufficient to increase the plan's share of the total allowed costs of benefits provided under the plan to 99 percent of such costs.

"(B) METHODS FOR REDUCING COST SHARING. —

"(i) IN GENERAL. — An issuer of a qualified health plan making reductions under this paragraph shall notify the Secretary of such reductions and the Secretary shall, out of funds made available under clause (ii), make periodic and timely payments to the issuer equal to 12 percent of the total allowed costs of benefits provided under each such plan to specified enrollees during plan years 2023, 2024, and 2025.

"(ii) APPROPRIATION. — In addition to amounts otherwise available, there are appropriated, out of any money in the Treasury not otherwise appropriated, such sums as may be necessary to the Secretary to make payments under clause (i).

"(C) SPECIFIED ENROLLEE DEFINED. — For purposes of this section, the term 'specified enrollee' means, with respect to month occurring during a plan year, an eligible insured with a household income that does not exceed 138 percent of the poverty line for a family of the size involved during such month. Such insured shall be deemed to be a specified enrollee for each month in such plan year.".

(b) OPEN ENROLLMENTS APPLICABLE TO CERTAIN LOWER-INCOME POPULATIONS. — Section 1311(c) of the Patient Protection and Affordable Care Act (42 U.S.C. 18031(c)) is amended —

(1) in paragraph (6) —

(A) in subparagraph (C), by striking at the end "and";

(B) in subparagraph (D), by striking the period at the end and inserting "; and"; and

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

"(E) with respect to a qualified health plan with respect to which section 1402 applies, for months occurring during the period beginning on January 1, 2022, and ending on December 31, 2025, enrollment periods described in subparagraph (A) of paragraph (8) for individuals described in subparagraph (B) of such paragraph."; and

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

"(8) SPECIAL ENROLLMENT PERIOD FOR CERTAIN LOW-INCOME POPULATIONS. —

"(A) IN GENERAL. — The enrollment period described in this paragraph is, in the case of an individual described in subparagraph (B), the continuous period beginning on the first day that such individual is so described.

"(B) INDIVIDUAL DESCRIBED. — For purposes of subparagraph (A), an individual described in this subparagraph is an individual —

"(i) with a household income that does not exceed 138 percent of the poverty line for a family of the size involved; and

"(ii) who is not eligible for minimum essential coverage (as defined in section 5000A(f) of the Internal Revenue Code of 1986), other than for coverage described in any of subparagraphs (B) through (E) of paragraph (1) of such section.".

(c) ADDITIONAL BENEFITS FOR CERTAIN LOW-INCOME INDIVIDUALS FOR PLAN YEARS 2024 AND 2025. — Section 1301(a) of the Patient Protection and Affordable Care Act (42 U.S.C. 18021(a)) is amended —

(1) in paragraph (1) —

(A) in subparagraph (B), by striking "and" at the end;

(B) in subparagraph (C)(iv), by striking the period and inserting "; and"; and

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

"(D) provides, with respect to a plan offered in the silver level of coverage to which section 1402 applies during plan year 2024 and 2025, for benefits described in paragraph (5) in the case of an individual who has a household income that does not exceed 138 percent of the poverty line for a family of the size involved, and who is eligible to receive cost-sharing reductions under section 1402."; and

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

"(5) ADDITIONAL BENEFITS FOR CERTAIN LOW-INCOME INDIVIDUALS FOR PLAN YEAR 2024 AND 2025. —

"(A) IN GENERAL. —

"(i) BENEFITS. — For purposes of paragraph (1)(D), the benefits described in this paragraph to be provided by a qualified health plan are benefits consisting of —

"(I) non-emergency medical transportation services (as described in section 1902(a)(4) of the Social Security Act); and

"(II) services described in subsection (a)(4)(C) of section 1905 of such Act for which Federal payments would have been available under title XIX of the Social Security Act had such services been furnished to an individual enrolled under a State plan (or wavier of such plan) under such title;

which are not otherwise provided under such plan as part of the essential health benefits package described in section 1302(a).

"(ii) CONDITION ON PROVISION OF BENEFITS. — Benefits described in this paragraph shall be provided —

"(I) without any restriction on the choice of a qualified provider from whom an individual may receive such benefits; and

"(II) without any imposition of cost sharing.

"(B) PAYMENTS FOR ADDITIONAL BENEFITS. —

"(i) IN GENERAL. — An issuer of a qualified health plan making payments for services described in subparagraph (A) furnished to individuals described in paragraph (1)(D) during plan year 2024 or 2025 shall notify the Secretary of such payments and the Secretary shall, out of funds made available under clause (ii), make periodic and timely payments to the issuer equal to payments for such services so furnished.

"(ii) APPROPRIATION. — In addition to amounts otherwise available, there is appropriated, out of any money in the Treasury not otherwise appropriated, such sums as may be necessary to the Secretary to make payments under clause (i).".

(d) EDUCATION AND OUTREACH ACTIVITIES. —

(1) IN GENERAL. — Section 1321(c) of the Patient Protection and Affordable Care Act (42 U.S.C. 18041(c)) is amended by adding at the end the following new paragraph:

"(3) OUTREACH AND EDUCATIONAL ACTIVITIES. —

"(A) IN GENERAL. — In the case of an Exchange established or operated by the Secretary within a State pursuant to this subsection, the Secretary shall carry out outreach and educational activities for purposes of informing individuals described in section 1902(a)(10)(A)(i)(VIII) of the Social Security Act who reside in States that have not expended amounts under a State plan (or waiver of such plan) under title XIX of such Act for all such individuals about qualified health plans offered through the Exchange, including by informing such individuals of the availability of coverage under such plans and financial assistance for coverage under such plans. Such outreach and educational activities shall be provided in a manner that is culturally and linguistically appropriate to the needs of the populations being served by the Exchange (including hard-to-reach populations, such as racial and sexual minorities, limited English proficient populations, individuals residing in areas where the unemployment rates exceeds the national average unemployment rate, individuals in rural areas, veterans, and young adults).

"(B) LIMITATION ON USE OF FUNDS. — No funds appropriated under this paragraph shall be used for expenditures for promoting non-ACA compliant health insurance coverage.

"(C) NON-ACA COMPLIANT HEALTH INSURANCE COVERAGE. — For purposes of subparagraph (B):

"(i) The term 'non-ACA compliant health insurance coverage' means health insurance coverage, or a group health plan, that is not a qualified health plan.

"(ii) Such term includes the following:

"(I) An association health plan.

"(II) Short-term limited duration insurance.

"(D) FUNDING. — In addition to amounts otherwise available, there is appropriated, out of any money in the Treasury not otherwise appropriated, to remain available until expended, $105,000,000 for fiscal year 2022 to carry out this paragraph, of which —

"(i) $15,000,000 shall be used to carry out this paragraph in fiscal year 2022; and

"(ii) $30,000,000 shall be used to carry out this paragraph for each of fiscal years 2023 through 2025.".

(2) NAVIGATOR PROGRAM. — Section 1311(i)(6) of the Patient Protection and Affordable Care Act (42 U.S.C. 18031(i)(6)) is amended —

(A) by striking "FUNDING. — Grants under" and inserting "FUNDING. —

"(A) STATE EXCHANGES. — Grants under"; and

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

"(B) FEDERAL EXCHANGES. — For purposes of carrying out this subsection, with respect to an Exchange established and operated by the Secretary within a State pursuant to section 1321(c), the Secretary shall obligate $10,000,000 out of amounts collected through the user fees on participating health insurance issuers pursuant to section 156.50 of title 45, Code of Federal Regulations (or any successor regulations) for fiscal year 2022, and $20,000,000 for each of fiscal years 2023, 2024, and 2025. Such amount so obligated for a fiscal year shall remain available until expended.".

(e) FUNDING. — In addition to amounts otherwise available, there is appropriated to the Secretary of Health and Human Services for fiscal year 2022, out of any money in the Treasury not otherwise appropriated, $65,000,000, to remain available until expended, for purposes of carrying out the provisions of, and the amendments made by, this section, section 30602, and section 30603.

SEC. 30602. ESTABLISHING A HEALTH INSURANCE AFFORDABILITY FUND.

(a) IN GENERAL. — Subtitle D of title I of the Patient Protection and Affordable Care Act is amended by inserting after section 1343 (42 U.S.C. 18063) the following new part:

"PART 6 — IMPROVE HEALTH INSURANCE AFFORDABILITY FUND

"SEC. 1351. ESTABLISHMENT OF PROGRAM.

"There is hereby established the 'Improve Health Insurance Affordability Fund' to be administered by the Secretary of Health and Human Services, acting through the Administrator of the Centers for Medicare & Medicaid Services (in this section referred to as the 'Administrator'), to provide funding, in accordance with this part, to the 50 States and the District of Columbia (each referred to in this section as a 'State') beginning on January 1, 2023, for the purposes described in section 1352.

"SEC. 1352. USE OF FUNDS.

"(a) IN GENERAL. — A State shall use the funds allocated to the State under this part for one of the following purposes:

"(1) To provide reinsurance payments to health insurance issuers with respect to individuals enrolled under individual health insurance coverage (other than through a plan described in subsection (b)) offered by such issuers.

"(2) To provide assistance (other than through payments described in paragraph (1)) to reduce out-of-pocket costs, such as copayments, coinsurance, premiums, and deductibles, of individuals enrolled under qualified health plans offered on the individual market through an Exchange and of individuals enrolled under standard health plans offered through a basic health program established under section 1331.

"(b) EXCLUSION OF CERTAIN GRANDFATHERED PLANS, TRANSITIONAL PLANS, STUDENT HEALTH PLANS, AND EXCEPTED BENEFITS. — For purposes of subsection (a), a plan described in this subsection is the following:

"(1) A grandfathered health plan (as defined in section 1251).

"(2) A plan (commonly referred to as a 'transitional plan') continued under the letter issued by the Centers for Medicare & Medicaid Services on November 14, 2013, to the State Insurance Commissioners outlining a transitional policy for coverage in the individual and small group markets to which section 1251 does not apply, and under the extension of the transitional policy for such coverage set forth in the Insurance Standards Bulletin Series guidance issued by the Centers for Medicare & Medicaid Services on March 5, 2014, February 29, 2016, February 13, 2017, April 9, 2018, March 25, 2019, January 31, 2020, and January 19, 2021, or under any subsequent extensions thereof.

"(3) Student health insurance coverage (as defined in section 147.145 of title 45, Code of Federal Regulations, or any successor regulation).

"(4) Excepted benefits (as defined in section 2791(c) of the Public Health Service Act).

"SEC. 1353. STATE ELIGIBILITY AND APPROVAL; DEFAULT SAFEGUARD.

"(a) ENCOURAGING STATE OPTIONS FOR ALLOCATIONS. —

"(1) IN GENERAL. — Subject to subsection (b), to be eligible for an allocation of funds under this part for a year (beginning with 2023), a State shall submit to the Administrator an application at such time (but, in the case of allocations for 2023, not later than 120 days after the date of the enactment of this part and, in the case of allocations for a subsequent year, not later than January 1 of the previous year) and in such form and manner as specified by the Administrator containing —

"(A) a description of how the funds will be used; and

"(B) such other information as the Administrator may require.

"(2) AUTOMATIC APPROVAL. — An application so submitted is approved (as outlined in the terms of the plan) unless the Administrator notifies the State submitting the application, not later than 90 days after the date of the submission of such application, that the application has been denied for not being in compliance with any requirement of this part and of the reason for such denial.

"(3) SUBSEQUENT YEAR APPLICATION APPROVAL. — If an application of a State is approved for a purpose described in section 1352 for a year, such application shall be treated as approved for such purpose for each of subsequent year through 2025.

"(4) OVERSIGHT AUTHORITY AND AUTHORITY TO REVOKE APPROVAL. —

"(A) OVERSIGHT. — The Secretary may conduct periodic reviews of the use of funds provided to a State under this section, with respect to a purpose described in section 1352, to ensure the State uses such funds for such purpose and otherwise complies with the requirements of this section.

"(B) REVOCATION OF APPROVAL. — The approval of an application of a State, with respect to a purpose described in section 1352, may be revoked if the State fails to use funds provided to the State under this section for such purpose or otherwise fails to comply with the requirements of this section.

"(b) DEFAULT FEDERAL SAFEGUARD FOR 2023, 2024, AND 2025 FOR CERTAIN STATES. —

"(1) IN GENERAL. — For 2023, 2024, and 2025, in the case of a State described in paragraph (5), with respect to such year, the State shall not be eligible to submit an application under subsection (a), and the Administrator, in consultation with the applicable State authority, shall from the amount calculated under paragraph (3) for such year, carry out the purpose described in paragraph (2) in such State for such year.

"(2) SPECIFIED USE. — The amount described in paragraph (3), with respect to a State described in paragraph (5) for 2023, 2024, or 2025, shall be used to carry out the purpose described in section 1352(a)(1) in such State for such year, as applicable, by providing reinsurance payments to health insurance issuers with respect to attachment range claims (as defined in section 1354(b)(2), using the dollar amounts specified in subparagraph (B) of such section for such year) in an amount equal to, subject to paragraph (4), the percentage (specified for such year by the Secretary under such subparagraph) of the amount of such claims.

"(3) AMOUNT DESCRIBED. — The amount described in this paragraph, with respect to 2023, 2024, or 2025, is the amount equal to the total sum of amounts that the Secretary would otherwise estimate under section 1354(b)(2)(A)(i) for such year for each State described in paragraph (5) for such year, as applicable, if each such State were not so described for such year.

"(4) ADJUSTMENT. — For purposes of this subsection, the Secretary may apply a percentage under paragraph (3) with respect to a year that is less than the percentage otherwise specified in section 1354(b)(2)(B) for such year, if the cost of paying the total eligible attachment range claims for States described in paragraph (5) for such year at such percentage otherwise specified would exceed the amount calculated under paragraph (3) for such year.

"(5) STATE DESCRIBED. — A State described in this paragraph, with respect to years 2023, 2024, and 2025, is a State that, as of January 1 of 2022, 2023, or 2024, respectively, was not expending amounts under the State plan (or waiver of such plan) for all individuals described in section 1902(a)(10)(A)(i)(VIII) during such year.

"SEC. 1354. ALLOCATIONS.

"(a) APPROPRIATION. — In addition to amounts otherwise available, there is appropriated, out of any money in the Treasury not otherwise appropriated, $10,000,000,000 for 2023 and each subsequent year through 2025 to provide allocations for States under subsection (b) and payments under section 1353(b).

"(b) ALLOCATIONS. —

"(1) PAYMENT. —

"(A) IN GENERAL. — From amounts appropriated under subsection (a) for a year, the Secretary shall, with respect to a State not described in section 1353(b) for such year and not later than the date specified under subparagraph (B) for such year, allocate for such State the amount determined for such State and year under paragraph (2).

"(B) SPECIFIED DATE. — For purposes of subparagraph (A), the date specified in this subparagraph is —

"(i) for 2023, the date that is 90 days after the date of the enactment of this part; and

"(ii) for 2024 or 2025, January 1 of the previous year.

"(C) NOTIFICATIONS OF ALLOCATION AMOUNTS. — For 2024 and 2025, the Secretary shall notify each State of the amount determined for such State under paragraph (2) for such year by not later than January 1 of the previous year.

"(2) ALLOCATION AMOUNT DETERMINATIONS. —

"(A) IN GENERAL. — For purposes of paragraph (1), the amount determined under this paragraph for a year for a State described in paragraph (1)(A) for such year is the amount equal to —

"(i) the amount that the Secretary estimates would be expended under this part for such year on attachment range claims of individuals residing in such State if such State used such funds only for the purpose described in paragraph (1) of section 1352(a) at the dollar amounts and percentage specified under subparagraph (B) for such year; minus

"(ii) the amount, if any, by which the Secretary determines —

"(I) the estimated amount of premium tax credits under section 36B of the Internal Revenue Code of 1986 that would be attributable to individuals residing in such State for such year without application of this part; exceeds

"(II) the estimated amount of premium tax credits under section 36B of the Internal Revenue Code of 1986 that would be attributable to individuals residing in such State for such year if section 1353(b) applied for such year and applied with respect to such State for such year.

For purposes of the previous sentence and section 1353(b)(3), the term 'attachment range claims' means, with respect to an individual, the claims for such individual that exceed a dollar amount specified by the Secretary for a year, but do not exceed a ceiling dollar amount specified by the Secretary for such year, under subparagraph (B).

"(B) SPECIFICATIONS. — For purposes of subparagraph (A) and section 1353(b)(3), the Secretary shall determine the dollar amounts and the percentage to be specified under this subparagraph for a year in a manner to ensure that the total amount of expenditures under this part for such year is estimated to equal the total amount appropriated for such year under subsection (a) if such expenditures were used solely for the purpose described in paragraph (1) of section 1352(a) for attachment range claims at the dollar amounts and percentage so specified for such year.

"(3) AVAILABILITY. — Funds allocated to a State under this subsection for a year shall remain available through the end of the subsequent year.".

(b) BASIC HEALTH PROGRAM FUNDING ADJUSTMENTS. — Section 1331 of the Patient Protection and Affordable Care Act (42 U.S.C. 18051) is amended —

(1) in subsection (a), by adding at the end the following new paragraph:

"(3) PROVISION OF INFORMATION ON QUALIFIED HEALTH PLAN PREMIUMS. —

"(A) IN GENERAL. — For plan years beginning on or after January 1, 2023, the program described in paragraph (1) shall provide that a State may not establish a basic health program unless such State furnishes to the Secretary, with respect to each qualified health plan offered in such State during a year that receives any reinsurance payment from funds made available under part 6 for such year, the adjusted premium amount (as defined in subparagraph (B)) for each such plan and year.

"(B) ADJUSTED PREMIUM AMOUNT DEFINED. — For purposes of subparagraph (A), the term 'adjusted premium amount' means, with respect to a qualified health plan and a year, the monthly premium for such plan and year that would have applied had such plan not received any payments described in subparagraph

(A) for such year."; and

(2) in subsection (d)(3)(A)(ii), by adding at the end the following new sentence: "In making such determination, the Secretary shall calculate the value of such premium tax credits that would have been provided to such individuals enrolled through a basic health program established by a State during a year using the adjusted premium amounts (as defined in subsection (a)(3)(B)) for qualified health plans offered in such State during such year.".

(c) IMPLEMENTATION AUTHORITY. — The Secretary of Health and Human Services may implement the provisions of, and the amendments made by, this section by subregulatory guidance or otherwise.

SEC. 30603. FUNDING FOR THE PROVISION OF HEALTH INSURANCE CONSUMER INFORMATION.

Section 2793(e) of the Public Health Service Act (42 U.S.C. 300gg-93(e)) is amended by adding at the end the following new paragraph:

"(3) FUNDING FOR FISCAL YEARS 2022 THROUGH [2026] — In addition to amounts otherwise available, there is appropriated, out of any money in the Treasury not otherwise appropriated, $15,000,000 for each of fiscal years 2022 through [2026] to carry out this section.".

Subtitle D — Green Energy

SEC. 136001. AMENDMENT OF 1986 CODE.

Except as otherwise expressly provided, whenever in this subtitle 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.

PART 1 — RENEWABLE ELECTRICITY AND REDUCING CARBON EMISSIONS

SEC. 136101. EXTENSION AND MODIFICATION OF CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES.

(a) IN GENERAL. — The following provisions of section 45(d) are each amended by striking "January 1, 2022" each place it appears and inserting "January 1, 2027":

(1) Paragraph (2)(A).

(2) Paragraph (3)(A).

(3) Paragraph (4)(B).

(4) Paragraph (6).

(5) Paragraph (7).

(6) Paragraph (9).

(7) Paragraph (11)(B).

(b) BASE CREDIT AMOUNT. — Section 45 is amended by striking "1.5 cents" each place it appears and inserting "0.3 cents".

(c) APPLICATION OF EXTENSION TO SOLAR. — Section 45(d)(4)(A) is amended by striking "is placed in service before January 1, 2006" and inserting "the construction of which begins before January 1, 2027.".

(d) EXTENSION OF ELECTION TO TREAT QUALIFIED FACILITIES AS ENERGY PROPERTY. — Section 48(a)(5)(C)(ii) is amended by striking "January 1, 2022" and inserting "January 1, 2027".

(e) APPLICATION OF EXTENSION TO WIND FACILITIES. —

(1) IN GENERAL. — Section 45(d)(1) is amended by striking "January 1, 2022" and inserting "January 1, 2027".

(2) APPLICATION OF PHASEOUT PERCENTAGE. —

(A) RENEWABLE ELECTRICITY PRODUCTION CREDIT. — Section 45(b)(5) is amended by inserting "placed in service before January 1, 2022" after "In the case of any facility".

(B) ENERGY CREDIT. — Section 48(a)(5)(E) is amended by inserting "placed in service before January 1, 2022" after "In the case of any facility".

(3) QUALIFIED OFFSHORE WIND FACILITIES UNDER ENERGY CREDIT. — Section 48(a)(5)(F)(i) is amended by striking "offshore wind facility — " and all that follows and inserting the following: "offshore wind facility, subparagraph (E) shall not apply.".

(f) WAGE AND APPRENTICESHIP REQUIREMENTS. — Section 45(b) is amended by adding at the end the following new paragraphs:

"(7) INCREASED CREDIT AMOUNT FOR QUALIFIED FACILITIES. —

"(A) IN GENERAL. — In the case of any qualified facility which satisfies the requirements of subparagraph (B), the amount of the credit determined under subsection (a) (determined after the application of paragraphs (1) through (6)) shall be equal to such amount multiplied by 5 (determined without regard to this sentence).

"(B) QUALIFIED FACILITY REQUIREMENTS. — A qualified facility meets the requirements of this subparagraph if it is one of the following:

"(i) A facility with a maximum net output of less than 1 megawatt.

"(ii) A facility the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (8) and (9).

"(iii) A facility which satisfies the requirements of paragraphs (8) and (9).

"(8) PREVAILING WAGE REQUIREMENTS. —

"(A) IN GENERAL. — The requirements described in this subparagraph with respect to any qualified facility are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in —

"(i) the construction of such facility, and

"(ii) for the period of the taxable year which is within the 10-year period beginning on the date the facility was originally placed in service, the alteration or repair of such facility, shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code. For purposes of determining an increased credit amount under paragraph (7)(A) for a taxable year, the requirement under clause (ii) is applied to such taxable year in which the alteration or repair of the qualified facility occurs."

"(B) CORRECTION AND PENALTY RELATED TO FAILURE TO SATISFY WAGE REQUIREMENTS. —

"(i) IN GENERAL. — In the case of any taxpayer which fails to satisfy the requirement under subparagraph (A) with respect to the construction of any qualified facility or with respect to the alteration or repair of a facility in any year during the period described in subparagraph (A)(ii), such taxpayer shall be deemed to have satisfied such requirement under such subparagraph with respect to such facility for any year if, with respect to any laborer or mechanic who was paid wages at a rate below the rate described in such subparagraph for any period during such year, such taxpayer —

"(I) makes payment to such laborer or mechanic in an amount equal to the sum of —

"(aa) an amount equal to the difference between —

"(AA) the amount of wages paid to such laborer or mechanic during such period, and

"(BB) the amount of wages required to be paid to such laborer or mechanic pursuant to such subparagraph during such period, plus

"(bb) interest on the amount determined under item (aa) at the underpayment rate established under section 6621 (determined by substituting '6 percentage points' for '3 percentage points' in subsection (a)(2) of such section) for the period described in such item, and

"(II) makes payment to the Secretary of a penalty in an amount equal to the product of —

"(aa) $5,000, multiplied by

"(bb) the total number of laborers and mechanics who were paid wages at a rate below the rate described in subparagraph (A) for any period during such year.

"(ii) DEFICIENCY PROCEDURES NOT TO APPLY. — Subchapter B of chapter 63 (relating to deficiency procedures for income, estate, gift, and certain excise taxes) shall not apply with respect to the assessment or collection of any penalty imposed by this section.

"(iii) INTENTIONAL DISREGARD. — If the Secretary determines that any failure described in subclause (i) is due to intentional disregard of the requirements under subparagraph (A), subclause (I) shall be applied by substituting 'three times the sum' for 'the sum' in item (aa) thereof and subclause (II) shall be applied by substituting '$10,000' for '5,000' in item (aa) thereof.

"(iv) LIMITATION ON PERIOD FOR PAYMENT. — Pursuant to rules issued by the Secretary which are similar to the rules under chapter 63, in the case of a final determination by the Secretary with respect to any failure by the taxpayer to satisfy the requirement under subparagraph (A), subparagraph (B)(i) shall not apply unless the payments described in subclauses (I) and (II) of such clause are made by the taxpayer on or before the date which is 180 days after the date of such determination.

"(9) APPRENTICESHIP REQUIREMENTS. — The requirements described in this subparagraph with respect to the construction of any qualified facility are as follows:

"(A) LABOR HOURS. —

"(i) PERCENTAGE OF TOTAL LABOR HOURS. — Taxpayers shall ensure that not less than the applicable percentage of the total labor hours of the construction, alteration, or repair work (including such work performed by any contractor or subcontractor) on any qualified facility shall, subject to subparagraph (B), be performed by qualified apprentices.

"(ii) APPLICABLE PERCENTAGE. — For purposes of clause (i), the applicable percentage shall be —

"(I) in the case of a qualified facility the construction of which begins before January 1, 2023, 10 percent,

"(II) in the case of a qualified facility the construction of which begins after December 31, 2022, and before January 1, 2024, 12.5 percent, and

"(III) in the case of a qualified facility the construction of which begins after December 31, 2023, 15 percent.

"(B) APPRENTICE TO JOURNEYWORKER RATIO. — The requirement under subparagraph (A)(i) shall be subject to any applicable requirements for apprentice-to-journey-worker ratios of the Department of Labor or the applicable State apprenticeship agency.

"(C) PARTICIPATION. — Each contractor and subcontractor who employs 4 or more individuals to perform construction, alteration, or repair work on a qualified facility shall employ 1 or more qualified apprentices to perform such work.

"(D) EXCEPTION. —

"(i) IN GENERAL. — A taxpayer shall not be treated as failing to satisfy the requirements of this paragraph if such taxpayer —

"(I) makes a good faith effort to comply with the requirements of this paragraph, or

"(II) subject to clause (iii), in the case of any failure by the taxpayer to satisfy the requirement under subparagraphs (A) and (C) with respect to the construction, alteration, or repair work on any qualified facility to which subclause (I) does not apply, makes payment to the Secretary of a penalty in an amount equal to the product of —

"(aa) $50, multiplied by

"(bb) the total labor hours for which the requirement described in such subparagraph was not satisfied with respect to the construction, alteration, or repair work on such qualified facility.

"(ii) GOOD FAITH EFFORT. — For purposes of clause (i), a taxpayer shall be deemed to have satisfied the requirements under such paragraph with respect to a qualified facility if such taxpayer has requested qualified apprentices from a registered apprenticeship program, as defined in section 3131(e)(3)(B), and —

"(I) such request has been denied, provided that such denial is not the result of a refusal by the contractors or subcontractors engaged in the performance of construction, alteration, or repair work on such qualified facility to comply with the established standards and requirements of the registered apprenticeship program, or

"(II) the registered apprentice ship program fails to respond to such request within 5 business days after the date on which such registered apprenticeship program received such request.

"(iii) INTENTIONAL DISREGARD. — If the Secretary determines that any failure described in subclause (i)(II) is due to intentional disregard of the requirements under subparagraphs (A) and (C), subclause (i)(II) shall be applied by substituting '$500' for '$50' in item (aa) thereof.

"(E) DEFINITIONS. — For purposes of this paragraph —

"(i) LABOR HOURS. — The term 'labor hours' —

"(I) means the total number of hours devoted to the performance of construction, alteration, or repair work by employees of the taxpayer (including construction, alteration, or repair work by any contractor or subcontractor), and

"(II) excludes any hours worked by —

"(aa) foremen,

"(bb) superintendents,

"(cc) owners, or

"(dd) persons employed in a bona fide executive, administrative, or professional capacity (within the meaning of those terms in part 541 of title 29, Code of Federal Regulations).

"(ii) QUALIFIED APPRENTICE. — The term 'qualified apprentice' means an individual who is an employee of the contractor or subcontractor and who is participating in a registered apprenticeship program, as defined in section 3131(e)(3)(B).

"(10) DOMESTIC CONTENT BONUS CREDIT AMOUNT. —

"(A) IN GENERAL. — In the case of any qualified facility which satisfies the requirement under subparagraph (B), the amount of the credit determined under subsection (a) (determined after the application of paragraphs (1) through (9)) shall be increased by an amount equal to 10 percent of the amount otherwise in effect under such subsection.

"(B) REQUIREMENT. —

"(i) IN GENERAL. — The requirement described in this subclause with respect to any qualified facility is satisfied if the taxpayer certifies to the Secretary (at such time, and in such form and manner, as the Secretary may prescribe) that any steel, iron, or manufactured product which is part of such facility (upon completion of construction) was produced in the United States.

"(ii) STEEL AND IRON. —

"(I) IN GENERAL. — In the case of steel or iron, clause (i) shall be applied in a manner consistent with section 661.5(b) of title 49, Code of Federal Regulations.

"(II) EXCEPTION. — Subclause (I) shall not apply with respect to any steel or iron which is used as a component or subcomponent of a manufactured product which is not primarily made of steel or iron.

"(iii) MANUFACTURED PRODUCT. — For purposes of clause (i), the manufactured products which are part of a qualified facility upon completion of construction shall be deemed to have been produced in the United States if not less than the adjusted percentage of the total cost of the constituent components across all such manufactured products of such facility are attributable to manufactured products (including components) which are mined, produced, or manufactured in the United States.

"(C) ADJUSTED PERCENTAGE. —

"(i) IN GENERAL. — Subject to subclause (ii), for purposes of subparagraph (B)(iii), the adjusted percentage shall be —

"(I) in the case of a facility the construction of which begins before January 1, 2025, 40 percent,

"(II) in the case of a facility the construction of which begins after December 31, 2024, and before January 1, 2026, 45 percent,

"(III) in the case of a facility the construction of which begins after December 31, 2025, and before January 1, 2027, 50 percent, and

"(IV) in the case of a facility the construction of which begins after December 31, 2026, 55 percent.

"(ii) OFFSHORE WIND FACILITY. — For purposes of subparagraph (B)(iii), in the case of a qualified facility which is an offshore wind facility, the adjusted percentage shall be —

"(I) in the case of a facility the construction of which begins before January 1, 2025, 20 percent,

"(II) in the case of a facility the construction of which begins after December 31, 2024, and before January 1, 2026, 27.5 percent,

"(III) in the case of a facility the construction of which begins after December 31, 2025, and before January 1, 2027, 35 percent,

"(IV) in the case of a facility the construction of which begins after December 31, 2026, and before January 1, 2028, 45 percent, and

"(V) in the case of a facility the construction of which begins after December 31, 2027, 55 percent.

"(11) PHASEOUT FOR ELECTIVE PAYMENT. —

"(A) IN GENERAL. — In the case of a taxpayer making an election under section 6417 with respect to a credit under this section, the amount of such credit shall be replaced with —

"(i) the value of such credit (determined without regard to this paragraph), multiplied by

"(ii) the applicable percentage.

"(B) 100 PERCENT APPLICABLE PERCENTAGE FOR CERTAIN QUALIFIED FACILITIES. — In the case of any qualified facility —

"(i) which satisfies the requirements under paragraph (10) with respect to the construction of such facility, or

"(ii) with a maximum net output of less than 1 megawatt, the applicable percentage shall be 100 percent.

"(C) PHASED DOMESTIC CONTENT REQUIREMENT. — Subject to subparagraph (D), in the case of any qualified facility which is not described in subparagraph (B), the applicable percentage shall be —

"(i) if construction of such facility began before January 1, 2024, 100 percent,

"(ii) if construction of such facility began in calendar year 2024, 90 percent,

"(iii) if construction of such facility began in calendar year 2025, 85 percent, and

"(iv) if construction of such facility began after December 31, 2025, 0 percent.

"(D) EXCEPTION. —

"(i) IN GENERAL. — For purposes of this paragraph, the Secretary shall provide appropriate exceptions to the requirements under subparagraph (B) for the construction of qualified facilities if —

"(I) the inclusion of domestic products increases the overall costs of construction of qualified facilities by more than 25 percent, or

"(II) relevant domestic products are not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality.

"(ii) APPLICABLE PERCENTAGE. — In any case in which the Secretary provides an exception pursuant to clause (i), the applicable percentage shall be 100 percent.

"(12) REGULATIONS AND GUIDANCE. — The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of establishing the requirements of this subsection.".

(g) CREDIT REDUCED FOR TAX-EXEMPT BONDS. — Section 45(b)(3) is amended to read as follows:

"(3) CREDIT REDUCED FOR TAX-EXEMPT BONDS. — The amount of the credit determined under subsection (a) with respect to any facility for any taxable year (determined after the application of paragraphs (1) and (2)) shall be reduced by the amount which is the product of the amount so determined for such year and the lesser of 15 percent or a fraction —

"(A) the numerator of which is the sum, for the taxable year and all prior taxable years, of proceeds of an issue of any obligations used to provide financing for the qualified facility the interest on which is exempt from tax under section 103, and

"(B) the denominator of which is the aggregate amount of additions to the capital account for the qualified facility for the taxable year and all prior taxable years. The amounts under the preceding sentence for any taxable year shall be determined as of the close of the taxable year.".

(h) EFFECTIVE DATES. —

(1) The amendments made by subsections (a), (b), (c), (d), (e), and (f) of this section shall apply to facilities placed in service after December 31, 2021.

(2) The amendment made by subsection (g) shall apply to facilities the construction of which begins after December 31, 2021.

SEC. 136102. EXTENSION AND MODIFICATION OF ENERGY CREDIT.

(a) EXTENSION OF CREDIT. — The following provisions of section 48 are each amended by striking "January 1, 2024" each place it appears and inserting "January 1, 2027":

(1) Subsection (a)(2)(A)(i)(II).

(2) Subsection (a)(3)(A)(ii).

(3) Subsection (a)(3)(A)(vii).

(4) Subsection (c)(1)(D).

(5) Subsection (c)(2)(D).

(6) Subsection (c)(3)(A)(iv).

(7) Subsection (c)(4)(C).

(b) PHASEOUT OF CREDIT. — Section 48(a) is amended by striking paragraphs (6) and (7) and inserting the following new paragraph:

"(6) PHASEOUT FOR CERTAIN ENERGY PROPERTY. —

"(A) IN GENERAL. — Subject to subparagraph (B), in the case of any qualified fuel cell property, qualified small wind property, waste energy recovery property, or energy property described in clause (i) or clause (ii) of paragraph (3)(A) the construction of which begins after December 31, 2019, and which is placed in service before January 1, 2022, the energy percentage determined under paragraph (2) shall be equal to 26 percent.

"(B) PLACED IN SERVICE DEADLINE. — In the case of any qualified fuel cell property, qualified small wind property, waste energy recovery property, or energy property described in clause (i) or (ii) of paragraph (3)(A) the construction of which begins before January 1, 2027, and which is not placed in service before January 1, 2029, the energy percentage determined under paragraph (2) shall be equal to 0 percent.".

(c) BASE ENERGY PERCENTAGE AMOUNT. — Section 48(a) is amended —

(1) in paragraph (2)(A) —

(A) in clause (i), by striking "30 percent" and inserting "6 percent", and

(B) in clause (ii), by striking "10 percent" and inserting "2 percent", and

(2) in paragraph (5)(A)(ii), by striking "30 percent" and inserting "6 percent".

(d) 6 PERCENT CREDIT FOR GEOTHERMAL. — Section 48(a)(2)(A)(i)(II) is amended by striking "paragraph (3)(A)(i)" and inserting "clause (i), (iii), or (vii) of paragraph (3)(A)".

(e) ENERGY STORAGE TECHNOLOGIES; QUALIFIED BIOGAS PROPERTY; MICROGRID CONTROLLERS; EXTENSION OF WASTE ENERGY RECOVERY PROPERTY. —

(1) IN GENERAL. — Section 48(a)(3)(A) is amended by striking "or" at the end of clause (viii), and by adding at the end the following new clauses:

"(ix) energy storage technology,

"(x) qualified biogas property, or

"(xi) microgrid controllers,".

(2) APPLICATION OF 6 PERCENT CREDIT. — Section 48(a)(2)(A)(i) is amended by striking "and" at the end of subclauses (IV) and (V) and adding at the end the following new subclauses:

"(VI) energy storage technology,

"(VII) qualified biogas property, and

"(VIII) microgrid controllers, and".

(3) DEFINITIONS. — Section 48(c) is amended by adding at the end the following new paragraphs:

"(6) ENERGY STORAGE TECHNOLOGY. —

"(A) IN GENERAL. — The term 'energy storage technology' means property (other than property primarily used in the transportation of goods or individuals and not for the production of electricity) which receives, stores, and delivers energy for conversion to electricity (or, in the case of hydrogen, which stores energy), and has a nameplate capacity of not less than 5 kilowatt hours.

"(B) MODIFICATIONS OF CERTAIN PROPERTY. — In the case of any equipment which either —

"(i) would be described in subparagraph (A) except that such equipment has a capacity of less than 5 kilowatt hours and is modified such that such equipment (after such modification) has a nameplate capacity of not less than 5 kilowatt hours, or

"(ii) is described in subparagraph (A) and which has a capacity of not less than 5 kilowatt hours and is modified such that such equipment (after such modification) has an increased nameplate capacity, such equipment shall be treated as described in subparagraph (A) except that the basis of any property which was part of such equipment before such modification shall not be taken into account for purposes of this section. In the case of any property to which this subparagraph applies, subparagraph (C) shall be applied by substituting 'modification' for 'construction'.

"(C) TERMINATION. — The term 'energy storage technology' shall not include any property the construction of which does not begin before January 1, 2027.

"(7) QUALIFIED BIOGAS PROPERTY. —

"(A) IN GENERAL. — The term 'qualified biogas property' means property comprising a system which —

"(i) converts biomass (as defined in section 45K(c)(3), as in effect on the date of enactment of this paragraph) into a gas which —

"(I) consists of not less than 52 percent methane by volume, or

"(II) is concentrated by such system into a gas which consists of not less than 52 percent methane, and

"(ii) captures such gas for sale or productive use, and not for disposal via combustion.

"(B) INCLUSION OF CLEANING AND CONDITIONING PROPERTY. — The term 'qualified biogas property' includes any property which is part of such system which cleans or conditions such gas.

"(C) TERMINATION. — The term 'qualified biogas property' shall not include any property the construction of which does not begin before January 1, 2027.

"(8) MICROGRID CONTROLLER. —

"(A) IN GENERAL. — The term 'microgrid controller' means equipment which is —

"(i) part of a qualified microgrid, and

"(ii) designed and used to monitor and control the energy resources and loads on such microgrid.

"(B) QUALIFIED MICROGRID. — The term 'qualified microgrid' means an electrical system which —

"(i) includes equipment which is capable of generating not less than 4 kilowatts and not greater than 20 megawatts of electricity,

"(ii) is capable of operating —

"(I) in connection with the electrical grid and as a single controllable entity with respect to such grid, and

"(II) independently (and disconnected) from such grid, and

"(iii) is not part of a bulk-power system (as defined in section 215 of the Federal Power Act (16 U.S.C. 24o)).

"(C) TERMINATION. — The term 'microgrid controller' shall not include any property the construction of which does not begin before January 1, 2027.".

(4) DENIAL OF DOUBLE BENEFIT FOR QUALIFIED BIOGAS PROPERTY. — Section 45(e) is amended by adding at the end the following new paragraph:

"(12) COORDINATION WITH ENERGY CREDIT FOR QUALIFIED BIOGAS PROPERTY. — The term 'qualified facility' shall not include any facility which produces electricity from gas produced by qualified biogas property (as defined in section 48(c)(7)) if a credit is determined under section 48 with respect to such property for the taxable year or any prior taxable year.".

(5) EXTENSION OF WASTE ENERGY RECOVERY PROPERTY. — Section 48(c)(5)(D) is amended by striking "January 1, 2024" and inserting "January 1, 2027".

(f) FUEL CELLS USING ELECTROMECHANICAL PROCESSES. —

(1) IN GENERAL. — Section 48(c)(1) is amended —

(A) in subparagraph (A)(i) —

(i) by inserting "or electromechanical" after "electrochemical", and

(ii) by inserting "(1 kilowatt in the case of a fuel cell power plant with a linear generator assembly)" after "0.5 kilowatt", and

(B) in subparagraph (C) —

(i) by inserting ", or linear generator assembly," after "a fuel cell stack assembly", and

(ii) by inserting "or electromechanical" after "electrochemical".

(2) LINEAR GENERATOR ASSEMBLY LIMITATION. — Section 48(c)(1) is amended by redesignating subparagraph (D) as subparagraph (E) and by inserting after subparagraph (C) the following new subparagraph:

"(D) LINEAR GENERATOR ASSEMBLY. — The term 'linear generator assembly' does not include any assembly which contains rotating parts.".

(g) DYNAMIC GLASS. — Section 48(a)(3)(A)(ii) is amended by inserting ", or electrochromic glass which uses electricity to change its light transmittance properties in order to heat or cool a structure," after "sunlight".

(h) COORDINATION WITH LOW INCOME HOUSING TAX CREDIT. — Paragraph (3) of section 50(c) of the Internal Revenue Code of 1986 is amended —

(1) by striking "and" at the end of subparagraph (A),

(2) by striking the period at the end of subparagraph (B) and inserting ", and", and

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

"(C) paragraph (1) shall not apply for purposes of determining eligible basis under section 42.".

(i) INTERCONNECTION PROPERTY. — Section 48(a) is amended by adding at the end the following new paragraph:

"(7) INTERCONNECTION PROPERTY. —

"(A) IN GENERAL. — For purposes of determining the credit under subsection (a), energy property shall include amounts paid or incurred by the taxpayer for qualified interconnection property in connection with the installation of energy property (described in paragraph (3)(A)) which has a maximum net output of not greater than 5 megawatts, to provide for the transmission or distribution of the electricity produced or stored by such property, and which are properly chargeable to the capital account of the taxpayer.

"(B) QUALIFIED INTERCONNECTION PROPERTY. — The term 'qualified interconnection property' means, with respect to an energy project which is not a microgrid controller, any tangible property —

"(i) which is part of an addition, modification, or upgrade to a transmission or distribution system which is required at or beyond the point at which the energy project interconnects to such transmission or distribution system in order to accommodate such interconnection,

"(ii) either —

"(I) which is constructed, reconstructed, or erected by the taxpayer, or

"(II) for which the cost with respect to the construction, reconstruction, or erection of such property is paid or incurred by such taxpayer, and

"(iii) the original use of which, pursuant to an interconnection agreement, commences with a utility.

"(C) INTERCONNECTION AGREEMENT. — The term 'interconnection agreement' means an agreement with a utility for the purposes of interconnecting the energy property owned by such taxpayer to the transmission or distribution system of such utility.

"(D) UTILITY. — The term 'utility' means the owner or operator of an electrical transmission or distribution system which is subject to the regulatory authority of a State or political subdivision thereof, any agency or instrumentality of the United States, a public service or public utility commission or other similar body of any State or political subdivision thereof, or the governing or ratemaking body of an electric cooperative.

"(E) SPECIAL RULE FOR INTERCONNECTION PROPERTY. — In the case of expenses paid or incurred for interconnection property, amounts otherwise chargeable to capital account with respect to such expenses shall be reduced under rules similar to the rules of section 50(c).".

(j) WAGE AND APPRENTICESHIP REQUIREMENTS. — Section 48(a) is amended by adding at the end the following new paragraphs:

"(8) INCREASED CREDIT AMOUNT FOR ENERGY PROJECTS. —

"(A) IN GENERAL. —

"(i) RULE. — In the case of any energy project which satisfies the requirements of subparagraph (B), the amount of the credit determined under this subsection (determined after the application of paragraphs (1) through (7)) shall be equal to such amount multiplied by 5 (determined without regard to this sentence).

"(ii) ENERGY PROJECT DEFINED. — For purposes of this subsection the term 'energy project' means a project consisting of multiple energy properties that are part of a single project. The requirements of this paragraph shall be applied to such project.

"(B) PROJECT REQUIREMENTS. — A project meets the requirements of this subparagraph if it is one of the following:

"(i) A project with a maximum net output of less than 1 megawatt of electrical or thermal energy.

"(ii) A project the construction of which begins before the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (9) and (10).

"(iii) A project which satisfies the requirements of paragraphs (9) and (10).

"(9) PREVAILING WAGE REQUIREMENTS. —

"(A) IN GENERAL. — The requirements described in this subparagraph with respect to any energy project are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in —

"(i) the construction of such energy project, and

"(ii) for the five-year period beginning on the date such project is originally placed in service, the alteration or repair of such project, shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.

"(B) CORRECTION AND PENALTY RELATED TO FAILURE TO SATISFY WAGE REQUIREMENTS. — Rules similar to the rules of section 45(b)(8)(B) shall apply.

"(C) RECAPTURE. — The Secretary shall, by regulations or other guidance, provide for recapturing the benefit of any increase in the credit allowed under subsection (a) by reason of paragraph (9), with respect to any project which does not satisfy the requirements under subparagraph (A) (after application of subparagraph (B)) for the period described in clause (ii) of subparagraph (A) (but which does not cease to be investment credit property within the meaning of section 50(a)). The period and percentage of such recapture shall be determined under rules similar to the rules of section 50(a).

"(10) APPRENTICESHIP REQUIREMENTS. — Rules similar to the rules of section 45(b)(9) shall apply.

"(11) DOMESTIC CONTENT BONUS CREDIT AMOUNT. —

"(A) IN GENERAL. — In the case of any energy project which satisfies the requirement under subparagraph (B), for purposes of applying paragraph (2) with respect to such property, the energy percentage shall be increased by the applicable credit rate increase.

"(B) REQUIREMENT. — Rules similar to the rules of section 45(b)(10)(B) shall apply.

"(C) APPLICABLE CREDIT RATE INCREASE. — For purposes of subparagraph (A), the applicable credit rate increase shall be —

"(i) in the case of an energy project that does not satisfy the requirements of paragraph (8)(B), 2 percentage points, and

"(ii) in the case of an energy project that satisfies the requirements of paragraph (8)(B), 10 percentage points.

"(12) PHASEOUT FOR ELECTIVE PAYMENT. — Rules similar to the rules of section 45(b)(11) shall apply.

"(13) REGULATIONS AND GUIDANCE. — The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of establishing the requirements of this subsection.".

(k) SPECIAL RULE FOR PROPERTY FINANCED BY TAX-EXEMPT BONDS. — Section 48(a)(4) is amended to read as follows:

"(4) SPECIAL RULE FOR PROPERTY FINANCED BY TAX-EXEMPT BONDS. — Rules similar to the rule under section 45(b)(3) shall apply for purposes of this section.".

(l) TREATMENT OF CERTAIN CONTRACTS INVOLVING ENERGY STORAGE. — Section 7701(e)(3) is amended —

(1) in subparagraph (A)(i), by striking "or" at the end of subclause (II), by striking "and" at the end of subclause (III) and inserting "or", and by adding at the end the following new subclause:

"(IV) the operation of a storage facility, or", and

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

"(F) STORAGE FACILITY. — For purposes of subparagraph (A), the term 'storage facility' means a facility which uses energy storage technology within the meaning of section 48(c)(6).".

(m) INCREASE IN CREDIT RATE FOR ENERGY COMMUNITIES. — Section 48(a) is amended by adding at the end the following new paragraph:

"(14) INCREASE IN CREDIT RATE FOR ENERGY COMMUNITIES. —

"(A) IN GENERAL. — In the case of any energy project that is placed in service within an energy community, for purposes of applying paragraph (2) with respect to such property, the energy percentage shall be increased by the applicable credit rate increase.

"(B) APPLICABLE CREDIT RATE INCREASE. — For purposes of subparagraph (A), the applicable credit rate increase shall be equal to —

"(i) in the case of any energy project that does not satisfy the requirements of paragraph (8)(B), 2 percentage points, and

"(ii) in the case of any energy project that satisfies the requirements of paragraph (8)(B), 10 percentage points.

"(C) ENERGY COMMUNITY. — For purposes of this paragraph, the term 'energy community' means a census tract —

"(i) in which —

"(I) for the calendar year in which construction of the energy property begins, not less than 5 percent of the employment in such tract is within the oil and gas sector,

"(II) after December 31, 1999, a coal mine has closed, or

"(III) after December 31, 2009, a coal-fired electric generating unit has been retired, or

"(ii) which is immediately adjacent to any census tract described in clause (i).".

(n) CONFORMING AMENDMENT. — Section 48(a)(2)(A) is amended by striking "paragraphs (6) and (7)" and inserting "paragraph (6)".

(o) EFFECTIVE DATES. —

(1) The amendments made by subsections (a), (b), (c), (d), (h), (i), (j), (l), (m), and (n) of this section shall apply to property placed in service after December 31, 2021.

(2) The amendments made by subsections (e), (f), and (g) shall apply to property placed in service after December 31, 2021, and, for any property the construction of which begins prior to January 1, 2022, only to the extent of the basis thereof attributable to the construction, reconstruction, or erection after December 31, 2021.

(3) The amendments made by subsection (k) shall apply to property the construction of which begins after December 31, 2021.

SEC. 136103. INCREASE IN ENERGY CREDIT FOR SOLAR FACILITIES PLACED IN SERVICE IN CONNECTION WITH LOW-INCOME COMMUNITIES.

(a) IN GENERAL. — Section 48 is amended by adding at the end the following new subsection:

"(e) SPECIAL RULES FOR CERTAIN SOLAR AND WIND FACILITIES PLACED IN SERVICE IN CONNECTION WITH LOW-INCOME COMMUNITIES. —

"(1) IN GENERAL. — In the case of any qualified solar and wind facility with respect to which the Secretary makes an allocation of environmental justice solar and wind capacity limitation under paragraph (4) —

"(A) the energy percentage otherwise determined under subsection (a)(2) with respect to any eligible property which is part of such facility shall be increased by —

"(i) in the case of a facility described in subclause (I) of paragraph (2)(A)(iii) and not described in subclause (II) of such paragraph, 10 percentage points, and

"(ii) in the case of a facility described in subclause (II) of paragraph (2)(A)(iii), 20 percentage points, and

"(B) the increase in the credit determined under subsection (a) by reason of this subsection for any taxable year with respect to all property which is part of such facility shall not exceed the amount which bears the same ratio to the amount of such increase (determined without regard to this subparagraph) as —

"(i) the environmental justice solar and wind capacity limitation allocated to such facility, bears to

"(ii) the total megawatt nameplate capacity of such facility, as measured in direct current.

"(2) QUALIFIED SOLAR AND WIND FACILITY. — For purposes of this subsection —

"(A) IN GENERAL. — The term 'qualified solar and wind facility' means any facility —

"(i) which generates electricity solely from property described in section 45(d)(1) or in clause (i) or (vi) of subsection (a)(3)(A),

"(ii) which has a maximum net output of less than 5 megawatts, and

"(iii) which —

"(I) is located in a low-income community (as defined in section 45D(e)) or on Indian land (as defined in section 2601(2) of the Energy Policy Act of 1992 (25 U.S.C. 3501(2))), or

"(II) is part of a qualified low-income residential building project or a qualified low-income economic benefit project.

"(B) QUALIFIED LOW-INCOME RESIDENTIAL BUILDING PROJECT. — A facility shall be treated as part of a qualified low-income residential building project if —

"(i) such facility is installed on a residential rental building which participates in a covered housing program (as defined in section 41411(a) of the Violence Against Women Act of 1994 (34 U.S.C. 12491(a)(3)), a Housing Development Fund Corporation cooperative under Article XI of the New York State Private Housing Finance Law, a housing assistance program administered by the Department of Agriculture under title V of the Housing Act of 1949, a housing program administered by a tribally designated housing entity (as defined in section 4(22) of the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4103(22))) or such other affordable housing programs as the Secretary may provide, and

"(ii) the financial benefits of the electricity produced by such facility are allocated equitably among the occupants of the dwelling units of such building.

"(C) QUALIFIED LOW-INCOME ECONOMIC BENEFIT PROJECT. — A facility shall be treated as part of a qualified low-income economic benefit project if at least 50 percent of the financial benefits of the electricity produced by such facility are provided to households with income of —

"(i) less than 200 percent of the poverty line applicable to a family of the size involved, or

"(ii) less than 80 percent of area median gross income (as determined under section 142(d)(2)(B)).

"(D) FINANCIAL BENEFIT. — For purposes of subparagraphs (B) and (C), electricity acquired at a below-market rate shall not fail to be taken into account as a financial benefit.

"(3) ELIGIBLE PROPERTY. — For purposes of this section, the term 'eligible property' means energy property which is part of a facility described in section 45(d)(1) or in clause (i) or (vi) of subsection (a)(3)(A), including energy storage property (described in subsection (a)(3)(A)(viii)) installed in connection with such energy property.

"(4) ALLOCATIONS. —

"(A) IN GENERAL. — Not later than 270 days after the date of enactment of this subsection, the Secretary shall establish a program to allocate amounts of environmental justice solar and wind capacity limitation to qualified solar and wind facilities.

"(B) LIMITATION. — The amount of environmental justice solar and wind capacity limitation allocated by the Secretary under subparagraph (A) during any calendar year shall not exceed the annual capacity limitation with respect to such year.

"(C) ANNUAL CAPACITY LIMITATION. — For purposes of this paragraph, the term 'annual capacity limitation' means 1.8 gigawatts of direct current capacity for each of calendar years 2022 through 2026, and zero thereafter.

"(D) CARRYOVER OF UNUSED LIMITATION. — If the annual capacity limitation for any calendar year exceeds the aggregate amount allocated for such year under this paragraph, such limitation for the succeeding calendar year shall be increased by the amount of such excess. No amount may be carried under the preceding sentence to any calendar year after 2026 except as provided in section 48F(i)(4)(D)(ii).

"(E) PLACED IN SERVICE DEADLINE. —

"(i) IN GENERAL. — Paragraph (1) shall not apply with respect to any property which is placed in service after the date that is 4 years after the date of the allocation with respect to the facility of which such property is a part.

"(ii) APPLICATION OF CARRYOVER. — Any amount of environmental justice solar and wind capacity limitation which expires under clause (i) during any calendar year shall be taken into account as an excess described in subparagraph (D) (or as an increase in such excess) for such calendar year, subject to the limitation imposed by the last sentence of such subparagraph.

"(F) SELECTION CRITERIA. — In determining to which qualified solar and wind facilities to allocate environmental justice solar and wind capacity limitation under this paragraph, the Secretary shall take into consideration which facilities will result in —

"(i) the greatest health and economic benefits, including the ability to withstand extreme weather events, for individuals described in section 45D(e)(2),

"(ii) the greatest employment and wages for such individuals, and

"(iii) the greatest engagement with, outreach to, or ownership by, such individuals, including through partnerships with local governments, Indian tribal governments (as defined in section 139E), and community-based organizations.

"(G) DISCLOSURE OF ALLOCATIONS. — The Secretary shall, upon making an allocation of environmental justice solar and wind capacity limitation under this paragraph, publicly disclose the identity of the applicant, the amount of the environmental justice solar and wind capacity limitation allocated to such applicant, and the location of the facility for which such allocation is made.

"(5) RECAPTURE. — The Secretary shall, by regulations or other guidance, provide for recapturing the benefit of any increase in the credit allowed under subsection (a) by reason of this subsection with respect to any property which ceases to be property eligible for such increase (but which does not cease to be investment credit property within the meaning of section 50(a)). The period and percentage of such recapture shall be determined under rules similar to the rules of section 50(a). To the extent provided by the Secretary, such recapture may not apply with respect to any property if, within 12 months after the date the taxpayer becomes aware (or reasonably should have become aware) of such property ceasing to be property eligible for such increase, the eligibility of such property for such increase is restored. The preceding sentence shall not apply more than once with respect to any facility.".

(b) EFFECTIVE DATE. — The amendments made by this section shall take effect on January 1, 2022.

SEC. 136104. ELECTIVE PAYMENT FOR ENERGY PROPERTY AND ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES, ETC.

(a) IN GENERAL. — Subchapter B of chapter 65 is amended by inserting after section 6416 the following new section:

"SEC. 6417. ELECTIVE PAYMENT OF APPLICABLE CREDITS.

"(a) IN GENERAL. — In the case of a taxpayer making an election (at such time and in such manner as the Secretary may provide) under this section with respect to any applicable credit determined with respect to such taxpayer, such taxpayer shall be treated as making a payment against the tax imposed by subtitle A (for the taxable year with respect to which such credit was determined) equal to the amount of such credit.

"(b) APPLICABLE CREDIT. — The term 'applicable credit' means each of the following:

"(1) So much of the renewable electricity production credit determined under section 45 as is attributable to qualified facilities which are originally placed in service after December 31, 2021, and with respect to which an election is made under subsection (c)(3).

"(2) The energy credit determined under section 48.

"(3) So much of the credit for carbon oxide sequestration determined under section 45Q as is attributable to carbon capture equipment which is originally placed in service after December 31, 2021, and with respect to which an election is made under subsection (c)(3).

"(4) The credit for alternative fuel vehicle refueling property allowed under section 30C.

"(5) The qualifying advanced energy project credit determined under section 48C.

"(c) SPECIAL RULES. — For purposes of this section —

"(1) APPLICATION TO TAX-EXEMPT AND GOVERNMENTAL ENTITIES. — In the case of any organization exempt from the tax imposed by subtitle A, any State or local government (or political subdivision thereof), the Tennessee Valley Authority, or any Indian tribal government (within the meaning of section 139E), which makes the election described in subsection (a), any applicable credit shall be determined —

"(A) without regard to paragraphs (3) and (4)(A)(i) of section 50(b), and

"(B) by treating any property with respect to which such credit is determined as used in a trade or business of the taxpayer.

"(2) APPLICATION TO PARTNERSHIPS AND S CORPORATIONS. —

"(A) IN GENERAL. — In the case of any applicable credit determined with respect to any facility or property held directly by a partnership or S corporation, if such partnership or S corporation makes an election under this subsection (in such manner as the Secretary may provide) with respect to such credit —

"(i) the Secretary shall make a payment to such partnership or S corporation equal to the amount of such credit,

"(ii) subsection (d) shall be applied with respect to such credit before determining any partner's distributive share, or shareholder's pro rata share, of such credit,

"(iii) any amount with respect to which the election in subsection (a) is made shall be treated as tax exempt income for purposes of sections 705 and 1366, and

"(iv) a partner's distributive share of such tax exempt income shall be based on such partner's distributive share of the otherwise applicable credit for each taxable year.

"(B) COORDINATION WITH APPLICATION AT PARTNER OR SHAREHOLDER LEVEL. — In the case of any partnership or S corporation, subsection (a) shall be applied at the partner or shareholder level after application of subparagraph (A)(ii).

"(3) ELECTIONS. —

"(A) IN GENERAL. — Any election under this subsection shall be made not later than the due date (including extensions of time) for the return of tax for the taxable year for which the election is made, but in no event earlier than 270 days after the date of the enactment of this section. Any such election, once made, shall be irrevocable. Except as otherwise provided in this paragraph, any election under this subsection shall apply with respect to any credit for the taxable year for which the election is made.

"(B) RENEWABLE ELECTRICITY PRODUCTION CREDIT. — In the case of the credit described in subsection (b)(1), any election under this subsection shall —

"(i) apply separately with respect to each qualified facility,

"(ii) be made for the taxable year in which such qualified facility is originally placed in service, and

"(iii) shall apply to such taxable year and all subsequent taxable years with respect to such qualified facility.

"(C) CREDIT FOR CARBON OXIDE SEQUESTRATION. — In the case of the credit described in subsection (b)(3), any election under this subsection shall —

"(i) apply separately with respect to the carbon capture equipment originally placed in service by the taxpayer during a taxable year, and

"(ii) shall apply to such taxable year and all subsequent taxable years with respect to such equipment.

"(4) TIMING. — The payment described in subsection (a) shall be treated as made on —

"(A) in the case of any government, or political subdivision, described in paragraph (1) and for which no return is required under section 6011 or 6033(a), the later of the date that a return would be due under section 6033(a) if such government or subdivision were described in that section or the date on which such government or subdivision submits a claim for credit or refund (at such time and in such manner as the Secretary shall provide), and

"(B) in any other case, the later of the due date (determined without regard to extensions) of the return of tax for the taxable year or the date on which such return is filed.

"(5) TREATMENT OF PAYMENTS TO PARTNERSHIPS AND S CORPORATIONS. — For purposes of section 1324 of title 31, United States Code, the payments under paragraph (2)(A)(ii) shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.

"(6) ADDITIONAL INFORMATION. — As a condition of, and prior to, a payment under this section, the Secretary may require such information or registration as the Secretary deems necessary or appropriate for purposes of preventing duplication, fraud, improper payments, or excessive payments under this section.

"(7) EXCESSIVE PAYMENT. —

"(A) IN GENERAL. — In the case of a payment made to a taxpayer under this subsection or any amount treated as a payment which is made by the taxpayer under subsection (a) which the Secretary determines constitutes an excessive payment, the tax imposed on such taxpayer by chapter 1 for the taxable year in which such determination is made shall be increased by an amount equal to the sum of —

"(i) the amount of such excessive payment, plus

"(ii) an amount equal to 20 percent of such excessive payment.

"(B) REASONABLE CAUSE. — Subparagraph (A)(ii) shall not apply if the taxpayer demonstrates to the satisfaction of the Secretary that the excessive payment resulted from reasonable cause.

"(C) EXCESSIVE PAYMENT DEFINED. — For purposes of this paragraph, the term 'excessive payment' means, with respect to a facility for which an election is made under this section for any taxable year, an amount equal to the excess of —

"(i) the amount of the payment made to the taxpayer under this subsection or any amount treated as a payment which is made by the taxpayer under subsection (a) with respect to such facility for such taxable year, over

"(ii) the amount of the credit which, without application of this subsection, would be otherwise allowable (determined without regard to section 38(c)) under this section with respect to such facility for such taxable year.

"(d) DENIAL OF DOUBLE BENEFIT. — In the case of a taxpayer making an election under this section with respect to an applicable credit, such credit shall be reduced to zero and shall, for any other purposes under this title, be deemed to have been allowed to the taxpayer for such taxable year.

"(e) MIRROR CODE POSSESSIONS. — In the case of any possession of the United States with a mirror code tax system (as defined in section 24(k)), this section shall not be treated as part of the income tax laws of the United States for purposes of determining the income tax law of such possession unless such possession elects to have this section be so treated.

"(f) BASIS REDUCTION AND RECAPTURE. — Except as otherwise provided in subsection (c)(1)(A), rules similar to the rules of section 50 shall apply for purposes of this section.

"(g) REGULATIONS. — The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including —

"(1) regulations or other guidance providing rules for determining a partner's distributive share of the tax exempt income described in subsection (c)(2)(A)(iii), and

"(2) guidance to ensure that the amount of the payment or deemed payment made under this section is commensurate with the amount of the credit that would be otherwise allowable (determined without regard to section 38(c)).".

(b) APPLICATION WITH RESPECT TO REAL ESTATE INVESTMENT TRUSTS. — Section 50(d) is amended by adding at the end the following: "In the case of a real estate investment trust making an election under section 6417, paragraphs (1)(B) and (2)(B) of the section 46(e) referred to in paragraph (1) of this subsection shall not apply to any qualified investment credit property of a real estate investment trust.".

(c) GROSS-UP OF PAYMENTS IN CASE OF SEQUESTRATION. — In the case of any payment made as a refund due to an overpayment as a result of section 6417 of the Internal Revenue Code of 1986 after the date of the enactment of this Act to which sequestration applies, the amount of such payment shall be increased to an amount equal to —

(1) such payment (determined before such sequestration), multiplied by

(2) the quotient obtained by dividing 1 by the amount by which 1 exceeds the percentage reduction in such payment pursuant to such sequestration.

For purposes of this subsection, the term "sequestration" means any reduction in direct spending ordered in accordance with a sequestration report prepared by the Director of the Office and Management and Budget pursuant to the Balanced Budget and Emergency Deficit Control Act of 1985 or the Statutory Pay-As-You-Go Act of 2010.

(d) CLERICAL AMENDMENT. — The table of sections for subchapter B of chapter 65 is amended by inserting after the item relating to section 6416 the following new item:

"Sec. 6417. Elective payment of applicable credits.".

(e) IN GENERAL. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 136105. INVESTMENT CREDIT FOR ELECTRIC TRANSMISSION PROPERTY.

(a) IN GENERAL. — Subpart E of part IV of subchapter A of chapter 1 is amended by inserting after section 48C the following new section:

"SEC. 48D. QUALIFYING ELECTRIC TRANSMISSION PROPERTY.

"(a) ALLOWANCE OF CREDIT. — For purposes of section 46, the qualifying electric transmission property credit for any taxable year is an amount equal to 6 percent of the basis of qualifying electric transmission property placed in service by the taxpayer during such taxable year.

"(b) QUALIFYING ELECTRIC TRANSMISSION PROPERTY. — For purposes of this section —

"(1) IN GENERAL. — The term 'qualifying electric transmission property' means tangible property —

"(A) which is a qualifying electric transmission line or related transmission property,

"(B)(i) the construction, reconstruction, or erection of which is completed by the taxpayer, or

"(ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer, and

"(C) with respect to which depreciation (or amortization in lieu of depreciation) is allowable.

"(2) QUALIFYING ELECTRIC TRANSMISSION LINE. — The term 'qualifying electric transmission line' means an electric transmission line which —

"(A) is capable of transmitting electricity at a voltage of not less than 275 kilovolts, and

"(B) has a transmission capacity of not less than 500 megawatts.

"(3) RELATED TRANSMISSION PROPERTY. —

"(A) IN GENERAL. — The term 'related transmission property' means, with respect to any electric transmission line, any property which —

"(i) is listed as a 'transmission plant' in the Uniform System of Accounts for the Federal Energy Regulatory Commission under part 101 of subchapter C of chapter I of title 18, Code of Federal Regulations, and

"(ii) is —

"(I) necessary for the operation of such electric transmission line, or

"(II) conversion equipment along such electric transmission line.

"(B) CREDIT NOT ALLOWED SEPARATELY WITH RESPECT TO RELATED PROPERTY. — No credit shall be allowed to any taxpayer under this section with respect to any related transmission property unless such taxpayer is allowed a credit under this section with respect to the qualifying electric transmission line to which such related transmission property relates.

"(c) APPLICATION TO REPLACEMENT AND UPGRADED SYSTEMS. —

"(1) IN GENERAL. — In the case of any qualifying electric transmission line (determined without regard to this subsection) which replaces any existing electric transmission line —

"(A) the 500 megawatts referred to in subsection (b)(2)(B) shall be increased by the transmission capacity of such existing electric transmission line, and

"(B) in no event shall the basis of such existing electric transmission line (or related transmission property with respect to such existing electric transmission line) be taken into account in determining the credit allowed under this section.

"(2) UPGRADES TREATED AS REPLACEMENTS. — For purposes of this subsection, any upgrade of an existing electric transmission line shall be treated as a replacement of such line.

"(d) EXCEPTION FOR CERTAIN PROPERTY AND PROJECTS ALREADY IN PROCESS. —

"(1) IN GENERAL. — No credit shall be allowed under this section with respect to —

"(A) any property that is selected in a regional transmission plan by a regional transmission organization or an independent system operator (as such terms are defined in paragraphs (27) and (28) of section 3 of the Federal Power Act (16 U.S.C. 796)) prior to January 1, 2022, or

"(B) any property if —

"(i) construction of such property begins before January 1, 2022, or

"(ii) construction of any portion of the qualifying electric transmission line to which such property relates begins before such date.

"(2) WHEN CONSTRUCTION BEGINS. — For purposes of subparagraph (B) of paragraph (1), construction of property begins when the taxpayer has begun on-site physical work of a significant nature with respect to such property.

"(e) CERTAIN QUALIFIED PROGRESS EXPENDITURES RULES MADE APPLICABLE. — Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section.

"(f) CREDIT ADJUSTMENTS; WAGE AND APPRENTICESHIP REQUIREMENTS. —

"(1) INCREASED CREDIT AMOUNT FOR APPLICABLE FACILITIES. —

"(A) IN GENERAL. —

"(i) RULE. — In the case of any applicable facility which satisfies the requirements of subparagraph (B), the amount of the credit determined under subsection (a) shall be such amount multiplied by 5 (determined without regard to this sentence).

"(ii) APPLICABLE FACILITY DEFINED. — For purposes of this subsection, the term 'applicable facility' means a qualifying electric transmission line and related transmission property to which such qualifying electric transmission line relates.

"(B) APPLICABLE FACILITY REQUIREMENTS. — An applicable facility meets the requirements of this subparagraph if it is one of the following:

"(i) An applicable facility the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (2) and (3).

"(ii) An applicable facility which satisfies the requirements of paragraphs (2) and (3).

"(2) PREVAILING WAGE REQUIREMENTS. — Rules similar to the rules of section 48(a)(9) shall apply.

"(3) APPRENTICESHIP REQUIREMENTS. — Rules similar to the rules of section 45(b)(9) shall apply.

"(4) DOMESTIC CONTENT BONUS CREDIT AMOUNT. — Rules similar to the rules of section 48(a)(11) shall apply.

"(5) PHASEOUT FOR ELECTIVE PAYMENT. — Rules similar to the rules of section 48(a)(12) shall apply.

"(g) TERMINATION. — This section shall not apply to any qualifying electric transmission property unless such property is placed in service before January 1, 2032.

"(h) REGULATIONS AND GUIDANCE. — The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of establishing the requirements of this subsection.".

(b) ELECTIVE PAYMENT OF CREDIT. — Section 6417(b), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:

"(6) The qualifying electric transmission property credit determined under section 48D.".

(c) SPECIAL RULE FOR PROPERTY FINANCED BY TAX-EXEMPT BONDS. — Section 48D, as added by subsection (a), is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection:

"(h) SPECIAL RULE FOR PROPERTY FINANCED BY TAX-EXEMPT BONDS. — Rules similar to the rules of section 45(b)(3) shall apply.".

(d) CONFORMING AMENDMENTS. —

(1) Section 46 is amended —

(A) by striking "and" at the end of paragraph (5),

(B) by striking the period at the end of paragraph (6) and inserting ", and", and

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

"(7) the qualifying electric transmission property credit.".

(2) Section 49(a)(1)(C) is amended —

(A) by striking "and" at the end of clause (iv),

(B) by striking the period at the end of clause (v) and inserting ", and", and

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

"(vi) the basis of any qualifying electric transmission property under section 48D.".

(3) Section 50(a)(2)(E) is amended by striking "or 48C(b)(2)" and inserting "48C(b)(2), or 48D(e)".

(4) The table of sections for subpart E of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 48C the following new item:

"Sec. 48D. Qualifying electric transmission property.".

(e) EFFECTIVE DATE. —

(1) IN GENERAL. — The amendments made by subsections (a), (b), and (d) of this section shall apply to property placed in service after December 31, 2021.

(2) TAX-EXEMPT BONDS. — The amendment made by subsection (c) shall apply to property the construction of which begins after December 31, 2021.

(3) EXCEPTION FOR CERTAIN PROPERTY AND PROJECTS ALREADY IN PROCESS. — For exclusion of certain property and projects already in process, see section 48D(d) of the Internal Revenue Code of 1986 (as added by this section).

SEC. 136106. EXTENSION AND MODIFICATION OF CREDIT FOR CARBON OXIDE SEQUESTRATION.

(a) MODIFICATION OF CARBON OXIDE CAPTURE REQUIREMENTS. — Section 45Q(d) is amended to read as follows:

"(d) QUALIFIED FACILITY. —

"(1) IN GENERAL. — For purposes of this section, the term 'qualified facility' means a facility which captures —

"(A) in the case of a direct air capture facility, not less than 1,000 metric tons of qualified carbon oxide during the taxable year,

"(B) in the case of an electricity generating facility, not less than 18,750 metric tons of qualified carbon oxide during the taxable year and not less than 75 percent by mass of the carbon oxide that would otherwise be released into the atmosphere by such facility during such taxable year, and

"(C) in the case of any other facility, not less than 12,500 metric tons of qualified carbon oxide during the taxable year.

"(2) TERMINATION RULE. — The term 'qualified facility' means any industrial facility or direct air capture facility —

"(A) the construction of which begins before January 1, 2032, and

"(B) either —

"(i) the construction of carbon capture equipment of which begins before such date, or

"(ii) the original planning and design of which includes installation of carbon capture equipment.".

(b) DETERMINATION OF APPLICABLE DOLLAR AMOUNT. —

(1) IN GENERAL. — Section 45Q(b)(1) is amended by redesignating subparagraph (B) as subparagraph (D) and by inserting after subparagraph (A) the following new subparagraphs:

"(B) SPECIAL RULE FOR DIRECT AIR CAPTURE FACILITIES. — For any qualified facility described in subsection (d)(1)(A), the construction of which begins after December 31, 2021, the applicable dollar amount shall be an amount equal to the applicable dollar amount otherwise determined with respect to such facility under subparagraph (A), except that such subparagraph shall be applied —

"(i) in clause (i)(I) of such subparagraph, by substituting '$36' for '$17', and

"(ii) in clause (i)(II) of such subparagraph, by substituting '$26' for '$12'.

"(C) APPLICABLE DOLLAR AMOUNT FOR ADDITIONAL CARBON CAPTURE EQUIPMENT. — In the case of any qualified facility the construction of which begins before January 1, 2022, if any additional carbon capture equipment is installed at such facility and construction of such equipment began after December 31, 2021, the applicable dollar amount shall be an amount equal to the applicable dollar amount otherwise determined under subparagraph (A), except that such subparagraph shall be applied by substituting 'carbon capture equipment' for 'qualified facility' each place it appears.".

(2) CONFORMING AMENDMENTS. —

(A) Section 45Q(b)(1)(A) is amended by striking "The applicable dollar amount" and inserting "Except as provided in subparagraph (B), the applicable dollar amount".

(B) Section 45Q(b)(1)(D), as redesignated by subparagraph (A), is amended by striking "subparagraph (A)" and inserting "subparagraph (A), (B), or (C)".

(C) Section 45Q(b)(2) is amended by inserting "Subject to paragraph (3)" before "in the case".

(c) WAGE AND APPRENTICESHIP REQUIREMENTS. — Section 45Q is amended by redesignating subsection (h) as subsection (i) and inserting after subsection (g) following new subsection:

"(h) INCREASED CREDIT AMOUNT FOR QUALIFIED FACILITIES AND CARBON CAPTURE EQUIPMENT. —

"(1) IN GENERAL. — In the case of any qualified facility and any carbon capture equipment which satisfy the requirements of paragraph (2), the amount of the credit determined under subsection (a) shall be equal to such amount multiplied by 5 (determined without regard to this sentence).

"(2) REQUIREMENTS. — The requirements described in this subparagraph are that —

"(A) with respect to any qualified facility the construction of which begins on or after the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (3) and (4), as well as any carbon capture equipment placed in service at such facility —

"(i) subject to subparagraph (B) of paragraph (3), such facility and equipment shall satisfy the requirements under subparagraph (A) of such paragraph, and

"(ii) subject to subparagraph (D) of paragraph (4), the construction of such facility and equipment shall satisfy the requirements under subparagraph (A) of such paragraph, and

"(B) with respect to any carbon capture equipment the construction of which begins after the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (3) and (4), and which is installed at a qualified facility the construction of which began prior to such date —

"(i) subject to subparagraph (B) of paragraph (3), such equipment satisfies the requirements of subparagraphs (A) of such paragraph, and

"(ii) subject to subparagraph (D) of paragraph (4), the construction of such equipment shall satisfy the requirements under subparagraph (A) of such paragraph.

"(3) PREVAILING WAGE REQUIREMENTS. —

"(A) IN GENERAL. — The requirements described in this subparagraph with respect to any qualified facility and any carbon capture equipment placed in service at such facility are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in —

"(i) in the case of —

"(I) any qualified facility described in subparagraph (A)(i) of paragraph (2), the construction of such facility and carbon capture equipment placed in service at such facility, or

"(II) any carbon capture equipment described in subparagraph (A)(ii) of paragraph (2), the construction of such equipment, and

"(ii) for the period of the taxable year which is within the 12-year period beginning on the date on which any carbon capture equipment is originally placed in service at any qualified facility (as described in paragraphs (3)(A) and (4)(A) of subsection (a)), the alteration or repair of such facility or such equipment, shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code. For purposes of determining an increased credit amount under paragraph (1) for a taxable year, the requirement under clause (ii) of this paragraph is applied to such taxable year in which the alteration or repair of qualified facility occurs.

"(B) CORRECTION AND PENALTY RELATED TO FAILURE TO SATISFY WAGE REQUIREMENTS. — Rules similar to the rules of section 45(b)(8)(B) shall apply.

"(4) APPRENTICESHIP REQUIREMENTS. — Rules similar to the rules of section 45(b)(9) shall apply.

"(5) REGULATIONS AND GUIDANCE. — The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of establishing the requirements of this subsection.".

(d) INCREASED APPLICABLE DOLLAR AMOUNT. —

(1) IN GENERAL. — Section 45Q(b)(1) is amended —

(A) by amending clause (i) of subparagraph (A) to read as follows:

"(i) for any taxable year beginning in a calendar year after 2016 and before 2027 —

"(I) for purposes of paragraph (3) of subsection (a), $17 for each calendar year during such period, and

"(II) for purposes of paragraph (4) of such subsection, $12 for each calendar year during such period, and", and

(B) in clause (ii) —

(i) in subclause (I), by striking "$50" and inserting "the amount determined under clause (i)(I) with respect to the qualified facility", and

(ii) in subclause (II), by striking "$35" and inserting "the amount determined under clause (i)(II) with respect to the qualified facility".

(e) INSTALLATION OF ADDITIONAL CARBON CAPTURE EQUIPMENT ON CERTAIN FACILITIES. — Section 45Q(b) is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph:

"(3) INSTALLATION OF ADDITIONAL CARBON CAPTURE EQUIPMENT ON CERTAIN FACILITIES. — In the case of a qualified facility described in paragraph (1)(C), for purposes of determining the amount of qualified carbon oxide which is captured by the taxpayer, rules similar to rules of paragraph (2) shall apply for purposes of subsection (a).".

(f) CREDIT REDUCED FOR TAX-EXEMPT BONDS. — Section 45Q(f) is amended by adding at the end the following new paragraph:

"(8) CREDIT REDUCED FOR TAX-EXEMPT BONDS. — Rules similar to the rule under section 45(b)(3) shall apply for purposes of this section.".

(g) APPLICATION OF SECTION FOR CERTAIN CARBON CAPTURE EQUIPMENT. — Section 45Q(g) is amended by inserting "the earlier of January 1, 2023 and" before "the end of the calendar year".

(h) ELECTION. — Section 45Q(f) is amended by adding at the end the following new paragraph:

"(9) ELECTION. — For purposes of paragraphs (3) and (4) of subsection (a), a person described in paragraph (3)(A)(ii) may elect, at such time and in such manner as the Secretary may prescribe, to have the 12-year period begin on the first day of the first taxable year in which a credit under this section is claimed with respect to carbon capture equipment which is originally placed in service at a qualified facility on or after the date of the enactment of the Bipartisan Budget Act of 2018 (after application of subsection (f)(6) where applicable) if —

"(A) no taxpayer claimed a credit under this section with respect to such carbon capture equipment for any prior taxable year,

"(B) the qualified facility at which such carbon capture equipment is placed in service is located in an area affected by a federally-declared disaster (as defined by section 165(i)(5)(A)) after the carbon capture equipment is originally placed in service, and

"(C) such federally-declared disaster results in a cessation of the operation of the qualified facility after the carbon capture equipment is originally placed in service.".

(i) EFFECTIVE DATE. — The amendments made by this section shall apply to facilities or equipment the construction of which begins after December 31, 2021.

SEC. 136107. GREEN ENERGY PUBLICLY TRADED PARTNERSHIPS.

(a) IN GENERAL. — Section 7704(d)(1)(E) is amended —

(1) by striking "income and gains derived from the exploration" and inserting "income and gains derived from —

"(i) the exploration",

(2) by inserting "or" before "industrial source", and

(3) by striking ", or the transportation or storage" and all that follows and inserting the following:

"(ii) the generation of electric power or thermal energy exclusively using any qualified energy resource (as defined in section 45(c)(1)),

"(iii) the operation of energy property (as defined in section 48(a)(3), determined without regard to any date by which the construction of the facility is required to begin),

"(iv) in the case of a facility described in paragraph (3) or (7) of section 45(d) (determined without regard to any placed in service date or date by which construction of the facility is required to begin), the accepting or processing of open-loop biomass or municipal solid waste,

"(v) the transportation or storage of any fuel described in subsection (b), (c), (d), or (e) of section 6426,

"(vi) the conversion of renewable biomass (as defined in subparagraph (I) of section 211(o)(1) of the Clean Air Act (as in effect on the date of the enactment of this clause)) into renewable fuel (as defined in subparagraph (J) of such section as so in effect), or the storage or transportation of such fuel,

"(vii) the production, storage, or transportation of any fuel which —

"(I) uses as its primary feedstock carbon oxides captured from an anthropogenic source or the atmosphere,

"(II) does not use as its primary feedstock carbon oxide which is deliberately released from naturally occurring subsurface springs, and

"(III) is determined by the Secretary to achieve a reduction of not less than a 60 percent in lifecycle greenhouse gas emissions (as defined in section 211(o)(1)(H) of the Clean Air Act, as in effect on the date of the enactment of this clause) compared to baseline lifecycle greenhouse gas emissions (as defined in section 211(o)(1)(C) of such Act, as so in effect), or

"(viii) a qualified facility (as defined in section 45Q(d), without regard to any date by which construction of the facility is required to begin).".

(b) EFFECTIVE DATE. — The amendments made by this section apply to taxable years beginning after December 31, 2021.

SEC. 136108. ZERO-EMISSION NUCLEAR POWER PRODUCTION CREDIT.

(a) IN GENERAL. — Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

"SEC. 45W. ZERO-EMISSION NUCLEAR POWER PRODUCTION CREDIT.

"(a) AMOUNT OF CREDIT. — For purposes of section 38, the zero-emission nuclear power production credit for any taxable year is an amount equal to the amount by which —

"(1) the product of —

"(A) 0.3 cents, multiplied by

"(B) the kilowatt hours of electricity —

"(i) produced by the taxpayer at a qualified nuclear power facility, and

"(ii) sold by the taxpayer to an unrelated person during the taxable year, exceeds

"(2) the reduction amount for such taxable year.

"(b) DEFINITIONS. —

"(1) QUALIFIED NUCLEAR POWER FACILITY. — For purposes of this section, the term 'qualified nuclear power facility' means any nuclear facility —

"(A) which is owned by the taxpayer and which uses nuclear energy to produce electricity,

"(B) which is not an advanced nuclear power facility as defined in subsection (d)(1) of section 45J, and

"(C) which is placed in service before the date of the enactment of this section.

"(2) REDUCTION AMOUNT. —

"(A) IN GENERAL. — For purposes of this section, the term 'reduction amount' means, with respect to any qualified nuclear power facility for any taxable year, the amount equal to the lesser of —

"(i) the amount determined under subsection (a)(1), or

"(ii) the amount equal to 80 percent of the excess of —

"(I) subject to subparagraph (B), the gross receipts from any electricity produced by such facility (including any electricity services or products provided in conjunction with the electricity produced by such facility) and sold to an unrelated person during such taxable year, over

"(II) the amount equal to the product of —

"(aa) 0.5 cents (or 2.5 cents for purposes of determining the amount of the credit for any facility described in subsection (d)(1)(A)), multiplied by

"(bb) the amount determined under subsection (a)(1)(B).

"(B) TREATMENT OF CERTAIN RECEIPTS. —

"(i) IN GENERAL. — The amount determined under subparagraph (A)(ii)(I) shall include any amount received by the taxpayer during the taxable year with respect to the qualified nuclear power facility from a zero-emission credit program unless the amount received by the taxpayer is subject to reduction —

"(I) by the full amount of the credit determined under this section, or

"(II) by any lesser amount if such amount entirely offsets the amount received from a zero-emission credit program.

"(ii) ZERO-EMISSION CREDIT PROGRAM. — For purposes of this subparagraph, the term 'zero-emission credit program' means any payments to a qualified nuclear power facility as a result of any Federal, State or local government program for, in whole or in part, the zero-emission, zero-carbon, or air quality attributes of any portion of the electricity produced by such facility.

"(3) ELECTRICITY. — For purposes of this section, the term 'electricity' means the energy produced by a qualified nuclear power facility from the conversion of nuclear fuel into electric power.

"(c) OTHER RULES. —

"(1) INFLATION ADJUSTMENT. — The 0.3 cent amount in subsection (a)(1)(A) and the 0.5 cent (or 2.5 cents where applicable) amount in subsection (b)(2)(A)(ii)(II)(aa) shall each be adjusted by multiplying such amount by the inflation adjustment factor (as determined under section 45(e)(2), as applied by substituting 'calendar year 2022' for 'calendar year 1992' in subparagraph (B) thereof) for the calendar year in which the sale occurs. If any amount as increased under the preceding sentence is not a multiple of 0.1 cent, such amount shall be rounded to the nearest multiple of 0.1 cent.

"(2) SPECIAL RULES. — Rules similar to the rules of paragraphs (1), (3), (4), and (5) of section 45(e) shall apply for purposes of this section.

"(3) ULTIMATE PURCHASER. — For purposes of this section, electricity produced by the taxpayer shall be treated as sold to an unrelated person if the ultimate purchaser of such electricity is unrelated to such taxpayer.

"(d) WAGE REQUIREMENTS. —

"(1) INCREASED CREDIT AMOUNT FOR QUALIFIED NUCLEAR POWER FACILITIES. — In the case of any qualified nuclear power facility which satisfies the requirements of paragraph (2), the amount of the credit determined under subsection (a) shall be equal to such amount multiplied by 5 (determined without regard to this sentence).

"(2) PREVAILING WAGE REQUIREMENTS. —

"(A) IN GENERAL. — The taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in the alteration or repair of a facility shall be paid wages at rates not less than the prevailing rates for alteration or repair of a similar character in the locality as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.

"(B) CORRECTION AND PENALTY RELATED TO FAILURE TO SATISFY WAGE REQUIREMENTS. — Rules similar to the rules of section 45(b)(8)(B) shall apply.

"(3) REGULATIONS AND GUIDANCE. — The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of establishing the requirements of this subsection.

"(e) TERMINATION. — This section shall not apply to taxable years beginning after December 31, 2029.".

(b) CONFORMING AMENDMENTS. —

(1) Section 38(b) of the Internal Revenue Code of 1986 is amended —

(A) in paragraph (32), by striking "plus" at the end,

(B) in paragraph (33), by striking the period at the end and inserting ", plus", and

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

"(34) the zero-emission nuclear power production credit determined under section 45W(a).".

(2) The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

"Sec. 45W. Zero-emission nuclear power production credit.".

(c) ELECTIVE PAYMENT OF CREDIT. — Section 6417(b), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:

"(7) The zero-emission nuclear power production credit determined under section 45W.".

(d) EFFECTIVE DATE. — This section shall apply to electricity produced and sold after December 31, 2021, in taxable years beginning after such date.

PART 2 — RENEWABLE FUELS

SEC. 136201. EXTENSION OF INCENTIVES FOR BIODIESEL, RENEWABLE DIESEL AND ALTERNATIVE FUELS.

(a) BIODIESEL AND RENEWABLE DIESEL CREDIT. — Section 40A(g) is amended by striking "December 31, 2022" and inserting "December 31, 2026".

(b) BIODIESEL MIXTURE CREDIT. —

(1) IN GENERAL. — Section 6426(c)(6) is amended by striking "December 31, 2022" and inserting "December 31, 2026".

(2) FUELS NOT USED FOR TAXABLE PURPOSES. — Section 6427(e)(6)(B) is amended by striking "December 31, 2022" and inserting "December 31, 2026".

(c) ALTERNATIVE FUEL CREDIT. — Section 6426(d)(5) is amended by striking "December 31, 2021" and inserting "December 31, 2026".

(d) ALTERNATIVE FUEL MIXTURE CREDIT. — Section 6426(e)(3) is amended by striking "December 31, 2021" and inserting "December 31, 2026".

(e) PAYMENTS FOR ALTERNATIVE FUELS. — Section 6427(e)(6)(C) is amended by striking "December 31, 2021" and inserting "December 31, 2026".

(f) EFFECTIVE DATE. — The amendments made by this section shall apply to fuel sold or used after December 31, 2021.

SEC. 136202. EXTENSION OF SECOND GENERATION BIOFUEL INCENTIVES.

(a) IN GENERAL. — Section 40(b)(6)(J)(i) is amended by striking "2022" and inserting "2027".

(b) EFFECTIVE DATE. — The amendment made by subsection (a) shall apply to qualified second generation biofuel production after December 31, 2021.

SEC. 136203. SUSTAINABLE AVIATION FUEL CREDIT.

(a) IN GENERAL. — Subpart D of part IV of subchapter A of chapter 1 is amended by inserting after section 40A the following new section:

"SEC. 40B. SUSTAINABLE AVIATION FUEL CREDIT.

"(a) IN GENERAL. — For purposes of section 38, the sustainable aviation fuel credit for the taxable year is, with respect to any sale or use of a qualified mixture which occurs during such taxable year, an amount equal to the product of —

"(1) the number of gallons of sustainable aviation fuel in such mixture, multiplied by

"(2) the sum of —

"(A) $1.25, plus

"(B) the applicable supplementary amount with respect to such sustainable aviation fuel.

"(b) APPLICABLE SUPPLEMENTARY AMOUNT. — For purposes of this section, the term 'applicable supplementary amount' means, with respect to any sustainable aviation fuel, an amount equal to $0.01 for each percentage point by which the lifecycle greenhouse gas emissions reduction percentage with respect to such fuel exceeds 50 percent. In no event shall the applicable supplementary amount determined under this subsection exceed $0.50.

"(c) QUALIFIED MIXTURE. — For purposes of this section, the term 'qualified mixture' means a mixture of sustainable aviation fuel and kerosene if —

"(1) such mixture is produced by the taxpayer in the United States,

"(2) such mixture is used by the taxpayer (or sold by the taxpayer for use) in an aircraft,

"(3) such sale or use is in the ordinary course of a trade or business of the taxpayer, and

"(4) the transfer of such mixture to the fuel tank of such aircraft occurs in the United States.

"(d) SUSTAINABLE AVIATION FUEL. — For purposes of this section, the term 'sustainable aviation fuel' means liquid fuel which —

"(1) meets the requirements of —

"(A) ASTM International Standard D7566, or

"(B) the Fischer Tropsch provisions of ASTM International Standard D1655, Annex A1,

"(2) is not derived from palm fatty acid distillates or petroleum, and

"(3) has been certified in accordance with subsection (e) as having a lifecycle greenhouse gas emissions reduction percentage of at least 50 percent.

"(e) LIFECYCLE GREENHOUSE GAS EMISSIONS REDUCTION PERCENTAGE. — For purposes of this section, the term 'lifecycle greenhouse gas emissions reduction percentage' means, with respect to any sustainable aviation fuel, the percentage reduction in lifecycle greenhouse gas emissions —

"(1) as defined in accordance with —

"(A) the most recent Carbon Offsetting and Reduction Scheme for International Aviation which has been adopted by the International Civil Aviation Organization with the agreement of the United States, or

"(B) any similar methodology which satisfies the criteria under section 211(o)(1)(H) of the Clean Air Act (42 U.S.C. 7545(o)(1)(H)), and

"(2) achieved by such fuel as compared with petroleum-based jet fuel.

"(f) REGISTRATION OF SUSTAINABLE AVIATION FUEL PRODUCERS. — No credit shall be allowed under this section with respect to any sustainable aviation fuel unless the producer of such fuel is registered with the Secretary under section 4101 and has provided such other information with respect to such fuel as the Secretary may require for purposes of carrying out this section.

"(g) COORDINATION WITH CREDIT AGAINST EXCISE TAX. — The amount of the credit determined under this section with respect to any sustainable aviation fuel shall, under rules prescribed by the Secretary, be properly reduced to take into account any benefit provided with respect to such sustainable aviation fuel solely by reason of the application of section 6426 or 6427(e).

"(h) TERMINATION. — This section shall not apply to any sale or use after December 31, 2026.".

(b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT. — Section 38(b) is amended by striking "plus" at the end of paragraph (33), by striking the period at the end of paragraph (34) and inserting ", plus", and by inserting after paragraph (34) the following new paragraph:

"(35) the sustainable aviation fuel credit determined under section 40B.".

(c) COORDINATION WITH BIODIESEL INCENTIVES. —

(1) IN GENERAL. — Section 40A(d)(1) is amended by inserting "or 40B" after "determined under section 40".

(2) CONFORMING AMENDMENT. — Section 40A(f) is amended by striking paragraph (4).

(d) SUSTAINABLE AVIATION FUEL ADDED TO CREDIT FOR ALCOHOL FUEL, BIODIESEL, AND ALTERNATIVE FUEL MIXTURES. —

(1) IN GENERAL. — Section 6426 is amended by adding at the end the following new subsection:

"(k) SUSTAINABLE AVIATION FUEL CREDIT. —

"(1) IN GENERAL. — For purposes of this section, the sustainable aviation fuel credit for the taxable year is, with respect to any sale or use of a qualified mixture, an amount equal to the product of —

"(A) the number of gallons of sustainable aviation fuel in such mixture, multiplied by

"(B) the sum of —

"(i) $1.25, plus

"(ii) the applicable supplementary amount with respect to such sustainable aviation fuel.

"(2) APPLICABLE SUPPLEMENTARY AMOUNT. — For purposes of this subsection, the term 'applicable supplementary amount' has the meaning given such term in section 40B(b).

"(3) OTHER DEFINITIONS. — Any term used in this subsection which is also used in section 40B shall have the meaning given such term by section 40B.

"(4) REGISTRATION REQUIREMENT. — For purposes of this subsection, rules similar to the rules of section 40B(f) shall apply.".

(2) CONFORMING AMENDMENTS. —

(A) Section 6426 is amended —

(i) in subsection (a)(1), by striking "and (e)" and inserting "(e), and (k)", and

(ii) in subsection (h), by striking "under section 40 or 40A" and inserting "under section 40, 40A, or 40B".

(B) Section 6427(e)(6) is amended by striking the "and" at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting ", and", and by adding at the end the following new subparagraph:

"(E) any qualified mixture of sustainable aviation fuel (as defined in section 6426(k)(3)) sold or used after December 31, 2026.".

(C) Section 6427(e) is amended in the heading by striking "OR ALTERNATIVE FUEL" and inserting, "ALTERNATIVE FUEL, OR SUSTAINABLE AVIATION FUEL".

(D) Section 6427(e)(1) is amended by inserting "or the sustainable aviation fuel mixture credit" after "alternative fuel mixture credit".

(E) Section 4101(a)(1) is amended by inserting "every person producing sustainable aviation fuel (as defined in section 40B or section 6426(k)(3))," before "and every person producing second generation biofuel".

(e) GUIDANCE. — Under rules prescribed by the Secretary of the Treasury (or the Secretary's delegate), the amount of the credit allowed under section 40B of the Internal Revenue Code of 1986 (as added by this subsection) shall be properly reduced to take into account any benefit provided with respect to sustainable aviation fuel (as defined in such section 40B) by reason of the application of section 6426 or section 6427(e).

(f) AMOUNT OF CREDIT INCLUDED IN GROSS INCOME. — Section 87 is amended by striking "and" in paragraph (1), by striking the period at the end of paragraph (2) and inserting ", and", and by adding at the end the following new paragraph:

"(3) the sustainable aviation fuel credit determined with respect to the taxpayer for the taxable year under section 40B(a).".

(g) EFFECTIVE DATE. — The amendments made by this section shall apply to fuel sold or used after December 31, 2022.

SEC. 136204. CLEAN HYDROGEN.

(a) CREDIT FOR PRODUCTION OF CLEAN HYDROGEN. —

(1) IN GENERAL. — Subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section:

"SEC. 45X. CREDIT FOR PRODUCTION OF CLEAN HYDROGEN.

"(a) AMOUNT OF CREDIT. — For purposes of section 38, the clean hydrogen production credit for any taxable year is an amount equal to the product of —

"(1) the applicable amount, multiplied by

"(2) the kilograms of qualified clean hydrogen produced by the taxpayer during such taxable year at a qualified clean hydrogen production facility during the 10-year period beginning on the date such facility was originally placed in service.

"(b) APPLICABLE AMOUNT. —

"(1) IN GENERAL. — For purposes of subsection (a)(1), the applicable amount shall be an amount equal to the applicable percentage of $0.60. If any amount as determined under the preceding sentence is not a multiple of 0.1 cent, such amount shall be rounded to the nearest multiple of 0.1 cent.

"(2) APPLICABLE PERCENTAGE. — For purposes of paragraph (1), the term 'applicable percentage' shall be determined as follows:

"(A) In the case of any qualified clean hydrogen which is produced by a facility that is placed in service before January 1, 2027 through a process that results in a lifecycle greenhouse gas emissions rate of —

"(i) not greater than 6 kilograms of CO2e per kilogram of hydrogen, and

"(ii) not less than 4 kilograms of CO2e per kilogram of hydrogen, the applicable percentage shall be 8.4 percent.

"(B) In the case of any qualified clean hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of —

"(i) less than 4 kilograms of CO2e per kilogram of hydrogen, and

"(ii) not less than 2.5 kilograms of CO2e per kilogram of hydrogen, the applicable percentage shall be 20 percent.

"(C) In the case of any qualified clean hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of —

"(i) less than 2.5 kilograms of CO2e per kilogram of hydrogen, and

"(ii) not less than 1.5 kilograms of CO2e per kilogram of hydrogen, the applicable percentage shall be 33.4 percent.

"(D) In the case of any qualified clean hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of —

"(i) less than 1.5 kilograms of CO2e per kilogram of hydrogen, and

"(ii) not less than 0.45 kilograms of CO2e per kilogram of hydrogen, the applicable percentage shall be 50 percent.

"(E) In the case of any qualified clean hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of less than 0.45 kilograms of CO2e per kilogram of hydrogen, the applicable percentage shall be 100 percent.

"(3) INFLATION ADJUSTMENT. — The $0.60 amount in paragraph (1) shall be adjusted by multiplying such amount by the inflation adjustment factor (as determined under section 45(e)(2), determined by substituting '2020' for '1992' in subparagraph (B) thereof) for the calendar year in which the qualified clean hydrogen is produced. If any amount as increased under the preceding sentence is not a multiple of 0.1 cent, such amount shall be rounded to the nearest multiple of 0.1 cent.

"(c) DEFINITIONS. — For purposes of this section —

"(1) LIFECYCLE GREENHOUSE GAS EMISSIONS. —

"(A) IN GENERAL. — Subject to subparagraph (B), the term 'lifecycle greenhouse gas emissions' has the same meaning given such term under subparagraph (H) of section 211(o)(1) of the Clean Air Act (42 U.S.C. 7545(o)(1)), as in effect on the date of enactment of this section.

"(B) GREET MODEL. — The term 'lifecycle greenhouse gas emissions' shall only include emissions through the point of production, as determined under the most recent Greenhouse gases, Regulated Emissions, and Energy use in Transportation model (commonly referred to as the 'GREET model') developed by Argonne National Laboratory, or a successor model (as determined by the Secretary).

"(2) QUALIFIED CLEAN HYDROGEN. —

"(A) IN GENERAL. — The term 'qualified clean hydrogen' means hydrogen which is produced through a process that results in a lifecycle greenhouse gas emissions rate of not greater than 6 kilograms of CO2e per kilogram of hydrogen.

"(B) ADDITIONAL REQUIREMENTS. — Such term shall not include any hydrogen unless such hydrogen is produced —

"(i) in the United States (as defined in section 638(1) or a possession of the United States (as defined in section 638(2)),

"(ii) in the ordinary course of a trade or business of the taxpayer, and

"(iii) for sale or use, as verified by an unrelated third party of such production and sale or use in such form or manner as the Secretary may prescribe under subsection (f)(2).

"(3) QUALIFIED CLEAN HYDROGEN PRODUCTION FACILITY. —

"(A) IN GENERAL. — The term 'qualified clean hydrogen production facility' means a facility owned by the taxpayer which produces qualified clean hydrogen and which meets the requirements of subparagraph (B).

"(B) TERMINATION. — The term 'qualified clean hydrogen production facility' shall not include any facility the construction of which begins after December 31, 2028.

"(d) SPECIAL RULES. —

"(1) TREATMENT OF FACILITIES OWNED BY MORE THAN 1 TAXPAYER. — Rules similar to the rules section 45(e)(3) shall apply for purposes of this section.

"(2) COORDINATION WITH CREDIT FOR CARBON OXIDE SEQUESTRATION. — No credit shall be allowed under this section with respect to any qualified clean hydrogen produced at a facility which includes carbon capture equipment for which a credit is allowed to any taxpayer under section 45Q for the taxable year or any prior taxable year.

"(e) INCREASED CREDIT AMOUNT FOR QUALIFIED CLEAN HYDROGEN PRODUCTION FACILITIES. —

"(1) IN GENERAL. — In the case of any qualified clean hydrogen production facility which satisfies the requirements of paragraph (2), the amount of the credit determined under subsection (a) with respect to qualified clean hydrogen described in subsection (b)(2) shall be equal to such amount multiplied by 5 (determined without regard to this sentence).

"(2) REQUIREMENTS. — A facility meets the requirements of this subparagraph if it is one of the following:

"(A) A facility —

"(i) the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (3) and (4), and

"(ii) which meets the requirements of paragraph (3) with respect to construction, alteration, or repair of facilities which occurs after such date, and

"(B) A facility which satisfies the requirements of paragraphs (3) and (4).

"(3) PREVAILING WAGE REQUIREMENTS. —

"(A) IN GENERAL. — The requirements described in this subparagraph with respect to any qualified clean hydrogen production facility are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in —

"(i) the construction of such facility, and

"(ii) for the period of the taxable year which is within the 10-year period beginning on the date the facility was originally placed in service, the alteration or repair of such facility, shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code. For purposes of determining an increased credit amount under paragraph (1) for a taxable year, the requirement under clause (ii) of this paragraph is applied to such taxable year in which the alteration or repair of qualified facility occurs.

"(B) CORRECTION AND PENALTY RELATED TO FAILURE TO SATISFY WAGE REQUIREMENTS. — Rules similar to the rules of section 45(b)(8)(B) shall apply.

"(4) APPRENTICESHIP REQUIREMENTS. — Rules similar to the rules of section 45(b)(9) shall apply.

"(5) REGULATIONS AND GUIDANCE. — The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of establishing the requirements of this subsection.

"(f) REGULATIONS. — Not later than 1 year after the date of enactment of this section, the Secretary shall issue regulations or other guidance to carry out the purposes of this section, including regulations or other guidance —

"(1) for determining lifecycle greenhouse gas emissions, and

"(2) which require verification by unrelated third parties of the production and sale or use of qualified clean hydrogen with respect to which credit is otherwise allowed under this section.".

(2) ELECTIVE PAYMENT OF CREDIT. —

(A) IN GENERAL. — Section 6417(b), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:

"(8) So much of the the credit for production of clean hydrogen determined under section 45X as is attributable to qualified clean hydrogen production facilities which are originally placed in service after December 31, 2011, and with respect to which an election is made under subsection (c)(3).".

(B) ELECTION. — Section 6417(c)(3), as amended by the preceding provisions of this Act, is amended by adding at the end the following new subparagraph:

"(D) CREDIT FOR PRODUCTION OF CLEAN HYDROGEN. — In the case of the credit described in subsection (b)(8), any election under this subsection shall —

"(i) apply separately with respect to each qualified clean hydrogen production facility,

"(ii) be made for the taxable year in which the facility is placed in service (or within 90 days of date of enactment in the case of facilities placed in service before December 31, 2021),

"(iii) shall apply to such taxable year and all subsequent taxable years with respect to such facility.".

(3) CREDIT REDUCED FOR TAX-EXEMPT BONDS. — Section 45X(d), as added by this section, is amended by adding at the end the following new paragraph:

"(3) CREDIT REDUCED FOR TAX-EXEMPT BONDS. — Rules similar to the rule under section 45(b)(3) shall apply for purposes of this section.".

(4) CONFORMING AMENDMENTS. —

(A) Section 38(b) is amended —

(i) in paragraph (34), by striking "plus" at the end,

(ii) in paragraph (35), by striking the period at the end and inserting ", plus", and

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

"(36) the clean hydrogen production credit determined under section 45X(a).".

(B) The table of sections for subpart D of part IV of subchapter A of chapter 1 amended by adding at the end the following new item:

"Sec. 45X. Credit for production of clean hydrogen.".

(5) EFFECTIVE DATES. —

(A) The amendments made by paragraphs (1), (2), and (4) of this subsection shall apply to hydrogen produced after December 31, 2021.

(B) The amendment made by paragraph (3) shall apply to facilities the construction of which begins after December 31, 2021.

(b) CREDIT FOR ELECTRICITY PRODUCED FROM RENEWABLE RESOURCES ALLOWED IF ELECTRICITY IS USED TO PRODUCE CLEAN HYDROGEN. —

(1) IN GENERAL. — Section 45(e) is amended by adding at the end the following new paragraph:

"(13) SPECIAL RULE FOR ELECTRICITY USED AT A QUALIFIED CLEAN HYDROGEN PRODUCTION FACILITY. — Electricity produced by the taxpayer shall be treated as sold by such taxpayer to an unrelated person during the taxable year if such electricity is used during such taxable year by the taxpayer or a person related to the taxpayer at a qualified clean hydrogen production facility (as defined in section 45X(c)(3)) to produce qualified clean hydrogen (as defined in section 45X(c)(2)) during the 10 year period after such facility is placed in service. The Secretary shall issue such regulations or other guidance as the Secretary determines appropriate to carry out the purposes of this paragraph, including regulations or other guidance to require verification by unrelated third parties of the production and use of electricity to which this paragraph applies.".

(2) EFFECTIVE DATE. — The amendment made by this subsection shall apply to electricity produced after December 31, 2021.

(c) ELECTION TO TREAT CLEAN HYDROGEN PRODUCTION FACILITIES AS ENERGY PROPERTY. —

(1) IN GENERAL. — Section 48(a) is amended by adding at the end the following new paragraph:

"(15) ELECTION TO TREAT CLEAN HYDROGEN PRODUCTION FACILITIES AS ENERGY PROPERTY. —

"(A) IN GENERAL. — In the case of any qualified property (as defined in paragraph (5)(D)) which is part of a specified clean hydrogen production facility —

"(i) such property shall be treated as energy property for purposes of this section, and

"(ii) the energy percentage with respect to such property is —

"(I) in the case of a facility which is designed and reasonably expected to produce qualified clean hydrogen which is described in a subparagraph (A) of section 45X(b)(2), 0.5 percent,

"(II) in the case of a facility which is designed and reasonably expected to produce qualified clean hydrogen which is described in a subparagraph (B) of such section, 1.2 percent,

"(III) in the case of a facility which is designed and reasonably expected to produce qualified clean hydrogen which is described in a subparagraph (C) of such section, 2 percent,

"(IV) in the case of a facility which is designed and reasonably expected to produce qualified clean hydrogen which is described in a subparagraph (D) of such section, 3 percent, and

"(V) in the case of a facility which is designed and reasonably expected to produce qualified clean hydrogen which is described in subparagraph (E) of such section, 6 percent.

"(B) DENIAL OF PRODUCTION CREDIT. — No credit shall be allowed under section 45X or section 45Q for any taxable year with respect to any specified clean hydrogen production facility or any carbon capture equipment included at such facility.

"(C) SPECIFIED CLEAN HYDROGEN PRODUCTION FACILITY. — For purposes of this paragraph, the term 'specified clean hydrogen production facility' means any qualified clean hydrogen production facility (as defined in section 45X(c)(3)) or any portion of such facility —

"(i) which is placed in service after December 31, 2021, and

"(ii) with respect to which —

"(I) no credit has been allowed under section 45X or 45Q, and

"(II) the taxpayer makes an irrevocable election to have this paragraph apply.

"(D) QUALIFIED CLEAN HYDROGEN. — For purposes of this paragraph, the term 'qualified clean hydrogen' has the meaning given such term by section 45X(c)(2).

"(E) REGULATIONS. — The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this section, including regulations or other guidance which —

"(i) requires verification by one or more unrelated third parties that the facility produces hydrogen which is consistent with the hydrogen that such facility was designed and expected to produce under subparagraph (A)(ii), and

"(ii) recaptures so much of any credit allowed under this section as exceeds the amount of the credit which would have been allowed if the expected production were consistent with the actual verified production (or all of the credit so allowed in the absence of such verification).".

(2) EFFECTIVE DATE. — The amendments made by this subsection shall apply to property placed in service after December 31, 2021 and, for any property the construction of which begins prior to January 1, 2022, only to the extent of the basis thereof attributable to the construction, reconstruction, or erection after December 31, 2021.

(d) TERMINATION OF EXCISE TAX CREDIT FOR HYDROGEN. —

(1) IN GENERAL. — Section 6426(d)(2) is amended by striking subparagraph (D) and by redesignating subparagraphs (E), (F), and (G) as subparagraphs (D), (E), and (F), respectively.

(2) CONFORMING AMENDMENT. — Section 6426(e)(2) is amended by striking "(F)" and inserting "(E)".

(3) EFFECTIVE DATE. — The amendments made by this subsection shall apply to fuel sold or used after December 31, 2021.

PART 3 — GREEN ENERGY AND EFFICIENCY INCENTIVES FOR INDIVIDUALS

SEC. 136301. EXTENSION, INCREASE, AND MODIFICATIONS OF NONBUSINESS ENERGY PROPERTY CREDIT.

(a) EXTENSION OF CREDIT. — Section 25C(g)(2) is amended by striking "December 31, 2021" and inserting "December 31, 2031".

(b) INCREASE IN CREDIT PERCENTAGE FOR QUALIFIED ENERGY EFFICIENCY IMPROVEMENTS. — Section 25C(a)(1) is amended by striking "10 percent" and inserting "30 percent".

(c) APPLICATION OF ANNUAL LIMITATION IN LIEU OF LIFETIME LIMITATION. — Section 25C(b) is amended to read as follows:

"(b) LIMITATIONS. —

"(1) IN GENERAL. — The credit allowed under this section with respect to any taxpayer for any taxable year shall not exceed $1,200.

"(2) WINDOWS. — The credit allowed under this section by reason of subsection (a)(1) with respect to any taxpayer for any taxable year shall not exceed, in the aggregate with respect to all exterior windows and skylights, $600.

"(3) DOORS. — The credit allowed under this section by reason of subsection (a)(1) with respect to any taxpayer for any taxable year shall not exceed —

"(A) $250 in the case of any exterior door, and

"(B) $500 in the aggregate with respect to all exterior doors.

"(4) CERTAIN PROPERTY EXCLUDED FROM LIMITATION. — Amounts paid or incurred for property described in subsection (d)(2)(A)(ii), subsection (d)(2)(B), or subsection (d)(2)(C) shall not be subject to the limitation in paragraph (1) or factored in for purposes of calculating the limitation under such paragraph.".

(d) MODIFICATIONS RELATED TO QUALIFIED ENERGY EFFICIENCY IMPROVEMENTS. —

(1) STANDARDS FOR ENERGY EFFICIENT BUILDING ENVELOPE COMPONENTS. — Section 25C(c)(2) is amended by striking "meets — " and all that follows through the period at the end and inserting the following: "meets —

"(A) in the case of an exterior window or skylight, Energy Star most efficient certification requirements

"(B) in the case of any other component, the prescriptive criteria for such component established by the most recent International Energy Conservation Code standard in effect as of the beginning of the calendar year which is 2 years prior to the calendar year in which such component is placed in service.".

(2) ROOFS NOT TREATED AS BUILDING ENVELOPE COMPONENTS. — Section 25C(c)(3) is amended by adding "and" at the end of subparagraph (B), by striking ", and" at the end of subparagraph (C) and inserting a period, and by striking subparagraph (D).

(3) AIR SEALING INSULATION ADDED TO DEFINITION OF BUILDING ENVELOPE COMPONENT. — Section 25C(c)(3)(A) is amended by striking "material or system" and inserting "material or system, including air sealing material or system,".

(e) MODIFICATION OF RESIDENTIAL ENERGY PROPERTY EXPENDITURES. — Section 25C(d) is amended to read as follows:

"(d) RESIDENTIAL ENERGY PROPERTY EXPENDITURES. — For purposes of this section —

"(1) IN GENERAL. — The term 'residential energy property expenditures' means expenditures made by the taxpayer for qualified energy property which is —

"(A) installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer, and

"(B) originally placed in service by the taxpayer.

Such term includes expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property.

"(2) QUALIFIED ENERGY PROPERTY. — The term 'qualified energy property' means:

"(A) Any of the following which meet or exceed the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency which is in effect as of the beginning of the calendar year in which the property is placed in service:

"(i) An electric heat pump water heater.

"(ii) An electric heat pump.

"(iii) A central air conditioner.

"(iv) A natural gas, propane, or oil water heater.

"(v) A natural gas, propane, or oil furnace or hot water boiler.

"(B) A geothermal heat pump which meets such requirements of the Energy Star program as are in effect at the time that the expenditure for such equipment is made.

"(C) A biomass stove —

"(i) which uses the burning of biomass fuel to heat a dwelling unit located in the United States and used as a residence by the taxpayer, or to heat water for use in such a dwelling unit, and

"(ii) which has a thermal efficiency rating of at least 75 percent (measured by the higher heating value of the fuel).

"(D) Any oil furnace or hot water boiler which —

"(i) is placed in service after December 31, 2021 and before January 1, 2027 and meets or exceeds 2021 Energy Star efficiency criteria and is rated by the manufacturer for use with eligible fuel blends of 20 percent or more, or

"(ii) is placed in service after December 31, 2026 and achieves an annual fuel utilization efficiency rate of not less than 90 and is rated by the manufacturer for use with eligible fuel blends of 50 percent or more.

"(3) ELIGIBLE FUEL. — For purposes of paragraph (2), the term 'eligible fuel' means biodiesel and renewable diesel (within the meaning of section 40A) and second generation biofuel (within the meaning of section 40).".

(f) HOME ENERGY AUDITS. —

(1) IN GENERAL. — Section 25C(a) is amended by striking "and" at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting ", and", and by adding at the end the following new paragraph:

"(3) 30 percent of the amount paid or incurred by the taxpayer during the taxable year for home energy audits.".

(2) LIMITATION. — Section 25C(b), as amended by subsection (c), is amended adding at the end the following new paragraph:

"(4) HOME ENERGY AUDITS. —

"(A) DOLLAR LIMITATION. — The amount of the credit allowed under this section by reason of subsection (a)(3) shall not exceed $150.

"(B) SUBSTANTIATION REQUIREMENT. — No credit shall be allowed under this section by reason of subsection (a)(3) unless the taxpayer includes with the taxpayer's return of tax such information or documentation as the Secretary may require.".

(3) HOME ENERGY AUDITS. —

(A) IN GENERAL. — Section 25C, as amended by subsection (a), is amended by redesignating subsections (e), (f), and (g), as subsections (f), (g), and (h), respectively, and by inserting after subsection (d) the following new subsection:

"(e) HOME ENERGY AUDITS. — For purposes of this section, the term 'home energy audit' means an inspection and written report with respect to a dwelling unit located in the United States and owned or used by the taxpayer as the taxpayer's principal residence (within the meaning of section 121) which —

"(1) identifies the most significant and cost-effective energy efficiency improvements with respect to such dwelling unit, including an estimate of the energy and cost savings with respect to each such improvement, and

"(2) is conducted and prepared by a home energy auditor that meets the certification or other requirements specified by the Secretary (not later than 365 days after the date of the enactment of this subsection) in regulations or other guidance.".

(B) CONFORMING AMENDMENT. — Section 1016(a)(33) is amended by striking "section 25C(f)" and inserting "section 25C(g)".

(4) LACK OF SUBSTANTIATION TREATED AS MATHEMATICAL OR CLERICAL ERROR. — Section 6213(g)(2) is amended —

(A) in subparagraph (P), by striking "and" at the end,

(B) in subparagraph (Q), by striking the period at the end and inserting ", and", and

(C) by adding at the end the following:

"(R) an omission of correct information or documentation required under section 25C(b)(4)(B) (relating to home energy audits) to be included on a return.".

(g) IDENTIFICATION NUMBER REQUIREMENT. —

(1) IN GENERAL. — Section 25C, as amended by subsections (a) and (f), is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection:

"(h) PRODUCT IDENTIFICATION NUMBER REQUIREMENT. —

"(1) IN GENERAL. — No credit shall be allowed under subsection (a) with respect to any item of specified property placed in service after December 31, 2023, unless —

"(A) such item is produced by a qualified manufacturer, and

"(B) the taxpayer includes the qualified product identification number of such item on the return of tax for the taxable year.

"(2) QUALIFIED PRODUCT IDENTIFICATION NUMBER. — For purposes of this section, the term 'qualified product identification number' means, with respect to any item of specified property, the product identification number assigned to such item by the qualified manufacturer pursuant to the methodology referred to in paragraph (3).

"(3) QUALIFIED MANUFACTURER. — For purposes of this section, the term 'qualified manufacturer' means any manufacturer of specified property which enters into an agreement with the Secretary which provides that such manufacturer will —

"(A) assign a product identification number to each item of specified property produced by such manufacturer utilizing a methodology that will ensure that such number (including any alphanumeric) is unique to each such item (by utilizing numbers or letters which are unique to such manufacturer or by such other method as the Secretary may provide),

"(B) label such item with such number in such manner as the Secretary may provide, and

"(C) make periodic written reports to the Secretary (at such times and in such manner as the Secretary may provide) of the product identification numbers so assigned and including such information as the Secretary may require with respect to the item of specified property to which such number was so assigned.

"(4) SPECIFIED PROPERTY. — For purposes of this subsection, the term 'specified property' means any qualified energy property and any property described in subparagraph (B) or (C) of subsection (c)(3).".

(2) OMISSION OF CORRECT PRODUCT IDENTIFICATION NUMBER TREATED AS MATHEMATICAL OR CLERICAL ERROR. — Section 6213(g)(2), as amended by the preceding provisions of this Act, is amended —

(A) in subparagraph (Q), by striking "and" at the end,

(B) in subparagraph (R), by striking the period at the end and inserting ", and", and

(C) by adding at the end the following:

"(S) an omission of a correct product identification number required under section 25C(h) (relating to credit for nonbusiness energy property) to be included on a return.".

(h) EFFECTIVE DATES. —

(1) IN GENERAL. — Except as otherwise provided by this subsection, the amendments made by this section shall apply to property placed in service after December 31, 2021.

(2) HOME ENERGY AUDITS. — The amendments made by subsection (f) shall apply to amounts paid or incurred after December 31, 2021.

(3) IDENTIFICATION NUMBER REQUIREMENT. — The amendments made subsection (g) shall apply to property placed in service after December 31, 2023.

SEC. 136302. RESIDENTIAL ENERGY EFFICIENT PROPERTY.

(a) EXTENSION OF CREDIT. —

(1) IN GENERAL. — Section 25D(h) is amended by striking "December 31, 2023" and inserting "December 31, 2033".

(2) APPLICATION OF PHASEOUT. — Section 25D(g) is amended —

(A) by striking "before January 1, 2023" in paragraph (2) and inserting "before January 1, 2022",

(B) by striking "and" at the end of paragraph (2),

(C) by redesignating paragraph (3) as paragraph (5) and by inserting after paragraph

(2) the following new paragraphs:

"(3) in the case of property placed in service after December 31, 2021, and before January 1, 2032, 30 percent,

"(4) in the case of property placed in service after December 31, 2031, and before January 1, 2033, 26 percent, and", and

(D) by striking "December 31, 2022, and before January 1, 2024" in paragraph (5) (as so redesignated) and inserting "December 31, 2032, and before January 1, 2034".

(b) RESIDENTIAL ENERGY EFFICIENT PROPERTY CREDIT FOR BATTERY STORAGE TECHNOLOGY. —

(1) IN GENERAL. — Section 25D(a) is amended by striking "and" at the end of paragraph (5) and by inserting after paragraph (6) the following new paragraph:

"(7) the qualified battery storage technology expenditures,".

(2) QUALIFIED BATTERY STORAGE TECHNOLOGY EXPENDITURE. — Section 25D(d) is amended by adding at the end the following new paragraph:

"(7) QUALIFIED BATTERY STORAGE TECHNOLOGY EXPENDITURE. — The term 'qualified battery storage technology expenditure' means an expenditure for battery storage technology which —

"(A) is installed in connection with a dwelling unit located in the United States and used as a residence by the taxpayer, and

"(B) has a capacity of not less than 3 kilowatt hours.".

(c) CREDIT MADE REFUNDABLE; INSTALLER REQUIREMENTS; TREATMENT OF CERTAIN POSSESSIONS. — Section 25D is amended by redesignating subsection (h) as subsection (k) and by inserting after subsection (g) the following new subsections:

"(h) CREDIT MADE REFUNDABLE FOR TAXABLE YEARS AFTER 2021. — In the case of any taxable year beginning after December 31, 2022, the credit allowed under subsection (a) shall be treated as a credit allowed under subpart C (and not allowed under this subpart).

"(i) REQUIREMENT FOR QUALIFIED INSTALLER. —

"(1) IN GENERAL. — No credit shall be allowed under this section with respect to any property described in subsection (a) placed in service after December 31, 2022 unless —

"(A) such property is installed by a qualified installer, and

"(B) the taxpayer includes the qualified installation identification number described in paragraph (3) on the return of tax for the taxable year.

"(2) QUALIFIED INSTALLER. —

"(A) IN GENERAL. — For purposes of this section, the term 'qualified installer' means an installer who enters into an agreement with the Secretary which provides that such installer will, with respect to expenditures described in subsection (a) in connection with the residence of a taxpayer —

"(i) provide the taxpayer with a qualified installation identification number and a written receipt of the purchase and installation of such property in a manner prescribed by the Secretary, and

"(ii) make periodic written reports to the Secretary (in such manner as the Secretary may provide) of installation identification numbers assigned by the installer corresponding to such expenditures, including such information as the Secretary may require with respect to such expenditures.

"(B) INSTALLER DEEMED TO MEET REQUIREMENT. — For purposes of subparagraph (A), to the extent provided by the Secretary, an installer may be deemed to meet the requirement under clause (ii) of such subparagraph on the basis of information available to the Secretary which the Secretary determines is reasonably reliable for purposes of determining the amount of qualified expenditures under subsection (a) made by a taxpayer in connection with a residence of such taxpayer.

"(3) QUALIFIED INSTALLATION IDENTIFICATION NUMBER. — For purposes of this section, the term 'qualified installation identification number' means a unique identification number with respect to expenditures described in subsection (a) in connection with a residence of a taxpayer that is installed by a qualified installer.

"(4) REGISTRATION. — The Secretary may require such information or registration of a qualified installer as the Secretary deems necessary or appropriate for purposes of preventing duplication, fraud, or improper claims with respect to property described in subsection (a). Under regulations or other guidance prescribed by the Secretary, the registration of any person under this section may be denied, revoked, or suspended if the Secretary determines that such denial, revocation, or suspension is necessary to prevent duplication, fraud, or improper claims with respect to property described in subsection (a).

"(j) TREATMENT OF CERTAIN POSSESSIONS. —

"(1) PAYMENTS TO POSSESSIONS WITH MIRROR CODE TAX SYSTEMS. — The Secretary shall pay to each possession of the United States which has a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of the provisions of this section. Such amounts shall be determined by the Secretary based on information provided by the government of the respective possession.

"(2) PAYMENTS TO OTHER POSSESSIONS. — The Secretary shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary as being equal to the aggregate benefits (if any) that would have been provided to residents of such possession by reason of the provisions of this section if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply unless the respective possession has a plan which has been approved by the Secretary under which such possession will promptly distribute such payments to its residents.

"(3) MIRROR CODE TAX SYSTEM; TREATMENT OF PAYMENTS. — Rules similar to the rules of paragraphs (3), (4), and (5) of section 21(h) shall apply for purposes of this section.".

(d) CERTAIN EXPENDITURES DISALLOWED. — Section 25D is amended —

(1) in subsection (a), by adding "and" at the end of paragraph (3), by striking the comma at the end of paragraph (4) and inserting a period, and by striking paragraphs (5) and (6), and

(2) in subsection (d), by striking paragraphs (5) and (6).

(e) CONFORMING AMENDMENT. — Section 6213(g)(2), as amended by the preceding provisions of this Act, is amended —

(1) in subparagraph (T), by striking "and" at the end,

(2) in subparagraph (U), by striking the period at the end and inserting ", and", and

(3) by adding at the end the following:

"(V) an omission of a correct qualified installation identification number required under section 25D (relating to credit for residential energy efficient property) to be included on a return.".

(f) EFFECTIVE DATES. —

(1) The amendments made by subsections (a), (b), (d), and (e) shall apply to expenditures made after December 31, 2021.

(2) The amendments made by subsection (c) shall apply to expenditures made after December 31, 2022.

SEC. 136303. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

(a) PLACED IN SERVICE REQUIREMENT. — Section 179D(c)(2) is amended to read as follows:

"(2) REFERENCE STANDARD 90.1. — The term 'Reference Standard 90.1' means, with respect to any property, the more recent of —

"(A) Standard 90.1-2007 published by the American Society of Heating, Refrigerating, and Air Conditioning Engineers and the Illuminating Engineering Society of North America, or

"(B) the most recent Standard 90.1 published by the American Society of Heating, Refrigerating, and Air Conditioning Engineers and the Illuminating Engineering Society of North America for which the Department of Energy has issued a final determination and which has been affirmed by the Secretary for purposes of this section not later than the date that is 4 years before the date such property is placed in service.".

(b) TEMPORARY INCREASE IN DEDUCTION, ETC. — Section 179D is amended by adding at the end the following:

"(i) TEMPORARY RULES. —

"(1) PERIOD OF APPLICATION. — The provisions of this subsection shall apply only to taxable years beginning after December 31, 2021, and before January 1, 2032.

"(2) MODIFICATION OF EFFICIENCY STANDARD. — Subsection (c)(1)(D) shall be applied by substituting '25' for '50'.

"(3) MAXIMUM AMOUNT OF DEDUCTION. —

"(A) IN GENERAL. — The deduction under subsection (a) with respect to any building for any taxable year shall not exceed the excess (if any) of —

"(i) the product of —

"(I) the applicable dollar value, and

"(II) the square footage of the building, over

"(ii) the aggregate amount of the deductions under subsection (a) and paragraph (6) with respect to the building for the 3 taxable years immediately preceding such taxable year (or, in the case of any such deduction allowable to a person other than the taxpayer, for any taxable year ending during the 4-taxable-year period ending with such taxable year).

"(B) APPLICABLE DOLLAR VALUE. — For purposes of paragraph (3)(A)(i), the applicable dollar value shall be an amount equal to $0.50 increased (but not above $1.00) by $0.02 for each percentage point by which the total annual energy and power costs for the building are certified to be reduced by a percentage greater than 25 percent.

"(C) APPLICATION OF INFLATION ADJUSTMENT. — Subsection (g) shall be applied —

"(i) by substituting '2022' for '2020',

"(ii) by substituting 'subsection (i)(3)(B)' for 'subsection (b) or subsection (d)(1)(A)', and

"(iii) by substituting '2021' for '2019'.

"(D) LIMITATION TO APPLY IN LIEU OF CURRENT LIMITATION AND PARTIAL ALLOWANCE. — Subsections (b) and (d)(1) shall not apply.

"(4) INCREASED CREDIT AMOUNT FOR CERTAIN PROPERTY. —

"(A) IN GENERAL. — In the case of any property which satisfies the requirements of subparagraph (B), paragraph (3)(B) shall be applied by substituting '$2.50' for '$0.50', '$.10' for '$.02', and '$5.00' for '$1.00'.

"(B) PROJECT REQUIREMENTS. — A project meets the requirements of this subparagraph if it is one of the following:

"(i) A building or qualified retrofit plan the construction of which begins prior to 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (5) and (6).

"(ii) A building or qualified retrofit plan the construction of which satisfies the requirements of paragraphs (5) and (6).

"(5) PREVAILING WAGE REQUIREMENTS. —

"(A) IN GENERAL. — The requirements described in this subparagraph with respect to any project are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in the construction of any property or with respect to building modifications made as part of a qualified retrofit plan shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.

"(B) CORRECTION AND PENALTY RELATED TO FAILURE TO SATISFY WAGE REQUIREMENTS. — Rules similar to the rules of section 45(b)(8)(B) shall apply.

"(6) APPRENTICESHIP REQUIREMENTS. — Rules similar to the rules of section 45(b)(9) shall apply.

"(7) ALLOCATION OF DEDUCTION BY CERTAIN TAX-EXEMPT ENTITIES. —

"(A) IN GENERAL. — A specified tax-exempt entity shall be treated in the same manner as a Federal, State, or local government for purposes of applying subsection (d)(4).

"(B) SPECIFIED TAX-EXEMPT ENTITY. — For purposes of this paragraph, the term 'specified tax-exempt entity' means —

"(i) the United States, any State or political subdivision thereof, any possession of the United States, or any agency or instrumentality of any of the foregoing,

"(ii) any Indian tribal government (within the meaning of section 139E), and

"(iii) any organization exempt from tax imposed by this chapter.

"(8) ALTERNATIVE DEDUCTION FOR ENERGY EFFICIENT RETROFIT BUILDING PROPERTY. —

"(A) IN GENERAL. — In the case of a taxpayer which elects (at such time and in such manner as the Secretary may provide) the application of this paragraph with respect to any qualified building, there shall be allowed as a deduction for the taxable year which includes the date of the qualifying final certification with respect to the qualified retrofit plan of such building, an amount equal to the lesser of —

"(i) the excess described in paragraph (3) (determined by substituting 'energy usage intensity' for 'total annual energy and power costs' in subparagraph (B) thereof), or

"(ii) the aggregate adjusted basis (determined after taking into account all adjustments with respect to such taxable year other than the reduction under subsection (e)) of energy efficient retrofit building property placed in service by the taxpayer pursuant to such qualified retrofit plan.

"(B) QUALIFIED RETROFIT PLAN. — For purposes of this paragraph, the term 'qualified retrofit plan' means a written plan prepared by a qualified professional which specifies modifications to a building which, in the aggregate, are expected to reduce such building's energy usage intensity by 25 percent or more in comparison to the baseline energy usage intensity of such building. Such plan shall provide for a qualified professional to —

"(i) as of any date during the 1-year period ending on the date of the first certification described in clause (ii), certify the energy usage intensity of such building as of such date,

"(ii) certify the status of property installed pursuant to such plan as meeting the requirements of clauses (ii) and (iii) subparagraph (C), and

"(iii) as of any date that is more than 1 year after completion of the plan, certify the energy usage intensity of such building as of such date.

"(C) ENERGY EFFICIENT RETROFIT BUILDING PROPERTY. — For purposes of this paragraph, the term 'energy efficient retrofit building property' means property —

"(i) with respect to which depreciation (or amortization in lieu of depreciation) is allowable,

"(ii) which is installed on or in any qualified building,

"(iii) which is installed as part of —

"(I) the interior lighting systems,

"(II) the heating, cooling, ventilation, and hot water systems, or

"(III) the building envelope, and

"(iv) which is certified in accordance with subparagraph (B)(ii) as meeting the requirements of clauses (ii) and (iii).

"(D) QUALIFIED BUILDING. — For purposes of this paragraph, the term 'qualified building' means any building which —

"(i) is located in the United States, and

"(ii) was originally placed in service not less than 5 years before the establishment of the qualified retrofit plan with respect to such building.

"(E) QUALIFYING FINAL CERTIFICATION. — For purposes of this paragraph, the term 'qualifying final certification' means, with respect to any qualified retrofit plan, the certification described in subparagraph (B)(iii) if the energy usage intensity certified in such certification is not more than 75 percent of the baseline energy usage intensity of the building.

"(F) BASELINE ENERGY USAGE INTENSITY. —

"(i) IN GENERAL. — The term 'baseline energy usage intensity' means the energy usage intensity certified under subparagraph (B)(i), as adjusted to take into account weather as compared to the energy usage intensity determined under subparagraph (B)(iii).

"(ii) DETERMINATION OF ADJUSTMENT. — For purposes of clause (i), the adjustments described in such clause shall be determined in such manner as the Secretary may provide.

"(G) OTHER DEFINITIONS. — For purposes of this paragraph —

"(i) ENERGY USAGE INTENSITY. — The term 'energy usage intensity' means the annualized, measured site energy usage intensity determined in accordance with such regulations or other guidance as the Secretary may provide and measured in British thermal units.

"(ii) QUALIFIED PROFESSIONAL. — The term 'qualified professional' means an individual who is a licensed architect or a licenced engineer and meets such other requirements as the Secretary may provide.

"(H) COORDINATION WITH DEDUCTION OTHERWISE ALLOWED UNDER SUBSECTION (a). —

"(i) IN GENERAL. — In the case of any building with respect to which an election is made under subparagraph (A), the term 'energy efficient commercial building property' shall not include any energy efficient retrofit building property with respect to which a deduction is allowable under this paragraph.

"(ii) CERTAIN RULES NOT APPLICABLE. —

"(I) IN GENERAL. — Except as provided in subclause (II), subsection (d) shall not apply for purposes of this paragraph.

"(II) ALLOCATION OF DEDUCTION BY CERTAIN TAX-EXEMPT ENTITIES. — Rules similar to subsection (d)(4) (determined after application of paragraph (5)) shall apply for purposes of this paragraph.".

(c) APPLICATION TO REAL ESTATE INVESTMENT TRUST EARNINGS AND PROFITS. — Section 312(k)(3)(B) is amended —

(1) by striking "for purposes of computing the earnings and profits of a corporation" and inserting the following:

"(i) IN GENERAL. — For purposes of computing the earnings and profits of a corporation, except as provided in clause (ii)", and

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

"(ii) SPECIAL RULE. — In the case of a corporation that is a real estate investment trust, any amount deductible under section 179D shall be allowed in the year in which the property giving rise to such deduction is placed in service.".

(d) CONFORMING AMENDMENT. — Section 179D(d)(2) is amended by striking "not later than the date that is 2 years before the date that construction of such property begins" and inserting "not later than the date that is 4 years before the date such property is placed in service".

(e) EFFECTIVE DATE. —

(1) IN GENERAL. — Except as otherwise provided in this subsection, the amendment made by this section shall apply to taxable years beginning after December 31, 2021.

(2) ALTERNATIVE DEDUCTION FOR ENERGY EFFICIENT RETROFIT BUILDING PROPERTY. — Paragraph (8) of section 179D(i) of the Internal Revenue Code of 1986 (as added by this section), and any other provision of such section solely for purposes of applying such paragraph, shall apply to property placed in service after December 31, 2021 (in taxable years ending after such date) if such property is placed in service pursuant to qualified retrofit plan (within the meaning of such section) established after such date.

SEC. 136304. EXTENSION, INCREASE, AND MODIFICATIONS OF NEW ENERGY EFFICIENT HOME CREDIT.

(a) EXTENSION OF CREDIT. — Section 45L(g) is amended by striking "December 31, 2021" and inserting "December 31, 2031".

(b) INCREASE IN CREDIT AMOUNTS. — Section 45L(a)(2) is amended to read as follows:

"(2) APPLICABLE AMOUNT. — For purposes of paragraph (1), the applicable amount is an amount equal to —

"(A) in the case of a dwelling unit which is eligible to participate in the Energy Star Residential New Construction Program or the Energy Star Manufactured New Homes program —

"(i) that is described in subsection (c)(1)(A) (and not described in subsection (c)(1)(B)), $2,500, and

"(ii) that is described in subsection (c)(1)(B), $5000, and

"(B) in the case of a dwelling unit which is part of a building eligible to participate in the Energy Star Multifamily New Construction Program —

"(i) that is described in subsection (c)(1)(A) (and not described in subsection (c)(1)(B)), $500, and

"(ii) that is described in subsection (c)(1)(B), $1000.".

(c) MODIFICATION OF ENERGY SAVING REQUIREMENTS. — Section 45L(c) is amended to read as follows:

"(c) ENERGY SAVING REQUIREMENTS. —

"(1) IN GENERAL. — A dwelling unit meets the energy saving requirements of this subsection if —

"(A) such dwelling unit meets the requirements of paragraph (2) or (3) (whichever is applicable), or

"(B) such dwelling unit is certified as a zero energy ready home under the zero energy ready home program of the Department of Energy (or any successor program determined by the Secretary) as in effect on January 1, 2022.

"(2) SINGLE-FAMILY HOME REQUIREMENTS. — A dwelling unit meets the requirements of this paragraph if —

"(A) such dwelling unit meets —

"(i) in the case of a dwelling unit acquired before January 1, 2025, the Energy Star Single-Family New Homes National Program Requirements 3.1, and

"(ii) in the case of a dwelling unit acquired after December 31, 2024, the Energy Star Single-Family New Homes National Program Requirements 3.2,

"(B) such dwelling unit meets the most recent Energy Star Single-Family New Homes Program Requirements applicable to the location of such dwelling unit (as in effect on the latter of January 1, 2022 or January 1 of two calendar years prior to the date the dwelling unit was acquired), or

"(C) such dwelling unit meets the most recent Energy Star Manufactured Home National program requirements as in effect on the latter of January 1, 2022 or January 1 of two calendar years prior to the date such dwelling unit is acquired.

"(3) MULTI-FAMILY HOME REQUIREMENTS. — A dwelling unit meets the requirements of this paragraph if —

"(A) such dwelling unit meets the most recent Energy Star Multifamily New Construction National Program Requirements (as in effect on either January 1, 2022 or January 1 of three calendar years prior to the date the dwelling was acquired, whichever is later), and

"(B) such dwelling unit meets the most recent Energy Star Multifamily New Construction Regional Program Requirements applicable to the location of such dwelling unit (as in effect on either January 1, 2022 or January 1 of three calendar years prior to the date the dwelling was acquired, whichever is later).".

(d) PREVAILING WAGE REQUIREMENT. — Section 45L is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:

"(g) PREVAILING WAGE REQUIREMENT. —

"(1) IN GENERAL. — In the case of a qualifying residence described in subsection (b)(2)(B) meeting the prevailing wage requirements of paragraph (2), the credit amount allowed with respect to such residence shall be —

"(A) $2,500 in the case of a residence described in subparagraph (A) of subsection (c)(1) (and not described in subparagraph (B) of such subsection), and

"(B) $5,000 in the case of a residence described in (c)(1)(B).

"(2) PREVAILING WAGE REQUIREMENTS. —

"(A) IN GENERAL. — The requirements described in this paragraph with respect to any qualified residence are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in the construction of such residence shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.

"(B) CORRECTION AND PENALTY RELATED TO FAILURE TO SATISFY WAGE REQUIREMENTS. — Rules similar to the rules of section 45(b)(8)(B) shall apply.

"(3) REGULATIONS AND GUIDANCE. — The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of establishing the requirements of this subsection.".

(e) EFFECTIVE DATES. — The amendments made by this section shall apply to dwelling units acquired after December 31, 2021.

SEC. 136305. MODIFICATIONS TO INCOME EXCLUSION FOR CONSERVATION SUBSIDIES.

(a) IN GENERAL. — Section 136(a) is amended —

(1) by striking "any subsidy provided" and inserting "any subsidy —

"(1) provided",

(2) by striking the period at the end and inserting a comma, and

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

"(2) provided (directly or indirectly) by a public utility to a customer, or by a State or local government to a resident of such State or locality, for the purchase or installation of any water conservation or efficiency measure,

"(3) provided (directly or indirectly) by a storm water management provider to a customer, or by a State or local government to a resident of such State or locality, for the purchase or installation of any storm water management measure, or

"(4) provided (directly or indirectly) by a State or local government to a resident of such State or locality for the purchase or installation of any wastewater management measure, but only if such measure is with respect to the taxpayer's principal residence.".

(b) CONFORMING AMENDMENTS. —

(1) DEFINITION OF WATER CONSERVATION OR EFFICIENCY MEASURE AND STORM WATER MANAGEMENT MEASURE. — Section 136(c) is amended —

(A) by striking "ENERGY CONSERVATION MEASURE" in the heading thereof and inserting "DEFINITIONS",

(B) by striking "IN GENERAL" in the heading of paragraph (1) and inserting "ENERGY CONSERVATION MEASURE", and

(C) by redesignating paragraph (2) as paragraph (5) and by inserting after paragraph (1) the following:

"(2) WATER CONSERVATION OR EFFICIENCY MEASURE. — For purposes of this section, the term 'water conservation or efficiency measure' means any evaluation of water use, or any installation or modification of property, the primary purpose of which is to reduce consumption of water or to improve the management of water demand with respect to one or more dwelling units.

"(3) STORM WATER MANAGEMENT MEASURE. — For purposes of this section, the term 'storm water management measure' means any installation or modification of property primarily designed to reduce or manage amounts of storm water with respect to one or more dwelling units.

"(4) WASTEWATER MANAGEMENT MEASURE. — For purposes of this section, the term 'wastewater management measure' means any installation or modification of property primarily designed to manage wastewater (including septic tanks and cesspools) with respect to one or more dwelling units.".

(2) DEFINITION OF PUBLIC UTILITY. — Section 136(c)(5) (as redesignated by paragraph (1)(C)) is amended by striking subparagraph (B) and inserting the following:

"(B) PUBLIC UTILITY. — The term 'public utility' means a person engaged in the sale of electricity, natural gas, or water to residential, commercial, or industrial customers for use by such customers.

"(C) STORM WATER MANAGEMENT PROVIDER. — The term 'storm water management provider' means a person engaged in the provision of storm water management measures to the public.

"(D) PERSON. — For purposes of subparagraphs (B) and (C), the term 'person' includes the Federal Government, a State or local government or any political subdivision thereof, or any instrumentality of any of the foregoing.".

(3) CLERICAL AMENDMENTS. —

(A) The heading for section 136 is amended —

(i) by inserting "AND WATER" after "ENERGY", and

(ii) by striking "PROVIDED BY PUBLIC UTILITIES".

(B) The item relating to section 136 in the table of sections of part III of subchapter B of chapter 1 is amended —

(i) by inserting "and water" after "energy", and

(ii) by striking "provided by public utilities".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to amounts received after December 31, 2018.

(d) NO INFERENCE. — Nothing in this Act or the amendments made by this Act shall be construed to create any inference with respect to the proper tax treatment of any subsidy received directly or indirectly from a public utility, a storm water management provider, or a State or local government for any water conservation measure or storm water management measure before January 1, 2019.

SEC. 136306. CREDIT FOR QUALIFIED WILDFIRE MITIGATION EXPENDITURES.

(a) IN GENERAL. — Subpart B of part IV of subchapter A of chapter 1 is amended by inserting after section 27 the following new section:

"SEC. 28. QUALIFIED WILDFIRE MITIGATION EXPENDITURES.

"(a) IN GENERAL. — There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 30 percent of the qualified wildfire mitigation expenditures paid or incurred by the taxpayer during such taxable year with respect to real property owned or leased by the taxpayer.

"(b) QUALIFIED WILDFIRE MITIGATION EXPENDITURES. — For purposes of this section —

"(1) IN GENERAL. — The term 'qualified wildfire mitigation expenditures' means any specified wildfire mitigation expenditure made pursuant to a qualified State wildfire mitigation program of a State which requires expenditures for wildfire mitigation to be paid both by the taxpayer and such State. Such term shall not include any item of expenditure unless the ratio of the State's expenditure for such item to the sum of the State's and taxpayer's expenditures for such item is not less than 25 percent.

"(2) SPECIFIED WILDFIRE MITIGATION EXPENDITURE. — The term 'specified wildfire mitigation expenditure' means, with respect to any real property owned or leased by the taxpayer, any amount paid or incurred to reduce the risk of wildfire by removing accumulations of vegetation (including establishing, expanding, or maintaining fuel breaks to serve as fire breaks) on such real property.

"(3) QUALIFIED STATE WILDFIRE MITIGATION PROGRAM. — The term 'qualified State wildfire mitigation program' means any program of a State the primary purpose of which is to mitigate the risk of wildfires in such State.

"(4) TREATMENT OF REIMBURSEMENTS. — Any amount originally paid or incurred by the taxpayer which is reimbursed by a State under a qualified wildfire mitigation program of such State shall be treated as paid by such State (and not by such taxpayer).

"(c) APPLICATION WITH OTHER CREDITS. —

"(1) BUSINESS CREDIT TREATED AS PART OF GENERAL BUSINESS CREDIT. — So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to expenditures made in the ordinary course of the taxpayer's trade or business (or, in the case of expenditures made by a State, would have been expenditures made in the ordinary course of the taxpayer's trade or business if made by the taxpayer) shall be treated as a credit listed in section 38(b) for taxable year (and not allowed under subsection (a)).

"(2) PERSONAL CREDIT. — For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.

"(d) REDUCTION OF CREDIT PERCENTAGE WHERE TAXPAYER EXPENDITURES LESS THAN 30 PERCENT. —

"(1) IN GENERAL. — If the expenditure percentage with respect to any item of qualified wildfire mitigation expenditure is less than 30 percent, subsection (a) shall be applied by substituting 'the expenditure percentage' for '30 percent' with respect to such item of expenditure.

"(2) EXPENDITURE PERCENTAGE. — For purposes of this section, the term 'expenditure percentage' means, with respect to any item of qualified wildfire mitigation expenditure any portion of which is paid or incurred by a State, the ratio (expressed as a percentage) of —

"(A) the taxpayer's expenditure for such item, divided by

"(B) the sum of the taxpayer's and such State's expenditures for such item.

"(e) SPECIAL RULES. —

"(1) TREATMENT OF EXPENDITURES RELATED TO MARKETABLE TIMBER. — An expenditure shall not be taken into account for purposes of this section (whether made by the taxpayer or a State pursuant to a qualified State wildfire mitigation program of such State) if such expenditure is properly allocable to timber which is sold or exchanged by the taxpayer. The preceding sentence shall not apply to the extent that such amount exceeds the gain on such sale or exchange.

"(2) BASIS REDUCTION. — For purposes of this subtitle, if the basis of any property would (but for this paragraph) be determined by taking into account any qualified wildfire mitigation expenditure, the basis of such property shall be reduced by the amount of the credit allowed under subsection (a) with respect to such expenditure (determined without regard to subsection (c)).

"(3) DENIAL OF DOUBLE BENEFIT. — The amount of any deduction or other credit allowable under this chapter for any expenditure for which a credit is allowable under subsection (a) shall be reduced by the amount of credit allowed under such subsection for such expenditure (determined without regard to subsection (c)).".

(b) CONFORMING AMENDMENTS. —

(1) Section 38(b), as amended by the preceding provisions of this Act, is amended by striking "plus" at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting ", plus", and by adding at the end the following new paragraph:

"(37) the portion of the qualified wildfire mitigation expenditures credit to which section 28(c)(1) applies.".

(2) Section 1016(a) is amended by redesignating paragraphs (35) through (38) as paragraphs (36) through (39), respectively, and by inserting after paragraph (34) the following new paragraph:

"(35) to the extent provided in section 28(e)(2),".

(3) The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 27 the following new item:

"Sec. 28. Qualified wildfire mitigation expenditures.".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to expenditures paid or incurred after the date of the enactment of this Act, in taxable years ending after such date.

PART 4 — GREENING THE FLEET AND ALTERNATIVE VEHICLES

SEC. 136401. REFUNDABLE NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLE CREDIT FOR INDIVIDUALS.

(a) IN GENERAL. — Subpart C of part IV of subchapter A of chapter 1 is amended by inserting after section 36B the following new section:

"SEC. 36C. NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES.

"(a) ALLOWANCE OF CREDIT. — In the case of an individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the sum of the credit amounts determined under subsection (b) with respect to each new qualified plug-in electric drive motor vehicle placed in service by the taxpayer during the taxable year.

"(b) PER VEHICLE AMOUNTS. —

"(1) IN GENERAL. — The amount determined under this subsection with respect to any new qualified plug-in electric drive motor vehicle is the sum of the amounts determined under paragraphs (2) through (5) with respect to such vehicle (not to exceed 50 percent of the purchase price of such vehicle).

"(2) BASE AMOUNT. — The amount determined under this paragraph is $4,000.

"(3) BATTERY CAPACITY. — In the case of a new qualified plug-in electric drive motor vehicle, the amount determined under this paragraph is $3,500 if —

"(A) in the case of a vehicle placed in service before January 1, 2027, such vehicle draws propulsion energy from a battery with not less than 40 kilowatt hours of capacity and has a gasoline tank capacity not greater than 2.5 gallons, and

"(B) in the case of a vehicle placed in service after December 31, 2026, such vehicle draws propulsion energy from a battery with not less than 50 kilowatt hours of capacity and has a gasoline tank capacity not greater than 2.5 gallons.

"(4) DOMESTIC ASSEMBLY. — In the case of a new qualified electric drive plug-in vehicle which satisfies the domestic assembly qualifications, the amount determined under this paragraph is $4,500.

"(5) DOMESTIC CONTENT. — In the case of a new qualified electric drive plug-in vehicle which satisfies domestic content qualifications, the amount determined under this paragraph is $500.

"(c) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME. —

"(1) IN GENERAL. — The amount of the credit allowable under subsection (a) for any taxable year shall be reduced (but not below zero) by $200 for each $1,000 (or fraction thereof) by which —

"(A) the lesser of —

"(i) the taxpayer's modified adjusted gross income for such taxable year, or

"(ii) the taxpayer's modified adjusted gross income for the preceding taxable year, exceeds

"(B) the threshold amount.

For purposes of the preceding sentence, the term 'modified adjusted gross income' means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.

"(2) THRESHOLD AMOUNT. — For purposes of paragraph (1), the term 'threshold amount' means —

"(A) $800,000 in the case of a joint return or surviving spouse (half such amount in the case of a married individual filing a separate return),

"(B) $600,000 in the case of a head of household, and

"(C) $400,000 in any other case.

"(d) MANUFACTURER'S SUGGESTED RETAIL PRICE LIMITATION. —

"(1) IN GENERAL. — No credit shall be allowed under subsection (a) for a vehicle with a manufacturer's suggested retail price in excess of the applicable limitation.

"(2) APPLICABLE LIMITATION. — For purposes of paragraph (1), the applicable limitation for each vehicle classification is as follows:

"(A) VANS. — In the case of a van, $64,000.

"(B) SPORT UTILITY VEHICLES. — In the case of a sport utility vehicle, $69,000.

"(C) PICKUP TRUCKS. — In the case of a pickup truck, $74,000.

"(D) OTHER. — In the case of any other vehicle, $55,000.

"(3) REGULATIONS AND GUIDANCE. — For purposes of this subsection, the Secretary shall prescribe such regulations or other guidance as the Secretary determines necessary or appropriate for determining vehicle classifications using criteria similar to that employed by the Environmental Protection Agency and the Department of the Energy to determine size and class of vehicles."

"(e) NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLE. — For purposes of this section —

"(1) IN GENERAL. — The term 'new qualified plug-in electric drive motor vehicle' means a motor vehicle —

"(A) the original use of which commences with the taxpayer,

"(B) which is acquired for use by the taxpayer and not for resale,

"(C) which is made by a qualified manufacturer,

"(D) which is treated as a motor vehicle for purposes of title II of the Clean Air Act,

"(E) which has a gross vehicle weight rating of less than 14,000 pounds,

"(F) which is propelled to a significant extent by an electric motor which draws electricity from a battery which —

"(i) has a capacity of not less than 10 kilowatt hours, and

"(ii) is capable of being recharged from an external source of electricity,

"(G) with respect to which, in the case of a vehicle placed in service after December 31, 2026, final assembly is within the United States,

"(H) is not of a character subject to an allowance for depreciation, and

"(I) for which the person who sells or leases any new qualified plug-in electric vehicle to the taxpayer furnishes a report to the taxpayer and to the Secretary, at such time and in such manner as the Secretary shall provide, containing —

"(i) the name and taxpayer identification number of the taxpayer,

"(ii) the vehicle identification number of the vehicle, unless, in accordance with any applicable rules promulgated by the Secretary of Transportation, the vehicle is not assigned such a number,

"(iii) the battery capacity of the vehicle,

"(iv) in the case of any new qualified plug-in electric vehicle, verification that original use of the vehicle commences with the taxpayer,

"(v) the maximum credit under this section allowable to the taxpayer with respect to the vehicle, and

"(vi) any amount described in subsection (k)(2)(C) which has been provided to the taxpayer.

"(2) MOTOR VEHICLE. — The term 'motor vehicle' means any vehicle which is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails) and which has at least 4 wheels.

"(3) QUALIFIED MANUFACTURER. — The term 'qualified manufacturer' means any manufacturer (within the meaning of the regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.)) which enters into a written agreement with the Secretary under which such manufacturer agrees —

"(A) to ensure that each vehicle manufactured by such manufacturer after the later of the date on which such agreement takes effect or December 31, 2021, and that meets the requirements of subsection (d), subparagraphs (D), (E), and (F) of paragraph (1), and paragraph (6) of subsection (f) is labeled with a unique vehicle identification number, and

"(B) to make periodic written reports to the Secretary (at such times and in such manner as the Secretary may provide) providing such vehicle identification numbers and such other information related to such vehicle as the Secretary may require.

"(4) BATTERY CAPACITY. — The term 'capacity' means, with respect to any battery, the quantity of electricity which the battery is capable of storing, expressed in kilowatt hours, as measured from a 100 percent state of charge to a 0 percent state of charge.

"(f) SPECIAL RULES. —

"(1) BASIS REDUCTION. — For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed.

"(2) NO DOUBLE BENEFIT. — The amount of any deduction or other credit allowable under this chapter for a vehicle for which a credit is allowable under subsection (a) shall be reduced by the amount of credit allowed under such subsection for such vehicle.

"(3) PROPERTY USED OUTSIDE UNITED STATES NOT QUALIFIED. — No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1).

"(4) RECAPTURE. — The Secretary shall, by regulations or other guidance, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property which ceases to be property eligible for such credit.

"(5) ELECTION NOT TO TAKE CREDIT. — No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such vehicle.

"(6) INTERACTION WITH AIR QUALITY AND MOTOR VEHICLE SAFETY STANDARDS. — A vehicle shall not be considered eligible for a credit under this section unless such vehicle is in compliance with —

"(A) the applicable provisions of the Clean Air Act for the applicable make and model year of the vehicle (or applicable air quality provisions of State law in the case of a State which has adopted such provision under a waiver under section 209(b) of the Clean Air Act), and

"(B) the motor vehicle safety provisions of sections 30101 through 30169 of title 49, United States Code.

"(g) CREDIT ALLOWED FOR 2 AND 3-WHEELED PLUG-IN ELECTRIC VEHICLES. —

"(1) IN GENERAL. — In the case of a qualified 2or 3-wheeled plug-in electric vehicle —

"(A) there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the sum of the applicable amount with respect to each such qualified 2or 3-wheeled plug-in electric vehicle placed in service by the taxpayer during the taxable year, and

"(B) the amount of the credit allowed under subparagraph (A) shall be treated as a credit allowed under subsection (a).

"(2) APPLICABLE AMOUNT. — For purposes of paragraph (1), the applicable amount is an amount equal to the lesser of —

"(A) 30 percent of the cost of the qualified 2or 3-wheeled plug-in electric vehicle, or

"(B) $7,500.

"(3) QUALIFIED 2 OR 3-WHEELED PLUG-IN ELECTRIC VEHICLE. — The term 'qualified 2or 3wheeled plug-in electric vehicle' means any vehicle which —

"(A) has 2 or 3 wheels,

"(B) meets the requirements of —

"(i) subparagraphs (A), (B), (C), (E), (F), (G), and (I) of subsection (e)(1) (determined by substituting '2.5 kilowatt hours' for '10 kilowatt hours' in subparagraph (F)(i)),

"(ii) paragraphs (3) and (4) of subsection (e), and

"(iii) subsections (f), (h), (i), and (k),

"(C) is manufactured primarily for use on public streets, roads, and highways, and

"(D) is capable of achieving a speed of 45 miles per hour or greater.

"(h) VIN NUMBER REQUIREMENT. — No credit shall be allowed under this section with respect to any vehicle unless the taxpayer includes the vehicle identification number of such vehicle on the return of tax for the taxable year.

"(i) TREATMENT OF CERTAIN POSSESSIONS. —

"(1) PAYMENTS TO POSSESSIONS WITH MIRROR CODE TAX SYSTEMS. — The Secretary shall pay to each possession of the United States which has a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of the provisions of this section (determined without regard to this subsection). Such amounts shall be determined by the Secretary based on information provided by the government of the respective possession.

"(2) PAYMENTS TO OTHER POSSESSIONS. — The Secretary shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary as being equal to the aggregate benefits (if any) that would have been provided to residents of such possession by reason of the provisions of this section if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply unless the respective possession has a plan which has been approved by the Secretary under which such possession will promptly distribute such payments to its residents.

"(3) MIRROR CODE TAX SYSTEM; TREATMENT OF PAYMENTS. — Rules similar to the rules of paragraphs (3), (4), and (5) of section 21(h) shall apply for purposes of this section.

"(j) ASSEMBLY AND CONTENT QUALIFICATIONS. — For purposes of this section —

"(1) DOMESTIC ASSEMBLY QUALIFICATIONS. — The term 'domestic assembly qualifications' means, with respect to any new qualified plug-in electric vehicle, that the final assembly of such vehicle occurs at a plant, factory, or other place which is located in the United States and operating under a collective bargaining agreement negotiated by an employee organization (as defined in section 412(c)(4)), determined in a manner consistent with section 7701(a)(46).

"(2) DOMESTIC CONTENT QUALIFICATIONS. — The term 'domestic content qualifications' means, with respect to any model of a new qualified plug-in electric vehicle, that vehicles of that model are powered by battery cells which are manufactured in the United States as certified by the manufacturer at such time and in such form and manner as the Secretary may prescribe.

"(3) FINAL ASSEMBLY. — The term 'final assembly' means the process by which a manufacturer produces a new qualified plug-in electric drive motor vehicle at, or through the use of, a plant, factory, or other place from which the vehicle is delivered to a dealer or importer with all component parts necessary for the mechanical operation of the vehicle included with the vehicle, whether or not the component parts are permanently installed in or on the vehicle.

"(k) TERMINATION. — No credit shall be allowed under this section with respect to any vehicle acquired after December 31, 2031.".

(b) TRANSFER OF CREDIT. —

(1) IN GENERAL. — Section 36C, as added by subsection (a), is amended by redesignating subsection (k) as subsection (l) and by inserting after subsection (j) following new subsection:

"(k) TRANSFER OF CREDIT. —

"(1) IN GENERAL. — Subject to such regulations or other guidance as the Secretary determines necessary or appropriate, if the taxpayer who acquires a new plug-in electric drive motor vehicle elects the application of this subsection with respect to such vehicle, the credit which would (but for this subsection) be allowed to such taxpayer with respect to such vehicle shall be allowed to the eligible entity specified in such election (and not to such taxpayer).

"(2) ELIGIBLE ENTITY. — For purposes of this paragraph, the term 'eligible entity' means, with respect to the vehicle for which the credit is allowed under subsection (a), the dealer which sold such vehicle to the taxpayer and has —

"(A) subject to paragraph (4), registered with the Secretary for purposes of this paragraph, at such time, and in such form and manner, as the Secretary may prescribe,

"(B) prior to the election described in paragraph (1) and not later than at the time of such sale, disclosed to the taxpayer purchasing such vehicle —

"(i) the manufacturer's suggested retail price,

"(ii) the value of the credit allowed or other incentive available for the purchase of such vehicle,

"(iii) all fees associated with the purchase of such vehicle, and

"(iv) the amount provided by the dealer to such taxpayer as a condition of the election described in paragraph (1),

"(C) made payment to such taxpayer (whether in cash or in the form of a partial payment or down payment for the purchase of such vehicle) in an amount equal to the credit otherwise allowable to such taxpayer, and

"(D) with respect to any incentive otherwise available for the purchase of a vehicle for which a credit is allowed under this section, including any incentive in the form of a rebate or discount provided by the dealer or manufacturer, ensured that —

"(i) the availability or use of such incentive shall not limit the ability of a taxpayer to make an election described in paragraph (1), and 

"(ii) such election shall not limit the value or use of such incentive.

"(3) TIMING. — An election described in paragraph (1) shall be made by the taxpayer not later than the date on which the vehicle for which the credit is allowed under subsection (a) is purchased.

"(4) REVOCATION OF REGISTRATION. — Upon determination by the Secretary that a dealer has failed to comply with the requirements described in paragraph (2), the Secretary may revoke the registration (as described in subparagraph (A) of such paragraph) of such dealer.

"(5) TAX TREATMENT OF PAYMENTS. — With respect to any payment described in paragraph (2)(C), such payment —

"(A) shall not be includible in the gross income of the taxpayer, and

"(B) with respect to the dealer, shall not be deductible under this title.

"(6) APPLICATION OF CERTAIN OTHER REQUIREMENTS. — In the case of any election under paragraph (1) with respect to any vehicle —

"(A) the amount of the reduction under subsection (c) shall be determined with respect to the modified adjusted gross income of the taxpayer for the taxable year preceding the taxable year in which such vehicle was acquired (and not with respect to such income for the taxable year in which such vehicle was acquired),

"(B) the requirements of paragraphs (1) and (2) of subsection (f) shall apply to the taxpayer who acquired the vehicle in the same manner as if the credit determined under this section with respect to such vehicle were allowed to such taxpayer,

"(C) subsection (f)(5) shall not apply, and

"(D) the requirement of subsection (h) shall be treated as satisfied if the eligible entity provides the vehicle identification number of such vehicle to the Secretary in such manner as the Secretary may provide.

"(7) ADVANCE PAYMENT TO REGISTERED DEALERS. —

"(A) IN GENERAL. — The Secretary shall establish a program to make advance payments to any eligible entity in an amount equal to the cumulative amount of the credits allowed under subsection (a) with respect to any vehicles sold by such entity for which an election described in paragraph (1) has been made.

"(B) EXCESSIVE PAYMENTS. — Rules similar to the rules of section 6417(c)(8) shall apply for purposes of this paragraph.

"(8) DEALER. — For purposes of this subsection, the term 'dealer' means a person licensed by a State, the District of Columbia, the Commonwealth of Puerto Rico, any other territory or possession of the United States, or an Indian Tribe (as defined in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304)) to engage in the sale of vehicles.".

(2) CONFORMING AMENDMENT. — Section 36C(g)(3)(iii), as added by subsection (a), is amended by striking ", and (k)" and inserting "(k), and (l)".

(c) REPEAL OF NONREFUNDABLE NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLE CREDIT. — Subpart B of part IV of subchapter A of chapter 1 is amended by striking section 30D (and by striking the item relating to such section in the table of sections of such subpart).

(d) CONFORMING AMENDMENTS. —

(1) Section 1016(a)(37) is amended by striking "section 30D(f)(1)" and inserting "section 36C(f)(1)".

(2) Section 6211(b)(4)(A) is amended by inserting "36C," after "36B,".

(3) Section 6213(g)(2), as amended by the preceding provisions of this Act, is amended —

(A) in subparagraph (R), by striking "and" at the end,

(B) in subparagraph (S), by striking the period at the end and inserting ", and", and

(C) by adding at the end the following:

"(T) an omission of a correct vehicle identification number required under section 36C(f) (relating to credit for new qualified plug-in electric drive motor vehicles) to be included on a return.".

(4) Section 6501(m) is amended by striking "30D(e)(4)" and inserting "36C(f)(5)".

(5) Section 166(b)(5)(A)(ii) of title 23, United States Code, is amended by striking "section 30D(d)(1)" and inserting "section 36C(e)(1)".

(6) Section 1324(b)(2) of title 31, United States Code, is amended by inserting "36C," after "36B,".

(7) The table of sections for subpart C of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 36B the following new item:

"Sec. 36C. New qualified plug-in electric drive motor vehicles.".

(e) EFFECTIVE DATES. —

(1) The amendments made by subsections (a), (c), and (d) of this section shall apply to vehicles acquired after December 31, 2021.

(2) The amendments made by subsection (b) shall apply to vehicles acquired after December 31, 2022.

SEC. 136402. CREDIT FOR PREVIOUSLY-OWNED QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES.

(a) IN GENERAL. — Subpart C of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is amended by inserting after section 36C the following new section:

"SEC. 36D. PREVIOUSLY-OWNED QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES.

"(a) ALLOWANCE OF CREDIT. — In the case of a qualified buyer who during a taxable year places in service a previously-owned qualified plug-in electric drive motor vehicle, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the sum of —

"(1) $2,000, plus

"(2) the supplemental credit amount.

"(b) SUPPLEMENTAL CREDIT AMOUNT. — For purposes of subsection (a), the term 'supplemental credit amount' means —

"(1) $2,000, if —

"(A) in the case of a vehicle placed in service before January 1, 2027, such vehicle draws propulsion energy from a battery with not less than 40 kilowatt hours of capacity and has a gasoline tank capacity not greater than 2.5 gallons, and

"(B) in the case of a vehicle placed in service after December 31, 2026, such vehicle draws propulsion energy from a battery with not less than 50 kilowatt hours of capacity and has a gasoline tank capacity not greater than 2.5 gallons, and

"(2) $0 in any other case.

"(c) LIMITATIONS. —

"(1) SALE PRICE. — The credit allowed under subsection (a) with respect to sale of a vehicle shall not exceed 50 percent of the sale price.

"(2) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME. — The amount which would (but for this paragraph) be allowed as a credit under subsection (a) shall be reduced (but not below zero) by $200 for each $1,000 (or fraction thereof) by which the lesser of —

"(A) the taxpayer's modified adjusted gross income for such taxable year, or

"(B) the taxpayer's modified adjusted gross income for the preceding taxable year, exceeds —

"(i) $150,000 in the case of a joint return or a surviving spouse (as defined in section 2(a)),

"(ii) $112,500 in the case of a head of household (as defined in section 2(b)), and

"(iii) $75,000 in the case of a taxpayer not described in paragraph (1) or (2).

"(d) DEFINITIONS. — For purposes of this section —

"(1) PREVIOUSLY-OWNED QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLE. — The term 'previously-owned qualified plug-in electric drive motor vehicle' means, with respect to a taxpayer, a motor vehicle —

"(A) the model year of which is at least 2 years earlier than the calendar year in which the taxpayer acquires such vehicle,

"(B) the original use of which commences with a person other than the taxpayer,

"(C) which is acquired by the taxpayer in a qualified sale, and

"(D) which meets the requirements of subparagraphs (C), (D), (E), (F), (G), (H), and (I) of section 36C(e)(1) (determined by applying 'previously-owned qualified plug-in electric drive motor vehicle' for 'new qualified plug-in electric drive motor vehicle'), or which is a new qualified fuel cell motor vehicle (as defined in subparagraphs (A) and (B) of section 30B(b)(3)) which has a gross vehicle weight rating of less than 14,000 pounds.

"(2) QUALIFIED SALE. — The term 'qualified sale' means a sale of a motor vehicle —

"(A) by a seller who holds such vehicle in inventory (within the meaning of section 471) for sale or lease,

"(B) for a sale price not to exceed $25,000, and

"(C) which is the first transfer since the date of the enactment of this section to a person other than the person with whom the original use of such vehicle commenced.

"(3) QUALIFIED BUYER. — The term 'qualified buyer' means, with respect to a sale of a motor vehicle, a taxpayer —

"(A) who is an individual,

"(B) who purchases such vehicle for use and not for resale,

"(C) with respect to whom no deduction is allowable with respect to another taxpayer under section 151,

"(D) who has not been allowed a credit under this section for any sale during the 3-year period ending on the date of the sale of such vehicle, and

"(E) who possesses a certificate issued by the seller that certifies —

"(i) that the vehicle is a previously owned qualified plug-in electric drive motor vehicle,

"(ii) the vehicle identification number of such vehicle,

"(iii) the capacity of the battery at time of sale, and

"(iv) such other information as the Secretary may require.

"(4) MOTOR VEHICLE; CAPACITY. — The terms 'motor vehicle' and 'capacity' have the meaning given such terms in paragraphs (2) and (4) of section 36C(e), respectively.

"(e) VIN NUMBER REQUIREMENT. — No credit shall be allowed under subsection (a) with respect to any vehicle unless the taxpayer includes the vehicle identification number of such vehicle on the return of tax for the taxable year.

"(f) APPLICATION OF CERTAIN RULES. — For purposes of this section, rules similar to the rules of paragraphs (1), (2), (4), (5), and (6) of section 36C(f) shall apply for purposes of this section.

"(g) CERTIFICATE SUBMISSION REQUIREMENT. — The Secretary may require that the issuer of the certificate described in subsection (c)(3)(E) submit such certificate to the Secretary at the time and in the manner required by the Secretary.

"(h) TREATMENT OF CERTAIN POSSESSIONS. —

"(1) PAYMENTS TO POSSESSIONS WITH MIRROR CODE TAX SYSTEMS. — The Secretary shall pay to each possession of the United States which has a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of the provisions of this section. Such amounts shall be determined by the Secretary based on information provided by the government of the respective possession.

"(2) PAYMENTS TO OTHER POSSESSIONS. — The Secretary shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary as being equal to the aggregate benefits (if any) that would have been provided to residents of such possession by reason of the provisions of this section if a mirror code tax system had been in effect in such possession.

The preceding sentence shall not apply unless the respective possession has a plan which has been approved by the Secretary under which such possession will promptly distribute such payments to its residents.

"(3) MIRROR CODE TAX SYSTEM; TREATMENT OF PAYMENTS. — Rules similar to the rules of paragraphs (3), (4), and (5) of section 21(h) shall apply for purposes of this section.

"(i) TRANSFER OF CREDIT. — Rules similar to the rules of section 36C(k) shall apply.

"(j) TERMINATION. — No credit shall be allowed under this section with respect to any vehicle acquired after December 31, 2031.".

(b) CONFORMING AMENDMENTS. —

(1) Section 6211(b)(4)(A), as amended by the preceding provisions of this Act, is amended by inserting "36D," after "36C,".

(2) Section 6213(g)(2), as amended by the preceding provisions of this Act, is amended —

(A) in subparagraph (S), by striking "and" at the end,

(B) in subparagraph (T), by striking the period at the end and inserting ", and", and

(C) by adding at the end the following:

"(U) an omission of a correct vehicle identification number required under section 36D(d) (relating to credit for previously-owned qualified plug-in electric drive motor vehicles) to be included on a return.".

(3) Paragraph (2) of section 1324(b) of title 31, United States Code, as amended by the preceding provisions of this Act, is amended by inserting "36D," after "36C,".

(c) CLERICAL AMENDMENT. — The table of sections for subpart C of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is amended by inserting after the item relating to section 36C the following new item:

"Sec. 36D. Previously-owned qualified plug-in electric drive motor vehicles.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to vehicles acquired after December 31, 2021.

SEC. 136403. QUALIFIED COMMERCIAL ELECTRIC VEHICLES.

(a) IN GENERAL. — Subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section:

"SEC. 45Y. CREDIT FOR QUALIFIED COMMERCIAL ELECTRIC VEHICLES.

"(a) IN GENERAL. — For purposes of section 38, the qualified commercial electric vehicle credit for any taxable year is an amount equal to the sum of the credit amounts determined under subsection (b) with respect to each qualified commercial electric vehicle placed in service by the taxpayer during the taxable year.

"(b) PER VEHICLE AMOUNT. —

"(1) IN GENERAL. — The amount determined under this subsection with respect to any qualified commercial electric vehicle shall be equal to the lesser of —

"(A) 15 percent of the basis of such vehicle (30 percent in the case of a vehicle not powered by a gasoline or diesel internal combustion 

"(B) the incremental cost of such vehicle.

"(2) INCREMENTAL COST. — For purposes of paragraph (1)(B), the incremental cost of any qualified commercial electric vehicle is an amount equal to the excess of the purchase price for such vehicle over such price of a comparable vehicle.

"(3) COMPARABLE VEHICLE. — For purposes of this paragraph, the term 'comparable vehicle' means, with respect to any qualified commercial electric vehicle, any vehicle which is powered solely by a gasoline or diesel internal combustion engine and which is comparable in size and use to such vehicle.

"(4) VEHICLES FOR LEASE TO INDIVIDUALS. —

"(A) IN GENERAL. — In the case of a commercial electric vehicle which is acquired by the taxpayer for the purpose of leasing such vehicle to any individual, the amount determined under this subsection with respect to such vehicle shall, at the election of such taxpayer, be equal to the amount of the credit that would otherwise be allowed under section 36C(a) with respect to such vehicle, as determined as if such vehicle —

"(i) is a new qualified plug-in electric drive motor vehicle, and

"(ii) has been acquired and placed in service by an individual.

"(B) ELECTION REQUIREMENTS. —

"(i) IN GENERAL. — An election under subparagraph (A) shall be made at such time and in such manner as the Secretary prescribes by regulations or other guidance.

"(ii) DISCLOSURE REQUIREMENT. — For purposes of any regulations or other guidance prescribed under clause (i), the Secretary shall require that, as a condition of an election under subparagraph (A), the taxpayer making such election shall be required to disclose to the lessee of the commercial electric vehicle the value of the credit allowed under this section.

"(c) QUALIFIED COMMERCIAL ELECTRIC VEHICLE. — For purposes of this section, the term 'qualified commercial electric vehicle' means any vehicle which —

"(1) meets the requirements of subparagraphs (A) and (C) of section 36C(e)(1) without regard to any gross vehicle weight rating, and is acquired for use or lease by the taxpayer and not for resale,

"(2) either —

"(A) meets the requirements of subparagraph (D) of section 36C(e)(1) and is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails), or

"(B) is mobile machinery, as defined in section 4053(8) (including vehicles that are not designed to perform a function of transporting a load over the public highways),

"(3) either —

"(A) is propelled to a significant extent by an electric motor which draws electricity from a battery which has a capacity of not less than 15 kilowatt hours and is capable of being recharged from an external source of electricity, or

"(B) is a new qualified fuel cell motor vehicle described in subparagraphs (A) and (B) of section 30B(b)(3), and

"(4) is of a character subject to the allowance for depreciation.

"(d) SPECIAL RULES. —

"(1) IN GENERAL. — Subject to paragraph (2), rules similar to the rules under subsection (f) of section 36C shall apply for purposes of this section.

"(2) RECAPTURE. — The Secretary shall, by regulations or other guidance, provide for recapturing the benefit of any credit allowed under subsection (a) with respect to any property which ceases to be property eligible for such credit, including regulations or other guidance which, in the case of any commercial electric vehicle for which an election was made under subsection (b)(4) —

"(A) recaptures the credit allowed under subsection (a) if —

"(i) such vehicle was not leased to an individual, or

"(ii) the taxpayer failed to comply with the requirements described in subsection (b)(4)(B)(ii), and

"(B) in the case of a commercial electric vehicle which is leased by an individual whose modified adjusted gross income exceeds the threshold amount under section 36C(c)(2), recaptures so much of the credit allowed under subsection (a) as exceeds the amount of the credit which would have otherwise been allowable under such subsection if, for purposes of subsection (b)(4)(A), the amount of the credit that would otherwise be allowed under section 36C(a) with respect to such vehicle had been determined as if such vehicle was acquired and placed in service by such individual and subject to reduction under section 36C(c).

"(3) VEHICLES PLACED IN SERVICE BY TAXEXEMPT ENTITIES. — Subsection (c)(4) shall not apply to any vehicle which is not subject to a lease and which is placed in service by a tax-exempt entity described in clause (i), (ii), or (iv) of section 168(h)(2)(A).

"(e) VIN NUMBER REQUIREMENT. — No credit shall be determined under subsection (a) with respect to any vehicle unless the taxpayer includes the vehicle identification number of such vehicle on the return of tax for the taxable year.

"(f) TERMINATION. — No credit shall be determined under this section with respect to any vehicle acquired after December 31, 2031.".

(b) ELECTIVE PAYMENT OF CREDIT IN CASE OF CERTAIN TAX-EXEMPT ENTITIES. — Section 6417(b), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:

"(9) In the case of a tax-exempt entity described in clause (i), (ii), or (iv) of section 168(h)(2)(A), the credit for qualified commercial vehicles determined under section 45Y by reason of subsection (d)(2) thereof.".

(c) CONFORMING AMENDMENTS. —

(1) Section 38(b) is amended by striking paragraph (30) and inserting the following:

"(30) the qualified commercial electric vehicle credit determined under section 45Y,".

(2) Section 6213(g)(2), as amended by the preceding provisions of this Act, is amended —

(A) in subparagraph (T), by striking "and" at the end,

(B) in subparagraph (U), by striking the period at the end and inserting ", and", and

(C) by adding at the end the following:

"(V) an omission of a correct vehicle identification number required under section 45Y(e) (relating to commercial electric vehicle credit) to be included on a return.".

(3) The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

"Sec. 45Y. Qualified commercial electric vehicle credit.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to vehicles acquired after Decem24 ber 31, 2021.

SEC. 136404. QUALIFIED FUEL CELL MOTOR VEHICLES.

(a) IN GENERAL. — Section 30B(k)(1) is amended by striking "December 31, 2021" and inserting "December 31, 2031".

(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE. — Section 30B(b) is amended by striking "and" at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting ", and", and by adding at the end the following new subparagraph:

"(F) which is not property of a character subject to an allowance for depreciation.".

(c) CONFORMING AMENDMENT. — Section 30B(g) is amended to read as follows:

"(g) PERSONAL CREDIT. — For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to property placed in service after December 31, 2021.

SEC. 136405. ALTERNATIVE FUEL REFUELING PROPERTY CREDIT.

(a) IN GENERAL. — Section 30C(g) is amended by striking "December 31, 2021" and inserting "December 31, 2031".

(b) ADDITIONAL CREDIT FOR CERTAIN ELECTRIC CHARGING PROPERTY. —

(1) IN GENERAL. — Section 30C(a) is amended —

(A) by striking "equal to 30 percent" and inserting the following: "equal to the sum of —

"(1) 30 percent (6 percent in the case of property described in subsection (b)(2))",

(B) by striking the period at the end and inserting ", plus", and

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

"(2) 4 percent of so much of such cost as exceeds the limitation under subsection (b)(1) that does not exceed the amount of cost attributable to qualified alternative vehicle refueling property (determined without regard to subsection (c)(1) and as if only electricity, and fuel at least 85 percent of the volume of which consists of hydrogen, were treated as clean-burning fuels for purposes of section 179A(d)) which —

"(A) is intended for general public use with no associated fee or payment arrangement,

"(B) is intended for general public use and accepts payment via a credit card reader, including a credit card reader that uses contactless technology, or

"(C) is intended for use exclusively by commercial or governmental vehicles.".

(2) CONFORMING AMENDMENT. — Section 30C(b) is amended —

(A) by striking "The credit allowed under subsection (a)" and inserting "The amount of cost taken into account under subsection (a)(1)",

(B) by striking "$30,000" and inserting "$100,000", and

(C) by striking "$1,000" and inserting "$3,333.33".

(3) BIDIRECTIONAL CHARGING EQUIPMENT INCLUDED AS QUALIFIED ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY. — Section 30C(c) is amended —

(A) by striking "For purposes of this section, the term" and inserting "For purposes of this section —

"(1) IN GENERAL. — The term", and

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

"(2) BIDIRECTIONAL CHARGING EQUIPMENT. —  Property shall not fail to be treated as qualified alternative vehicle refueling property solely because such property —

"(A) is capable of charging the battery of a motor vehicle propelled by electricity, and

"(B) allows discharging electricity from such battery to an electric load external to such motor vehicle.".

(c) CERTAIN ELECTRIC CHARGING STATIONS INCLUDED AS QUALIFIED ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY. — Section 30C is amended by redesignating subsections (f) and (g) as subsections (g) and (h), respectively, and by inserting after subsection (e) the following:

"(f) SPECIAL RULE FOR ELECTRIC CHARGING STATIONS FOR CERTAIN VEHICLES WITH 2 OR 3 WHEELS. — For purposes of this section —

"(1) IN GENERAL. — The term 'qualified alternative fuel vehicle refueling property' includes any property described in subsection (c) for the recharging of a motor vehicle described in paragraph

(2) that is propelled by electricity, but only if the property —

"(A) meets the requirements of subsection (a)(2), and

"(B) is of a character subject to depreciation.

"(2) MOTOR VEHICLE. — A motor vehicle is described in this paragraph if the motor vehicle —

"(A) is manufactured primarily for use on public streets, roads, or highways (not including a vehicle operated exclusively on a rail or rails), and

"(B) has at least 2, but not more than 3, wheels.".

(d) WAGE AND APPRENTICESHIP REQUIREMENTS. — Section 30C, as amended by this section, is further amended by redesignating subsections (g) and (h) as subsections (h) and (i) and by inserting after subsection (f) the following new subsection:

"(g) WAGE AND APPRENTICESHIP REQUIREMENTS. —

"(1) INCREASED CREDIT AMOUNT. —

"(A) IN GENERAL. — In the case of any qualified alternative fuel vehicle refueling project which satisfies the requirements of subparagraph (C), the amount of the credit determined under subsection (a) shall be equal to such amount multiplied by 5 (determined without regard to this sentence).

"(B) QUALIFIED ALTERNATIVE FUEL VEHICLE REFUELING PROJECT. — For purposes of this subsection, the term 'qualified alternative fuel vehicle refueling project' means a project consisting of multiple properties that are part of a single project. The requirements of this paragraph shall be applied to such project.

"(C) PROJECT REQUIREMENTS. — A project meets the requirements of this subparagraph if it is one of the following:

"(i) A project the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (2) and (3).

"(ii) A project which satisfies the requirements of paragraphs (2) and (3).

"(2) PREVAILING WAGE REQUIREMENTS. —

"(A) IN GENERAL. — The requirements described in this subparagraph with respect to any qualified alternative fuel vehicle refueling project are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in the construction of such property shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.

"(B) CORRECTION AND PENALTY RELATED TO FAILURE TO SATISFY WAGE REQUIREMENTS. — Rules similar to the rules of section 45(b)(8)(B) shall apply.

"(3) APPRENTICESHIP REQUIREMENTS. — Rules similar to the rules of section 45(b)(9) shall apply.

"(4) REGULATIONS AND GUIDANCE. — The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of establishing the requirements of this subsection.".

(e) EFFECTIVE DATE. — The amendment made by  this section shall apply to property placed in service after  December 31, 2021.

SEC. 136406. REINSTATEMENT AND EXPANSION OF EMPLOYER-PROVIDED FRINGE BENEFITS FOR BICYCLE COMMUTING.

(a) REPEAL OF SUSPENSION OF EXCLUSION FOR QUALIFIED BICYCLE COMMUTING BENEFITS. — Section 132(f) is amended by striking paragraph (8).

(b) EXPANSION OF BICYCLE COMMUTING BENEFITS. — Section 132(f)(5)(F) is amended to read as follows:

"(F) DEFINITIONS RELATED TO BICYCLE COMMUTING BENEFITS. —

"(i) QUALIFIED BICYCLE COMMUTING BENEFIT. — The term 'qualified bicycle commuting benefit' means, with respect to any calendar year —

"(I) any employer reimbursement during the 15-month period beginning with the first day of such calendar year for reasonable expenses incurred by the employee during such calendar year for the purchase (including associated finance charges), lease, rental (including a bikeshare), improvement, repair, or storage of qualified commuting property, or

"(II) the direct or indirect provision by the employer to the employee during such calendar year of the use (including a bikeshare), improvement, repair, or storage of qualified commuting property, if the employee regularly uses such qualified commuting property for travel between the employee's residence, place of employment, a qualified parking facility, or a mass transit facility that connects the employee to their residence or place of employment.

"(ii) QUALIFIED COMMUTING PROPERTY. — The term 'qualified commuting property' means —

"(I) any bicycle (other than a bicycle equipped with any motor),

"(II) any electric bicycle which meets the requirements of section 36E(c)(5), 

"(III) any 2- or 3-wheel scooter (other than a scooter equipped with any motor), and

"(IV) any 2- or 3-wheel scooter propelled by an electric motor if such motor does not provide assistance if the speed of such scooter exceeds 20 miler per hour (or if the speed of such scooter is not capable of exceeding 20 miles per hour) and the weight of such scooter does not exceed 100 pounds.

"(iii) BIKESHARE. — The term 'bikeshare' means a rental operation at which qualified commuting property is made available to customers to pick up and drop off for point-to-point use within a defined geographic area.".

(c) LIMITATION ON EXCLUSION. — Section 132(f)(2)(C) is amended to read as follows:

"(C) 30 percent of the dollar amount in effect under subparagraph (B) per month in the case of any qualified bicycle commuting benefit.".

(d) NO CONSTRUCTIVE RECEIPT. — Section 132(f)(4) is amended by striking "(other than a qualified bicycle commuting reimbursement)".

(e) CONFORMING AMENDMENTS. —

(1) Section 132(f)(1)(D) is amended by striking "reimbursement" and inserting "benefit".

(2) Section 274(l) is amended by striking paragraph (2).

(f) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 136407. CREDIT FOR CERTAIN NEW ELECTRIC BICYCLES.

(a) IN GENERAL. — Subpart C of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is amended by inserting after section 36D the following new section:

"SEC. 36E. ELECTRIC BICYCLES.

"(a) ALLOWANCE OF CREDIT. — There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 30 percent of the cost of each qualified electric bicycle placed in service by the taxpayer during such taxable year.

"(b) LIMITATIONS. —

"(1) LIMITATION ON COST PER ELECTRIC BICYCLE TAKEN INTO ACCOUNT. — The amount taken into account under subsection (a) as the cost of any qualified electric bicycle shall not exceed $5,000.

"(2) BICYCLE LIMITATION WITH RESPECT TO CREDIT. —

"(A) LIMITATION ON NUMBER OF PERSONAL-USE BICYCLES. — In the case of any taxpayer for any taxable year, the number of personal-use bicycles taken into account under subsection (a) shall not exceed the excess (if any) of —

"(i) 1 (2 in the case of a joint return), reduced by

"(ii) the aggregate number of bicycles taken into account by the taxpayer under subsection (a) for the 2 preceding taxable years.

"(B) PHASEOUT BASED ON MODIFIED ADJUSTED GROSS INCOME. — The credit allowed under subsection (a) shall be reduced by $200 for each $1,000 (or fraction thereof) by which the taxpayer's modified adjusted gross income exceeds —

"(i) $150,000 in the case of a joint return or a surviving spouse (as defined in section 2(a)),

"(ii) $112,500 in the case of a head of household (as defined in section 2(b)), and

"(iii) $75,000 in the case of a taxpayer not described in clause (i) or (ii).

"(C) MODIFIED ADJUSTED GROSS INCOME. — For purposes of subparagraph (B), the term 'modified adjusted gross income' means adjusted gross income increased by any amount excluded from gross income under section 911931, or 933.

"(D) SPECIAL RULE FOR MODIFIED ADJUSTED GROSS INCOME TAKEN INTO ACCOUNT. — The modified adjusted gross income of the taxpayer that is taken into account for purposes of this paragraph shall be the lesser of —

"(i) the modified adjusted gross income for the taxable year in which the credit is claimed, or

"(ii) the modified adjusted gross income for the immediately preceding taxable year.

"(c) QUALIFIED ELECTRIC BICYCLE. — For purposes of this section, the term 'qualified electric bicycle' means a bicycle —

"(1) the original use of which commences with the taxpayer,

"(2) which is acquired for use by the taxpayer and not for resale,

"(3) which is made by a qualified manufacturer and is labeled with the qualified vehicle identification number assigned to such bicycle by such manufacturer,

"(4) with respect to which the aggregate amount paid for such acquisition does not exceed $8,000, and

"(5) which is equipped with —

"(A) fully operable pedals,

"(B) a saddle or seat for the rider, and

"(C) an electric motor of less than 750 watts which is designed to provided assistance in propelling the bicycle and —

"(i) does not provide such assistance if the bicycle is moving in excess of 20 miler per hour, or

"(ii) if such motor only provides such assistance when the rider is pedaling, does not provide such assistance if the bicycle is moving in excess of 28 miles per hour.

"(d) VIN NUMBER REQUIREMENT. —

"(1) IN GENERAL. — No credit shall be allowed under subsection (a) with respect to any qualified electric bicycle unless the taxpayer includes the qualified vehicle identification number of such bicycle on the return of tax for the taxable year.

"(2) QUALIFIED VEHICLE IDENTIFICATION NUMBER. — For purposes of this section, the term 'qualified vehicle identification number' means, with respect to any bicycle, the vehicle identification number assigned to such bicycle by a qualified manufacturer pursuant to the methodology referred to in paragraph (3).

"(3) QUALIFIED MANUFACTURER. — For purposes of this section, the term 'qualified manufacturer' means any manufacturer of qualified electric bicycles which enters into an agreement with the Secretary which provides that such manufacturer will —

"(A) assign a vehicle identification number to each qualified electric bicycle produced by such manufacturer utilizing a methodology that will ensure that such number (including any alphanumeric) is unique to such bicycle (by utilizing numbers or letters which are unique to such manufacturer or by such other method as the Secretary may provide),

"(B) label such bicycle with such number in such manner as the Secretary may provide, and

"(C) make periodic written reports to the Secretary (at such times and in such manner as the Secretary may provide) of the vehicle identification numbers so assigned and including such information as the Secretary may require with respect to the qualified electric bicycle to which such number was so assigned.

"(e) SPECIAL RULES. —

"(1) BASIS REDUCTION. — For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed.

"(2) NO DOUBLE BENEFIT. — The amount of any deduction or other credit allowable under this chapter for a qualified electric bicycle for which a credit is allowable under subsection (a) shall be reduced by the amount of credit allowed under such subsection for such bicycle.

"(3) PROPERTY USED OUTSIDE UNITED STATES NOT QUALIFIED. — No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1).

"(4) RECAPTURE. — The Secretary shall, by regulations or other guidance, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property which ceases to be property eligible for such credit.

"(5) ELECTION NOT TO TAKE CREDIT. — No credit shall be allowed under subsection (a) for any bicycle if the taxpayer elects to not have this section apply to such bicycle.

"(f) TREATMENT OF CERTAIN POSSESSIONS. —

"(1) PAYMENTS TO POSSESSIONS WITH MIRROR CODE TAX SYSTEMS. — The Secretary shall pay to each possession of the United States which has a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of the provisions of this section (determined without regard to this subsection). Such amounts shall be determined by the Secretary based on information provided by the government of the respective possession.

"(2) PAYMENTS TO OTHER POSSESSIONS. — The Secretary shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary as being equal to the aggregate benefits (if any) that would have been provided to residents of such possession by reason of the provisions of this section if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply unless the respective possession has a plan which has been approved by the Secretary under which such possession will promptly distribute such payments to its residents.

"(3) MIRROR CODE TAX SYSTEM; TREATMENT OF PAYMENTS. — Rules similar to the rules of paragraphs (3), (4), and (5) of section 21(h) shall apply for purposes of this section.

"(g) TRANSFER OF CREDIT. —

"(1) IN GENERAL. — Subject to such regulations or other guidance as the Secretary determines necessary or appropriate, if the taxpayer who acquires a qualified electric bicycle after December 31, 2022 elects the application of this subsection with respect to such qualified electric bicycle, the credit which would (but for this subsection) be allowed to such taxpayer with respect to such qualified electric bicycle shall be allowed to the eligible entity specified in such election (and not to such taxpayer).

"(2) ELIGIBLE ENTITY. — For purposes of this paragraph, the term 'eligible entity' means, with respect to the qualified electric bicycle for which the credit is allowed under subsection (a), the retailer which sold such qualified electric bicycle to the taxpayer and has —

"(A) subject to paragraph (4), registered with the Secretary for purposes of this paragraph, at such time, and in such form and manner, as the Secretary may prescribe,

"(B) prior to the election described in paragraph (1) and no later than at the time of such sale, disclosed to the taxpayer purchasing such qualified electric bicycle —

"(i) the retail price,

"(ii) the value of the credit allowed or other incentive available for the purchase of such qualified electric bicycle,

"(iii) all fees associated with the purchase of such qualified electric bicycle, and

"(iv) the amount provided by the retailer to such taxpayer as a condition of the election described in paragraph (1),

"(C) made payment to such taxpayer (whether in cash or in the form of a partial payment or down payment for the purchase of such qualified electric bicycle) in an amount equal to the credit otherwise allowable to such taxpayer, and

"(D) with respect to any incentive otherwise available for the purchase of a qualified electric bicycle for which a credit is allowed under this section, including any incentive in the form of a rebate or discount provided by the retailer or manufacturer, ensured that —

"(i) the availability or use of such incentive shall not limit the ability of a taxpayer to make an election described in paragraph (1), and

"(ii) such election shall not limit the value or use of such incentive.

"(3) TIMING. — An election described in paragraph (1) shall be made by the taxpayer not later than the date on which the qualified electric bicycle for which the credit is allowed under subsection (a) is purchased.

"(4) REVOCATION OF REGISTRATION. — Upon determination by the Secretary that a retailer has failed to comply with the requirements described in paragraph (2), the Secretary may revoke the registration (as described in subparagraph (A) of such paragraph) of such retailer.

"(5) TAX TREATMENT OF PAYMENTS. — With respect to any payment described in paragraph (2)(C), such payment —

"(A) shall not be includible in the gross income of the taxpayer, and

"(B) with respect to the retailer, shall not be deductible under this title.

"(6) APPLICATION OF CERTAIN OTHER REQUIREMENTS. — In the case of any election under paragraph (1) with respect to any qualified electric bicycle —

"(A) the amount of the reduction under subsection (b) shall be determined with respect to the modified adjusted gross income of the taxpayer for the taxable year preceding the taxable year in which such qualified electric bicycle was acquired (and not with respect to such income for the taxable year in which such qualified electric bicycle was acquired),

"(B) the requirements of paragraphs (1) and (2) of subsection (e) shall apply to the taxpayer who acquired the qualified electric bicycle in the same manner as if the credit determined under this section with respect to such qualified electric bicycle were allowed to such taxpayer, and

"(C) subsection (e)(5) shall not apply.

"(7) ADVANCE PAYMENT TO REGISTERED RETAILERS. —

"(A) IN GENERAL. — The Secretary shall establish a program to make advance payments to any eligible entity in an amount equal to the cumulative amount of the credits allowed under subsection (a) with respect to any qualified electric bicycles sold by such entity for which an election described in paragraph (1) has been made.

"(B) EXCESSIVE PAYMENTS. — Rules similar to the rules of section 6417(c)(8) shall apply for purposes of this paragraph.

"(8) RETAILER. — For purposes of this subsection, the term 'retailer' means a person engaged in the trade or business of selling qualified electric bicycles in a State, the District of Columbia, the Commonwealth of Puerto Rico, any other territory or possession of the United States, or an Indian Tribe (as defined in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304)).

"(h) TERMINATION. — This section shall not apply to bicycles placed in service after December 31, 2026.".

(b) CONFORMING AMENDMENTS. —

(1) Section 1016(a) is amended by striking "and" at the end of paragraph (38), by striking the period at the end of paragraph (39) and inserting ", and", and by adding at the end the following new paragraph:

"(40) to the extent provided in section 36E(f)(1).".

(2) Section 6211(b)(4)(A) of such Code is amended by inserting "36E by reason of subsection (c)(2) thereof," before "32,".

(3) Section 6213(g)(2), as amended by the preceding provisions of this Act, is amended —

(A) in subparagraph (U), by striking "and" at the end,

(B) in subparagraph (V), by striking the period at the end and inserting ", and", and

(C) by adding at the end the following:

"(W) an omission of a correct vehicle identification number required under section 36E(d) (relating to electric bicycles credit) to be included on a return.".

(4) Section 6501(m) is amended by inserting "36E(f)(4)," after "35(g)(11),".

(5) Section 1324(b)(2) of title 31, United States Code, is amended by inserting "36E," after "36D,".

(c) CLERICAL AMENDMENT. — The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

"Sec. 36E. Electric bicycles.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to property placed in service after December 31, 2021, in taxable years ending after such date.

PART 5 — INVESTMENT IN THE GREEN WORKFORCE AND MANUFACTURING

SEC. 136501. EXTENSION OF THE ADVANCED ENERGY PROJECT CREDIT.

(a) EXTENSION OF CREDIT. — Section 48C is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection:

"(e) ADDITIONAL ALLOCATIONS. —

"(1) IN GENERAL. — Not later than 270 days after the date of enactment of this subsection, the Secretary shall establish a program to consider and award certifications for qualified investments eligible for credits under this section to qualifying advanced energy project sponsors.

"(2) ANNUAL LIMITATION. —

"(A) IN GENERAL. — The amount of credits that may be allocated under this subsection during any calendar year shall not exceed the annual credit limitation with respect to such year.

"(B) ANNUAL CREDIT LIMITATION. —

"(i) IN GENERAL. — For purposes of this subsection, the term 'annual credit limitation' means $5,000,000,000 for each of calendar years 2022 through 2023, $1,875,000,000 for each of calendar years 2024 through 2031, and zero thereafter.

"(ii) AMOUNT SET ASIDE FOR AUTOMOTIVE COMMUNITIES. —

"(I) IN GENERAL. — For purposes of clause (i), $800,000,000 of the annual credit limitation for each of calendar years 2022 through 2023 and $300,000,000 for each of calendar years 2024 through 2031 shall be allocated to qualified investments located within automotive communities.

"(II) AUTOMOTIVE COMMUNITIES. — For purposes of this clause, the term 'automotive communities' means a census tract and any directly adjoining census tract, including a nopopulation census tract, that has experienced major job losses in the automotive manufacturing sector since January 1, 1994, as determined by the Secretary.

"(iii) AMOUNT SET ASIDE FOR ENERGY COMMUNITIES. —

"(I) IN GENERAL. — For purposes of clause (i), $800,000,000 of the annual credit limitation for each of calendar years 2022 through 2023 and $300,000,000 for each of calendar years 2024 through 2031 shall be allocated to qualified investments located within energy communities.

"(II) ENERGY COMMUNITITES. — For purposes of this clause, the term 'energy communities' means a census tract or any directly adjoining census tract in which —

"(aa) after December 31, 1999, a coal mine has closed, or

"(bb) after December 31, 2009, a coal-fired electric generating unit has been retired.

"(C) CARRYOVER OF UNUSED LIMITATION. — If the annual credit limitation for any calendar year exceeds the aggregate amount designated for such year under this subsection, such limitation for the succeeding calendar year shall be increased by the amount of such excess. No amount may be carried under the preceding sentence to any calendar year after 2036.

"(3) CERTIFICATIONS. —

"(A) APPLICATION REQUIREMENT. — Each applicant for certification under this subsection shall submit an application at such time and containing such information as the Secretary may require.

"(B) TIME TO MEET CRITERIA FOR CERTIFICATION. — Each applicant for certification shall have 2 years from the date of acceptance by the Secretary of the application during which to provide to the Secretary evidence that the requirements of the certification have been met.

"(C) PERIOD OF ISSUANCE. — An applicant which receives a certification shall have 2 years from the date of issuance of the certification in order to place the project in service and to notify the Secretary that such project has been so placed in service, and if such project is not placed in service (and the Secretary so notified) by that time period, then the certification shall no longer be valid. If any certification is revoked under this subparagraph, the amount of the annual credit limitation under paragraph (2) for the calendar year in which such certification is revoked shall be increased by the amount of the credit with respect to such revoked certification.

"(4) SELECTION CRITERIA. — Selection criteria similar to those in subsection (d)(3) shall apply, except that in determining designations under this subsection, the Secretary shall —

"(A) in addition to the factors described in subsection (d)(3)(B), take into consideration which projects —

"(i) will provide the greatest net impact in avoiding or reducing anthropogenic emissions of greenhouse gases, as determined by the Secretary,

"(ii) will provide the greatest domestic job creation (both direct and indirect) during the credit period,

"(iii) will provide the greatest job creation within the vicinity of the project, particularly with respect to —

"(I) low-income communities (as described in section 45D(e)), and

"(II) dislocated workers who were previously employed in manufacturing, coal power plants, or coal mining, and

"(iv) will provide the greatest job creation in areas with a population that is at risk of experiencing higher or more adverse human health or environmental effects and a significant portion of such population is comprised of communities of color, low-income communities, Tribal and Indigenous communities, or individuals formerly employed in the fossil fuel industry, and

"(B) give the highest priority to projects which —

"(i) manufacture (other than primarily assembly of components) property described in a subclause of subsection (c)(1)(A)(i) (or components thereof), and

"(ii) have the greatest potential for commercial deployment of new applications.

"(5) DISCLOSURE OF ALLOCATIONS. — The Secretary shall, upon allocating a credit under this subsection, publicly disclose the identity of the applicant, the amount of the credit with respect to such applicant, and the project location for which such credit was allocated.

"(6) CREDIT CONDITIONED UPON WAGE AND APPRENTICESHIP REQUIREMENTS. —

"(A) BASE RATE. — For purposes of allocations under this subsection, the amount of the credit determined under subsection (a) shall be determined by substituting '6 percent' for '30 percent'.

"(B) ALTERNATIVE RATE. — In the case of any project which satisfies the requirements of paragraphs (7) and (8), the amount of the credit determined under subsection (a) shall be equal to such amount multiplied by 5.

"(7) PREVAILING WAGE REQUIREMENTS. —

"(A) IN GENERAL. — The requirements described in this paragraph with respect to a project are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in the re-equipping, expansion, or establishment of a manufacturing facility shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.

"(B) CORRECTION AND PENALTY RELATED TO FAILURE TO SATISFY WAGE REQUIREMENTS. — In the case of any taxpayer which fails to satisfy the requirement under subparagraph (A) with respect to any project —

"(i) rules similar to the rules of section 45(b)(8)(B) shall apply, and

"(ii) if the failure to satisfy the requirement under subparagraph (A) is not corrected pursuant to the rules described in clause (i), the certification with respect to the re-equipping, expansion, or establishment of a manufacturing facility shall no longer be valid.

"(8) APPRENTICESHIP REQUIREMENTS. — Rules similar to the rules of section 45(b)(9) shall apply.".

(b) MODIFICATION OF QUALIFYING ADVANCED ENERGY PROJECTS. —

(1) INCLUSION OF WATER AS A RENEWABLE RESOURCE. — Section 48C(c)(1)(A)(i)(I) is amended by inserting "water," after "sun,".

(2) ENERGY STORAGE SYSTEMS. — Section 48C(c)(1)(A)(i)(II) is amended by striking "an energy storage system for use with electric or hybrid-electric motor vehicles" and inserting "energy storage systems and components".

(3) MODIFICATION OF QUALIFYING ELECTRIC GRID PROPERTY. — Section 48C(c)(1)(A)(i)(III) is amended to read as follows:

"(III) electric grid modernization equipment or components,".

(4) USE OF CAPTURED CARBON. — Section 48C(c)(1)(A)(i)(IV) is amended by striking "sequester" and insert "use or sequester".

(5) ELECTRIC VEHICLES AND BICYCLES. — Section 48C(c)(1)(A)(i)(VI) is amended —

(A) by striking "new qualified plug-in electric drive motor vehicles (as defined by section 30D)" and inserting "vehicles described in sections 36C and 45Y, and bicycles described in section 36E", and

(B) and striking "and power control units" and inserting "power control units, and equipment used for charging or refueling".

(6) PROPERTY FOR PRODUCTION OF HYDROGEN. — Section 48C(c)(1)(A)(i) is amended by striking "or" at the end of subclause (VI), by redesignating subclause (VII) as subclause (VIII), an by inserting after subclause (VI) the following new subclause:

"(VII) property designed to be used to produce qualified clean hydrogen (as defined in section 45X), or".

(7) RECYCLING OF ADVANCED ENERGY PROPERTY. — Section 48C(c)(1) is amended by adding at the end the following new subparagraph:

"(C) SPECIAL RULE FOR CERTAIN RECYCLING FACILITIES. — A facility which recycles batteries or similar energy storage property described in subparagraph (A)(i) shall be treated as part of a manufacturing facility described in such subparagraph.".

(c) DENIAL OF DOUBLE BENEFIT. — 48C(f), as redesignated by this section, is amended by striking "or 48B" and inserting "48B, 48F, 45Q, or 45X".

(d) QUALIFYING ADVANCED ENERGY PROJECT. — Section 48C(c)(1)(A) is amended by striking "and" at the end of clause (i), by redesignating clause (ii) as clause (iii), and by inserting after clause (i) the following new clause:

"(ii) which re-equips a manufacturing facility with equipment designed to reduce greenhouse gas emissions by at least 20 percent, as determined by the Secretary, and".

(e) EFFECTIVE DATE. — The amendments made by this section shall take effect on January 1, 2022.

SEC. 136502. LABOR COSTS OF INSTALLING MECHANICAL INSULATION PROPERTY.

(a) IN GENERAL. — Subpart D of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is further amended by adding at the end the following new section:

"SEC. 45Z. LABOR COSTS OF INSTALLING MECHANICAL INSULATION PROPERTY.

"(a) IN GENERAL. — For purposes of section 38, the mechanical insulation labor costs credit determined under this section for any taxable year is an amount equal to 2 percent of the mechanical insulation labor costs paid or incurred by the taxpayer during such taxable year.

"(b) MECHANICAL INSULATION LABOR COSTS. — For purposes of this section —

"(1) IN GENERAL. — The term 'mechanical insulation labor costs' means the labor cost of installing mechanical insulation property with respect to a mechanical system referred to in paragraph (2)(A) which was originally placed in service not less than 1 year before the date on which such mechanical insulation property is installed.

"(2) MECHANICAL INSULATION PROPERTY. — The term 'mechanical insulation property' means insulation materials, and facings and accessory products installed in connection to such insulation materials —

"(A) placed in service in connection with a mechanical system which —

"(i) is located in the United States,

"(ii) is of a character subject to an allowance for depreciation, and

"(iii) meets the requirements of section 434.403 of title 10, Code of Federal Regulations (as in effect on the date of enactment of this section), and

"(B) which result in a reduction in energy loss from the mechanical system which is greater than the expected reduction from the installation of insulation materials which meet the minimum requirements of Reference Standard 90.1 (as defined in section 179D(c)(2)).

"(c) WAGE AND APPRENTICESHIP REQUIREMENTS. —

"(1) IN GENERAL. — In the case of any project which meets the prevailing wage and apprenticeship requirements of this subsection, the amount of credit determined under subsection (a) shall be multiplied by 5.

"(2) WAGE REQUIREMENTS. — Rules similar to the rules of section 45(b)(8) shall apply.

"(3) APPRENTICESHIP REQUIREMENTS. — Rules similar to the rules of section 45(b)(9) shall apply.

"(d) TERMINATION. — This section shall not apply to mechanical insulation labor costs paid or incurred after December 31, 2027.".

(b) CREDIT ALLOWED AS PART OF GENERAL BUSINESS CREDIT. — Section 38(b), as amended by the preceding provisions of this Act, is further amended by striking "plus" at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting ", plus", and by adding at the end the following new paragraph:

"(38) the mechanical insulation labor costs credit determined under section 45Z(a).".

(c) CONFORMING AMENDMENTS. —

(1) Section 280C is amended by adding at the end the following new subsection:

"(i) MECHANICAL INSULATION LABOR COSTS CREDIT. —

"(1) IN GENERAL. — No deduction shall be allowed for that portion of the mechanical insulation labor costs (as defined in section 45Z(b)) otherwise allowable as deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section 45Z(a).

"(2) SIMILAR RULE WHERE TAXPAYER CAPITALIZES RATHER THAN DEDUCTS EXPENSES. — If —

"(A) the amount of the credit determined for the taxable year under section 45Z(a), exceeds

"(B) the amount of allowable as a deduction for such taxable year for mechanical insulation labor costs (determined without regard to paragraph (1)), the amount chargeable to capital account for the taxable year for such costs shall be reduced by the amount of such excess.".

(2) The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is further amended by adding at the end the following new item:

"Sec. 45Z. Labor costs of installing mechanical insulation property.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to amounts paid or incurred after December 31, 2021, in taxable years ending after such date.

SEC. 136503. ADVANCED MANUFACTURING INVESTMENT CREDIT.

(a) IN GENERAL. — Subpart E of part IV of subchapter A of chapter 1 is amended by inserting after section 48D the following new section:

"SEC. 48E. ADVANCED MANUFACTURING INVESTMENT CREDIT.

"(a) ESTABLISHMENT OF CREDIT. —

"(1) IN GENERAL. — For purposes of section 46, the advanced manufacturing investment credit for any taxable year is an amount equal to the applicable percentage of the qualified investment for such taxable year with respect to any advanced manufacturing facility.

"(2) APPLICABLE PERCENTAGE. —

"(A) BASE AMOUNT. — In the case of any advanced manufacturing facility which does not satisfy the requirements described in clauses (i) and (ii) of subparagraph (B), the applicable percentage shall be 5 percent.

"(B) ALTERNATIVE AMOUNT. — In the case of any advanced manufacturing facility which —

"(i) subject to subparagraph (B) of subsection (c)(2), satisfies the requirements under subparagraph (A) of such subsection, and

"(ii) with respect to the construction of such facility, satisfies the apprenticeship requirements under subsection (c)(3), the applicable percentage shall be 25 percent.

"(b) QUALIFIED INVESTMENT. —

"(1) IN GENERAL. — For purposes of subsection (a)(1), the qualified investment with respect to any advanced manufacturing facility for any taxable year is the basis of any qualified property placed in service by the taxpayer during such taxable year which is part of an advanced manufacturing facility.

"(2) QUALIFIED PROPERTY. —

"(A) IN GENERAL. — For purposes of this subsection, the term 'qualified property' means property —

"(i) which is tangible property,

"(ii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable,

"(iii) which is —

"(I) constructed, reconstructed, or erected by the taxpayer, or

"(II) acquired by the taxpayer if the original use of such property commences with the taxpayer, and

"(iv) which is integral to the operation of the advanced manufacturing facility.

"(B) BUILDINGS AND STRUCTURAL COMPONENTS. —

"(i) IN GENERAL. — The term 'qualified property' shall include any building or its structural components which otherwise satisfy the requirements under subparagraph (A).

"(ii) EXCEPTION. — Clause (i) shall not apply with respect to any offices or other administrative buildings.

"(3) ADVANCED MANUFACTURING FACILITY. — For purposes of this subpart, the term 'advanced manufacturing facility' means a facility —

"(A) for which the primary purpose is the manufacturing of semiconductors and semiconductor tooling equipment, and

"(B) the construction of which begins before January 1, 2027.

"(4) COORDINATION WITH REHABILITATION CREDIT. — The qualified investment with respect to any advanced manufacturing facility for any taxable year shall not include that portion of the basis of any property which is attributable to qualified rehabilitation expenditures (as defined in section 47(c)(2)).

"(c) SPECIAL RULES. —

"(1) CERTAIN PROGRESS EXPENDITURE RULES MADE APPLICABLE. — Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of subsection (a).

"(2) WAGE REQUIREMENTS. —

"(A) IN GENERAL. — The requirements described in this subparagraph with respect to any facility are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in —

"(i) the construction of such facility, and

"(ii) for any year during the 5-year period beginning on the date the facility is originally placed in service, the alteration or repair of such facility, shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as most recently determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.

"(B) CORRECTION AND PENALTY RELATED TO FAILURE TO SATISFY WAGE REQUIREMENTS. — Rules similar to the rules of section 45(b)(8)(B) shall apply.

"(C) RECAPTURE. — The Secretary shall, by regulations or other guidance, provide for recapturing the benefit of any increase in the credit allowed under paragraph (2)(B) of subsection (a), with respect to any project which does not satisfy the requirements under subparagraph (A) (after application of subparagraph (B)) for the period described in clause (ii) of subparagraph (A) (but which does not cease to be investment credit property within the meaning of section 50(a)). The period and percentage of such recapture shall be determined under rules similar to the rules of section 50(a).

"(3) APPRENTICESHIP REQUIREMENTS. — Rules similar to the rules of section 45(b)(9) shall apply.

"(4) REGULATIONS AND GUIDANCE. — The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this section, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of establishing the requirements of this section.".

(b) ELECTIVE PAYMENT OF CREDIT. — Section 6417(b), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:

"(10) The advanced manufacturing investment credit determined under section 48E.".

(c) CONFORMING AMENDMENTS. —

(1) Section 46 is amended —

(A) by striking "and" at the end of paragraph (6),

(B) by striking the period at the end of paragraph (7) and inserting ", and", and

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

"(8) the advanced manufacturing investment credit.".

(2) Section 49(a)(1)(C) is amended —

(A) by striking "and" at the end of clause (vi),

(B) by striking the period at the end of clause (vii) and inserting ", and", and

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

"(viii) the basis of any qualified property (as defined in section 48E(b)(2)) which is part of an advanced manufacturing facility.".

(3) Section 50(a)(2)(E) is amended by striking "or 48D(e)" and inserting "48D(e), or 48E(c)(1)".

(4) The table of sections for subpart E of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 48D the following new item:

"48E. Advanced manufacturing investment credit.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to property placed in service after December 31, 2021 and, for any property the construction of which begins prior to January 1, 2022, only to the extent of the basis thereof attributable to the construction, reconstruction, or erection after December 31, 2021.

SEC. 136504. ADVANCED MANUFACTURING PRODUCTION CREDIT.

(a) IN GENERAL. — Subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section:

"SEC. 45AA. ADVANCED MANUFACTURING PRODUCTION CREDIT.

"(a) IN GENERAL. —

"(1) ALLOWANCE OF CREDIT. — For purposes of section 38, the advanced manufacturing production credit for any taxable year is an amount equal to the sum of the credit amounts determined under subsection (b) with respect to each eligible component which is —

"(A) produced by such taxpayer, and

"(B) during the taxable year, sold by the taxpayer to an unrelated person for the use of such person in their trade or business.

"(2) PRODUCTION AND SALE MUST BE IN TRADE OR BUSINESS. — Any eligible component produced and sold by the taxpayer shall be taken into account only if the production and sale described in paragraph (1) is in a trade or business of the taxpayer.

"(b) CREDIT AMOUNT. —

"(1) IN GENERAL. — Subject to paragraph (3), the amount determined under this subsection with respect to any eligible component, including any eligible component it incorporates, shall be equal to —

"(A) in the case of a thin film photovoltaic cell, an amount equal to the product of —

"(i) 5 cents, multiplied by

"(ii) the capacity of such cell (expressed on a per direct current watt basis)

"(B) in the case of a crystalline photovoltaic cell, an amount equal to the product of —

"(i) 4 cents, multiplied by

"(ii) the capacity of such cell (expressed on a per direct current watt basis),

"(C) in the case of a photovoltaic wafer, $12 per square meter,

"(D) in the case of solar grade polysilicon, $3 per kilogram,

"(E) in the case of a solar module, an amount equal to the product of —

"(i) 7 cents, multiplied by

"(ii) the capacity of such module (expressed on a per direct current watt basis), and

"(F) in the case of a wind energy component, an amount equal to the product of —

"(i) the applicable amount with respect to such component, multiplied by

"(ii) the total rated capacity (expressed on a per watt basis) of the completed wind turbine for which such component is designed.

"(2) APPLICABLE AMOUNT. — For purposes of paragraph (1)(F), the applicable amount with respect to any wind energy component shall be —

"(A) in the case of a blade, 2 cents,

"(B) in the case of a nacelle, 5 cents,

"(C) in the case of a tower, 3 cents, and

"(D) in the case of an offshore wind foundation —

"(i) which uses a fixed platform, 2 cents, or

"(ii) which uses a floating platform, 4 cents.

"(3) PHASE OUT. —

"(A) IN GENERAL. — In the case of any eligible component sold after December 31, 2026, the amount determined under this subsection with respect to such component shall be equal to the product of —

"(i) the amount determined under paragraph (1) with respect to such component, as determined without regard to this paragraph, multiplied by

"(ii) the phase out percentage under subparagraph (B).

"(B) PHASE OUT PERCENTAGE. — The phase out percentage under this subparagraph is equal to —

"(i) in the case of an eligible component sold during calendar year 2027, 75 percent,

"(ii) in the case of an eligible component sold during calendar year 2028, 50 percent,

"(iii) in the case of an eligible component sold during calendar year 2029, 25 percent,

"(iv) in the case of an eligible component sold after December 31, 2029, 0 percent.

"(c) DEFINITIONS. — For purposes of this section —

"(1) ELIGIBLE COMPONENT. —

"(A) IN GENERAL. — The term 'eligible component' means —

"(i) any solar energy component, and

"(ii) any wind energy component.

"(B) APPLICATION WITH OTHER CREDITS. — With respect to any taxable year, the term 'eligible component' shall not include any property which is produced at a facility which, for such taxable year or any previous taxable year, the basis of any property which is part of such facility is taken into account for purposes of the credit allowed under section 48C or 48E.

"(2) SOLAR ENERGY COMPONENT. —

"(A) IN GENERAL. — The term 'solar energy component' means any of the following:

"(i) Solar modules.

"(ii) Photovoltaic cells.

"(iii) Photovoltaic wafers.

"(iv) Solar grade polysilicon.

"(B) ASSOCIATED DEFINITIONS. —

"(i) PHOTOVOLTAIC CELL. — The term 'photovoltaic cell' means the smallest semiconductor element of a solar module which performs the immediate conversion of light into electricity.

"(ii) PHOTOVOLTAIC WAFER. — The term 'photovoltaic wafer' means a thin slice, sheet, or layer of semiconductor material of at least 240 square centimeters produced by a single manufacturer —

"(I) either —

"(aa) directly from molten or evaporated solar grade polysilicon or deposition of solar grade thin film semiconductor photon absorber layer, or

"(bb) through formation of an ingot from molten polysilicon and subsequent slicing, and

"(II) which comprises the substrate or absorber layer of one or more photovoltaic cells.

"(iii) SOLAR GRADE POLYSILICON. — The term 'solar grade polysilicon' means silicon which is —

"(I) suitable for use in photovoltaic manufacturing, and

"(II) purified to a minimum purity of 99.999999 percent silicon by mass.

"(iv) SOLAR MODULE. — The term 'solar module' means the connection and lamination of photovoltaic cells into an environmentally protected final assembly which is —

"(I) suitable to generate electricity when exposed to sunlight, and

"(II) ready for installation without an additional manufacturing process.

"(3) WIND ENERGY COMPONENT. —

"(A) IN GENERAL. — The term 'wind energy component' means any of the following:

"(i) Blades.

"(ii) Nacelles.

"(iii) Towers.

"(iv) Offshore wind foundations.

"(B) ASSOCIATED DEFINITIONS. —

"(i) BLADE. — The term 'blade' means an airfoil-shaped blade which is responsible for converting wind energy to low-speed rotational energy.

"(ii) OFFSHORE WIND FOUNDATION. — The term 'offshore wind foundation' means the component which secures an offshore wind tower and any above-water turbine components to the seafloor using —

"(I) fixed platforms, such as offshore wind monopiles, jackets, or gravity-based foundations, or

"(II) floating platforms and associated mooring systems.

"(iii) NACELLE. — The term 'nacelle' means the assembly of the drivetrain and other tower-top components of a wind turbine (with the exception of the blades and the hub) within their cover housing.

"(iv) TOWER. — The term 'tower' means a tubular or lattice structure which supports the nacelle and rotor of a wind turbine.

"(d) SPECIAL RULES. — In this section —

"(1) RELATED PERSONS. — Persons shall be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section 52(b). In the case of a corporation which is a member of an affiliated group of corporations filing a consolidated return, such corporation shall be treated as selling components to an unrelated person if such component is sold to such a person by another member of such group.

"(2) ONLY PRODUCTION IN THE UNITED STATES TAKEN INTO ACCOUNT. — Sales shall be taken into account under this section only with respect to eligible components the production of which is within —

"(A) the United States (within the meaning of section 638(1)), or

"(B) a possession of the United States (within the meaning of section 638(2)).

"(3) PASS-THRU IN THE CASE OF ESTATES AND TRUSTS. — Under regulations prescribed by the Secretary, rules similar to the rules of subsection (d) of section 52 shall apply.

"(4) CREDIT EQUAL TO 10 PERCENT OF THE CREDIT AMOUNT FOR UNION FACILITIES. — In the case of a facility operating under a collective bargaining agreement negotiated by an employee organization (as defined in section 412(c)(4)), determined in a manner consistent with section 7701(a)(46), for purposes of determining the amount of the credit under subsection (a) with respect to eligible components produced by such facility, the applicable amount under subsection (b) of such subsection shall be increased by an amount equal to 10 percent of the amount otherwise in effect under such subsection.".

(b) ELECTIVE PAYMENT OF CREDIT. — Section 6417(b), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:

"(11) The credit for advanced manufacturing production under section 45AA.".

(c) CONFORMING AMENDMENTS. —

(1) Section 38(b) of the Internal Revenue Code of 1986 is amended —

(A) in paragraph (37), by striking "plus" at the end,

(B) in paragraph (38), by striking the period at the end and inserting ", plus", and

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

"(39) the advanced manufacturing production credit determined under section 45AA(a).".

(2) The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

"Sec. 45AA. Advanced manufacturing production credit.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to components produced and sold after December 31, 2021.

PART 6 — ENVIRONMENTAL JUSTICE

SEC. 136601. QUALIFIED ENVIRONMENTAL JUSTICE PROGRAM CREDIT.

(a) IN GENERAL. — Subpart C of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is amended by inserting after section 36F the following new section:

"SEC. 36G. QUALIFIED ENVIRONMENTAL JUSTICE PROGRAMS.

"(a) ALLOWANCE OF CREDIT. — In the case of an eligible educational institution, there shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to the applicable percentage of the amounts paid or incurred by such taxpayer during such taxable year which are necessary for a qualified environmental justice program.

"(b) QUALIFIED ENVIRONMENTAL JUSTICE PROGRAM. — For purposes of this section —

"(1) IN GENERAL. — The term 'qualified environmental justice program' means a program conducted by one or more eligible educational institutions that is designed to address, or improve data about, qualified environmental stressors for the primary purpose of improving, or facilitating the improvement of, health and economic outcomes of individuals residing in low-income areas or areas that experience, or are at risk of experiencing, multiple exposures to qualified environmental stressors.

"(2) QUALIFIED ENVIRONMENTAL STRESSOR. — The term 'qualified environmental stressor' means, with respect to an area, a contamination of the air, water, soil, or food with respect to such area or a change relative to historical norms of the weather conditions of such area, including —

"(A) toxic pollutants (such as lead, pesticides, or fine particulate matter) in air, soil, food, or water,

"(B) high rates of asthma prevalence and incidence, and

"(C) such other adverse human health or environmental effects as are identified by the Secretary.

"(c) ELIGIBLE EDUCATIONAL INSTITUTION. — For purposes of this section, the term 'eligible educational institution' means an institution of higher education (as such term is defined in section 101 or 102(c) of the Higher Education Act of 1965) that is eligible to participate in a program under title IV of such Act.

"(d) APPLICABLE PERCENTAGE. — For purposes of this section, the term 'applicable percentage' means —

"(1) in the case of a program involving material participation of faculty and students of an institution described in section 371(a) of the Higher Education Act of 1965, 30 percent, and

"(2) in all other cases, 20 percent.

"(e) CREDIT ALLOCATION. —

"(1) ALLOCATION. —

"(A) IN GENERAL. — The Secretary shall allocate credit dollar amounts under this section to eligible educational institutions, for qualified environmental justice programs, that —

"(i) submit applications at such time and in such manner as the Secretary may provide, and

"(ii) are selected by the Secretary under subparagraph (B).

"(B) SELECTION CRITERIA. — The Secretary shall select applications on the basis of the following criteria:

"(i) The extent of participation of faculty and students of an institution described in section 371(a) of the Higher Education Act of 1965.

"(ii) The extent of the expected effect on the health or economic outcomes of individuals residing in areas within the United States that are low-income areas or areas that experience, or are at risk of experiencing, multiple exposures to qualified environmental stressors.

"(iii) The creation or significant expansion of qualified environmental justice programs.

"(2) LIMITATIONS. —

"(A) IN GENERAL. — The amount of the credit determined under this section for any taxable year to any eligible educational institution for any qualified environmental justice program shall not exceed the excess of —

"(i) the credit dollar amount allocated to such institution for such program under this subsection, over

"(ii) the credits previously claimed by such institution for such program under this section.

"(B) FIVE-YEAR LIMITATION. — No amounts paid or incurred after the 5-year period beginning on the date a credit dollar amount is allocated to an eligible educational institution for a qualified environmental justice program shall be taken into account under subsection (a) with respect to such institution for such program.

"(C) ALLOCATION LIMITATION. — The total amount of credits that may be allocated under the program shall not exceed —

"(i) $1,000,000,000 for each of taxable years 2022 through 2031, and

"(ii) $0 for each subsequent year.

"(D) CARRYOVER OF UNUSED LIMITATION. — If the annual credit limitation for any calendar year exceeds the aggregate amount designated for such year under this subsection, such limitation for the succeeding calendar year shall be increased by the amount of such excess. No amount may be carried under the preceding sentence to any calendar year after 2036.

"(f) REQUIREMENTS. —

"(1) IN GENERAL. — An eligible educational institution that has been allocated credit dollar amounts under this section for a qualified environmental justice project for a taxable year shall —

"(A) make publicly available the application submitted to the Secretary under subsection (e) with respect to such project, and

"(B) submit an annual report to the Secretary that describes the amounts paid or incurred for, and expected impact of, such project.

"(2) FAILURE TO COMPLY. — In the case of an eligible educations institution that has failed to comply with the requirements of this subsection, the credit dollar amount allocated to such institution under this section is deemed to be $0.

"(g) PUBLIC DISCLOSURE. — The Secretary, upon making an allocation of credit dollar amounts under this section, shall publicly disclose —

"(1) the identity of the eligible educational institution receiving the allocation, and

"(2) the amount of such allocation.".

(b) GROSS-UP OF PAYMENTS IN CASE OF SEQUESTRATION. — In the case of any payment made as a refund due to an overpayment as a result of section 36G of the Internal Revenue Code of 1986 made after the date of the enactment of this Act to which sequestration applies, the amount of such payment shall be increased to an amount equal to —

(1) such payment (determined before such sequestration), multiplied by (2) the quotient obtained by dividing 1 by the amount by which 1 exceeds the percentage reduction in such payment pursuant to such sequestration.

For purposes of this subsection, the term "sequestration" means any reduction in direct spending ordered in accordance with a sequestration report prepared by the Director of the Office and Management and Budget pursuant to the Balanced Budget and Emergency Deficit Control Act of 1985 or the Statutory Pay-As-You-Go Act of 2010.

(c) CONFORMING AMENDMENTS. —

(1) Section 6211(b)(4)(A), as amended by the preceding provisions of this Act, is amended by inserting "36G," after "36F,".

(2) Paragraph (2) of section 1324(b) of title 31, United States Code, as amended by the preceding provisions of this Act, is amended by inserting "36G," after "36F,".

(d) CLERICAL AMENDMENT. — The table of sections for subpart C of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is amended by inserting after the item relating to section 36F the following new item:

"Sec. 36G. Qualified environmental justice programs.".

(e) EFFECTIVE DATE. — The amendments made by this section shall take effect on January 1, 2022.

PART 7 — SUPERFUND

SEC. 136701. REINSTATEMENT OF SUPERFUND.

(a) HAZARDOUS SUBSTANCE SUPERFUND FINANCING RATE. —

(1) EXTENSION. — Section 4611(e) is amended to read as follows:

"(e) APPLICATION OF HAZARDOUS SUBSTANCE SUPERFUND FINANCING RATE. — The Hazardous Substance Superfund financing rate under this section shall apply after June 30, 2022.".

(2) ADJUSTMENT FOR INFLATION. —

(A) Section 4611(c)(2)(A) is amended by striking "9.7 cents" and inserting "16.4 cents".

(B) Section 4611(c) is amended by adding at the end the following:

"(3) ADJUSTMENT FOR INFLATION. —

"(A) IN GENERAL. — In the case of a year beginning after 2022, the amount in paragraph (2)(A) shall be increased by an amount equal to —

"(i) such amount, multiplied by

"(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting 'calendar year 2021' for 'calendar year 2016' in subparagraph (A)(ii) thereof.

"(B) ROUNDING. — If any amount as adjusted under subparagraph (A) is not a multiple of $0.01, such amount shall be rounded to the next lowest multiple of $0.01.".

(b) AUTHORITY FOR ADVANCES. — Section 9507(d)(3)(B) is amended by striking "December 31, 1995" and inserting "December 31, 2031".

(c) EFFECTIVE DATE. — The amendments made by this section shall take effect on July 1, 2022.

PART 8 — INCENTIVES FOR CLEAN ELECTRICITY AND CLEAN TRANSPORTATION

SEC. 136801. CLEAN ELECTRICITY PRODUCTION CREDIT.

(a) IN GENERAL. — Subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section:

"SEC. 45BB. CLEAN ELECTRICITY PRODUCTION CREDIT.

"(a) AMOUNT OF CREDIT. —

"(1) IN GENERAL. — For purposes of section 38, the clean electricity production credit for any taxable year is an amount equal to the product of —

"(A) the kilowatt hours of electricity —

"(i) produced by the taxpayer at a qualified facility, and

"(ii)(I) sold by the taxpayer to an unrelated person during the taxable year, or

"(II) in the case of a qualified facility which is equipped with a metering device which is owned and operated by an unrelated person, sold, consumed, or stored by the taxpayer during the taxable year, multiplied by

"(B) the applicable amount with respect to such qualified facility.

"(2) APPLICABLE AMOUNT. —

"(A) BASE AMOUNT. — Subject to subsection (g)(7), in the case of any qualified facility which is not described in clause (i) of subparagraph (B) and does not satisfy the requirements described in clause (ii) of such subparagraph, the applicable amount shall be 0.3 cents.

"(B) ALTERNATIVE AMOUNT. — Subject to subsection (g)(7), in the case of any qualified facility —

"(i) with a maximum net output of less than 1 megawatt, or

"(ii) which —

"(I) satisfies the requirements under paragraph (9) of subsection (g), and

"(II) with respect to the construction of such facility, satisfies the requirements under paragraph (10) of subsection (g), the applicable amount shall be 1.5 cents.

"(b) QUALIFIED FACILITY. —

"(1) IN GENERAL. —

"(A) DEFINITION. — Subject to subparagraphs (B), (C), and (D), the term 'qualified facility' means a facility owned by the taxpayer —

"(i) which is used for the generation of electricity,

"(ii) the construction of which begins after December 31, 2026, and

"(iii) for which the greenhouse gas emissions rate (as determined under paragraph (2)) is not greater than zero.

"(B) 10-YEAR PRODUCTION CREDIT. — For purposes of this section, a facility shall only be treated as a qualified facility during the 10-year period beginning on the date the facility was originally placed in service.

"(C) EXPANSION OF FACILITY; INCREMENTAL PRODUCTION. — The term 'qualified facility' shall include either of the following in connection with a facility described in subparagraph (A) (without regard to clause (ii) of such subparagraph) the construction of which begins before January 1, 2027, but only to the extent of the increased amount of electricity produced at the facility by reason of the following:

"(i) A new unit the construction of which begins after December 31, 2026.

"(ii) Any additions of capacity the construction of which begins after December 31, 2026.

"(D) COORDINATION WITH OTHER CREDITS. — The term 'qualified facility' shall not include any facility for which a credit determined under section 45, 45J, 45Q, 48, 48A, or 48F is allowed under section 38 for the taxable year or any prior taxable year.

"(2) GREENHOUSE GAS EMISSIONS RATE. —

"(A) IN GENERAL. — For purposes of this section, the term 'greenhouse gas emissions rate' means the amount of greenhouse gases emitted into the atmosphere by a facility in the production of electricity, expressed as grams of CO2e per KWh.

"(B) FUEL COMBUSTION AND GASIFICATION. — In the case of a facility which produces electricity through combustion or gasification, the greenhouse gas emissions rate for such facility shall be equal to the net rate of greenhouse gases emitted into the atmosphere by such facility (taking into account lifecycle greenhouse gas emissions, as described in section 211(o)(1)(H) of the Clean Air Act (42 U.S.C. 7545(o)(1)(H))) in the production of electricity, expressed as grams of CO2e per KWh.

"(C) ESTABLISHMENT OF EMISSIONS RATES FOR FACILITIES. —

"(i) PUBLISHING EMISSIONS RATES. — The Secretary shall annually publish a table that sets forth the greenhouse gas emissions rates for types or categories of facilities, which a taxpayer shall use for purposes of this section.

"(ii) PROVISIONAL EMISSIONS RATE. — In the case of any facility for which an emissions rate has not been established by the Secretary, a taxpayer which owns such facility may file a petition with the Secretary for determination of the emissions rate with respect to such facility.

"(D) CARBON CAPTURE AND SEQUESTRATION EQUIPMENT. — For purposes of this subsection, the amount of greenhouse gases emitted into the atmosphere by a facility in the production of electricity shall not include any qualified carbon dioxide that is captured by the taxpayer and —

"(i) pursuant to any regulations established under paragraph (2) of section 45Q(f), disposed of by the taxpayer in secure geological storage, or

"(ii) utilized by the taxpayer in a manner described in paragraph (5) of such section.

"(c) INFLATION ADJUSTMENT. —

"(1) IN GENERAL. — In the case of a calendar year beginning after 2021, the 0.3 cent amount in paragraph (2)(A) of subsection (a) and the 1.5 cent amount in paragraph (2)(B) of such subsection shall each be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale or use of the electricity occurs. If any amount as increased under the preceding sentence is not a multiple of 0.1 cent, such amount shall be rounded to the nearest multiple of 0.1 cent.

"(2) ANNUAL COMPUTATION. — The Secretary shall, not later than April 1 of each calendar year, determine and publish in the Federal Register the inflation adjustment factor for such calendar year in accordance with this subsection.

"(3) INFLATION ADJUSTMENT FACTOR. — The term 'inflation adjustment factor' means, with respect to a calendar year, a fraction the numerator of which is the GDP implicit price deflator for the preceding calendar year and the denominator of which is the GDP implicit price deflator for the calendar year 1992. The term 'GDP implicit price deflator' means the most recent revision of the implicit price deflator for the gross domestic product as computed and published by the Department of Commerce before March 15 of the calendar year.

"(d) CREDIT PHASE-OUT. —

"(1) IN GENERAL. — The amount of the clean electricity production credit under subsection (a) for any qualified facility the construction of which begins during a calendar year described in paragraph (2) shall be equal to the product of —

"(A) the amount of the credit determined under subsection (a) without regard to this subsection, multiplied by

"(B) the phase-out percentage under paragraph (2).

"(2) PHASE-OUT PERCENTAGE. — The phase-out percentage under this paragraph is equal to —

"(A) for a facility the construction of which begins during the first calendar year following the applicable year, 100 percent,

"(B) for a facility the construction of which begins during the second calendar year following the applicable year, 75 percent,

"(C) for a facility the construction of which begins during the third calendar year following the applicable year, 50 percent, and

"(D) for a facility the construction of which begins during any calendar year subsequent to the calendar year described in subparagraph (C), 0 percent.

"(3) APPLICABLE YEAR. — For purposes of this subsection, the term 'applicable year' means the later of —

"(A) the calendar year in which the Secretary determines that the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2021, or

"(B) 2031.

"(e) DEFINITIONS. — For purposes of this section:

"(1) CO2e PER KWh. — The term 'CO2e per KWh' means, with respect to any greenhouse gas, the equivalent carbon dioxide (as determined based on global warming potential) per kilowatt hour of electricity produced.

"(2) GREENHOUSE GAS. — The term 'greenhouse gas' has the same meaning given such term under section 211(o)(1)(G) of the Clean Air Act (42 U.S.C. 7545(o)(1)(G)), as in effect on the date of the enactment of this section.

"(3) QUALIFIED CARBON DIOXIDE. — The term 'qualified carbon dioxide' means carbon dioxide captured from an industrial source which —

"(A) would otherwise be released into the atmosphere as industrial emission of greenhouse gas,

"(B) is measured at the source of capture and verified at the point of disposal or utilization, and

"(C) is captured and disposed or utilized within the United States (within the meaning of section 638(1)) or a possession of the United States (within the meaning of section 638(2)).

"(f) GUIDANCE. — Not later than January 1, 2027, the Secretary shall issue guidance regarding implementation of this section, including calculation of greenhouse gas emission rates for qualified facilities and determination of clean electricity production credits under this section.

"(g) SPECIAL RULES. —

"(1) ONLY PRODUCTION IN THE UNITED STATES TAKEN INTO ACCOUNT. — Consumption or sales shall be taken into account under this section only with respect to electricity the production of which is within —

"(A) the United States (within the meaning of section 638(1)), or

"(B) a possession of the United States (within the meaning of section 638(2)).

"(2) COMBINED HEAT AND POWER SYSTEM PROPERTY. —

"(A) IN GENERAL. — For purposes of subsection (a) —

"(i) the kilowatt hours of electricity produced by a taxpayer at a qualified facility shall include any production in the form of useful thermal energy by any combined heat and power system property within such facility, and

"(ii) the amount of greenhouse gases emitted into the atmosphere by such facility in the production of such useful thermal energy shall be included for purposes of determining the greenhouse gas emissions rate for such facility.

"(B) COMBINED HEAT AND POWER SYSTEM PROPERTY. — For purposes of this paragraph, the term 'combined heat and power system property' has the same meaning given such term by section 48(c)(3) (without regard to subparagraphs (A)(iv), (B), and (D) thereof).

"(C) CONVERSION FROM BTU TO KWH. —

"(i) IN GENERAL. — For purposes of subparagraph (A)(i), the amount of kilowatt hours of electricity produced in the form of useful thermal energy shall be equal to the quotient of —

"(I) the total useful thermal energy produced by the combined heat and power system property within the qualified facility, divided by "(II) the heat rate for such facility.

"(ii) HEAT RATE. — For purposes of this subparagraph, the term 'heat rate' means the amount of energy used by the qualified facility to generate 1 kilowatt hour of electricity, expressed as British thermal units per net kilowatt hour generated.

"(3) PRODUCTION ATTRIBUTABLE TO THE TAXPAYER. — In the case of a qualified facility in which more than 1 person has an ownership interest, except to the extent provided in regulations prescribed by the Secretary, production from the facility shall be allocated among such persons in proportion to their respective ownership interests in the gross sales from such facility.

"(4) RELATED PERSONS. — Persons shall be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section 52(b). In the case of a corporation which is a member of an affiliated group of corporations filing a consolidated return, such corporation shall be treated as selling electricity to an unrelated person if such electricity is sold to such a person by another member of such group.

"(5) PASS-THRU IN THE CASE OF ESTATES AND TRUSTS. — Under regulations prescribed by the Secretary, rules similar to the rules of subsection (d) of section 52 shall apply.

"(6) ALLOCATION OF CREDIT TO PATRONS OF AGRICULTURAL COOPERATIVE. —

"(A) ELECTION TO ALLOCATE. —

"(i) IN GENERAL. — In the case of an eligible cooperative organization, any portion of the credit determined under subsection (a) for the taxable year may, at the election of the organization, be apportioned among patrons of the organization on the basis of the amount of business done by the patrons during the taxable year.

"(ii) FORM AND EFFECT OF ELECTION. — An election under clause (i) for any taxable year shall be made on a timely filed return for such year. Such election, once made, shall be irrevocable for such taxable year. Such election shall not take effect unless the organization designates the apportionment as such in a written notice mailed to its patrons during the payment period described in section 1382(d).

"(B) TREATMENT OF ORGANIZATIONS AND PATRONS. — The amount of the credit apportioned to any patrons under subparagraph (A) —

"(i) shall not be included in the amount determined under subsection (a) with respect to the organization for the taxable year, and

"(ii) shall be included in the amount determined under subsection (a) for the first taxable year of each patron ending on or after the last day of the payment period (as defined in section 1382(d)) for the taxable year of the organization or, if earlier, for the taxable year of each patron ending on or after the date on which the patron receives notice from the cooperative of the apportionment.

"(C) SPECIAL RULES FOR DECREASE IN CREDITS FOR TAXABLE YEAR. — If the amount of the credit of a cooperative organization determined under subsection (a) for a taxable year is less than the amount of such credit shown on the return of the cooperative organization for such year, an amount equal to the excess of —

"(i) such reduction, over

"(ii) the amount not apportioned to such patrons under subparagraph (A) for the taxable year, shall be treated as an increase in tax imposed by this chapter on the organization. Such increase shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter.

"(D) ELIGIBLE COOPERATIVE DEFINED. — For purposes of this section, the term 'eligible cooperative' means a cooperative organization described in section 1381(a) which is owned more than 50 percent by agricultural producers or by entities owned by agricultural producers. For this purpose an entity owned by an agricultural producer is one that is more than 50 percent owned by agricultural producers.

"(7) INCREASE IN CREDIT IN CERTAIN CASES. —

"(A) ENERGY COMMUNITIES. —

"(i) IN GENERAL. — In the case of any qualified facility which is located in an energy community, for purposes of determining the amount of the credit under subsection (a) with respect to any electricity produced by the taxpayer at such facility during the taxable year, the applicable amount under paragraph (2) of such subsection shall be increased by an amount equal to 10 percent of the amount otherwise in effect under such paragraph (without application of subparagraph (B)).

"(ii) ENERGY COMMUNITY. — For purposes of this subparagraph, the term 'energy community' means a census tract —

"(I) in which —

"(aa) for the calendar year in which construction of the qualified facility began, not less than 5 percent of the employment in such tract is within the oil and gas sector,

"(bb) after December 31, 1999, a coal mine has closed, or

"(cc) after December 31, 2009, a coal-fired electric generating unit has been retired, or

"(II) which is immediately adjacent to any census tract described in subclause (I).

"(B) DOMESTIC CONTENT. — Rules similar to the rules of section 45(b)(10) shall apply.

"(8) CREDIT REDUCED FOR TAX-EXEMPT BONDS. — Rules similar to the rules of section 45(b)(3) shall apply.

"(9) WAGE REQUIREMENTS. — Rules similar to the rules of section 45(b)(8) shall apply.

"(10) APPRENTICESHIP REQUIREMENTS. — Rules similar to the rules of section 45(b)(9) shall apply.

"(11) DOMESTIC CONTENT REQUIREMENT FOR ELECTIVE PAYMENT. — Rules similar to the rules of section 45(b)(11) shall apply.".

(b) ELECTIVE PAYMENT OF CREDIT. — Section 6417(b), as amended by preceding provisions of this Act, is amended by adding at the end the following new paragraph:

"(12) The clean electricity production credit determined under section 45BB(a).".

(c) ELECTION. — Section 6417(c)(3), as amended by the preceding provisions of this Act, is amended by adding at the end the following new subparagraph:

"(D) CLEAN ELECTRICITY PRODUCTION CREDIT. — In the case of the credit described in subsection (b)(10), any election under this subsection shall —

"(i) apply separately with respect to each qualified facility,

"(ii) be made for the taxable year in which the facility is placed in service, and

"(iii) shall apply to such taxable year and all subsequent taxable years with respect to such facility.".

(d) CONFORMING AMENDMENTS. —

(1) Section 38(b) is amended —

(A) in paragraph (38), by striking "plus" at the end,

(B) in paragraph (39), by striking the period at the end and inserting ", plus", and

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

"(40) the clean electricity production credit determined under section 45BB(a).".

(2) The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

"Sec. 45BB. Clean electricity production credit.".

(e) EFFECTIVE DATE. — The amendments made by this section shall apply to facilities placed in service after December 31, 2022.

SEC. 136802. CLEAN ELECTRICITY INVESTMENT CREDIT.

(a) IN GENERAL. — Subpart E of part IV of subchapter A of chapter 1 is amended by inserting after section 48E the following new section:

"SEC. 48F. CLEAN ELECTRICITY INVESTMENT CREDIT.

"(a) INVESTMENT CREDIT FOR QUALIFIED PROPERTY. —

"(1) IN GENERAL. — For purposes of section 46, the clean electricity investment credit for any taxable year is an amount equal to the applicable percentage of the qualified investment for such taxable year with respect to —

"(A) any qualified facility, and

"(B) any grid improvement property.

"(2) APPLICABLE PERCENTAGE. —

"(A) QUALIFIED FACILITIES. — Subject to paragraph (3) —

"(i) BASE RATE. — In the case of any qualified facility which is not described in subclause (I) of clause (ii) and does not satisfy the requirements described in subclause (II) of such clause, the applicable percentage shall be 6 percent.

"(ii) ALTERNATIVE RATE. — In the case of any qualified facility —

"(I) with a maximum net output of less than 1 megawatt, or

"(II) which —

"(aa) satisfies the requirements of subsection (d)(3), and

"(bb) with respect to the construction of such facility, satisfies the requirements of subsection (d)(4), the applicable percentage shall be 30 percent.

"(B) GRID IMPROVEMENT PROPERTY. — Subject to paragraph (3) —

"(i) BASE RATE. — In the case of any grid improvement property which is not described in subclause (I) of clause (ii) and does not satisfy the requirements described in subclause (II) of such clause, the applicable percentage shall be 6 percent.

"(ii) ALTERNATIVE RATE. — In the case of any grid improvement property —

"(I) which is energy storage property with a capacity of less than 1 megawatt, or

"(II) which —

"(aa) satisfies the requirements of subsection (d)(3), and

"(bb) with respect to the construction of such property, satisfies rules similar to the rules of section 45(b)(9), the applicable percentage shall be 30 percent.

"(3) INCREASE IN CREDIT RATE IN CERTAIN CASES. —

"(A) ENERGY COMMUNITIES. —

"(i) IN GENERAL. — In the case of any qualified investment with respect to a qualified facility or with respect to grid improvement property which is placed in service within an energy community, for purposes applying paragraph (2) with respect to such property or investment, the applicable percentage shall be increased by the applicable credit rate increase.

"(ii) APPLICABLE CREDIT RATE INCREASE. — For purposes of clause (i), the applicable credit rate increase shall be an amount equal to —

"(I) in the case of any qualified investment with respect to a qualified facility described in paragraph (2)(A)(i) or with respect to grid improvement property described in paragraph (2)(B)(i), 2 percentage points, and

"(II) in the case of any qualified investment with respect to a qualified facility described in paragraph (2)(A)(ii) or with respect to grid improvement property described in paragraph (2)(B)(ii), 10 percentage points.

"(B) DOMESTIC CONTENT. — Rules similar to the rules of section 45(a)(11) shall apply.

"(b) QUALIFIED INVESTMENT WITH RESPECT TO A QUALIFIED FACILITY. —

"(1) IN GENERAL. — For purposes of subsection (a), the qualified investment with respect to any qualified facility for any taxable year is the sum of —

"(A) the basis of any qualified property placed in service by the taxpayer during such taxable year which is part of a qualified facility, plus

"(B) the amount of any expenditures which are —

"(i) paid or incurred by the taxpayer for qualified interconnection property —

"(I) in connection with a qualified facility which has a maximum net output of not greater than 5 megawatts, and

"(II) placed in service during the taxable year of the taxpayer, and

"(ii) properly chargeable to capital account of the taxpayer.

"(2) QUALIFIED PROPERTY. — The term 'qualified property' means property —

"(A) which is —

"(i) tangible personal property, or

"(ii) other tangible property (not including a building or its structural components), but only if such property is used as an integral part of the qualified facility,

"(B) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and

"(C)(i) the construction, reconstruction, or erection of which is completed by the taxpayer, or

"(ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer.

"(3) QUALIFIED FACILITY. —

"(A) IN GENERAL. — For purposes of this section, the term 'qualified facility' means a facility —

"(i) which is used for the generation of electricity,

"(ii) the construction of which begins after December 31, 2026, and

"(iii) for which the anticipated greenhouse gas emissions rate (as determined under subparagraph (B)(ii)) is not greater than zero.

"(B) ADDITIONAL RULES. —

"(i) EXPANSION OF FACILITY; INCREMENTAL PRODUCTION. — Rules similar to the rules of section 45BB(b)(1)(C) shall apply for purposes of this paragraph.

"(ii) GREENHOUSE GAS EMISSIONS RATE. — Rules similar to the rules of section 45BB(b)(2) shall apply for purposes of this paragraph.

"(C) EXCLUSION. — The term 'qualified facility' shall not include any facility for which —

"(i) a renewable electricity production credit determined under section 45,

"(ii) an advanced nuclear power facility production credit determined under section 45J,

"(iii) a carbon oxide sequestration credit determined under section 45Q,

"(iv) a clean electricity production credit determined under section 45BB,

"(v) an energy credit determined under section 48,

"(vi) a qualifying advanced coal project credit under section 48A, or

"(vii) a qualifying electric transmission property credit under section 48D, is allowed under section 38 for the taxable year or any prior taxable year.

"(4) QUALIFIED INTERCONNECTION PROPERTY. — For purposes of this paragraph, the term 'qualified interconnection property' has the meaning given such term in section 48(a)(7)(B).

"(5) COORDINATION WITH REHABILITATION CREDIT. — The qualified investment with respect to any qualified facility for any taxable year shall not include that portion of the basis of any property which is attributable to qualified rehabilitation expenditures (as defined in section 47(c)(2)).

"(6) DEFINITIONS. — For purposes of this subsection, the terms 'CO2e per KWh' and 'greenhouse gas emissions rate' have the same meaning given such terms under section 45BB(b).

"(c) QUALIFIED INVESTMENT WITH RESPECT TO GRID IMPROVEMENT PROPERTY. —

"(1) IN GENERAL. —

"(A) QUALIFIED INVESTMENT. — For purposes of subsection (a), the qualified investment with respect to grid improvement property for any taxable year is the basis of any grid improvement property placed in service by the taxpayer during such taxable year.

"(B) GRID IMPROVEMENT PROPERTY. — For purposes of this section, the term 'grid improvement property' means any energy storage property.

"(2) ENERGY STORAGE PROPERTY. — For purposes of this section, the term 'energy storage property' has the meaning given such term in section 48(c)(6).

"(d) SPECIAL RULES. —

"(1) CERTAIN PROGRESS EXPENDITURE RULES MADE APPLICABLE. — Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of subsection (a).

"(2) SPECIAL RULE FOR PROPERTY FINANCED BY SUBSIDIZED ENERGY FINANCING OR PRIVATE ACTIVITY BONDS. — Rules similar to the rules of section 45(b)(3) shall apply.

"(3) PREVAILING WAGE REQUIREMENTS. — Rules similar to the rules of section 48(a)(9) shall apply.

"(4) APPRENTICESHIP REQUIREMENTS. — Rules similar to the rules of section 45(b)(9) shall apply.

"(5) DOMESTIC CONTENT REQUIREMENT FOR ELECTIVE PAYMENT. — Rules similar to the rules of section 45(b)(11) shall apply.

"(e) CREDIT PHASE-OUT. —

"(1) IN GENERAL. — The amount of the clean electricity investment credit under subsection (a) for any qualified investment with respect to any qualified facility or grid improvement property the construction of which begins during a calendar year described in paragraph (2) shall be equal to the product of —

"(A) the amount of the credit determined under subsection (a) without regard to this subsection, multiplied by

"(B) the phase-out percentage under paragraph (2).

"(2) PHASE-OUT PERCENTAGE. — The phase-out percentage under this paragraph is equal to —

"(A) for any qualified investment with respect to any qualified facility or grid improvement property the construction of which begins during the first calendar year following the applicable year, 100 percent,

"(B) for any qualified investment with respect to any qualified facility or grid improvement property the construction of which begins during the second calendar year following the applicable year, 75 percent,

"(C) for any qualified investment with respect to any qualified facility or grid improvement property the construction of which begins during the third calendar year following the applicable year, 50 percent, and

"(D) for any qualified investment with respect to any qualified facility or grid improvement property the construction of which begins during any calendar year subsequent to the calendar year described in subparagraph (C), 0 percent.

"(3) APPLICABLE YEAR. — For purposes of this subsection, the term 'applicable year' has the same meaning given such term in section 45BB(d)(3).

"(f) GREENHOUSE GAS. — In this section, the term 'greenhouse gas' has the same meaning given such term under section 45BB(e)(2).

"(g) RECAPTURE OF CREDIT. — For purposes of section 50, if the Secretary determines that the greenhouse gas emissions rate for a qualified facility is greater than 10 grams of CO2e per KWh, any property for which a credit was allowed under this section with respect to such facility shall cease to be investment credit property in the taxable year in which the determination is made.

"(h) GUIDANCE. — Not later than January 1, 2027, the Secretary shall issue guidance regarding implementation of this section.".

(b) ELECTIVE PAYMENT OF CREDIT. — Section 6417(b), as amended by preceding provisions of this Act, is amended by adding at the end the following new paragraph:

"(13) The clean electricity investment credit determined under section 48F.".

(c) PUBLIC UTILITY PROPERTY. — Section 50(d) is amended by adding at the end the following: "Paragraphs (1)(B) and (2)(B) of the section 46(e) referred to in paragraph (1) of this subsection shall not apply to any qualified investment described in section 48F of a real estate investment trust."

(d) CONFORMING AMENDMENTS. —

(1) Section 46 is amended —

(A) by striking "and" at the end of paragraph (5),

(B) by striking the period at the end of paragraph (6) and inserting ", and", and

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

"(7) the clean electricity investment credit.".

(2) Section 49(a)(1)(C) is amended —

(A) by striking "and" at the end of clause (iv),

(B) by striking the period at the end of clause (v) and inserting a comma, and

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

"(vi) the basis of any qualified property which is part of a qualified facility under section 48F, and

"(vii) the basis of any energy storage property under section 48F.".

(3) Section 50(a)(2)(E) is amended by striking "or 48E(c)(1)" and inserting "48E(c)(1), or 48F(e)".

(4) Section 50(c)(3) is amended by inserting "or clean electricity investment credit" after "In the case of any energy credit".

(5) The table of sections for subpart E of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 48E the following new item:

"48F. Clean electricity investment credit.".

(e) EFFECTIVE DATE. — The amendments made by this section shall apply to property placed in service after December 31, 2026, and, for any property the construction of which begins prior to January 1, 2027, only to the extent of the basis thereof attributable to the construction, reconstruction, or erection after December 31, 2026.

SEC. 136803. INCREASE IN CLEAN ELECTRICITY INVESTMENT CREDIT FOR FACILITIES PLACED IN SERVICE IN CONNECTION WITH LOW-INCOME COMMUNITIES.

(a) IN GENERAL. — Section 48F, as added by this Act, is amended by adding at the end the following new subsection:

"(i) SPECIAL RULES FOR CERTAIN FACILITIES PLACED IN SERVICE IN CONNECTION WITH LOW-INCOME COMMUNITIES. —

"(1) IN GENERAL. — In the case of any qualified facility with respect to which the Secretary makes an allocation of environmental justice capacity limitation under paragraph (4) —

"(A) the applicable percentage otherwise determined under subsection (a)(2) with respect to any eligible property which is part of such facility shall be increased by —

"(i) in the case of a facility described in subclause (I) of paragraph (2)(A)(iii) and not described in subclause (II) of such paragraph, 10 percentage points, and

"(ii) in the case of a facility described in subclause (II) of paragraph (2)(A)(iii), 20 percentage points, and

"(B) the increase in the credit determined under subsection (a) by reason of this subsection for any taxable year with respect to all property which is part of such facility shall not exceed the amount which bears the same ratio to the amount of such increase (determined without regard to this subparagraph) as —

"(i) the environmental justice capacity limitation allocated to such facility, bears to

"(ii) the total megawatt nameplate capacity of such facility, as measured in direct current.

"(2) QUALIFIED FACILITY. — For purposes of this subsection —

"(A) IN GENERAL. — The term 'qualified facility' means any facility —

"(i) which is described in subsection (b)(3)(A) and not described in section 45BB(b)(2)(B),

"(ii) which has a maximum net output of less than 5 megawatts, and

"(iii) which —

"(I) is located in a low-income community (as defined in section 45D(e)) or on Indian land (as defined in section 2601(2) of the Energy Policy Act of 1992 (25 U.S.C. 3501(2))), or

"(II) is part of a qualified low-income residential building project or a qualified low-income economic benefit project.

"(B) QUALIFIED LOW-INCOME RESIDENTIAL BUILDING PROJECT. — A facility shall be treated as part of a qualified low-income residential building project if —

"(i) such facility is installed on a residential rental building which participates in a covered housing program (as defined in section 41411(a) of the Violence Against Women Act of 1994 (34 U.S.C. 12491(a)(3)), a Housing Development Fund Corporation cooperative under Article XI of the New York State Private Housing Finance Law, a housing assistance program administered by the Department of Agriculture under title V of the Housing Act of 1949, a housing program administered by a tribally designated housing entity (as defined in section 4(22) of the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4103(22))) or such other affordable housing programs as the Secretary may provide, and

"(ii) the financial benefits of the electricity produced by such facility are allocated equitably among the occupants of the dwelling units of such building.

"(C) QUALIFIED LOW-INCOME ECONOMIC BENEFIT PROJECT. — A facility shall be treated as part of a qualified low-income economic benefit project if at least 50 percent of the financial benefits of the electricity produced by such facility are provided to households with income of —

"(i) less than 200 percent of the poverty line applicable to a family of the size involved, or

"(ii) less than 80 percent of area median gross income (as determined under section 142(d)(2)(B)).

"(D) FINANCIAL BENEFIT. — For purposes of subparagraphs (B) and (C), electricity acquired at a below-market rate shall not fail to be taken into account as a financial benefit.

"(3) ELIGIBLE PROPERTY. — For purposes of this section, the term 'eligible property' means a qualified investment with respect to any qualified facility which is described in subsection (b).

"(4) ALLOCATIONS. —

"(A) IN GENERAL. — Not later than January 1, 2027, the Secretary shall establish a program to allocate amounts of environmental justice capacity limitation to qualified facilities.

"(B) LIMITATION. — The amount of environmental justice capacity limitation allocated by the Secretary under subparagraph (A) during any calendar year shall not exceed the annual capacity limitation with respect to such year.

"(C) ANNUAL CAPACITY LIMITATION. — For purposes of this paragraph, the term 'annual capacity limitation' means 1.8 gigawatts of direct current capacity for each of calendar years 2027 through 2031, and zero thereafter.

"(D) CARRYOVER OF UNUSED LIMITATION. —

"(i) IN GENERAL. — If the annual capacity limitation for any calendar year exceeds the aggregate amount allocated for such year under this paragraph, such limitation for the succeeding calendar year shall be increased by the amount of such excess. No amount may be carried under the preceding sentence to any calendar year after 2033.

"(ii) CARRYOVER FROM SECTION 48 FOR CALENDAR YEAR 2027. — If the annual capacity limitation for calendar year 2026 under section 48(e)(4)(D) exceeds the aggregate amount allocated for such year under section 48(e)(4)(D), such excess amount may be carried over and applied to the annual capacity limitation under this subsection for calendar year 2027. Such limitation shall be increased by the amount of such excess.

"(E) PLACED IN SERVICE DEADLINE. —

"(i) IN GENERAL. — Paragraph (1) shall not apply with respect to any property which is placed in service after the date that is 4 years after the date of the allocation with respect to the facility of which such property is a part.

"(ii) APPLICATION OF CARRYOVER. — Any amount of environmental justice capacity limitation which expires under clause (i) during any calendar year shall be taken into account as an excess described in subparagraph (D) (or as an increase in such excess) for such calendar year, subject to the limitation imposed by the last sentence of such subparagraph.

"(F) SELECTION CRITERIA. — In determining to which qualified facilities to allocate environmental justice capacity limitation under this paragraph, the Secretary shall take into consideration which facilities will result in —

"(i) the greatest health and economic benefits, including the ability to withstand extreme weather events, for individuals described in section 45D(e)(2),

"(ii) the greatest employment and wages for such individuals, and

"(iii) the greatest engagement with, outreach to, or ownership by, such individuals, including through partnerships with local governments, Indian tribal governments (as defined in section 139E), and community-based organizations.

"(G) DISCLOSURE OF ALLOCATIONS. — The Secretary shall, upon making an allocation of environmental justice capacity limitation under this paragraph, publicly disclose the identity of the applicant, the amount of the environmental justice capacity limitation allocated to such applicant, and the location of the facility for which such allocation is made.

"(5) RECAPTURE. — The Secretary shall, by regulations or other guidance, provide for recapturing the benefit of any increase in the credit allowed under subsection (a) by reason of this subsection with respect to any property which ceases to be property eligible for such increase (but which does not cease to be investment credit property within the meaning of section 50(a)). The period and percentage of such recapture shall be determined under rules similar to the rules of section 50(a). To the extent provided by the Secretary, such recapture may not apply with respect to any property if, within 12 months after the date the taxpayer becomes aware (or reasonably should have become aware) of such property ceasing to be property eligible for such increase, the eligibility of such property for such increase is restored. The preceding sentence shall not apply more than once with respect to any facility.".

(b) EFFECTIVE DATE. — The amendments made by this section shall take effect on January 1, 2027.

SEC. 136804. COST RECOVERY FOR QUALIFIED FACILITIES, QUALIFIED PROPERTY, AND GRID IMPROVEMENT PROPERTY.

(a) IN GENERAL. — Section 168(e)(3)(B) is amended —

(1) in clause (vi)(III), by striking "and" at the end,

(2) in clause (vii), by striking the period at the end and inserting ", and", and

(3) by inserting after clause (vii) the following:

"(viii) any qualified facility (as defined in section 45BB(b)(1)(A)), any qualified property (as defined in subsection (b)(2) of section 48F) which is a qualified investment (as defined in subsection (b)(1) of such section), or any grid improvement property (as defined in subsection (c)(1)(B) of such section).".

(b) EFFECTIVE DATE. — The amendments made by this section shall apply to facilities and property placed in service after December 31, 2026.

SEC. 136805. CLEAN FUEL PRODUCTION CREDIT.

(a) IN GENERAL. — Subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section:

"SEC. 45CC. CLEAN FUEL PRODUCTION CREDIT.

"(a) AMOUNT OF CREDIT. —

"(1) IN GENERAL. — For purposes of section 38, the clean fuel production credit for any taxable year is an amount equal to the product of —

"(A) the applicable amount per gallon (or gallon equivalent) with respect to any transportation fuel which is —

"(i) produced by the taxpayer at a qualified facility, and

"(ii) sold by the taxpayer in a manner described in paragraph (4) during the taxable year, and

"(B) the emissions factor for such fuel (as determined under subsection (b)).

"(2) APPLICABLE AMOUNT. —

"(A) BASE AMOUNT. — In the case of any transportation fuel produced at a qualified facility which does not satisfy the requirements described in subparagraph (B), the applicable amount shall be 20 cents.

"(B) ALTERNATIVE AMOUNT. — In the case of any transportation fuel produced at a qualified facility which satisfies the requirements under paragraphs (6) and (7) of subsection (g), the applicable amount shall be $1.00.

"(3) SPECIAL RATE FOR SUSTAINABLE AVIATION FUEL. —

"(A) IN GENERAL. — In the case of a transportation fuel which is sustainable aviation fuel, paragraph (2) shall be applied —

"(i) in the case of a transportation fuel produced at a qualified facility described in paragraph (2)(A), by substituting '35 cents' for '20 cents', and

"(ii) in the case of a transportation fuel produced at a qualified facility described in paragraph (2)(B), by substituting '$1.75' for '$1.00'.

"(B) SUSTAINABLE AVIATION FUEL. — For purposes of this subparagraph (A), the term 'sustainable aviation fuel' means liquid fuel which is sold for use in an aircraft and which —

"(i) meets the requirements of —

"(I) ASTM International Standard D7566, or

"(II) the Fischer Tropsch provisions of ASTM International Standard D1655, Annex A1, and

"(ii) is not derived from palm fatty acid distillates or petroleum.

"(4) SALE. — For purposes of paragraph (1), the transportation fuel is sold in a manner described in this paragraph if such fuel is sold by the taxpayer to an unrelated person —

"(A) for use by such person in the production of a fuel mixture,

"(B) for use by such person in a trade or business, or

"(C) who sells such fuel at retail to another person and places such fuel in the fuel tank of such other person.

"(5) ROUNDING. — If any amount determined under paragraph (1) is not a multiple of 0.1 cent, such amount shall be rounded to the nearest multiple of 0.1 cent.

"(b) EMISSIONS FACTORS. —

"(1) EMISSIONS FACTOR. —

"(A) CALCULATION. —

"(i) IN GENERAL. — The emissions factor of a transportation fuel shall be an amount equal to the quotient of —

"(I) an amount equal to —

"(aa) 75 kilograms of CO2e per mmBTU, minus

"(bb) the emissions rate for such fuel, divided by

"(II) 75 kilograms of CO2e per mmBTU.

"(B) ESTABLISHMENT OF EMISSIONS RATE. —

"(i) IN GENERAL. — Subject to clauses (ii) and (iii), the Secretary shall annually publish a table which sets forth the emissions rate for similar types and categories of transportation fuels based on the amount of lifecycle greenhouse gas emissions (as described in section 211(o)(1)(H) of the Clean Air Act (42 U.S.C. 7545(o)(1)(H)), as in effect on the date of the enactment of this section) for such fuels, expressed as kilograms of CO2e per mmBTU, which a taxpayer shall use for purposes of this section.

"(ii) NON-AVIATION FUEL. — In the case of any transportation fuel which is not a sustainable aviation fuel, the lifecycle greenhouse gas emissions of such fuel shall be based on the most recent determinations under the Greenhouse gases, Regulated Emissions, and Energy use in Transportation model developed by Argonne National Laboratory, or a successor model (as determined by the Secretary).

"(iii) AVIATION FUEL. — In the case of any transportation fuel which is a sustainable aviation fuel, the lifecycle greenhouse gas emissions of such fuel shall be determined in accordance with —

"(I) the most recent Carbon Offsetting and Reduction Scheme for International Aviation which has been adopted by the International Civil Aviation Organization with the agreement of the United States, or

"(II) any similar methodology which satisfies the criteria under section 211(o)(1)(H) of the Clean Air Act (42 U.S.C. 7545(o)(1)(H)).

"(C) ROUNDING OF EMISSIONS RATE. — The Secretary may round the emissions rates under subparagraph (B) to the nearest multiple of 5 kilograms of CO2e per mmBTU, except that, in the case of an emissions rate that is less than 2.5 kilograms of CO2e per mmBTU, the Secretary may round such rate to zero.

"(D) PROVISIONAL EMISSIONS RATE. — In the case of any transportation fuel for which an emissions rate has not been established under subparagraph (B), a taxpayer producing such fuel may file a petition with the Secretary for determination of the emissions rate with respect to such fuel.

"(2) ROUNDING. — If any amount determined under paragraph (1)(A) is not a multiple of 0.1, such amount shall be rounded to the nearest multiple of 0.1.

"(c) INFLATION ADJUSTMENT. —

"(1) IN GENERAL. — In the case of calendar years beginning after 2026, the 20 cent amount in subsection (a)(2)(A), the $1.00 amount in subsection (a)(2)(B), the 35 cent amount in subsection (a)(3)(A)(i), and the $1.75 amount in subsection (a)(3)(A)(ii) shall each be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale of the transportation fuel occurs. If any amount as increased under the preceding sentence is not a multiple of 1 cent, such amount shall be rounded to the nearest multiple of 1 cent.

"(2) INFLATION ADJUSTMENT FACTOR. — For purposes of paragraph (1), the inflation adjustment factor shall be the inflation adjustment factor determined and published by the Secretary pursuant to section 45BB(c), determined by substituting 'calendar year 2021' for 'calendar year 1992' in paragraph (3) thereof.

"(d) CREDIT PHASE-OUT. —

"(1) IN GENERAL. — The amount of the clean fuel production credit under subsection (a) for any transportation fuel sold during a taxable year described in paragraph (2) shall be equal to the product of —

"(A) the amount of the credit determined under subsection (a) without regard to this subsection, multiplied by

"(B) the phase-out percentage under paragraph (2).

"(2) PHASE-OUT PERCENTAGE. — The phase-out percentage under this paragraph is equal to —

"(A) for any taxable year beginning in the first calendar year following the applicable year, 100 percent,

"(B) for any taxable year beginning in the second calendar year following the applicable year, 75 percent,

"(C) for any taxable year beginning in the third calendar year following the applicable year, 50 percent, and

"(D) for any taxable year beginning in any calendar year subsequent to the calendar year described in subparagraph (C), 0 percent.

"(3) APPLICABLE YEAR. — For purposes of this subsection, the term 'applicable year' means the later of —

"(A) the calendar year in which the Secretary determines that the greenhouse gas emissions from the transportation of persons and goods annually in the United States are equal to or less than 25 percent of the greenhouse gas emissions from the transportation of persons and goods in the United States during calendar year 2021, or

"(B) 2031.

"(e) DEFINITIONS. — In this section:

"(1) mmBTU. — The term 'mmBTU' means 1,000,000 British thermal units.

"(2) CO2e. — The term 'CO2e' means, with respect to any greenhouse gas, the equivalent carbon dioxide (as determined based on relative global warming potential).

"(3) GREENHOUSE GAS. — The term 'greenhouse gas' has the same meaning given that term under section 211(o)(1)(G) of the Clean Air Act (42 U.S.C. 7545(o)(1)(G)), as in effect on the date of the enactment of this section.

"(4) QUALIFIED FACILITY. — The term 'qualified facility' —

"(A) means a facility used for the production of transportation fuels, and

"(B) does not include any facility for which one of the following credits is allowed under section 38 for the taxable year:

"(i) The credit for production of clean hydrogen under section 45X.

"(ii) The credit for clean hydrogen production facilities under section 48(a)(15).

"(iii) The credit for carbon oxide sequestration under section 45Q.

"(5) TRANSPORTATION FUEL. — The term 'transportation fuel' means a fuel (with the exception of hydrogen) which —

"(A) is suitable for use as a fuel in a highway vehicle or aircraft, and

"(B) has an emissions rate which is not greater than —

"(i) in the case of a fuel which is not a sustainable aviation fuel —

"(I) for any such fuel sold during calendar years 2027 through 2030, 50 kilograms of CO2e per mmBTU, and

"(II) for any such fuel sold during any calendar year beginning after December 31, 2030, 25 kilograms of CO2e per mmBTU, or

"(ii) in the case of a fuel which is a sustainable aviation fuel —

"(I) for any such fuel sold during any period before January 1, 2031, 35 kilograms of CO2e per mmBTU, and

"(II) for any such fuel sold during any period after December 31, 2030, 25 kilograms of CO2e per mmBTU.

"(f) GUIDANCE. — Not later than January 1, 2027, the Secretary shall issue guidance regarding implementation of this section, including calculation of emissions factors for transportation fuel, the table described in subsection (b)(1)(B)(i), and the determination of clean fuel production credits under this section.

"(g) SPECIAL RULES. —

"(1) ONLY REGISTERED PRODUCTION IN THE UNITED STATES TAKEN INTO ACCOUNT. —

"(A) IN GENERAL. — No clean fuel production credit shall be determined under subsection

(a) with respect to any transportation fuel unless —

"(i) the taxpayer is registered as a producer of clean fuel under section 4101 at the time of production, and

"(ii) such fuel is produced in the United States.

"(B) UNITED STATES. — For purposes of this paragraph, the term 'United States' includes any possession of the United States.

"(2) PRODUCTION ATTRIBUTABLE TO THE TAXPAYER. — In the case of a facility in which more than 1 person has an ownership interest, except to the extent provided in regulations prescribed by the Secretary, production from the facility shall be allocated among such persons in proportion to their respective ownership interests in the gross sales from such facility.

"(3) RELATED PERSONS. — Persons shall be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section 52(b). In the case of a corporation which is a member of an affiliated group of corporations filing a consolidated return, such corporation shall be treated as selling fuel to an unrelated person if such fuel is sold to such a person by another member of such group.

"(4) PASS-THRU IN THE CASE OF ESTATES AND TRUSTS. — Under regulations prescribed by the Secretary, rules similar to the rules of subsection (d) of section 52 shall apply.

"(5) ALLOCATION OF CREDIT TO PATRONS OF AGRICULTURAL COOPERATIVE. —

"(A) ELECTION TO ALLOCATE. —

"(i) IN GENERAL. — In the case of an eligible cooperative organization, any portion of the credit determined under subsection (a) for the taxable year may, at the election of the organization, be apportioned among patrons of the organization on the basis of the amount of business done by the patrons during the taxable year.

"(ii) FORM AND EFFECT OF ELECTION. — An election under clause (i) for any taxable year shall be made on a timely filed return for such year. Such election, once made, shall be irrevocable for such taxable year. Such election shall not take effect unless the organization designates the apportionment as such in a written notice mailed to its patrons during the payment period described in section 1382(d).

"(B) TREATMENT OF ORGANIZATIONS AND PATRONS. — The amount of the credit apportioned to any patrons under subparagraph (A) —

"(i) shall not be included in the amount determined under subsection (a) with respect to the organization for the taxable year, and

"(ii) shall be included in the amount determined under subsection (a) for the first taxable year of each patron ending on or after the last day of the payment period (as defined in section 1382(d)) for the taxable year of the organization or, if earlier, for the taxable year of each patron ending on or after the date on which the patron receives notice from the cooperative of the apportionment.

"(C) SPECIAL RULES FOR DECREASE IN CREDITS FOR TAXABLE YEAR. — If the amount of the credit of a cooperative organization determined under subsection (a) for a taxable year is less than the amount of such credit shown on the return of the cooperative organization for such year, an amount equal to the excess of —

"(i) such reduction, over

"(ii) the amount not apportioned to such patrons under subparagraph (A) for the taxable year, shall be treated as an increase in tax imposed by this chapter on the organization. Such increase shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter.

"(D) ELIGIBLE COOPERATIVE DEFINED. — For purposes of this section the term 'eligible cooperative' means a cooperative organization described in section 1381(a) which is owned more than 50 percent by agricultural producers or by entities owned by agricultural producers. For this purpose an entity owned by an agricultural producer is one that is more than 50 percent owned by agricultural producers.

"(6) PREVAILING WAGE REQUIREMENTS. —

"(A) IN GENERAL. — Subject to subparagraph (B), rules similar to the rules of section 45(b)(8) shall apply.

"(B) SPECIAL RULE FOR FACILITIES PLACED IN SERVICE BEFORE JANUARY 1, 2027. — In the case of any qualified facility placed in service before January 1, 2027 —

"(i) the rules of clause (i) of section 45(b)(8) shall not apply, and

"(ii) clause (ii) of such section shall be applied by substituting 'for any period of the taxable year beginning after December 31, 2026 for which the credit is claimed under this section with respect to production of transportation fuel, the alteration or repair of such facility' for 'for the period of the taxable year which is within the 10-year period beginning on the date the facility was originally placed in service, the alteration or repair of such facility'.

"(7) APPRENTICESHIP REQUIREMENTS. — Rules similar to the rules of section 45(b)(9) shall apply.".

(b) ELECTIVE PAYMENT OF CREDIT. — Section 6417(b), as amended by preceding provisions of this Act, is amended by adding at the end the following new paragraph:

"(14) The clean fuel production credit determined under section 45CC(a).".

(c) CONFORMING AMENDMENTS. —

(1) Section 38(b), as amended by section 101, is amended —

(A) in paragraph (39), by striking "plus" at the end,

(B) in paragraph (40), by striking the period at the end and inserting ", plus", and

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

"(41) the clean fuel production credit determined under section 45CC(a).".

(2) The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by section 101, is amended by adding at the end the following new item:

"Sec. 45CC. Clean fuel production credit.".

(3) Section 4101(a)(1) is amended by inserting "every person producing a fuel eligible for the clean fuel production credit (pursuant to section 45CC)," after "section 6426(b)(4)(A)),".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to transportation fuel produced after December 31, 2026.

PART 9 — APPROPRIATIONS

SEC. 136901. APPROPRIATIONS.

Immediately upon the enactment of this Act, in addition to amounts otherwise available, there are appropriated for fiscal year 2022, out of any money in the Treasury not otherwise appropriated, $3,831,000,000 to remain available until September 30, 2031, for necessary expenses for the Internal Revenue Service to carry out this subtitle (and the amendments made by this subtitle), which shall supplement and not supplant any other appropriations that may be available for this purpose.

Subtitle E — Medicaid

PART 1 — EXPANDING ACCESS TO MEDICAID HOME AND COMMUNITY-BASED SERVICES

SEC. 30711. HCBS IMPROVEMENT PLANNING GRANTS.

(a) FUNDING. —

(1) IN GENERAL. — In addition to amounts otherwise available, there is appropriated to the Secretary for fiscal year 2022, out of any money in the Treasury not otherwise appropriated, $130,000,000, to remain available until expended, for carrying out this section.

(2) TECHNICAL ASSISTANCE AND GUIDANCE. — The Secretary shall reserve $5,000,000 of the amount appropriated under paragraph (1) for purposes of issuing guidance and providing technical assistance to States intending to apply for, or which are awarded, a planning grant under this section, and for other administrative expenses related to awarding planning grants under this section.

(b) AWARD AND USE OF GRANTS. —

(1) DEADLINE FOR AWARD OF GRANTS. — From the amount appropriated under subsection (a)(1), the Secretary, not later than 12 months after the date of enactment of this Act, shall solicit State requests for HCBS improvement planning grants and award such grants to all States that meet such requirements as determined by the Secretary.

(2) USE OF FUNDS. — Subject to paragraph (3), a State awarded a planning grant under this section shall use the grant to carry out planning activities for purposes of developing and submitting to the Secretary an HCBS improvement plan for the State that meets the requirements of subsections (c) and (d) in order to expand access to home and community-based services and strengthen the direct care workforce that provides such services. A State may use planning grant funds to support activities related to the implementation of the HCBS improvement plan for the State, collect and report information described in subsection (c), identify areas for improvement to the service delivery systems for home and community-based services, carry out activities related to evaluating payment rates for home and community-based services and identifying improvements to update the rate setting process, enhance caregiver supports, promote community integration and compliance with the home and community-based settings rule published on January 16, 2014, or any successor regulation, make infrastructure investments (such as case management or other information technology systems), and for related purposes as the Secretary shall specify.

(3) LIMITATION ON USE OF FUNDS. — None of the funds awarded to a State under this section may be used by a State as the source of the non-Federal share of expenditures under the State plan (or waiver of such plan).

(c) HCBS IMPROVEMENT PLAN REQUIREMENTS. — In order to meet the requirements of this subsection, an HCBS improvement plan developed using funds awarded to a State under this section shall include, with respect to the State and subject to subsection (d), the following:

(1) EXISTING MEDICAID HCBS LANDSCAPE. —

(A) ELIGIBILITY AND BENEFITS. — A description of the existing standards, pathways, and methodologies for eligibility for home and community-based services pursuant to the State plan (or waiver of such plan), including limits on assets and income, the home and community-based services available under the State Medicaid program and the types of settings in which they may be provided, and utilization management standards for such services.

(B) ACCESS. —

(i) BARRIERS. — A description of the barriers to accessing home and community-based services in the State identified by Medicaid eligible individuals, the families of such individuals, and direct care workers and home care agencies, or other similar organizations.

(ii) AVAILABILITY; UNMET NEED. — A summary, in accordance with guidance issued by the Secretary and as able to be practicably determined by the State, of the extent to which home and community-based services are available to all individuals in the State who would be eligible for such services under the State Medicaid program (including individuals who are on a waiting list for such services).

(C) UTILIZATION. — An assessment of the utilization of home and community-based services in the State (including the number of individuals receiving such services) during such period specified by the Secretary.

(D) SERVICE DELIVERY STRUCTURES AND SUPPORTS. — A description of the service delivery structures for providing home and community-based services in the State.

(E) WORKFORCE. — A description of the direct care workforce, including estimates of the number of full- and part-time direct care workers, the average and range of direct care worker wages, the benefits provided to direct care workers, the turnover and vacancy rates of direct care worker positions, the membership of direct care workers in labor organizations and, to the extent the State has access to such data, demographic information about such workforce, including information on race, ethnicity, and gender.

(F) PAYMENT RATES. —

(i) IN GENERAL. — A description of the payment rates for home and community-based services, including, to the extent applicable, how payments for such services are factored into the development of managed care capitation rates, when the State last updated payment rates for home and community-based services, and an estimate of the portion of the payment rate that goes toward direct care worker compensation.

(ii) ASSESSMENT. — An assessment of the relationship between payment rates for such services and workforce shortages, average beneficiary wait times for such services, provider-to-beneficiary ratios in the geographic region, and any other factors identified by the Secretary.

(G) QUALITY. — A description of how the quality of home and community-based services is measured and monitored.

(H) LONG-TERM SERVICES AND SUPPORTS PROVIDED IN INSTITUTIONAL SETTINGS. — A description of the number of individuals enrolled in the State Medicaid program in a year who receive items and services furnished by an institution for greater than 30 days in an institutional setting.

(I) HCBS SHARE OF OVERALL MEDICAID LTSS SPENDING. — For the most recent State fiscal year for which complete data is available, the percentage of expenditures made by the State under the State Medicaid program for long-term services and supports that are for home and community-based services.

(J) DEMOGRAPHIC DATA. — To the extent available and as applicable with respect to the information required under subparagraphs (B), (C), and (H), demographic data for such information, disaggregated by age groups, primary disability, income brackets, gender, race, ethnicity, geography, primary language, and type of service setting.

(2) GOALS FOR HCBS IMPROVEMENTS. — A description of how the State will do the following:

(A) Conduct the activities required under subsection (jj) of section 1905 of the Social Security Act (as added under section 30712).

(B) Reduce barriers to and disparities in access or utilization of home and community-based services in the State.

(C) Monitor and report (with supporting data, to the extent available and applicable, disaggregated by age groups, primary disability, income brackets, gender, race, ethnicity, geography, primary language, and type of service setting) on access to home and community-based services under the State Medicaid program, disparities in access to such services, and the utilization of such services.

(D) Monitor and report the amount of State Medicaid expenditures for home and community-based services under the State Medicaid program as a proportion of the total amount of State expenditures under the State Medicaid program for long-term services and supports.

(E) Monitor and report on wages, benefits, and vacancy and turnover rates for direct care workers.

(F) Assess and monitor the sufficiency of payment rates under the State Medicaid program, in a manner specified by the Secretary, for the specific types of home and community-based services available under such program for purposes of supporting direct care worker recruitment and retention and ensuring the availability of home and community-based services.

(G) Coordinate implementation of the HCBS improvement plan among the State Medicaid agency, agencies serving individuals with disabilities, agencies serving the elderly, and other relevant State and local agencies and organizations that provide related supports, such as those for housing, transportation, employment, and other services and supports.

(d) DEVELOPMENT AND APPROVAL REQUIREMENTS. —

(1) DEVELOPMENT REQUIREMENTS. — In order to meet the requirements of this subsection, a State awarded a planning grant under this section shall develop an HCBS improvement plan for the State with input from stakeholders through a public notice and comment process that includes consultation with Medicaid eligible individuals who are recipients of home and community-based services, family caregivers of such recipients, providers, health plans, direct care workers, chosen representatives of direct care workers, and aging, disability, and workforce advocates.

(2) AUTHORITY TO ADJUST CERTAIN PLAN CONTENT REQUIREMENTS. — The Secretary may modify the requirements for any of the information specified in subsection (c)(1) if a State requests a modification and demonstrates to the satisfaction of the Secretary that it is impracticable for the State to collect and submit the information.

(3) SUBMISSION AND APPROVAL. — Not later than 24 months after the date on which a State is awarded a planning grant under this section, the State shall submit an HCBS improvement plan for approval by the Secretary, along with assurances by the State that the State will implement the plan in accordance with the requirements of the HCBS Improvement Program established under subsection (jj) of section 1905 of the Social Security Act (42 U.S.C. 1396d) (as added by section 30712). The Secretary shall approve and make publicly available the HCBS improvement plan for a State after the plan and such assurances are submitted to the Secretary for approval and the Secretary determines the plan meets the requirements of subsection (c). A State may amend its HCBS improvement plan, subject to the approval of the Secretary that the plan as so amended meets the requirements of subsection (c). The Secretary may withhold or recoup funds provided under this section to a State, if the State fails to comply with the requirements of this section.

(e) DEFINITIONS. — In the part:

(1) DIRECT CARE WORKER. — The term "direct care worker" means, with respect to a State, any of the following individuals who are paid to provide directly to Medicaid eligible individuals home and community-based services available under the State Medicaid program:

(A) A registered nurse, licensed practical nurse, nurse practitioner, or clinical nurse specialist, or a licensed nursing assistant who provides such services under the supervision of a registered nurse, licensed practical nurse, nurse practitioner, or clinical nurse specialist.

(B) A direct support professional.

(C) A personal care attendant.

(D) A home health aide.

(E) Any other paid health care professional or worker determined to be appropriate by the State and approved by the Secretary.

(2) HCBS PROGRAM IMPROVEMENT STATE. — The term "HCBS program improvement State" means a State that is awarded a planning grant under subsection (b) and has an HCBS improvement plan approved by the Secretary under subsection (d)(3).

(3) HEALTH PLAN. — The term "health plan" means any of the following entities that provide or arrange for home and community-based services for Medicaid eligible individuals who are enrolled with the entities under a contract with a State:

(A) A medicaid managed care organization, as defined in section 1903(m)(1)(A) of the Social Security Act (42 U.S.C. 1396b(m)(1)(A)).

(B) A prepaid inpatient health plan or prepaid ambulatory health plan, as defined in section 438.2 of title 42, Code of Federal Regulations (or any successor regulation).

(C) Any other entity determined to be appropriate by the State and approved by the Secretary.

(4) HOME AND COMMUNITY-BASED SERVICES. — The term "home and community-based services" means any of the following (whether provided on a fee-for-service, risk, or other basis):

(A) Home health care services authorized under paragraph (7) of section 1905(a) of the Social Security Act (42 U.S.C. 1396d(a)).

(B) Private duty nursing services authorized under paragraph (8) of such section, when such services are provided in a Medicaid eligible individual's home.

(C) Personal care services authorized under paragraph (24) of such section.

(D) PACE services authorized under paragraph (26) of such section.

(E) Home and community-based services authorized under subsections (b), (c), (i), (j), and (k) of section 1915 of such Act (42 U.S.C. 1396n), authorized under a waiver under section 1115 of such Act (42 U.S.C. 1315), or provided through coverage authorized under section 1937 of such Act (42 U.S.C. 1396u-7).

(F) Case management services authorized under section 1905(a)(19) of the Social Security Act (42 U.S.C. 1396d(a)(19)) and section 1915(g) of such Act (42 U.S.C. 1396n(g)).

(G) Rehabilitative services, including those related to behavioral health, described in section 1905(a)(13) of such Act (42 U.S.C. 1396d(a)(13)).

(H) Such other services specified by the Secretary.

(5) INSTITUTIONAL SETTING. — The term "institutional setting" means —

(A) a skilled nursing facility (as defined in section 1819(a) of the Social Security Act (42 U.S.C. 1395i-3(a)));

(B) a nursing facility (as defined in section 1919(a) of such Act (42 U.S.C. 1396r(a)));

(C) a long-term care hospital (as described in section 1886(d)(1)(B)(iv) of such Act (42 U.S.C. 1395ww(d)(1)(B)(iv)));

(D) a facility described in section 1905(d) of such Act (42 U.S.C. 1396d(d)));

(E) an institution which is a psychiatric hospital (as defined in section 1861(f) of such Act (42 U.S.C. 1395x(f))) or that provides inpatient psychiatric services in a residential setting specified by the Secretary;

(F) an institution described in section 1905(i) of such Act (42 U.S.C. 1396d(i)); and

(G) any other relevant facility, as determined by the Secretary.

(6) MEDICAID ELIGIBLE INDIVIDUAL. — The term "Medicaid eligible individual" means an individual who is eligible for and receiving medical assistance under a State Medicaid plan or a waiver of such plan. Such term includes an individual who is on a waiting list and who would become eligible for medical assistance and enrolled under a State Medicaid plan, or waiver of such plan, upon receipt of home and community-based services.

(7) STATE MEDICAID PROGRAM. — The term "State Medicaid program" means, with respect to a State, the State program under title XIX of the Social Security Act (42 U.S.C. 1396 through 1396w-6) (including any waiver or demonstration under such title or under section 1115 of such Act (42 U.S.C. 1315) relating to such title).

(8) SECRETARY. — The term "Secretary" means the Secretary of Health and Human Services.

(9) STATE. — The term "State" means each of the 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa.

SEC. 30712. HCBS IMPROVEMENT PROGRAM.

(a) INCREASED FMAP FOR HCBS PROGRAM IMPROVEMENT STATES. — Section 1905 of the Social Security Act (42 U.S.C. 1396d) is amended —

(1) in subsection (b), by striking "and (ii)" and inserting "(ii), and (jj)"; and

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

"(jj) ADDITIONAL SUPPORT FOR HCBS PROGRAM IMPROVEMENT STATES. —

"(1) IN GENERAL. —

"(A) ADDITIONAL SUPPORT. — Subject to paragraph (5), in the case of a State that is an HCBS program improvement State, for each fiscal quarter that begins on or after the first date on which the State is an HCBS program improvement State —

"(i) and for which the State meets the requirements described in paragraphs (2) and (4), notwithstanding subsection (b) or (ff), subject to subparagraph (B), with respect to amounts expended during the quarter by such State for medical assistance for home and community-based services, the Federal medical assistance percentage for such State and quarter (as determined for the State under subsection (b) and, if applicable, increased under subsection (y), (z), (aa), or (ii), or section 6008(a) of the Families First Coronavirus Response Act) shall be increased by 6 percentage points in addition any percentage point increases pursuant to either such subsection (y), (z), (aa), or (ii), or such section 6008(a); and

"(ii) with respect to the State meeting the requirements described in paragraphs (2) and (4), notwithstanding [sections 1903(a)(7) and 1903(a)(3)], with respect to amounts expended during the quarter and before October 1, 2031, for administrative costs for expanding and enhancing home and community-based services, including for enhancing Medicaid data and technology infrastructure, modifying rate setting processes, adopting or improving training programs for direct care workers and family caregivers, home and community-based services ombudsman office activities, developing processes to identify direct care workers and assign such workers unique identifiers, and adopting, carrying out, or enhancing programs that register direct care workers or connect beneficiaries to direct care workers, the per centum specified in such [sections 1903(a)(7) and 1903(a)(3)] shall be increased to 80 percent.

In no case may the application of clause (i) result in the Federal medical assistance percentage determined for a State being more than 95 percent with respect to such expenditures. In no case shall the application of clause (ii) result in a reduction to the per centum otherwise specified without application of such clause. Any increase pursuant to clause (ii) shall be available to a State before the State meets the requirements of paragraphs (2) and (4).

"(B) ADDITIONAL HCBS IMPROVEMENT EFFORTS. — Subject to paragraph (5), in addition to the increase to the Federal medical assistance percentage under subparagraph (A)(i) for amounts expended during a quarter for medical assistance for home and community-based services by an HCBS program improvement State that meets the requirements of paragraphs (2) and (4) for the quarter, the Federal medical assistance percentage for amounts expended by the State during the quarter for medical assistance for home and community-based services shall be further increased by 2 percentage points (but not to exceed 95 percent) during the first 6 fiscal quarters throughout which the State has implemented and has in effect a program to support self-directed care that meets the requirements of paragraph (3).

"(C) NONAPPLICATION OF TERRITORIAL FUNDING CAPS. — Any payment made to Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, or American Samoa for expenditures that are subject to an increase in the Federal medical assistance percentage under subparagraph (A)(i) or (B), or an increase in an applicable Federal matching percentage under subparagraph (A)(ii), shall not be taken into account for purposes of applying payment limits under subsections (f) and (g) of section 1108.

"(D) NONAPPLICATION TO CHIP EFMAP. — Any increase described in subparagraph (A) (or payment made for expenditures on medical assistance that are subject to such increase) shall not be taken into account in calculating the enhanced FMAP of a State under section 2105.

"(2) REQUIREMENTS. — Subject to the last sentence of paragraph (1)(A), as conditions for receipt of the increase under paragraph (1) to the Federal medical assistance percentage determined for a State, with respect to a fiscal year quarter, the State shall meet each of the following requirements:

"(A) NONSUPPLANTATION. — The State uses the Federal funds attributable to the increase in the Federal medical assistance percentage for amounts expended during a quarter for medical assistance for home and community-based services under subparagraphs (A) and, if applicable, (B) of paragraph (1) to supplement, and not supplant, the level of State funds expended for home and community-based services for eligible individuals through programs in effect as of the date the State is awarded a planning grant under section 30711 of the Act titled 'An Act to provide for reconciliation pursuant to title II of S. Con. Res. 14'. In applying this subparagraph, the Secretary shall provide that a State shall have a 3year period, as specified by the Secretary, to spend any accumulated unspent State funds attributable to the increase described in clause (i) in the Federal medical assistance percentage.

"(B) MAINTENANCE OF EFFORT. —

"(i) IN GENERAL. — The State does not —

"(I) reduce the amount, duration, or scope of home and community-based services available under the State plan (or waiver of such plan) relative to the home and community-based services available under the plan or a waiver of such plan as of the date on which the State was awarded a planning grant under section 30711 of the Act titled 'An Act to provide for reconciliation pursuant to title II of S. Con. Res. 14';

"(II) reduce payment rates for home and community-based services lower than such rates that were in place as of the date described in subclause (I), including, to the extent applicable, assumed payment rates for such services that are included in managed care capitation rates as such rates are being prospectively built; or

"(III) except to the extent permitted under clause (ii), adopt more restrictive standards, methodologies, or procedures for determining eligibility for or the scope of medical assistance of home and community-based services, including with respect to cost-sharing, than the standards, methodologies, or procedures applicable as of the date described in subclause (I).

"(ii) FLEXIBILITY TO SUPPORT INNOVATIVE MODELS. — A State may make modifications that would otherwise violate the maintenance of effort described in clause (i) if the State demonstrates to the satisfaction of the Secretary that such modifications shall not result in —

"(I) home and community-based services that are less comprehensive or lower in amount, duration, or scope;

"(II) fewer individuals (overall and within particular eligibility groups) receiving home and community-based services, the calculation of which may be adjusted for demographic changes since the date described in clause (i)(I); or

"(III) increased cost-sharing (other than resulting from the rate of inflation) for home and community-based services.

"(C) ACCESS TO SERVICES. — Not later than an implementation date as specified by the Secretary (which may vary for each of the following clauses) after the first day of the first fiscal quarter for which a State receives an increase to the Federal medical assistance percentage or other applicable Federal matching percentage under paragraph (1), the State does all of the following to improve access to services:

"(i) Reduce access barriers and disparities in access or utilization of home and community-based services, as described in the State HCBS improvement plan.

"(ii) Provides coverage of personal care services authorized under subsection (a)(24) for all individuals eligible for and enrolled in medical assistance in the State.

"(iii) Provides for navigation of home and community-based services through 'no wrong door' programs, provides expedited eligibility for home and community-based services, and improves home and community-based services counseling and education programs.

"(iv) Expands access to behavioral health services furnished in home and community-based settings.

"(v) Improves coordination of home and community-based services with employment, housing, and transportation supports.

"(vi) Provides supports to family caregivers, such as respite care, caregiver assessments, peer supports, or paid family caregiving.

"(vii) Newly provides coverage under, or expands existing eligibility criteria for, 1 or more of the eligibility categories authorized under subclause (XIII), (XV), or (XVI) of section 1902(a)(10)(A)(ii).

"(D) STRENGTHENED AND EXPANDED WORKFORCE. —

"(i) IN GENERAL. — The State strengthens and expands the direct care workforce that provides home and community-based services by —

"(I) adopting processes to ensure that payment rates for home and community-based services are sufficient (as defined by the Secretary) to ensure that care and services are available to the extent described in the State HCBS improvement plan; and

"(II) updating qualification standards (at such time and at such frequency as the Secretary determines appropriate), and developing and adopting training opportunities, for the continuum of providers of home and community-based services, including programs for independent providers of such services and agency direct care workers, as well as unique programs and resources for family caregivers.

"(ii) PAYMENT RATES. — In carrying out clause (i)(I), the State shall —

"(I) update and, as appropriate, increase payment rates to support recruitment and retention of the direct care workforce by 2 years after approval of the improvement plan and, at least every 3 years thereafter, using, through existing or other processes to determine provider payment, a transparent process involving meaningful input from stakeholders; and

"(II) ensure that increases in the payment rates for home and community-based services —

"(aa) at a minimum, result in a proportionate increase to payments for direct care workers and in a manner that is determined with input from the stakeholders described in subclause (II); and

"(bb) are incorporated into provider payment rates for home and community-based services provided under this title by a health plan, under a contract and paid through capitation rates with the State.

"(3) SELF-DIRECTED MODELS FOR THE DELIVERY OF SERVICES. — As conditions for receipt of the increase under paragraph (1)(B) to the Federal medical assistance percentage determined for a State, with respect to a fiscal year quarter, the State shall establish directly, or by contract with 1 or more entities, including an agency with choice or a similar service delivery model, a program for the performance of all of the following functions to facilitate beneficiary use of self-directed care in the case the State covers home and community-based services under authorities that permit self-direction:

"(A) Registering qualified direct care workers and assisting beneficiaries in finding direct care workers.

"(B) Undertaking activities to recruit and train independent providers to enable beneficiaries to direct their own care, including by providing or coordinating training for beneficiaries on self-directed care.

"(C) Ensuring the safety of, and supporting the quality of, care provided to beneficiaries, such as by conducting background checks and addressing complaints reported by recipients of home and community-based services.

"(D) Facilitating coordination between State and local agencies and direct care workers for matters of public health, training opportunities, changes in program requirements, workplace health and safety, or related matters.

"(E) Supporting beneficiary hiring, if selected by the beneficiary, of independent providers of home and community-based services, including by processing applicable tax information, collecting and processing timesheets, submitting claims and processing payments to such providers.

"(F) To the extent a State permits beneficiaries to hire a family member or individual with whom they have an existing relationship to provide home and community-based services, providing support to beneficiaries who wish to hire a caregiver who is a family member or individual with whom they have an existing relationship, such as by facilitating enrollment of such family member or individual as a provider of home and community-based services under the State plan or a waiver of such plan.

"(G) Ensuring that the program under this paragraph does not promote or prevent the ability of workers to form a labor organization or discriminate against workers who may join or decline to join such an organization.

"(4) REPORTING AND OVERSIGHT. — As conditions for receipt of the increase under paragraph (1) to the Federal medical assistance percentage determined for a State, with respect to a fiscal year quarter, the State shall meet each of the following requirements:

"(A) The State designates (by a date specified by the Secretary) an HCBS ombudsman (or a long-term care ombudsman program office) that —

"(i) operates independently from the State Medicaid agency and managed care entities;

"(ii) provides direct assistance to recipients of home and community-based services available under the State Medicaid program and their families; and

"(iii) identifies and reports systemic problems to State officials, the public, and the Secretary.

"(B) Beginning with the last day of the 5th fiscal quarter for which the State is an HCBS program improvement State, and annually thereafter, the State reports to the Secretary on the state (as of the most recent quarter before the report for which complete data is available and which may be incorporated into the report) of —

"(i) the availability and utilization of home and community-based services, disaggregated (to the extent available and as applicable) by age groups, primary disability, income brackets, gender, race, ethnicity, geography, primary language, and type of service setting;

"(ii) benefits, turnover and vacancy rates, and average and range of wages for the direct care workforce;

"(iii) changes in payment rates for home and community-based services;

"(iv) implementation of the activities to strengthen and expand access to home and community-based services and the direct care workforce that provides such services in accordance with the requirements of subparagraphs (C) and (D) of paragraph (2);

"(v) if applicable, implementation of the activities described in paragraph (3);

"(vi) State expenditures for home and community-based services under the State plan or a waiver of such plan as a proportion of the total amount of State expenditures under the plan or waiver of such plan for long-term services and supports;

"(vii) the challenges in, and best practices identified for expanding access to home and community-based services, reducing disparities, and supporting and expanding the direct care workforce; and

"(viii) the use of enhanced Federal funding provided under this section.

"(5) BENCHMARKS FOR DEMONSTRATING IMPROVEMENTS. — An HCBS program improvement State shall cease to be eligible for an increase in the Federal medical assistance percentage under paragraph (1)(A)(i) or (1)(B) or an increase in an applicable Federal matching percentage under paragraph (1)(A)(ii) on or after the first date on which a State is an HCBS program improvement State if the State is found to be out of compliance with paragraph (2)(B) or any other requirement of this subsection and, beginning with such 29th fiscal quarter, unless, not later than 90 days before the first day of such fiscal quarter, the State submits to the Secretary a report demonstrating the following improvements:

"(A) Increased availability (above a marginal increase) of home and community-based services in the State relative to such availability as reported in the State HCBS improvement plan and adjusted for demographic changes in the State since the submission of such plan.

"(B) Reduced disparities in the utilization and availability of home and community-based services relative to the availability and utilization of such services by such populations as reported in such plan according to age groups, primary disability, income brackets, gender, race, ethnicity, geography, primary language, and type of service setting (to the extent available and applicable), and adjusted for demographic changes in the State since the submission of such plan.

"(C) Evidence that rates are sufficient (as defined by the Secretary) to ensure access to items and services for individuals eligible for HCBS in such State.

"(D) With respect to the percentage of expenditures made by the State for long-term services and supports that are for home and community-based services, in the case of an HCBS program improvement State for which such percentage (as reported in the State HCBS improvement plan) was —

"(i) less than 50 percent, the State demonstrates that the percentage of such expenditures has increased to at least 50 percent since the plan was approved; and

"(ii) at least 50 percent, the State demonstrates that such percentage has not decreased since the plan was approved.

"(6) DEFINITIONS. — In this subsection, the terms 'State Medicaid plan', 'direct care worker', 'HCBS program improvement State', 'health plan'; and 'home and community-based services' have the meaning given those terms in section 30711(e) of the Act titled 'An Act to provide for reconciliation pursuant to title II of S. Con. Res. 14'.".

SEC. 30713. FUNDING FOR FEDERAL ACTIVITIES.

In addition to amounts otherwise available, there is appropriated to the Secretary for fiscal year 2022, out of any money in the Treasury not otherwise appropriated, $40,000,000, to remain available until expended, to carry out section 30712 (including the amendments made by such section), including by issuing necessary guidance and technical assistance to States, conducting program integrity and oversight efforts, and preparing and submitting to the Committee on Energy and Commerce of the House of Representatives and the Committee on Finance of the Senate, beginning 5 years after the date of the enactment of this Act and every three years thereafter, a report describing the progress of the HCBS planning and improvement activities undertaken by States as applicable and as described in sections 30711 and 30712 (including the amendments made by such sections), and describing the impact of such activities on access to care, including with respect to disparities in access and utilization, and the direct care workforce.

SEC. 30714. FUNDING FOR HCBS QUALITY MEASUREMENT AND IMPROVEMENT.

(a) INCREASED FEDERAL MATCHING RATE FOR ADOPTION AND REPORTING OF HCBS QUALITY MEASURES. —

(1) IN GENERAL. — Section 1903(a)(3) of the Social Security Act (42 U.S.C. 1396b(a)(3)) is amended —

(A) in subparagraph (F)(ii), by striking "plus" after the semicolon and inserting "and"; and

(B) by inserting after subparagraph (F), the following:

"(G) 80 percent of so much of the sums expended during such quarter as are attributable to the reporting of information regarding the quality of home and community-based services in accordance with sections 1139A(a)(4)(B)(ii) and 1139B(b)(3)(C); and".

(2) EXEMPTION FROM TERRITORIES' PAYMENT LIMITS. — Section 1108(g)(4) of the Social Security Act is amended by adding at the end the following new subparagraph:

"(C) ADDITIONAL EXEMPTION RELATING TO HCBS QUALITY REPORTING. — Payments under section 1903(a)(3)(G) shall not be taken into account in applying payment limits under subsections (f) and (g) of this subsection.".

(b) HCBS QUALITY MEASURES FOR INCREASE. — Title XI of the Social Security Act (42 U.S.C. 1301 through 1320e-3) is amended —

(1) in section 1139A —

(A) in subsection (a)(4)(B) —

(i) by striking "Beginning with the annual State report on fiscal year 2024" and inserting the following:

"(i) IN GENERAL. — Subject to clause (ii), beginning with the annual State report on fiscal year 2024"; and

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

"(ii) REPORTING HCBS QUALITY MEASURES. — With respect to reporting on information regarding the quality of home and community-based services provided to children under title XIX or title XXI, beginning with the annual State report required under subsection (c)(1) for the first fiscal year that begins on or after the date that is 2 years after the date that the Secretary publishes the home and community-based services quality measures developed under subsection (b)(5)(B) the Secretary shall require States to report such information using the standardized format for reporting information and procedures developed under subparagraph (A) and using all such home and community-based quality measures developed under subsection (b)(5) (including any updates or changes to such measures)."; and

(B) in subsection (b)(5) —

(i) by striking "Beginning no later than January 1, 2013" and inserting the following:

"(A) IN GENERAL. — Beginning no later than January 1, 2013"; and

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

"(B) HCBS QUALITY MEASURES. — Beginning with the first year that begins on the date that is 2 years after the date of enactment of this subparagraph, the requirements of subparagraph (A) shall apply, and the core measures described in subsection (a) (and any updates or changes to such measures) shall include home and community-based services quality measures developed by the Secretary in the manner described in section 1139B(b)(5)(D). The Secretary shall ensure that the application of such measures reflects the full array of home and community-based services, consult with stakeholders with expertise in home and community-based services (including recipients and providers of such services) and allowing for the collection (to the extent available) of data disaggregated by age groups, primary disability, income brackets, gender, race, ethnicity, geography, primary language, and type of service setting.";

(C) in subsection (b)(6)

(i) by inserting "or support services" before "that is capable of";

(ii) by striking "and ambulatory health care and home and community-based settings" and inserting ", ambulatory health care, and home and community-based settings"; and

(iii) by inserting "and home and community-based" before "care system"; and

(D) in subsection (c)(1), in the matter preceding subparagraph (A), by inserting ", subject to subsection (a)(4)(B)(ii)," before "annually report"; and

(2) in section 1139B —

(A) in subsection (b) —

(i) in paragraph (3), by adding at the end the following new subparagraph:

"(C) MANDATORY REPORTING WITH RESPECT TO HCBS QUALITY MEASURES. — Beginning with the State report required under subsection (d)(1) for the first year that begins on or after the date that is 2 years after the date that the Secretary publishes the home and community-based quality measures developed under paragraph (5)(D), the Secretary shall require States to report information, using the standardized format for reporting information and procedures developed under subparagraph (A), regarding the quality of home and community-based services for Medicaid eligible adults using all of the home and community-based services quality measures included in the core set of adult health quality measures under paragraph (5)(D), and any updates or changes to such measures."; and

(ii) in paragraph (5), by adding at the end the following new subparagraph:

"(D) HCBS QUALITY MEASURES. —

"(i) FUNDING. — In addition to amounts otherwise available, there is appropriated to the Secretary, for each fiscal year, beginning with fiscal year 2022, out of any money in the Treasury not otherwise appropriated, $5,000,000, for carrying out this subparagraph.

"(ii) INCLUSION OF HCBS QUALITY MEASURES. — Beginning with respect to State reports required under subsection (d)(1) for the first year that begins on or after the date that is 2 years after the date of enactment of this subparagraph (or, in the case of measures that require development and testing prior to availability, not later than 4 years after the date of enactment of this subparagraph) the core set of child and adult health quality measures maintained under this paragraph (and any updates or changes to such measures) shall include home and community-based services quality measures developed in accordance with this subparagraph.

"(iii) REQUIREMENTS. —

"(I) IN GENERAL. — In developing (and subsequently reviewing and updating) the home and community-based services quality measures included in the core set of adult health quality measures maintained under this paragraph, the Secretary shall collaborate with relevant agencies across the Department of Health and Human Services and ensure that such measures are informed consultation with stakeholders with expertise in home and community-based services (including recipients and providers of such services).

"(II) FULL ARRAY OF SERVICES. — Such home and community-based services quality measures shall reflect the full array of home and community-based services and adult recipients of such services.

"(III) DEMOGRAPHICS. — Such home and community-based services quality measures shall allow for the collection, to the extent available, of data that is disaggregated by age groups, primary disability, income brackets, gender, race, ethnicity, geography, primary language, and type of service setting.

"(IV) DEFINITIONS. — For purposes of this section and section 1139A, the terms 'home and community-based services', and 'direct care worker' have the meanings given those terms in section 30711(e) of the Act titled 'An Act to provide for reconciliation pursuant to title II of S. Con. Res. 14'."; and

(B) in subsection (d)(1)(A), by striking "; and" and inserting "and, beginning with the report for the first year that begins after the date that is 2 years after the Secretary publishes the home and community-based quality measures developed under subsection (b)(5)(D), all home and community-based services quality measures included in the core set of adult health quality measures maintained under subsection (b)(5) and any updates or changes to such measures; and".

PART 2 — OTHER MEDICAID

SEC. 30721. PERMANENT EXTENSION OF MEDICAID PROTECTIONS AGAINST SPOUSAL IMPOVERISHMENT FOR RECIPIENTS OF HOME AND COMMUNITY-BASED SERVICES.

(a) IN GENERAL. — Section 1924(h)(1)(A) of the Social Security Act (42 U.S.C. 1396r-5(h)(1)(A)) is amended by striking "(at the option of the State) is described in section 1902(a)(10)(A)(ii)(VI)" and inserting the following: "is eligible for medical assistance for home and community-based services provided under subsection (c), (d), or (i) of section 1915 or under a waiver approved under section 1115, or who is eligible for such medical assistance by reason of being determined eligible under section 1902(a)(10)(C) or by reason of section 1902(f) or otherwise on the basis of a reduction of income based on costs incurred for medical or other remedial care, or who is eligible for medical assistance for home and community-based attendant services and supports under section 1915(k)".

(b) CONFORMING AMENDMENT. — Section 2404 of the Patient Protection and Affordable Care Act (42 U.S.C. 1396r-5 note) is amended by striking "September 30, 2023" and inserting "the date of the enactment of the Act titled 'An Act to provide for reconciliation pursuant to title II of S. Con. Res. 14' ".

SEC. 30722. PERMANENT EXTENSION OF MONEY FOLLOWS THE PERSON REBALANCING DEMONSTRATION.

(a) IN GENERAL. — Subsection (h) of section 6071 of the Deficit Reduction Act of 2005 (42 U.S.C. 1396a note) is amended —

(1) in paragraph (1) —

(A) in subparagraph (I), by inserting "and" after the semicolon;

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

"(J) $450,000,000 for each fiscal year after fiscal year 2021."; and

(C) by striking subparagraph (K);

(2) in paragraph (2), by striking "September 30, 2023" and inserting "September 30 of the subsequent fiscal year"; and

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

"(3) TECHNICAL ASSISTANCE. — Out of the amounts made available under paragraph (1), for the 3-year period beginning with fiscal year 2022 and for each subsequent 3-year period, $5,000,000 shall be made available for carrying out subsections (f), (g), and (i).".

(b) REDISTRIBUTION OF UNEXPENDED GRANT AWARDS. — Subsection (e)(2) of section 6071 of the Deficit Reduction Act of 2005 (42 U.S.C. 1396a note) is amended by adding at the end the following new sentence: "Any portion of a State grant award for a fiscal year under this section that is unexpended by the State at the end of the fourth succeeding fiscal year shall be rescinded by the Secretary and added to the appropriation for the fifth succeeding fiscal year.".

Subtitle F — Social Safety Net

SEC. 137001. AMENDMENT OF 1986 CODE.

Except as otherwise expressly provided, whenever in this subtitle 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.

PART 1 — CHILD TAX CREDIT

SEC. 137101. MODIFICATIONS APPLICABLE BEGINNING IN 2021.

(a) SAFE HARBOR EXCEPTION FOR FRAUD AND INTENTIONAL DISREGARD OF RULES AND REGULATIONS. —  Section 24(j)(2)(B) is amended —

(1) by striking "qualified" each place it appears in clause (iv)(II) and inserting "qualifying", and

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

"(v) EXCEPTION FOR FRAUD AND INTENTIONAL DISREGARD OF RULES AND REGULATIONS. —

"(I) IN GENERAL. — For purposes of determining the safe harbor amount under clause (iv) with respect to any taxpayer, an individual shall not be treated as taken into account in determining the annual advance amount of such taxpayer if the Secretary determines that such individual was so taken into account due to fraud by the taxpayer or intentional disregard of rules and regulations by the taxpayer.

"(II) ARRANGEMENTS TO TAKE INDIVIDUAL INTO ACCOUNT MORE THAN ONCE. — For purposes of subclause (I), a taxpayer shall not fail to be treated as intentionally disregarding rules and regulations with respect to any individual taken into account in determining the annual advance amount of such taxpayer if such taxpayer entered into a plan or other arrangement with, or expected, another taxpayer to take such individual into account in determining the credit allowed under this section for the taxable year.".

(b) RULES RELATING TO RECONCILIATION OF CREDIT AND ADVANCE CREDIT. — Section 24(j) is amended by adding at the end the following new paragraphs:

"(3) JOINT RETURNS. — Except as otherwise provided by the Secretary, in the case of an advance payment made under section 7527A with respect to a joint return, half of such payment shall be treated as having been made to each individual filing such return.

"(4) COORDINATION WITH POSSESSIONS OF THE UNITED STATES. — For purposes of this subsection, payments made under section 7527A include payments made by any jurisdiction other than the United States under section 7527A of the income tax law of such jurisdiction, and advance payments made by American Samoa pursuant to a plan described in subsection (k)(3)(B). In carrying out this section, the Secretary shall coordinate with each possession of the United States to prevent any application of this paragraph that is inconsistent with the purposes of this subsection.".

(c) ANNUAL ADVANCE AMOUNT. — Section 7527A(b) is amended —

(1) in paragraph (1) —

(A) in subparagraph (A), by inserting "or based on any other information known to the Secretary" after "reference taxable year",

(B) in subparagraph (C), by inserting "unless determined by the Secretary based on any information known to the Secretary," before "the only children", and

(C) in subparagraph (D), by inserting "unless determined by the Secretary based on any information known to the Secretary," before "the ages of", and

(2) in paragraph (3)(A)(ii), by striking "provided by the taxpayer" and inserting "provided, or known,".

(d) DISCLOSURE OF INFORMATION RELATING TO JOINT FILERS AND ADVANCE PAYMENT OF CHILD TAX CREDIT. — Section 6103(e) is amended by adding at the end the following new paragraph:

"(12) DISCLOSURE OF INFORMATION RELATING TO JOINT FILERS AND ADVANCE PAYMENT OF CHILD TAX CREDIT. — In the case of an individual to whom the Secretary makes payments under section 7527A, if the reference taxable year (as defined in section 7527A(b)(2)) that the Secretary uses to calculate such payments is a year for which the individual filed an income tax return jointly with another individual, the Secretary may disclose to such individual any information which is relevant in determining the payment under section 7527A and the individual's eligibility for such payment, including information regarding any of the following:

"(A) The number of specified children, including by reason of the birth of a child.

"(B) The name and TIN of specified children.

"(C) Marital status.

"(D) Modified adjusted gross income.

"(E) Principal place of abode.

"(F) Any other factor which the Secretary may provide pursuant to section 7527A(c).".

(e) EFFECTIVE DATE. —

(1) IN GENERAL. — Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning, and payments made, after December 31, 2020.

(2) DISCLOSURE OF INFORMATION RELATING TO JOINT FILERS AND ADVANCE PAYMENT OF CHILD TAX CREDIT. — The amendment made by subsection (d) shall take effect on the date of the enactment of this Act.

SEC. 137102. EXTENSIONS AND MODIFICATIONS APPLICABLE BEGINNING IN 2022.

(a) EXTENSIONS. —

(1) EXTENSION OF CHILD TAX CREDIT. — Section 24(i) is amended —

(A) by striking "January 1, 2022" in the matter preceding paragraph (1) and inserting "January 1, 2023", and

(B) by inserting "AND 2022" after "2021" in the heading thereof.

(2) EXTENSION OF PROVISIONS RELATED TO POSSESSIONS OF THE UNITED STATES. —

(A) Section 24(k)(2)(B) is amended —

(i) by striking "December 31, 2021" in the matter preceding clause (i) and inserting "December 31, 2022", and

(ii) by striking "AFTER 2021" in the heading thereof and inserting "AFTER 2022".

(B) Section 24(k)(3)(C)(ii) is amended —

(i) in subclause (I), by inserting "or 2022" after "2021", and

(ii) in subclause (II), by striking "December 31, 2021" and inserting "December 31, 2022".

(C) The heading of section 24(k)(2)(A) is amended by inserting "AND 2022" after "2021".

(b) EXTENSION AND MODIFICATION OF ADVANCE PAYMENT. —

(1) IN GENERAL. — Section 7527A is amended —

(A) in subsection (b)(1), by striking "50 percent of",

(B) in clauses (i) and (ii) of subsection (e)(4)(C), by inserting "or 2022" after "in 2021", and

(C) in subsection (f), by striking "December 31, 2021" and inserting "December 31, 2022".

(2) MONTHLY PAYMENTS. —

(A) IN GENERAL. — Section 7527A(a) is amended to read as follows:

"(a) IN GENERAL. — The Secretary shall establish a program for making monthly payments to taxpayers in amounts equal to 1/12 of the annual advance amount with respect to such taxpayer.".

(B) MODIFICATIONS DURING CALENDAR YEAR. — Section 7527A(b)(3), as amended by the preceding provisions of this Act, is amended —

(i) by amending subparagraph (A)(ii) to read as follows:

"(ii) any other information provided, or known, to the Secretary which allows the Secretary to more accurately estimate the amount treated as allowed under subpart C of part IV of subchapter A of chapter 1 by reason of section 24(i)(1) with respect to the taxpayer for the reference taxable year.",

(ii) by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:

"(B) APPLICATION OF MODIFICATIONS TO SUBSEQUENT MONTHS. — Except as may be provided under subparagraph (C), any modification of the annual advance amount with respect to any taxpayer under subparagraph (A) shall be taken into account for purposes of determining the amount of monthly payments with respect to such taxpayer under subsection (a) which are determined by the Secretary after such modification.", and

(iii) in subparagraph (C) (as redesignated by clause (ii), by striking "periodic payment" both places it appears and inserting "monthly payment".

(C) CONFORMING AMENDMENT. — Section 7527A(c)(2) is amended by striking "subsection (b)(3)(B)" and inserting "subsection (b)(3)".

(3) ELIGIBILITY FOR ADVANCE PAYMENTS LIMITED BASED ON MODIFIED ADJUSTED GROSS INCOME. — Section 7527A(b) is amended by adding at the end the following new paragraph:

"(6) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME. —

"(A) IN GENERAL. — If the modified adjusted gross income of the taxpayer for the reference taxable year exceeds the applicable threshold amount with respect to such taxpayer (as defined in section 24(i)(4)(B)), the annual advance amount with respect to such taxpayer shall be zero.

"(B) EXCEPTION FOR MODIFICATIONS MADE DURING THE CALENDAR YEAR. — Subparagraph (A) shall not apply to a reference taxable year taken into account by reason of paragraph (3)(A)(i) or subsection (c) if the taxpayer received one or more payments under subsection (a) for months in the calendar year which precede the month for which such reference taxable year will be taken into account.".

(4) ADVANCE PAYMENTS TO PUERTO RICO RESIDENTS FOR 2022. — Section 7527A(e)(4) is amended —

(A) in subparagraph (A), by striking "The advance" and inserting "Except as provided in subparagraph (D), the advance", and

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

"(D) ADVANCE PAYMENTS TO PUERTO RICO RESIDENTS FOR 2022. — For the period beginning on July 1, 2022, and ending on December 31, 2022, the Secretary may apply this section without regard to subparagraph (A)(i).".

(c) ELECTION TO APPLY INCOME PHASEOUT ON BASIS OF INCOME FROM THE PRECEDING TAXABLE YEAR. — Section 24(i) is amended by adding at the end the following new paragraph:

"(5) ELECTION TO APPLY INCOME PHASEOUT ON BASIS OF INCOME FROM THE PRECEDING TAXABLE YEAR. — In the case of a taxpayer who elects (at such time and in such manner as the Secretary may provide) the application of this paragraph for any taxable year, paragraph (4) and subsection (b)(1) shall both be applied with respect to the modified adjusted gross income (as defined in subsection (b)) for the taxpayer's preceding taxable year.".

(d) MODIFICATION OF RECAPTURE SAFE HARBOR FOR 2022. — Section 24(j)(2)(B)(iv), as amended by the preceding provisions of this Act, is amended to read as follows:

"(iv) SAFE HARBOR AMOUNT. — For purposes of this subparagraph, the term 'safe harbor amount' means, with respect to any taxpayer for any taxable year, the sum of —

"(I) an amount equal to the product of $3,600 multiplied by the excess (if any) of the number of qualifying children who have not attained age 6 as of the close of the calendar year in which the taxable year of the taxpayer begins, and who are taken into account in determining the annual advance amount with respect to the taxpayer under section 7527A with respect to months beginning in such taxable year, over the number of such qualifying children taken into account in determining the credit allowed under this section for such taxable year, plus

"(II) an amount equal to the product of $3,000 multiplied by the excess (if any) of the number of qualifying children not described in clause (I), and who are taken into account in determining the annual advance amount with respect to the taxpayer under section 7527A with respect to months beginning in such taxable year, over the number of such qualifying children taken into account in determining the credit allowed under this section for such taxable year.".

(e) REPEAL OF SOCIAL SECURITY NUMBER REQUIREMENT. —

(1) IN GENERAL. — Section 24(h) is amended by striking paragraph (7).

(2) CONFORMING AMENDMENTS. —

(A) Section 24(h)(1) is amended by striking "paragraphs (2) through (7)" and inserting "paragraphs (2) through (6)".

(B) Section 24(h)(4) is amended by striking subparagraph (C).

(f) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning, and payments made, after December 31, 2021.

SEC. 137103. REFUNDABLE CHILD TAX CREDIT AFTER 2022.

(a) IN GENERAL. — Section 24 is amended by adding at the end the following new subsection:

"(l) REFUNDABLE CREDIT AFTER 2022. — In the case of any taxable year beginning after December 31, 2022, if the taxpayer (in the case of a joint return, either spouse) has a principal place of abode in the United States (determined as provided in section 32) for more than one-half of the taxable year or is a bona fide resident of Puerto Rico (within the meaning of section 937(a)) for such taxable year —

"(1) subsection (d) shall not apply, and

"(2) so much of the credit determined under subsection (a) (after application of paragraph (1)) as does not exceed the amount of such credit which would be so determined without regard to subsection (h)(4) shall be allowed under subpart C (and not allowed under this subpart)".

(b) CONFORMING AMENDMENTS RELATED TO POSSESSIONS OF THE UNITED STATES. —

(1) PUERTO RICO. — Section 24(k)(2)(B), as amended by the preceding provisions of this Act, is amended to read as follows:

"(B) APPLICATION TO TAXABLE YEARS AFTER 2022. — For application of refundable credit to residents of Puerto Rico for taxable years after 2022, see subsection (l).".

(2) AMERICAN SAMOA. — Section 24(k)(3)(C)(ii)(II), as amended by the preceding provisions of this Act, is amended to read as follows:

"(II) if such taxable year begins after December 31, 2022, subsection (l) shall be applied by substituting 'Puerto Rico or American Samoa' for 'Puerto Rico'.".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2022.

PART 2 — EARNED INCOME TAX CREDIT

SEC. 137201. CERTAIN IMPROVEMENTS TO THE EARNED INCOME TAX CREDIT EXTENDED THROUGH 2022.

(a) IN GENERAL. — Section 32(n) is amended by striking "January 1, 2022" and inserting "January 1, 2023".

(b) INFLATION ADJUSTMENT. — Section 32(n)(4)(B) is amended to read as follows:

"(B) INFLATION ADJUSTMENT. — In the case of any taxable year beginning after 2021, the $9,820 and $11,610 dollar amounts in subparagraph (A) shall be increased by an amount equal to —

"(i) such dollar amount, multiplied by "(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting 'calendar year 2020' for 'calendar year 2016' in subparagraph (A)(ii) thereof.".

(c) ELECTION TO DETERMINE EARNED INCOME BASED ON PRIOR TAXABLE YEAR. — Section 32, as amended by subsection (f), is amended by adding at the end the following new subsection:

"(o) ELECTION TO DETERMINE EARNED INCOME BASED ON PRIOR TAXABLE YEAR. —

"(1) IN GENERAL. — In the case of a taxpayer whose earned income for any taxable year beginning after December 31, 2021, and before January 1, 2023, is less than the earned income of such taxpayer for the preceding taxable year, if such taxpayer elects (at such time and in such manner as the Secretary may provide) the application of this subsection for such taxable year, the earned income of such taxpayer for such taxable year shall be treated for purposes of this section as being equal to the earned income of such taxpayer for such preceding taxable year.

"(2) JOINT RETURNS. — For purposes of this subsection, in the case of a joint return, the earned income of the taxpayer for the preceding taxable year shall be the sum of the earned income of each spouse for the preceding taxable year.

"(3) TREATMENT AS MATHEMATICAL OR CLERICAL ERROR. — In the case of a taxpayer described in paragraph (1) who makes the election described in such paragraph, the use on the return for purposes of this section of an amount of earned income for the preceding taxable year which differs from the amount of such earned income as shown in the electronic files of the Internal Revenue Service shall be treated as a mathematical or clerical error for purposes of section 6213.

"(4) TREATMENT OF REFERENCES. — Any provision of this title which defines or determines earned income by reference to this section shall be applied without regard to this subsection unless such provision specifically provides otherwise.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 137202. FUNDS FOR ADMINISTRATION OF EARNED INCOME TAX CREDITS IN THE TERRITORIES.

(a) PUERTO RICO. — Section 7530(a)(1) is amended by striking "plus" at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting ", plus", and by adding at the end the following new subparagraph:

"(C) reasonable administrative costs associated with the provision of the earned income tax credit not in excess of $4,000,000.".

(b) POSSESSIONS WITH MIRROR CODE TAX SYSTEMS. — Section 7530(b)(1) is amended by striking "plus" at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting ", plus", and by adding at the end the following new subparagraph:

"(C) reasonable administrative costs associated with the provision of the earned income tax credit not in excess of $200,000.".

(c) AMERICAN SAMOA. — Section 7530(c)(1) is amended by striking "plus" at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting ", plus", and by adding at the end the following new subparagraph:

"(C) reasonable administrative costs associated with the provision of the earned income tax credit not in excess of $200,000.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to payments made for calendar years beginning after December 31, 2021.

PART 3 — EXPANDING ACCESS TO HEALTH COVERAGE AND LOWERING COSTS

SEC. 137301. IMPROVE AFFORDABILITY AND REDUCE PREMIUM COSTS OF HEALTH INSURANCE FOR CONSUMERS.

(a) IN GENERAL. — Section 36B(b)(3)(A) is amended —

(1) by striking clause (ii) and redesignating clause (iii) as clause (ii), and

(2) in clause (ii) (as redesignated by paragraph (1)) by striking all that precedes the table contained therein and inserting the following:

"(ii) TEMPORARY PERCENTAGES FOR 2021 THROUGH 2025. — In the case of a taxable year beginning after December 31, 2020, and before January 1, 2026, the following table shall be applied in lieu of the table contained in clause (i):".

(b) EXTENSION THROUGH 2025 OF RULE TO ALLOW CREDIT TO TAXPAYERS WHOSE HOUSEHOLD INCOME EXCEEDS 400 PERCENT OF THE POVERTY LINE. — Section 36B(c)(1)(E) is amended —

(1) by striking "in 2021 or 2022" and inserting "after December 31, 2020, and before January 1, 2026", and

(2) by striking "AND 2022" in the heading thereof and inserting "THROUGH 2025".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 137302. MODIFICATION OF EMPLOYER-SPONSORED COVERAGE AFFORDABILITY TEST IN HEALTH INSURANCE PREMIUM TAX CREDIT.

(a) IN GENERAL. — Section 36B(c)(2)(C)(i)(II) is amended by inserting "(8.5 percent in the case of any taxable year beginning after December 31, 2021, and before January 1, 2026)" after "9.5 percent".

(b) QUALIFIED SMALL EMPLOYER HEALTH REIMBURSEMENT ARRANGEMENTS. — Section 36B(c)(4)(C)(ii) is amended by inserting "(8.5 percent in the case of any taxable year beginning after December 31, 2021, and before January 1, 2026)" after "9.5 percent".

(c) PERCENTAGES DETERMINED WITHOUT REGARD TO ADJUSTMENTS AFTER 2025. —

(1) Section 36B(c)(2)(C) is amended by striking clause (iv).

(2) Section 36B(c)(4) is amended by striking subparagraph (F).

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 137303. TREATMENT OF LUMP-SUM SOCIAL SECURITY BENEFITS IN DETERMINING HOUSEHOLD INCOME.

(a) IN GENERAL. — Section 36B(d)(2) is amended by adding at the end the following new subparagraph:

"(C) EXCLUSION OF PORTION OF LUMP-SUM SOCIAL SECURITY BENEFITS. —

"(i) IN GENERAL. — The term 'modified adjusted gross income' shall not include so much of any lump-sum social security benefit payment as is attributable to months ending before the beginning of the taxable year.

"(ii) LUMP-SUM SOCIAL SECURITY BENEFIT PAYMENT. — For purposes of this subparagraph, the term 'lump-sum social security benefit payment' means any payment of social security benefits (as defined in section 86(d)(1)) which constitutes more than 1 month of such benefits.

"(iii) ELECTION TO INCLUDE EXCLUDABLE AMOUNT. — With respect to any taxable year beginning after December 31, 2025, a taxpayer may elect (at such time and in such manner as the Secretary may provide) to have this subparagraph not apply for such taxable year.".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 137304. TEMPORARY EXPANSION OF HEALTH INSURANCE PREMIUM TAX CREDITS FOR CERTAIN LOW-INCOME POPULATIONS.

(a) IN GENERAL. — Section 36B is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection:

"(h) CERTAIN TEMPORARY RULES BEGINNING IN 2022. — With respect to any taxable year beginning after December 31, 2021, and before January 1, 2026 —

"(1) ELIGIBILITY FOR CREDIT NOT LIMITED BASED ON INCOME. — Section 36B(c)(1)(A) shall be disregarded in determining whether a taxpayer is an applicable taxpayer.

"(2) CREDIT ALLOWED TO CERTAIN LOW-INCOME EMPLOYEES OFFERED EMPLOYER-PROVIDED COVERAGE. — Subclause (II) of subsection (c)(2)(C)(i) shall not apply if the taxpayer's household income does not exceed 138 percent of the poverty line for a family of the size involved. Subclause (II) of subsection (c)(2)(C)(i) shall also not apply to an individual described in the last sentence of such subsection if the taxpayer's household income does not exceed 138 percent of the poverty line for a family of the size involved.

"(3) CREDIT ALLOWED TO CERTAIN LOW-INCOME EMPLOYEES OFFERED QUALIFIED SMALL EMPLOYER HEALTH REIMBURSEMENT ARRANGEMENTS. — A qualified small employer health reimbursement arrangement shall not be treated as constituting affordable coverage for an employee (or any spouse or dependent of such employee) for any months of a taxable year if the employee's household income for such taxable year does not exceed 138 percent of the poverty line for a family of the size involved.

"(4) LIMITATIONS ON RECAPTURE. —

"(A) IN GENERAL. — In the case of a taxpayer whose household income is less than 200 percent of the poverty line for the size of the family involved for the taxable year, the amount of the increase under subsection (f)(2)(A) shall in no event exceed $300 (one-half of such amount in the case of a taxpayer whose tax is determined under section 1(c) for the taxable year).

"(B) LIMITATION ON INCREASE FOR CERTAIN NONFILERS. — In the case of any taxpayer who would not be required to file a return of tax for the taxable year but for any requirement to reconcile advance credit payments under subsection (f), if an Exchange established under title I of the Patient Protection and Affordable Care Act has determined that —

"(i) such taxpayer is eligible for advance payments under section of such Act for any portion of such taxable year, and

"(ii) such taxpayer's household income for such taxable year is projected to not exceed 138 percent of the poverty line for a family of the size involved, subsection (f)(2)(A) shall not apply to such taxpayer for such taxable year and such taxpayer shall not be required to file such return of tax.

"(C) INFORMATION PROVIDED BY EXCHANGE. — The information required to be provided by an Exchange to the Secretary and to the taxpayer under subsection (f)(3) shall include such information as is necessary to determine whether such Exchange has made the determinations described in clauses (i) and (ii) of subparagraph (B) with respect to such taxpayer.".

(b) EMPLOYER SHARED RESPONSIBILITY PROVISION NOT APPLICABLE WITH RESPECT TO CERTAIN LOW-INCOME TAXPAYERS RECEIVING PREMIUM ASSISTANCE. — Section 4980H(c)(3) is amended to read as follows:

"(3) APPLICABLE PREMIUM TAX CREDIT AND COST-SHARING REDUCTION. —

"(A) IN GENERAL. — The term 'applicable premium tax credit and cost-sharing reduction' means —

"(i) any premium tax credit allowed under section 36B,

"(ii) any cost-sharing reduction under section of the Patient Protection and Affordable Care Act, and

"(iii) any advance payment of such credit or reduction under section of such Act.

"(B) EXCEPTION WITH RESPECT TO CERTAIN LOW-INCOME TAXPAYERS. — Such term shall not include any premium tax credit, cost-sharing reduction, or advance payment otherwise described in subparagraph (A) if such credit, reduction, or payment is allowed or paid for a taxable year of an employee (beginning after December 31, 2021, and before January 1, 2026) with respect to which —

"(i) an Exchange established under title I of the Patient Protection and Affordable Care Act has determined that such employee's household income for such taxable year is projected to not exceed 138 percent of the poverty line for a family of the size involved, or

"(ii) such employee's household income for such taxable year does not exceed 138 percent of the poverty line for a family of the size involved.".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 137305. SPECIAL RULE FOR INDIVIDUALS RECEIVING UNEMPLOYMENT COMPENSATION.

(a) EXTENSION. — Section 36B(g)(1) is amended by striking "during 2021," and inserting "after December 31, 2020, and before January 1, 2026,".

(b) MODIFICATION OF INCOME NOT TAKEN INTO ACCOUNT. — Section 36B(g)(1)(B) is amended by striking "133 percent" and inserting "150 percent".

(c) CONFORMING AMENDMENT. — Section 36B(g) by inserting "THROUGH 2025" after "2021" in the heading thereof.

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 137306. PERMANENT CREDIT FOR HEALTH INSURANCE COSTS.

(a) IN GENERAL. — Subparagraph (B) of section 35(b)(1) of the Internal Revenue Code of 1986 is amended by striking ", and before January 1, 2022" and inserting a period.

(b) INCREASE IN CREDIT PERCENTAGE. — Subsection (a) of section 35 of the Internal Revenue Code of 1986 is amended by striking "72.5 percent" and inserting "80 percent".

(c) CONFORMING AMENDMENTS. — Subsections (b) and (e)(1) of section 7527 of the Internal Revenue Code of 1986 are each amended by striking "72.5 percent" and inserting "80 percent".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to coverage months beginning after December 31, 2021.

SEC. 137307. EXCLUSION OF CERTAIN DEPENDENT INCOME FOR PURPOSES OF PREMIUM TAX CREDIT.

(a) IN GENERAL. — Section 36B(d)(2), as amended by the preceding provisions of this Act, is further amended by adding at the end the following new subparagraph:

"(D) EXCEPTION FOR CERTAIN DEPENDENT INCOME. —

"(i) IN GENERAL. — There shall not be taken into account under subparagraph (A)(ii) the modified adjusted gross income of any dependent of the taxpayer who has not attained age 24 as of the last day of the calendar year in which the taxable year of the taxpayer begins.

"(ii) LIMITATION. — Clause (i) shall not apply to so much of the aggregate of the modified adjusted gross income of all dependents of the taxpayer who have not attained the age described in such clause as exceeds $3,500.

"(iii) ELECTION TO HAVE SUBPARAGRAPH NOT APPLY. — In the case of any taxable year beginning after December 31, 2025, a taxpayer may elect (at such time and in such manner as the Secretary may provide) to have this subparagraph not apply with respect to the income of any dependent of the taxpayer for such taxable year.

"(iv) ADJUSTMENT FOR INFLATION. — In the case of any taxable year beginning after December 31, 2023, the $3,500 amount in clause (ii) shall be increased by an amount equal to —

"(I) such amount, multiplied by

"(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting 'calendar year 2022' for 'calendar year 2016' in subparagraph (A)(ii) thereof.

If any increase determined under the preceding sentence is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100.".

(b) CONFORMING AMENDMENTS. —

(1) Section 36B(d)(2)(A)(ii) is amended by inserting ", except as provided in subparagraph (D)," after "individuals".

(2) Section (b)(3) of the Patient Protection and Affordable Care Act (42 U.S.C. 18081) is amended by adding at the end the following new subparagraph:

"(D) INFORMATION REGARDING CERTAIN DEPENDENTS. — Information regarding whether section 36B(d)(2)(D) will apply to any individuals taken into account as members of the household of the enrollee, and the amount of income of each such individual for the taxable year described in subparagraph (A).".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to credits allowed under section 36B of the Internal Revenue Code of 1986 for, and advance payments of credits under section of the Patient Protection and Affordable Care Act with respect to, taxable years beginning after December 31, 2022.

PART 4 — PATHWAY TO PRACTICE TRAINING PROGRAMS

SEC. 137401. ADMINISTRATIVE FUNDING OF THE RURAL AND UNDERSERVED PATHWAY TO PRACTICE TRAINING PROGRAMS FOR POST-BACCALAUREATE STUDENTS, MEDICAL STUDENTS, AND MEDICAL RESIDENTS.

The Secretary shall provide for the transfer of $6,000,000 from the Hospital Insurance Trust Fund established under section 1817 of the Social Security Act (42 U.S.C. 1395i) and the Federal Supplementary Medical Insurance Trust Fund under section 1841 of such Act (42 U.S.C. 1395t), in addition to amounts otherwise available, to carry out the administration of the Rural and Underserved Pathway to Practice Training Program for Post-Baccalaureate and Medical Students under section 1899C of such Act (42 U.S.C. 1395mmm) and the Rural and Underserved Pathway to Practice Training Programs for Medical Residents under section 1886(h)(4)(H)(vii) of such Act (42 U.S.C. 1395ww(h)(4)(H)(vii)). Amounts transferred under the preceding sentence shall remain available until expended.

SEC. 137402. ESTABLISHING RURAL AND UNDERSERVED PATHWAY TO PRACTICE TRAINING PROGRAMS FOR POST-BACCALAUREATE STUDENTS AND MEDICAL STUDENTS.

(a) PROGRAM. —

(1) IN GENERAL. — Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is amended by adding at the end the following new section:

"SEC. 1899C. RURAL AND UNDERSERVED PATHWAY TO PRACTICE TRAINING PROGRAM FOR POST-BACCALAUREATE AND MEDICAL STUDENTS.

"(a) IN GENERAL. — Not later than October 1, 2023, the Secretary shall, subject to the succeeding provisions of this section, carry out the 'Rural and Underserved Pathway to Practice Training Program for Post-Baccalaureate and Medical Students' (in this section, referred to as the 'Program') under which the Secretary awards Pathway to Practice medical scholarship vouchers to qualifying students described in subsection (b) for the purpose of increasing the number of physicians practicing in rural and underserved communities.

"(b) QUALIFYING STUDENT DESCRIBED. — For purposes of this section, a qualifying student described in this subsection is an individual who —

"(1) attests he or she —

"(A) is or will be a first-generation student of a 4year college, graduate school, or professional school;

"(B) was a Pell Grant recipient; or

"(C) lived in a medically underserved area, rural area, or health professional shortage area for a period of 4 or more years prior to attending an undergraduate program;

"(2) has accepted enrollment in —

"(A) a post-baccalaureate program that is not more than 2 years and intends to enroll in a qualifying medical school within 2 years after completion of such program; or

"(B) a qualifying medical school;

"(3) will practice medicine in a health professional shortage area, medically underserved area, public hospital, rural area, or as required under subsection (d)(5); and

"(4) submits an application and a signed copy of the agreement described under subsection (c).

"(c) APPLICATIONS. —

"(1) IN GENERAL. — To be eligible to receive a Pathway to Practice medical scholarship voucher under this section, a qualifying student described in subsection (b) shall submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require.

"(2) INFORMATION TO BE INCLUDED. — As a part of the application described in paragraph (1), the Secretary shall include a notice of the items which are required to be agreed to under subsection (d)(4) for the purpose of notifying the qualifying student of the terms of the Rural and Underserved Pathway to Practice Training Program for Post-Baccalaureate and Medical Students.

"(d) PATHWAY TO PRACTICE MEDICAL SCHOLARSHIP VOUCHER DETAILS. —

"(1) NUMBER. — On an annual basis, the Secretary shall award a Pathway to Practice medical scholarship voucher under the Program to 1,000 qualifying students described in subsection (b).

"(2) PRIORITIZATION CRITERIA. — In determining whether to award a Pathway to Practice medical scholarship voucher under the Program to qualifying students described in subsection (b), the Secretary shall prioritize applications from any such student who attests that he or she —

"(A) was a participant in the Health Resources and Services Administration Health Careers Opportunity Program, Centers of Excellence Program, or an Area Health Education Center program;

"(B) is a disadvantaged student (as defined by the National Health Service Corps of the Health Resources & Services Administration of the Department of Health and Human Services); or

"(C) attended a historically black college or other minority serving institution (as defined in section 1067q of title 20, United States Code).

"(3) DURATION. — Each Pathway to Practice medical scholarship voucher awarded to a qualifying student pursuant to paragraph (1) shall be so awarded to such a student on an annual basis for each year of enrollment in a post-baccalaureate program and a qualifying medical school (as appropriate).

"(4) AMOUNT. — Subject to paragraph (5), each Pathway to Practice medical scholarship voucher awarded under the Program shall include amounts for —

"(A) tuition;

"(B) academic fees (as determined by the qualifying medical school);

"(C) required textbooks and equipment;

"(D) a monthly stipend equal to the amount provided for individuals under the health professions scholarship and financial assistance program for active service stipend monthly rate; and

"(E) any other educational expenses normally incurred by students at the post-baccalaureate program or qualifying medical school (as appropriate).

"(5) REQUIRED AGREEMENT. — No amounts under paragraph (4) may be provided a qualifying student awarded a Pathway to Practice medical scholarship voucher under the Program unless the qualifying student submits to the Secretary an agreement to —

"(A) complete a post-baccalaureate program that is not more than 2 years (if applicable pursuant to the option under subsection (b)(2)(A));

"(B) graduate from a qualifying medical school;

"(C) complete a residency program in an approved residency training program (as defined in section 1886(h)(5)(A));

"(D) complete an initial residency period or the period of board eligibility;

"(E) practice medicine for at least the number of years of the Pathway to Practice medical scholarship voucher awarded under paragraph (2) after a residency program in a health professional shortage area, a medically underserved area, a public hospital, or a rural area, and during such period annually submit documentation with respect to whether the qualifying student practices medicine in such an area and where;

"(F) for the purpose of determining compliance with subparagraph (E), not later than 180 days after the date on which qualifying student completes a residency program, provide to the Secretary information with respect to where the qualifying student is practicing medicine following the period described in such subparagraph;

"(G) except in the case of a waiver for hardship pursuant to section 1892(f)(3), be liable to the United States pursuant to section 1892 for any amounts received under this Program that is determined a past-due obligation under subsection (b)(3) of such section in the case qualifying student fails to complete all of the requirements of this agreement under this subsection; and

"(H) for the purpose of determining the amount of Pathway to Practice medical scholarship vouchers paid or incurred by a qualifying medical school or any provider of a post-baccalaureate program referred to in subsection (b)(2)(A) for the costs of tuition under paragraph (4)(A), consent to any personally identifying information being shared with the Secretary of the Treasury.

"(6) RESPONSIBILITIES OF PARTICIPATING EDUCATIONAL INSTITUTIONS. — Each annual award of an amount of Pathway to Practice medical scholarship voucher under paragraph (2) shall be made with respect to a specific qualifying medical school or to a post-baccalaureate program that is not more than 2 years and such school or program shall (as a condition of, and prior to, such award being made with respect to such school or program) —

"(A) submit to the Secretary such information as the Secretary may require to determine the amount of such award on the basis of the costs of the costs of the items specified under paragraph (4) (except for subparagraph (D)) with respect to such school or program, and

"(B) enter into an agreement with the Secretary under which such school or provider will verify (in such manner as the Secretary may provide) that amounts paid by such school or provider to the qualifying student are used for such costs.

"(e) DEFINITIONS. — In this section:

"(1) HEALTH PROFESSIONAL SHORTAGE AREA. — The team 'health professional shortage area' has the meaning given such term in subparagraphs (A) or (B) of section 332(a)(1) of the Public Health Service Act.

"(2) INITIAL RESIDENCY PERIOD. — The term 'initial residency period' has the meaning given such term in section 1886(h)(5)(F).

"(3) MEDICALLY UNDERSERVED AREA. — The term 'medically underserved area' means an area designated pursuant to section 330(b)(3)(A) of the Public Health Service Act.

"(4) PELL GRANT RECIPIENT. — The term 'Pell Grant recipient' has the meaning given such term in section 322(3) of the Higher Education Act of 1965.

"(5) PERIOD OF BOARD ELIGIBILITY. — The term 'period of board eligibility' has the meaning given such term in section 1886(h)(5)(G).

"(6) QUALIFYING MEDICAL SCHOOL. — The term 'qualifying medical school' means a school of medicine accredited by the Liaison Committee on Medical Education of the American Medical Association and the Association of American Medical Colleges (or approved by such Committee as meeting the standards necessary for such accreditation) or a school of osteopathy accredited by the American Osteopathic Association, or approved by such Association as meeting the standards necessary for such accreditation which —

"(A) for each academic year, enrolls at least 10 qualifying students who are in enrolled in such a school;

"(B) requires qualifying students to enroll in didactic coursework and clinical experience applicable to practicing medicine in health professional shortage areas, medically underserved areas, or rural areas, including —

"(i) clinical rotations in such areas in applicable specialties (as applicable and as available);

"(ii) coursework or training experiences focused on medical issues prevalent in such areas and cultural or structural competency; and

"(C) is located in a State (as defined in section 210(h)).

"(7) RURAL AREA. — The term 'rural area' has the meaning given such term in section 1886(d)(2)(D).

"(f) PENALTY FOR FALSE INFORMATION. — Any person who knowingly and willfully obtains by fraud, false statement, or forgery, or fails to refund any funds, assets, or property provided under this section or attempts to so obtain by fraud, false statement or forgery, or fail to refund any funds, assets, or property, received pursuant to this section shall be fined not more than $20,000 or imprisoned for not more than 5 years, or both.".

(2) AGREEMENTS. — Section 1892 of the Social Security Act (42 U.S.C. 1395ccc) is amended —

(A) in subsection (a)(1)(A) —

(i) by striking ", or the" and inserting ", the"; and

(ii) by inserting "or the Rural and Underserved Pathway to Practice Training Program for Post-Baccalaureate and Medical Students under section 1899C" before ", owes a past-due obligation";

(B) in subsection (b) —

(i) in paragraph (1), by striking at the end "or";

(ii) in paragraph (2), by striking the period at the end and inserting "; or"; and

(iii) by adding the end the following new paragraph:

"(3) subject to subsection (f), owed by an individual to the United States by breach of an agreement under section 1899C(c) and which payment has not been paid by the individual for any amounts received under the Rural and Underserved Pathway to Practice Training Program for Post-Baccalaureate and Medical Students (and accrued interest determined in accordance with subsection (f)(4)) in the case such individual fails to complete the requirements of such agreement."; and

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

"(f) AUTHORITIES WITH RESPECT TO THE COLLECTION UNDER THE PATHWAY TO PRACTICE TRAINING PROGRAM. — The Secretary —

"(1) shall require payment to the United States for any amount of damages that the United States is entitled to recover under subsection (b)(3), within the 5year period beginning on the date an eligible individual fails to complete the requirements of such agreement under section 1899C(d)(5) (or such longer period beginning on such date as specified by the Secretary), and any such amounts not paid within such period shall be subject to collection through deductions in Medicare payments pursuant to subsection (e);

"(2) shall allow payments described in paragraph (1) to be paid in installments over such 5year period, which shall accrue interest in an amount determined pursuant to paragraph (5);

"(3) shall waive the requirement for an individual to pay a past-due obligation under subsection (b)(3) in the case of hardship (as determined by the Secretary);

"(4) shall not disclose any past-due obligation under subsection (b)(3) that is owed to the United States to any credit reporting agency that the United States entitled to be recovered the United States under this section; and

"(5) shall make a final determination of whether the amount of payment under section 1899C made to a qualifying student (as described in subsection (b) of such section) was in excess of or less than the amount of payment that is due, and payment of such excess or deficit is not made (or effected by offset) within 90 days of the date of the determination, and interest shall accrue on the balance of such excess or deficit not paid or offset (to the extent that the balance is owed by or owing to the provider) at a rate determined in accordance with the regulations of the Secretary of the Treasury applicable to charges for late payments.".

SEC. 137403. FUNDING FOR THE RURAL AND UNDERSERVED PATHWAY TO PRACTICE TRAINING PROGRAMS FOR POST-BACCALAUREATE STUDENTS AND MEDICAL STUDENTS.

(a) IN GENERAL. — Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986, as amended by the preceding provisions of this Act, is amended by inserting after section 36F the following new section:

"SEC. 36G. PATHWAY TO PRACTICE MEDICAL SCHOLARSHIP VOUCHER CREDIT.

"(a) IN GENERAL. — In the case of a qualified educational institution, there shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to the aggregate amount paid or incurred by such institution during such taxable year pursuant to any Pathway to Practice medical scholarship voucher awarded to a qualifying student with respect to such institution.

"(b) DETERMINATION OF AMOUNTS PAID PURSUANT TO QUALIFIED SCHOLARSHIP VOUCHERS, ETC. — For purposes of this section —

"(1) an amount shall be treated as paid or incurred pursuant to an annual award of a Pathway to Practice medical scholarship voucher only if such amount is paid or incurred in reimbursement, or anticipation of, an expense described in subparagraphs (A) through (E) of paragraph (4) of section 1899C(d) of the Social Security Act and is subject to verification in such manner as the Secretary of Health and Human Services may provide under paragraph (6) of such section, and

"(2) in the case of any amount credited by a qualified educational institution against a liability owed by the qualifying student to such institution, such amount shall be treated as paid by such institution to such student as of the date that such liability would otherwise be due.

"(c) DEFINITIONS. — For purposes of this section —

"(1) QUALIFIED EDUCATIONAL INSTITUTION. — The term 'qualified educational institution' means, with respect to any annual award of a Pathway to Practice medical scholarship voucher —

"(A) any qualifying medical school (as defined in subsection (e)(6) of section 1899C of the Social Security Act), and

"(B) any provider of a post-baccalaureate program referred to in subsection (b)(2)(A) of such section, which meets the requirements of subsection (d)(6) of such section.

"(2) QUALIFYING STUDENT. — The term 'qualifying student' means any student to whom the Secretary of Health and Human Services has made an annual award of a Pathway to Practice medical scholarship voucher under section 1899C of the Social Security Act.

"(3) ANNUAL AWARD OF A PATHWAY TO PRACTICE MEDICAL SCHOLARSHIP VOUCHER. — The term 'annual award of a Pathway to Practice medical scholarship voucher' means the annual award of a Pathway to Practice medical scholarship voucher referred to in section 1899C(d)(3) of the Social Security Act.

"(d) COORDINATION OF ACADEMIC AND TAXABLE YEARS. — The credit allowed under subsection (a) with respect to any Pathway to Practice medical scholarship voucher shall not exceed the amount of such voucher which is for expenses described in subparagraphs (A) through (E) of section 1899C(d)(4) of the Social Security Act, reduced by any amount of such voucher with respect to which credit was allowed under this section for any prior taxable year.

"(e) REGULATIONS. — The Secretary shall issue such regulations or other guidance as are necessary or appropriate to carry out the purposes of this section.".

(b) CONFORMING AMENDMENTS. —

(1) Section 6211(b)(4)(A), as amended by the preceding provisions of this Act, is amended by inserting "36G," after "36F,".

(2) Paragraph (2) of section 1324(b) of title 31, United States Code, as amended by the preceding provisions of this Act, is amended by inserting "36G," after "36F,".

(3) The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986, and amended by the preceding provisions of this Act, is amended by inserting after the item relating to section 36F the following new item:

"Sec. 36G. Pathway to Practice medical scholarship voucher credit.".

(c) INFORMATION SHARING. — The Secretary of Health and Human Services shall annually provide the Secretary of the Treasury such information regarding the program under section 1899C of the Social Security Act as the Secretary of the Treasury may require to administer the tax credits determined under section 36G of the Internal Revenue Code of 1986, including information to identify qualifying students and the qualified educational institutions at which such students are enrolled and the amount of the annual award of the Pathway to Practice medical scholarship voucher awarded to each such student with respect to such institution. Terms used in this subparagraph shall have the same meaning as when used is such section 36G.

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.

SEC. 137404. ESTABLISHING RURAL AND UNDERSERVED PATHWAY TO PRACTICE TRAINING PROGRAMS FOR MEDICAL RESIDENTS.

Section 1886 of the Social Security Act (42 U.S.C. 1395ww) is amended —

(1) in subsection (d)(5)(B)(v), by inserting "(h)(4)(H)(vii)," after "The provisions of subsections (h)(4)(H)(vi),"; and

(2) in subsection (h)(4)(H), by adding at the end the following new clause:

"(vii) EXCLUSION FROM FULL-TIME EQUIVALENT LIMITATION FOR HOSPITALS IMPLEMENTING RURAL AND UNDERSERVED PATHWAY TO PRACTICE PROGRAM MEDICAL RESIDENCY TRAINING PROGRAM. —

"(I) IN GENERAL. — For cost reporting periods beginning on or after October 1, 2026, during which a qualifying resident (as defined in subclause (II)) trains in an applicable hospital or hospitals (as defined in subclause (III)) in an approved Rural and Underserved Pathway to Practice Medical Residency Training Program (as defined in subclause (V)), the Secretary shall, for such cost reporting period by the number of full-time equivalent residents so trained under such program during such period, exclude from the limitation under subparagraph (F).

"(II) QUALIFYING RESIDENT. — For purposes of this clause, the term 'qualifying resident' means a full-time equivalent resident who —

"(aa) was a qualifying student awarded a Pathway to Practice medical scholarship voucher under section 1899C; and

"(bb) graduated from a qualifying medical school.

"(III) APPLICABLE HOSPITAL OR HOSPITALS DEFINED. — For purposes of this clause, the term 'applicable hospital or hospitals' means any hospital that —

"(aa) has established an approved Rural and Underserved Pathway to Practice Medical Residency Training Program;

"(bb) agrees to provide data to the Secretary with respect to where such residents practice medicine or participate in fellowships following their residencies; and

"(cc) agrees to promote community-based training of residents under such program, as appropriate.

"(IV) RURAL AND UNDERSERVED PATHWAY TO PRACTICE MEDICAL RESIDENCY TRAINING PROGRAM DEFINED. — For purposes of this clause, the term 'Rural and Underserved Pathway to Practice Medical Residency Training Program' means an approved medical residency training program that has been recognized by the Accreditation Council for Graduate Medical Education as meeting the following requirements:

"(aa) Such program provides mentorships for residents.

"(bb) Such program includes cultural or structural competency as part of the training of residents under such program.

"(cc) The program has a demonstrated record of training medical students in health professional shortage areas (as defined in section 332(a)(1)(A) of the Public Health Service Act).

"(V) OTHER DEFINITIONS. —

"(aa) HEALTH PROFESSIONAL SHORTAGE AREA. — The team 'health professional shortage area' has the meaning given such term in subparagraphs (A) or (B) of section 332(a)(1) of the Public Health Service Act.

"(bb) MEDICAL UNDERSERVED AREA. — The term 'medically underserved area' means an area designated pursuant to section 330(b)(3)(A) of the Public Health Service Act.

"(cc) QUALIFYING MEDICAL SCHOOL. — The term 'qualifying medical school' has the meaning given such term in section 1899C(e)(6).

"(dd) QUALIFYING MEDICAL STUDENT. — The term 'qualifying medical student' has the meaning given such term in section 1899C(b).

"(ee) RURAL AREA. — The term 'rural area' has the meaning given such term in section 1886(d)(2)(D).".

PART 5 — HIGHER EDUCATION

SEC. 137501. CREDIT FOR PUBLIC UNIVERSITY RESEARCH INFRASTRUCTURE.

(a) IN GENERAL. — Subpart D of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is amended by adding at the end the following new section:

"SEC. 45AA. PUBLIC UNIVERSITY RESEARCH INFRASTRUCTURE CREDIT.

"(a) ALLOWANCE OF CREDIT. — For purposes of section 38, the public university research infrastructure credit determined under this section for a taxable year is an amount equal to 40 percent of the qualified cash contributions made by a taxpayer during such taxable year.

"(b) QUALIFIED CASH CONTRIBUTION. —

"(1) IN GENERAL. —

"(A) DEFINED. — For purposes of subsection (a), the qualified cash contribution for any taxable year is the aggregate amount contributed in cash by a taxpayer during such taxable year to a certified educational institution in connection with a qualifying project that, but for this section, would be treated as a charitable contribution for purposes of section 170(c).

"(B) QUALIFIED CASH CONTRIBUTIONS TAKEN INTO ACCOUNT FOR PURPOSES OF CHARITABLE CONTRIBUTION LIMITATIONS. — Any qualified cash contributions made by a taxpayer under this section shall be taken into account for purposes of determining the percentage limitations under section 170(b).

"(2) DESIGNATION REQUIRED. — A contribution shall only be treated as a qualified cash contribution to the extent that it is designated as such by a certified educational institution under subsection (d).

"(c) DEFINITIONS. — For purposes of this section —

"(1) QUALIFYING PROJECT. — The term 'qualifying project' means a project to purchase, construct, or improve research infrastructure property.

"(2) RESEARCH INFRASTRUCTURE PROPERTY. — The term 'research infrastructure property' means any portion of a property, building, or structure of an eligible educational institution, or any land associated with such property, building, or structure, that is used for research.

"(3) ELIGIBLE EDUCATIONAL INSTITUTION. — The term 'eligible educational institution' means —

"(A) an institution of higher education (as such term is defined in section 101 or 102(c) of the Higher Education Act of 1965) that is a college or university described in section 511(a)(2)(B), or

"(B) an organization described in section 170(b)(1)(A)(iv), section 170(b)(1)(A)(vi), or section 509(a)(3) to which authority has been delegated by an institution described in subparagraph (A) for purposes of applying for or administering credit amounts on behalf of such institution.

"(4) CERTIFIED EDUCATIONAL INSTITUTION. — The term 'certified educational institution' means an eligible educational institution which has been allocated a credit amount for a qualifying project and —

"(A) has received a certification for such project under subsection (d)(2), and

"(B) designates credit amounts to taxpayers for qualifying cash contributions toward such project under subsection (d)(4).

"(d) QUALIFYING UNIVERSITY RESEARCH INFRASTRUCTURE PROGRAM. —

"(1) ESTABLISHMENT. —

"(A) IN GENERAL. — Not later than 180 days after the date of the enactment of this section, the Secretary, after consultation with the Secretary of Education, shall establish a program to —

"(i) certify and allocate credit amounts for qualifying projects to eligible educational institutions, and

"(ii) allow certified educational institutions to designate cash contributions for qualifying projects of such certified educational institutions as qualified cash contributions.

"(B) LIMITATIONS. —

"(i) ALLOCATION LIMITATION PER INSTITUTION. — The credit amounts allocated to a certified educational institution under subparagraph (A)(i) for all projects shall not exceed $50,000,000 per calendar year.

"(ii) OVERALL ALLOCATION LIMITATION. —

"(I) IN GENERAL. — The total amount of qualifying project credit amounts that may be allocated under subparagraph (A)(i) shall not exceed —

"(aa) $500,000,000 for each of calendar years 2022, 2023, 2024, 2025, and 2026, and

"(bb) $0 for each subsequent year.

"(II) ROLLOVER OF UNALLOCATED CREDIT AMOUNTS. — Any credit amounts described in subclause (I) that are unallocated during a calendar year shall be carried to the succeeding calendar year and added to the limitation allowable under such subclause for such succeeding calendar year.

"(iii) DESIGNATION LIMITATION. — The aggregate amount of cash contributions which are designated by a certified educational institution as qualifying cash contributions with respect to any qualifying project shall not exceed 250 percent of the credit amount allocated to such certified educational institution for a qualifying project under subparagraph (A)(i).

"(2) CERTIFICATION APPLICATION. — Each eligible educational institution which applies for certification of a project under this paragraph shall submit an application in such time, form, and manner as the Secretary may require.

"(3) SELECTION CRITERIA FOR ALLOCATIONS TO ELIGIBLE EDUCATIONAL INSTITUTIONS. — The Secretary, after consultation with the Secretary of Education, shall select applications from eligible educational institutions —

"(A) based on the extent of the expected expansion of an eligible educational institution's targeted research within disciplines in science, mathematics, engineering, and technology, and "(B) in a manner that ensures consideration is given to eligible educational institutions with full-time student populations of less than 12,000.

"(4) DESIGNATION OF QUALIFIED CASH CONTRIBUTIONS TO TAXPAYERS. — The Secretary, after consultation with the Secretary of Education, shall establish a process by which certified educational institutions shall designate cash contributions to such institutions as qualified cash contributions.

"(5) DISCLOSURE OF ALLOCATIONS AND DESIGNATIONS. —

"(A) ALLOCATIONS. — The Secretary shall, upon allocating credit amounts to an applicant under this subsection, publicly disclose the identity of the applicant and the credit amount allocated to such applicant.

"(B) DESIGNATIONS. — Each certified educational institution shall, upon designating contributions of a taxpayer as qualified cash contributions under this subsection, publicly disclose the identity of the taxpayer and the amount of contributions designated in such time, form, and manner as the Secretary may require.

"(e) REGULATIONS AND GUIDANCE. — The Secretary, after consultation with the Secretary of Education when applicable, shall prescribe such regulations and guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or other guidance for —

"(1) prevention of abuse,

"(2) establishment of reporting requirements,

"(3) establishment of selection criteria for applications, and

"(4) disclosure of allocations.

"(f) PENALTY FOR NONCOMPLIANCE. —

"(1) IN GENERAL. — If at any time during the 5-year period beginning on the date of the allocation of credit amounts to a certified educational institution under subsection (d)(1)(A)(i) there is a noncompliance event with respect to such credit amounts, then the following rules shall apply:

"(A) GENERAL RULE. — Any cash contribution designated as a qualifying cash contribution with respect to a qualifying project for which such credit amounts were allocated under subsection (d)(1)(A)(ii) shall be treated as unrelated business taxable income (as defined in section 512) of such certified educational institution.

"(B) RULE FOR UNUSED CREDIT AMOUNTS. — In the case of unused credit amounts described under paragraph (2)(A) and identified pursuant to subsection (g), the Secretary shall reallocate any portion of such unused credit amounts to certified educational institutions in lieu of imposing the general rule under subparagraph (A).

"(2) NONCOMPLIANCE EVENT. — For purposes of this subsection, the term 'noncompliance event' means, with respect to a credit amount allocated to a certified educational institution —

"(A) cash contributions equaling the amount of such credit amount are not designated as qualifying cash contributions within 2 years after December 31 of the year such credit amount is allocated,

"(B) a qualifying project with respect to which such credit amount was allocated is not placed in service within either —

"(i) 4 years after December 31 of the year such credit amount is allocated, or

"(ii) a period of time that the Secretary determines is appropriate, or

"(C) the research infrastructure property placed in service as part of a qualifying project with respect to which such credit amount was allocated ceases to be used for research within five years after such property is placed in service.

"(g) REVIEW AND REALLOCATION OF CREDIT AMOUNTS. —

"(1) REVIEW. — Not later than 5 years after the date of enactment of this section, the Secretary shall review the credit amounts allocated under this section as of such date.

"(2) REALLOCATION. —

"(A) IN GENERAL. — The Secretary may reallocate credit amounts allocated under this section if the Secretary determines, as of the date of the review in paragraph (1), that such credit amounts are subject to a noncompliance event.

"(B) ADDITIONAL PROGRAM. — If the Secretary determines that credits under this section are available for reallocation pursuant to the requirements set forth in subparagraph (A), the Secretary is authorized to conduct an additional program for applications for certification.

"(C) DEADLINE FOR REALLOCATION. — The Secretary shall not certify any project, or reallocate any credit amount, pursuant to this paragraph after December 31, 2031.

"(h) DENIAL OF DOUBLE BENEFIT. — No credit or deduction shall be allowed under any other provision of this chapter for any qualified cash contribution for which a credit is allowed under this section.

"(i) RULE FOR TRUSTS AND ESTATES. — For purposes of this section, rules similar to the rules of subsection (d) of section 52 shall apply.

"(j) TERMINATION. — This section shall not apply to qualified cash contributions made after December 31, 2033.".

(b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT. — Subsection (b) of section 38, as amended by the preceding provisions of this Act, is amended by striking "plus" at the end of paragraph (41), by striking the period at the end of paragraph (42) and inserting ", plus", and by adding at the end the following new paragraph:

"(43) the public university research infrastructure credit determined under section 45AA.".

(c) CLERICAL AMENDMENT. — The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by the preceding provisions of this Act, is amended by adding at the end the following new item:

"Sec. 45AA. Public university research infrastructure credit.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to qualified cash contributions made after December 31, 2021.

SEC. 137502. MODIFICATION OF EXCISE TAX ON INVESTMENT INCOME OF PRIVATE COLLEGES AND UNIVERSITIES.

(a) PHASEOUT OF INVESTMENT INCOME EXCISE TAX FOR PRIVATE COLLEGES AND UNIVERSITIES PROVIDING SUFFICIENT GRANTS AND SCHOLARSHIPS. — Section 4968 is amended by adding at the end the following new subsection:

"(e) PHASE OUT FOR INSTITUTIONS PROVIDING QUALIFIED AID. —

"(1) IN GENERAL. — The amount of tax imposed by subsection (a) (determined without regard to this subsection) shall be reduced (but not below zero) by the amount which bears the same ratio to such amount of tax (as so determined) as —

"(A) the excess (if any) of —

"(i) the aggregate amount of qualified aid awards provided by the institution to its first-time, full-time undergraduate students for academic periods beginning during the taxable year, over

"(ii) an amount equal to 20 percent of the aggregate undergraduate tuition and fees received by the institution from first-time, full-time undergraduate students for such academic periods, bears to

"(B) an amount equal to 13 percent of such aggregate undergraduate tuition and fees so received.

"(2) INSTITUTION MUST MEET REPORTING REQUIREMENT. —

"(A) IN GENERAL. — Paragraph (1) shall not apply to an applicable educational institution for a taxable year unless such institution furnishes to the Secretary, and makes widely available, a statement detailing the average aggregate amount of Federal student loans received by a student for attendance at the institution, averaged among each of the following groups of first-time, full-time undergraduate students who during the taxable year completed a course of study for which the institution awarded a baccalaureate degree:

"(i) All such students.

"(ii) The students who have been awarded a Federal Pell Grant under subpart 1 of part A of title IV of the Higher Education Act of 1965 for attendance at the institution.

"(iii) The students who received workstudy assistance under part C of title IV of such Act for attendance at such institution.

"(iv) The students who were provided such Federal student loans.

"(B) FORM AND MANNER FOR REPORT. — Such statement shall be furnished at such time and in such form and manner, and made widely available, under such regulations or guidance as the Secretary may prescribe.

"(C) FEDERAL STUDENT LOANS. — For purposes of this paragraph, the term 'Federal student loans' means a loan made under part D of title IV of the Higher Education Act of 1965, except such term does not include a Federal Direct PLUS Loan made on behalf of a dependent student.

"(3) OTHER DEFINITIONS. — For purposes of this subsection —

"(A) FIRST-TIME, FULL-TIME UNDERGRADUATE STUDENT. — The term 'first-time, full-time undergraduate student' shall have the same meaning as when used in section 132 of the Higher Education Act of 1965.

"(B) QUALIFIED AID AWARDS. — The term 'qualified aid awards' means, with respect to any applicable educational institution, grants and scholarships to the extent used for undergraduate tuition and fees.

"(C) UNDERGRADUATE TUITION AND FEES. — The term 'undergraduate tuition and fees' means, with respect to any institution, the tuition and fees required for the enrollment or attendance of a student as an undergraduate student at the institution.".

(b) INFLATION ADJUSTMENT TO PER STUDENT ASSET THRESHOLD. — Section 4968(b) is amended by adding at the end the following new paragraph:

"(3) INFLATION ADJUSTMENT. — In the case of any taxable year beginning after 2022, the dollar amount in paragraph (1)(D) shall be increased by an amount equal to —

"(A) such dollar amount, multiplied by

"(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting 'calendar year 2021' for 'calendar year 2016' in subparagraph (A)(ii) thereof.

If any increase determined under this paragraph is not a multiple of $1,000, such increase shall be rounded to the nearest multiple of $1,000.".

(c) CLARIFICATION OF 500 STUDENT THRESHOLD. — Section 4968(b)(1)(A) is amended by inserting "below the graduate level" after "500 tuition-paying students".

(d) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 137503. TREATMENT OF FEDERAL PELL GRANTS FOR INCOME TAX PURPOSES.

(a) EXCLUSION FROM GROSS INCOME. — Section 117(b)(1) is amended by striking "received by an individual" and all that follows and inserting "received by an individual —

"(A) as a scholarship or fellowship grant to the extent the individual establishes that, in accordance with the conditions of the grant, such amount was used for qualified tuition and related expenses, or

"(B) as a Federal Pell Grant under section 401 of the Higher Education Act of 1965.".

(b) TREATMENT FOR PURPOSES OF AMERICAN OPPORTUNITY TAX CREDIT AND LIFETIME LEARNING CREDIT. — Section 25A(g)(2) is amended —

(1) in subparagraph (A), by inserting "described in section 117(b)(1)(A)" after "a qualified scholarship", and

(2) in subparagraph (C), by inserting "or Federal Pell Grant under section 401 of the Higher Education Act of 1965" after "within the meaning of section 102(a)".

(c) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 137504. REPEAL OF DENIAL OF AMERICAN OPPORTUNITY TAX CREDIT ON BASIS OF FELONY DRUG CONVICTION.

(a) IN GENERAL. — Section 25A(b)(2) is amended by striking subparagraph (D).

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2021.

Subtitle G — Responsibly Funding Our Priorities

SEC. 138001. AMENDMENT OF 1986 CODE.

Except as otherwise expressly provided, whenever in this subtitle 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.

PART 1 — CORPORATE AND INTERNATIONAL TAX REFORMS

Subpart A — Corporate Provisions

SEC. 138101. CORPORATE ALTERNATIVE MINIMUM TAX.

(a) IMPOSITION OF TAX. —

(1) IN GENERAL. — Paragraph (2) of section 55(b) is amended to read as follows:

"(2) CORPORATIONS. —

"(A) APPLICABLE CORPORATIONS. — In the case of an applicable corporation, the tentative minimum tax for the taxable year shall be the excess of —

"(i) 15 percent of the adjusted financial statement income for the taxable year (as determined under section 56A), over

"(ii) the corporate AMT foreign tax credit for the taxable year.

"(B) OTHER CORPORATIONS. — In the case of any corporation which is not an applicable corporation, the tentative minimum tax for the taxable year shall be zero.".

(2) APPLICABLE CORPORATION. — Section 59 is amended by adding at the end the following new subsection:

"(k) APPLICABLE CORPORATION. — For purposes of this part —

"(1) APPLICABLE CORPORATION DEFINED. —

"(A) IN GENERAL. — The term 'applicable corporation' means any corporation (other than an S corporation, a regulated investment company, or a real estate investment trust) which, for any applicable 3-taxable year period —

"(i) has the average annual adjusted financial statement income which is greater than $1,000,000,000, and

"(ii) in the case of a corporation described in paragraph (2), has an average annual adjusted financial statement income (determined without regard to the application of paragraph (2)) which is $100,000,000 or more.

"(B) APPLICABLE 3-TAXABLE YEAR PERIOD. — For purposes of this paragraph, the term 'applicable 3-taxable-year period' means, with respect to any corporation for any taxable year, any 3 consecutive taxable years of such corporation occurring during the period ending with the taxable year which precedes such taxable year. For purposes of the preceding sentence, only taxable years ending after December 31, 2019, shall be taken into account.

"(C) EXCEPTION. — Notwithstanding subparagraph (A), the term 'applicable corporation' shall not include any corporation which otherwise meets the requirements of subparagraph (A) if —

"(i) such corporation —

"(I) has a change in ownership, or

"(II) has a consistent reduction in adjusted financial statement income below the dollar amounts applicable to such corporation under subparagraph (A), and

"(ii) the Secretary determines that it would not be appropriate to continue to treat such corporation as an applicable corporation.

The preceding sentence shall not apply to any corporation if, after the Secretary makes the determination described in clause (ii), such corporation meets the requirements of subparagraph (A) for any applicable 3-taxable year period beginning after the first taxable year for which the determination applies.

"(D) SPECIAL RULES FOR DETERMINING AVERAGE ANNUAL ADJUSTED FINANCIAL STATEMENT INCOME. — Solely for purposes of determining the average annual adjusted financial statement income of a corporation for any period —

"(i) all persons treated as a single employer under subsection (a) or (b) of section 52 shall be treated as 1 person, except that in applying section 1563 for purposes of section 52, the exceptions under subparagraphs (C) and (D) of section 1563(b)(2) shall be disregarded,

"(ii) in the case of a foreign corporation, only income described in section 56A(c)(3) and income that is, or is treated as, effectively connected with the conduct of a trade or business in the United States) shall be taken into account.

"(E) OTHER SPECIAL RULES. —

"(i) CORPORATIONS IN EXISTENCE FOR LESS THAN 3 YEARS. — If the corporation was in existence for less than 3-taxable years, subparagraph (B) shall be applied by substituting the number of taxable years for which the corporation was in existence for '3'.

"(ii) SHORT TAXABLE YEARS. — Adjusted financial statement income for any taxable year of less than 12 months shall be annualized by multiplying the adjusted financial statement income for the short period by 12 and dividing the result by the number of months in the short period.

"(iii) TREATMENT OF PREDECESSORS. — Any reference in this subparagraph to a corporation shall include a reference to any predecessor of such corporation.

"(2) SPECIAL RULE FOR FOREIGN-PARENTED CORPORATIONS. —

"(A) IN GENERAL. — Solely for purposes of determining whether a corporation is an applicable corporation under paragraph (1), any corporation which for any taxable year is a member of an international financial reporting group the common parent of which is a foreign corporation shall include in the adjusted financial statement income of such corporation for such taxable year the adjusted financial statement income of all foreign members of such group.

"(B) INTERNATIONAL FINANCIAL REPORTING GROUP. — For purposes of this subparagraph (A), the term 'international financial reporting group' means, with respect to any reporting year, two or more entities if —

"(i) either —

"(I) at least one entity is a foreign corporation engaged in a trade or business within the United States, or

"(II) at least one entity is a domestic corporation and another entity is a foreign corporation, and

"(ii) such entities are included in the same applicable financial statement with respect to such year.

"(3) REGULATIONS AND OTHER GUIDANCE. — The Secretary shall provide regulations and other guidance for the purposes of carrying out this subsection, including regulations or other guidance —

"(A) providing a simplified method for determining whether a corporation meets the requirements of paragraph (1), and

'"(B) addressing the application of this subsection to a corporation that experiences a change in ownership.".

(3) REDUCTION FOR BASE EROSION AND ANTIABUSE TAX. — Section 55(a)(2) is amended by inserting "plus, in the case of an applicable corporation (as defined in subsection (b)(2)), the tax imposed by section 59A" before the period at the end.

(4) CONFORMING AMENDMENTS. —

(A) Section 55(a) is amended by striking "In the case of a taxpayer other than a corporation, there" and inserting "There".

(B)(i) Section 55(b)(1) is amended —

(I) by striking so much as precedes subparagraph (A) and inserting the following:

"(1) NONCORPORATE TAXPAYERS. — In the case of a taxpayer other than a corporation — ", and

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

"(D) ALTERNATIVE MINIMUM TAXABLE INCOME. — The term 'alternative minimum taxable income' means the taxable income of the taxpayer for the taxable year —

"(i) determined with the adjustments provided in section 56 and section 58, and "(ii) increased by the amount of the items of tax preference described in section 57.

If a taxpayer is subject to the regular tax, such taxpayer shall be subject to the tax imposed by this section (and, if the regular tax is determined by reference to an amount other than taxable income, such amount shall be treated as the taxable income of such taxpayer for purposes of the preceding sentence).".

(ii) Section 860E(a)(4) is amended by striking "55(b)(2)" and inserting "55(b)(1)(D)".

(iii) Section 897(a)(2)(A)(i) is amended by striking "55(b)(2)" and inserting "55(b)(1)(D)".

(C) Section 11(d) is amended by striking "the tax imposed by subsection (a)" and inserting "the taxes imposed by subsection (a) and section 55".

(D) Section 12 is amended by adding at the end the following new paragraph:

"(5) For alternative minimum tax, see section 55.".

(E) Section 882(a)(1) is amended by inserting ", 55," after "section 11".

(F) Section 6425(c)(1)(A) is amended to read as follows:

"(A) the sum of —

"(i) the tax imposed by section 11 or subchapter L of chapter 1, whichever is applicable, plus

"(ii) the tax imposed by section 55, plus

"(iii) the tax imposed by section 59A, over".

(G) Section 6655(e)(2) is amended by inserting ", adjusted financial statement income (as defined in section 56A)," before "and modified taxable income" each place it appears in subparagraphs (A)(i) and (B)(i).

(H) Section 6655(g)(1)(A) is amended by redesignating clauses (ii) and (iii) as clauses (iii) and (iv), respectively, and by inserting after clause (i) the following new clause:

"(ii) the tax imposed by section 55,".

(b) ADJUSTED FINANCIAL STATEMENT INCOME. —

(1) IN GENERAL. — Part VI of subchapter A of chapter 1 is amended by inserting after section 56 the following new section:

"SEC. 56A. ADJUSTED FINANCIAL STATEMENT INCOME.

"(a) IN GENERAL. — For purposes of this part, the term 'adjusted financial statement income' means, with respect to any corporation for any taxable year, the net income or loss of the taxpayer set forth on the taxpayer's applicable financial statement for such taxable year, adjusted as provided in this section.

"(b) APPLICABLE FINANCIAL STATEMENT. — For purposes of this section, the term 'applicable financial statement' means, with respect to any taxable year, an applicable financial statement (as defined in section 451(b)(3)) which covers such taxable year.

"(c) GENERAL ADJUSTMENTS. —

"(1) STATEMENTS COVERING DIFFERENT TAXABLE YEARS. — Appropriate adjustments shall be made in adjusted financial statement income in any case in which an applicable financial statement covers a period other than the taxable year.

"(2) SPECIAL RULES FOR RELATED CORPORATIONS. —

"(A) CONSOLIDATED FINANCIAL STATEMENTS. — If the financial results of a taxpayer are reported on the applicable financial statement for a group of entities, such statement shall be treated as the applicable financial statement of the taxpayer.

"(B) CONSOLIDATED RETURNS. — If the taxpayer files a consolidated return for any taxable year, adjusted financial statement income for such taxable year shall take into account items on the taxpayer's applicable financial statement which are properly allocable to members of such group included on such return.

"(C) TREATMENT OF DIVIDENDS AND OTHER AMOUNTS. — In the case of any corporation which is not included on a consolidated return with the taxpayer, adjusted financial statement income shall take into account the earnings of such other corporation only to the extent of the sum of the dividends received from such other corporation and other amounts required to be included in gross income under this chapter (other than amounts required to be included under sections 951 and 951A) in respect of the earnings of such other corporation.

"(3) ADJUSTMENTS TO TAKE INTO ACCOUNT CERTAIN ITEMS OF FOREIGN INCOME. —

"(A) CONTROLLED FOREIGN CORPORATIONS. —

"(i) IN GENERAL. — If, for any taxable year, a taxpayer is a United States shareholder of one or more controlled foreign corporations, the adjusted financial statement income of such taxpayer shall be adjusted to take into account such taxpayer's pro rata share (determined under rules similar to the rules under section 951(a)(2)) of items taken into account in computing the net income or loss set forth on the applicable financial statement of each such controlled foreign corporation with respect to which such taxpayer is a United States shareholder.

"(ii) NEGATIVE ADJUSTMENTS. — In any case in which the adjustment determined under clause (i) would result in a negative adjustment for such taxable year —

"(I) no adjustment shall be made under this subparagraph for such taxable year, and

"(II) the amount of the adjustment determined under this subparagraph for the succeeding taxable year (determined without regard to this subparagraph) shall be reduced by an amount equal to the negative adjustment for such taxable year.

"(B) DISREGARDED ENTITIES. — Adjusted financial statement income shall be adjusted to take into account any adjusted financial statement income of a disregarded entity owned by the taxpayer that is not otherwise included on the applicable financial statement.

"(4) ADJUSTMENTS FOR CERTAIN TAXES. — Adjusted financial statement income shall be appropriately adjusted to disregard any Federal income taxes, or income, war profits, or excess profits taxes (within the meaning of section 901) imposed by any foreign country or possession of the United States, which are directly or indirectly taken into account on the taxpayer's applicable financial statement. The preceding sentence shall not apply to any such taxes imposed by a foreign country or possession of the United States if the taxpayer does not choose to take, to any extent, the benefits of section 901.

"(5) SPECIAL RULE FOR COOPERATIVES. — In the case of a cooperative to which section 1381 applies, the adjusted financial statement income (determined without regard to this paragraph) shall be reduced by the amounts referred to in section 1382(b) (relating to patronage dividends and per-unit retain allocations) to the extent such amounts were not otherwise taken into account in determining adjusted financial statement income.

"(6) RULES FOR ALASKA NATIVE CORPORATIONS. — Adjusted financial statement income shall be appropriately adjusted to allow —

"(A) cost recovery and depletion attributable to property the basis of which is determined under section 21(c) of the Alaska Native Claims Settlement Act (43 U.S.C. 1620(c)), and

"(B) deductions for amounts payable made pursuant to section 7(i) or section 7(j) of such Act (43 U.S.C. 1606(i) and 1606(j)) only at such time as the deductions are allowed for tax purposes.

"(7) AMOUNTS ATTRIBUTABLE TO ELECTIONS FOR DIRECT PAYMENT OF CERTAIN CREDITS. — Adjusted financial statement income shall be appropriately adjusted to disregard any amount received as a refund of taxes which is attributable to an election under section 6417.

"(8) CONSISTENT TREATMENT OF REASONABLE MORTGAGE SERVICING INCOME OF A TAXPAYER OTHER THAN A REGULATED INVESTMENT COMPANY. — Adjusted financial statement income shall be appropriately adjusted to provide that reasonable compensation (as determined by the Secretary) recognized in connection with a mortgage servicing contract shall not be taken into account earlier than when such income is taken into account under section 451.

"(9) SECRETARIAL AUTHORITY TO ADJUST ITEMS. — The Secretary shall issue regulations and other guidance to provide for such adjustments to adjusted financial statement income as the Secretary determines necessary to carry out the purposes of this section, including adjustments —

"(A) to prevent the omission or duplication of any item, and

"(B) to carry out the principles of part II of subchapter C of this chapter (relating to corporate liquidations) and part III of subchapter C of this chapter (relating to corporate organizations and reorganizations).

"(d) DEDUCTION FOR FINANCIAL STATEMENT NET OPERATING LOSS. —

"(1) IN GENERAL. — Adjusted financial statement income (determined after application of subsection (c) and without regard to this subsection) shall be reduced by an amount equal to the lesser of —

"(A) the aggregate amount of financial statement net operating loss carryovers to the taxable year, or

"(B) 80 percent of adjusted financial statement income computed without regard to the deduction allowable under this subsection.

"(2) FINANCIAL STATEMENT NET OPERATING LOSS CARRYOVER. — A financial statement net operating loss for any taxable year shall be a financial statement net operating loss carryover to each taxable year following the taxable year of the loss. The portion of such loss which shall be carried to subsequent taxable years shall be the excess, if any, of the amount of such loss over the amount of such loss remaining after the application of paragraph (1).

"(3) FINANCIAL STATEMENT NET OPERATING LOSS DEFINED. — For purposes of this subsection, the term 'financial statement net operating loss' means the amount of the net loss (if any) set forth on the corporation's applicable financial statement (determined after application of subsection (c) and without regard to this subsection) for taxable years ending after December 31, 2019.

"(e) REGULATIONS AND OTHER GUIDANCE. — The Secretary shall provide for such regulations an other guidance as necessary to carry out the purposes of this section, including regulations and other guidance relating to the effect of the rules of this section on partnerships with income taken into account by an applicable corporation.".

(2) CLERICAL AMENDMENT. — The table of sections for part VI of subchapter A of chapter 1 is amended by inserting after the item relating to section 56 the following new item:

"Sec. 56A. Adjusted financial statement income.".

(c) CORPORATE AMT FOREIGN TAX CREDIT. — Section 59, as amended by this section, is amended by adding at the end the following new subsection:

"(l) CORPORATE AMT FOREIGN TAX CREDIT. —

"(1) IN GENERAL. — For purposes of this part, if an applicable corporation chooses to have the benefits of subpart A of part III of subchapter N for any taxable year, the AMT foreign tax credit for the taxable year of the applicable corporation is an amount equal to sum of —

"(A) the lesser of —

"(i) the aggregate of the applicable corporation's pro rata share (as determined under section 56A(c)(3)(A)) of the amount of income, war profits, and excess profits taxes (within the meaning of section 901) imposed by any foreign country or possession of the United States which are —

"(I) directly or indirectly taken into account on the taxpayer's applicable financial statement, and

"(II) paid or accrued (for Federal income tax purposes) by each controlled foreign corporation with respect to which the applicable corporation is a United States shareholder, or "(ii) the product of the amount of the adjustment under section 56A(c)(3) and the percentage specified in section 55(b)(2)(A)(i), and

"(B) the amount of income, war profits, and excess profits taxes (within the meaning of section 901) imposed by any foreign country or possession of the United States to the extent such taxes are —

"(i) directly or indirectly taken into account on the applicable corporation's applicable financial statement, and

"(ii) paid or accrued (for Federal income tax purposes) by the applicable corporation.

"(2) CARRYOVER OF EXCESS TAX PAID. — For any taxable year for which an applicable corporation chooses to have the benefits of subpart A of part III of subchapter N, the excess of the amount described in paragraph (1)(A)(i) over the amount described in paragraph (1)(A)(ii) shall increase the amount described in paragraph (1)(A)(i) in any of the first 5 succeeding taxable years to the extent not taken into account in a prior taxable year.

"(3) REGULATIONS AND OTHER GUIDANCE. — The Secretary shall provide for such regulations and other guidance as necessary to carry out the purposes of this subsection.".

(d) TREATMENT OF GENERAL BUSINESS CREDIT. — Section 38(c)(6)(E) is amended to read as follows:

"(E) CORPORATIONS. — In the case of a corporation —

"(i) the first sentence of paragraph (1) shall be applied by substituting '25 percent of the taxpayer's net income tax as exceeds $25,000' for 'the greater of' and all that follows,

"(ii) paragraph (2)(A) shall be applied without regard to clause (ii)(I) thereof, and

"(iii) paragraph (4)(A) shall be applied without regard to clause (ii)(I) thereof.".

(e) CREDIT FOR PRIOR YEAR MINIMUM TAX LIABILITY. —

(1) IN GENERAL. — Section 53(e) is amended to read as follows:

"(e) APPLICATION TO APPLICABLE CORPORATIONS. — In the case of an applicable corporation —

"(1) subsection (b)(1) shall be applied by substituting 'the net minimum tax for all prior taxable years beginning after 2022' for 'the adjusted net minimum tax imposed for all prior taxable years beginning after 1986', and

"(2) the amount determined under subsection (c)(1) shall be increased by the amount of tax imposed under section 59A for the taxable year.".

(2) CONFORMING AMENDMENTS. — Section 53(d) is amended —

(A) in paragraph (2), by inserting "(other than an applicable corporation" after "corporation", and

(B) by striking paragraph (3).

(f) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2022.

SEC. 138102. EXCISE TAX ON REPURCHASE OF CORPORATE STOCK.

(a) IN GENERAL. — Subtitle D is amended by inserting after chapter 36 the following new chapter:

"CHAPTER 37 — REPURCHASE OF CORPORATE STOCK

"Sec. 4501. Repurchase of corporate stock.

"SEC. 4501. REPURCHASE OF CORPORATE STOCK.

"(a) GENERAL RULE. — There is hereby imposed on each covered corporation a tax equal to 1 percent of the fair market value of any stock of the corporation which is repurchased by such corporation during the taxable year.

"(b) COVERED CORPORATION. — For purposes of this section, the term 'covered corporation' means any domestic corporation the stock of which is traded on an established securities market (within the meaning of section 7704(b)(1)).

"(c) REPURCHASE. — For purposes of this section —

"(1) IN GENERAL. — The term 'repurchase' means —

"(A) a redemption within the meaning of section 317(b) with regard to the stock of a covered corporation, and

"(B) any transaction determined by the Secretary to be economically similar to a transaction described in subparagraph (A).

"(2) TREATMENT OF PURCHASES BY SPECIFIED AFFILIATES. —

"(A) IN GENERAL. — The acquisition of stock of a covered corporation by a specified affiliate of such covered corporation, from a person who is not the covered corporation or a specified affiliate of such covered corporation, shall be treated as a repurchase of the stock of the covered corporation by such covered corporation.

"(B) SPECIFIED AFFILIATE. — For purposes of this section, the term 'specified affiliate' means, with respect to any corporation —

"(i) any corporation more than 50 percent of the stock of which is owned (by vote or by value), directly or indirectly, by such corporation, and

"(ii) any partnership more than 50 percent of the capital interests or profits interests of which is held, directly or indirectly, by such corporation.

"(3) ADJUSTMENT. — The amount taken into account under subsection (a) with respect to any stock repurchased by a covered corporation shall be reduced by the fair market value of any stock issued by the covered corporation during the taxable year, including the fair market value of any stock issued to employees of such covered corporation or a specified affiliate of such covered corporation during the taxable year, whether or not such stock is issued in response to the exercise of an option to purchase such stock.

"(d) SPECIAL RULES FOR FOREIGN-PARENTED DOMESTIC CORPORATIONS. —

"(1) IN GENERAL. — In the case of an acquisition of stock of an applicable foreign corporation by a specified affiliate of such corporation (other than a foreign corporation or a foreign partnership (unless such partnership has a domestic entity as a direct or indirect partner)) from a person who is not the applicable foreign corporation or a specified affiliate of such applicable foreign corporation, for purposes of this section —

"(A) such specified affiliate shall be treated as a covered corporation with respect to such acquisition,

"(B) such acquisition shall be treated as a repurchase of stock of a covered corporation by such covered corporation, and

"(C) the adjustment under subsection (c)(3) shall be determined only with respect to stock issued by such specified affiliate to employees of the specified affiliate.

"(2) SURROGATE FOREIGN CORPORATIONS. — In the case of a repurchase of stock of a covered surrogate foreign corporation by such covered surrogate foreign corporation, or an acquisition of stock of a covered surrogate foreign corporation by a specified affiliate of such corporation, for purposes of this section —

"(A) the expatriated entity with respect to such covered surrogate foreign corporation shall be treated as a covered corporation with respect to such repurchase or acquisition,

"(B) such repurchase or acquisition shall be treated as a repurchase of stock of a covered corporation by such covered corporation, and

"(C) the adjustment under subsection (c)(3) shall be determined only with respect to stock issued by such expatriated entity to employees of the expatriated entity.

"(3) DEFINITIONS. — For purposes of this subsection —

"(A) APPLICABLE FOREIGN CORPORATION. — The term 'applicable foreign corporation' means any foreign corporation the stock of which is traded on an established securities market (within the meaning of section 7704(b)(1)).

"(B) COVERED SURROGATE FOREIGN CORPORATION. — The term 'covered surrogate foreign corporation' means any surrogate foreign corporation (as determined under section 7874(a)(2)(B) by substituting 'September 20, 2021' for 'March 4, 2003' each place it appears) the stock of which is traded on an established securities market (within the meaning of section 7704(b)(1)), but only with respect to taxable years which include any portion of the applicable period with respect to such corporation under section 7874(d)(1).

"(C) EXPATRIATED ENTITY. — The term 'expatriated entity' has the meaning given such term by section 7874(a)(2)(A).

"(e) EXCEPTIONS. — Subsection (a) shall not apply — "(1) to the extent that the repurchase is part of a reorganization (within the meaning of section 368(a)) and no gain or loss is recognized on such repurchase by the shareholder under chapter 1 by reason of such reorganization,

"(2) in any case in which the stock repurchased is, or an amount of stock equal to the value of the stock repurchased is, contributed to an employer-sponsored retirement plan, employee stock ownership plan, or similar plan,

"(3) in any case in which the total value of the stock repurchased during the taxable year does not exceed $1,000,000,

"(4) under regulations prescribed by the Secretary, in cases in which the repurchase is by a dealer in securities in the ordinary course of business,

"(5) to repurchases by a regulated investment company (as defined in section 851) or a real estate investment trust, or

"(6) to the extent that the repurchase is treated as a dividend for purposes of this title.

"(f) REGULATIONS AND GUIDANCE. — The Secretary shall prescribe such regulations and other guidance as are necessary or appropriate to administer and to prevent the avoidance of the purposes of this section, including regulations and other guidance —

"(1) to prevent the abuse of the exceptions provided by subsection (e),

"(2) to address special classes of stock and preferred stock, and

"(3) for the application of the rules under subsection (d).".

(b) TAX NOT DEDUCTIBLE. — Paragraph (6) of section 275(a) is amended by inserting "37," before "41".

(c) CLERICAL AMENDMENT. — The table of chapters for subtitle D is amended by inserting after the item relating to chapter 36 the following new item:

"CHAPTER 37 — REPURCHASE OF CORPORATE STOCK".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to repurchases (within the meaning of section 4501(c) of the Internal Revenue Code of 1986, as added by this section) of stock after December 31, 2021.

Subpart B — Limitations on Deduction for Interest Expense

SEC. 138111. LIMITATIONS ON DEDUCTION FOR INTEREST EXPENSE.

(a) INTEREST EXPENSE OF CERTAIN MEMBERS OF INTERNATIONAL FINANCIAL REPORTING GROUPS. — Section 163 is amended by redesignating subsection (n) as subsection (p) and by inserting after subsection (m) the following new subsection:

"(n) LIMITATION ON DEDUCTION OF INTEREST BY CERTAIN MEMBERS OF INTERNATIONAL FINANCIAL REPORTING GROUPS. —

"(1) IN GENERAL. — In the case of any specified domestic corporation which is a member of any international financial reporting group, the deduction under this chapter for interest paid or accrued during the taxable year in excess of the amount of interest includible in the gross income of such corporation shall not exceed the allowable percentage of 110 percent of such excess.

"(2) SPECIFIED DOMESTIC CORPORATION. — For purposes of this subsection —

"(A) IN GENERAL. — The term 'specified domestic corporation' means any domestic corporation other than —

"(i) any corporation if the excess of —

"(I) the average amount of interest paid or accrued by such corporation during the 3-taxable-year period ending with the taxable year to which paragraph (1) applies, over

"(II) the average amount of interest includible in the gross income of such corporation for such 3-taxable-year period, does not exceed $12,000,000,

"(ii) any corporation to which paragraph (1) of section 163(j) does not apply by reason of paragraph (3) thereof (relating to exemption for certain small businesses), and

"(iii) any S corporation, real estate investment trust, or regulated investment company.

"(B) AGGREGATION RULE. — For purposes of clauses (i) and (ii) of subparagraph (A), all domestic corporations which are members of the same international financial reporting group shall be treated as a single corporation.

"(C) FOREIGN CORPORATIONS ENGAGED IN TRADE OR BUSINESS WITHIN THE UNITED STATES. — For purposes of this subsection, if a foreign corporation is engaged in a trade or business within the United States, such foreign corporation shall be treated as a domestic corporation with respect to the items that are effectively connected with such trade or business.

"(3) INTERNATIONAL FINANCIAL REPORTING GROUP. — For purposes of this subsection —

"(A) IN GENERAL. — The term 'international financial reporting group' means, with respect to any reporting year, two or more entities if —

"(i) either —

"(I) at least one entity is a foreign corporation engaged in a trade or business within the United States, or

"(II) at least one entity is a domestic corporation and another entity is a foreign corporation, and

"(ii) such entities are included in the same applicable financial statement with respect to such year.

"(B) ELECTION TO INCLUDE ELIGIBLE CORPORATIONS IN GROUP. —

"(i) IN GENERAL. — To the extent provided by the Secretary in regulations or other guidance, an international financial reporting group may elect (at such time and in such manner as the Secretary may provide) to treat all eligible corporations with respect to such group as members of such group for purposes of this subsection. As a condition of such election, all such eligible corporations must maintain (and provide such group access to) such books and records as the Secretary determines are satisfactory to allow for the application of this subsection with respect to such eligible corporations. Such election may be revoked only with the consent of the Secretary.

"(ii) ELIGIBLE CORPORATION. — The term 'eligible corporation' means, with respect to any international financial reporting group, any corporation if at least 20 percent of the stock of such corporation (determined by vote and value) is held (directly or indirectly) by members of such international financial reporting group (determined without regard to this subparagraph).

"(4) ALLOWABLE PERCENTAGE. — For purposes of this subsection —

"(A) IN GENERAL. — The term 'allowable percentage' means, with respect to any specified domestic corporation for any taxable year, the ratio (expressed as a percentage and not greater than 100 percent) of —

"(i) such corporation's allocable share of the international financial reporting group's reported net interest expense for the reporting year of such group which ends in or with such taxable year of such corporation, over

"(ii) such corporation's reported net interest expense for such reporting year of such group.

"(B) REPORTED NET INTEREST EXPENSE. — The term 'reported net interest expense' means —

"(i) with respect to any international financial reporting group for any reporting year, the excess of —

"(I) the aggregate amount of interest expense reported in such group's applicable financial statements for such taxable year, over

"(II) the aggregate amount of interest income reported in such group's applicable financial statements for such taxable year, and

"(ii) with respect to any specified domestic corporation for any reporting year, the excess of —

"(I) the amount of interest expense of such corporation reported in the books and records of the international financial reporting group which are used in preparing such group's applicable financial statements for such taxable year, over

"(II) the amount of interest income of such corporation reported in such books and records.

"(C) ALLOCABLE SHARE OF REPORTED NET INTEREST EXPENSE. — With respect to any specified domestic corporation which is a member of any international financial reporting group, such corporation's allocable share of such group's reported net interest expense for any reporting year is the portion of such expense which bears the same ratio to such expense as —

"(i) the EBITDA of such corporation for such reporting year, bears to

"(ii) the EBITDA of such group for such reporting year.

"(D) EBITDA. —

"(i) IN GENERAL. — The term 'EBITDA' means, with respect to any reporting year, earnings before interest income and interest expense, taxes, depreciation, depletion, and amortization —

"(I) as determined in the international financial reporting group's applicable financial statements for such year, or

"(II) as determined in the books and records of the international financial reporting group which are used in preparing such statements if not determined in such statements.

"(ii) TREATMENT OF INTRA-GROUP DISTRIBUTIONS. — The EBITDA of any specified domestic corporation shall be determined without regard to any distribution received by such corporation from any other member of the international financial reporting group.

"(E) SPECIAL RULES FOR NON-POSITIVE EBITDA. —

"(i) NON-POSITIVE GROUP EBITDA. — In the case of any international financial reporting group the EBITDA of which is zero or less, paragraph (1) shall not apply to any specified domestic corporation which is a member of such group.

"(ii) NON-POSITIVE ENTITY EBITDA. — In the case of any specified domestic corporation the EBITDA of which is zero or less, the allowable percentage shall be 0 percent.

"(5) APPLICABLE FINANCIAL STATEMENT. — For purposes of this subsection, the term 'applicable financial statement' has the meaning given such term in section 451(b)(3).

"(6) REPORTING YEAR. — For purposes of this subsection, the term 'reporting year' means any year for which an applicable financial statement is prepared or required to be prepared.

"(7) REGULATIONS. — The Secretary may issue such regulations or other guidance as are necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance which —

"(A) allows or requires the adjustment of amounts reported on applicable financial statements,

"(B) allows or requires any corporation to be included or excluded as a member of any international financial reporting group for purposes of any determination or calculation under this subsection,

"(C) treats subpart F income of a controlled foreign corporation, and any interest expense of such corporation which is related to such income, as income and interest expense, respectively, of a specified domestic corporation for purposes of this section,

"(D) prevents the omission, inclusion, or duplication of any item or amount of interest income or interest expense, and

"(E) provides rules for the application of this subsection with respect to —

"(i) a domestic corporation that is a partner (directly or indirectly) in a partnership,

"(ii) a domestic corporation that owns (directly or indirectly) an interest in an entity that is fiscally transparent in one or more jurisdictions, and

"(iii) a foreign corporation to which this subsection applies by reason of paragraph (2)(C).".

(b) MODIFICATION OF APPLICATION OF LIMITATION ON BUSINESS INTEREST TO PARTNERSHIPS AND S CORPORATIONS. — Section 163(j)(4) is amended to read as follows:

"(4) APPLICATION TO PARTNERSHIPS AND S CORPORATIONS. —

"(A) IN GENERAL. — Except as otherwise provided in subparagraph (B), in the case of any partnership or S corporation, this subsection shall be applied at the partner or shareholder level, respectively.

"(B) APPLICATION OF EXEMPTION FOR CERTAIN SMALL BUSINESSES. —

"(i) PARTNERSHIPS. — In the case of any partner to which paragraph (3) applies (determined without regard to this subparagraph), paragraph (1) shall apply by only taking into account such partner's distributive share of items from any partnership not described in paragraph (3).

"(ii) S CORPORATIONS. — In the case of any S corporation shareholder to which paragraph (3) applies (determined without regard this subparagraph), paragraph (1) shall apply with respect to such shareholder under rules similar to the rules of clause (i).

"(C) REGULATIONS. — The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or other guidance —

"(i) for requiring or restricting the allocation of items and business interest under this subsection,

"(ii) to provide for such reporting requirements as the Secretary determines appropriate, and

"(iii) for the application of this subsection in the case of tiered structures or trades or businesses described in paragraph (2)(C).".

(c) CARRYFORWARD OF DISALLOWED INTEREST. —

(1) IN GENERAL. — Section 163 is amended by inserting after subsection (n), as added by subsection (a), the following new subsection:

"(o) CARRYFORWARD OF CERTAIN DISALLOWED INTEREST. — The amount of any interest not allowed as a deduction for any taxable year by reason of subsection (j) or (n)(1) (whichever imposes the lower limitation with respect to such taxable year) shall be treated as interest (and as business interest for purposes of subsection (j) to the extent such amount is properly attributable to a trade or business as defined in subsection (j)(7)) paid or accrued in the succeeding taxable year.".

(2) CONFORMING AMENDMENTS. —

(A) Section 163(j)(2) is amended to read as follows:

"(2) CARRYFORWARD CROSS-REFERENCE. — For carryforward treatment, see subsection (o).".

(B) Section 381(c)(20) is amended to read as follows:

"(20) CARRYFORWARD OF DISALLOWED INTEREST. — The carryover of disallowed interest described in section 163(o) to taxable years ending after the date of distribution or transfer.".

(C) Section 382(d)(3) is amended to read as follows:

"(3) APPLICATION TO CARRYFORWARD OF DISALLOWED INTEREST. — The term 'pre-change loss' shall include any carryover of disallowed interest described in section 163(o) under rules similar to the rules of paragraph (1).".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2022.

(e) TRANSITION RULE. — In the case of a partner's first succeeding taxable year described in subclause (II) of section 163(j)(4)(B)(ii) of the Internal Revenue Code of 1986 (as in effect before the amendment made by subsection (b)) which begins after December 31, 2022, the amount of excess business interest which would (but for such amendment) be carried to such taxable year under such subclause shall be treated as interest (and as business interest for purposes of section 163(j) of such Code, as amended by this section) paid or accrued in such taxable year. A rule similar to the rule in the preceding sentence shall apply in the case of an S corporation and its shareholders. For carryover of any such interest disallowed for such taxable year, see section 163(o) of such Code, as amended by this section.

Subpart C — Outbound International Provisions

SEC. 138121. MODIFICATIONS TO DEDUCTION FOR FOREIGN-DERIVED INTANGIBLE INCOME AND GLOBAL INTANGIBLE LOW-TAXED INCOME.

(a) IN GENERAL. — Section 250(a) is amended to read as follows:

"(a) IN GENERAL. — In the case of a domestic corporation for any taxable year, there shall be allowed as a deduction an amount equal to the sum of —

"(1) 24.8 percent of the foreign-derived intangible income of such domestic corporation for such taxable year, plus

"(2) 28.5 percent of —

"(A) the global intangible low-taxed income (if any) which is included in the gross income of such domestic corporation under section 951A for such taxable year, and

"(B) the amount treated as a dividend received by such corporation under section 78 which is attributable to the amount described in subparagraph (A).".

(b) DEDUCTION TAKEN INTO ACCOUNT IN DETERMINING NET OPERATING LOSS DEDUCTION. — Section 172(d) is amended by striking paragraph (9).

(c) CERTAIN OTHER MODIFICATIONS. —

(1) Section 250(b)(3) is amended —

(A) in subparagraph (A)(i) —

(i) by striking "and" at the end of subclause (V),

(ii) by striking "over" at the end of subclause (VI), and

(iii) by adding at the end the following new subclauses:

"(VII) any income described in clause (i) or (ii) of section 904(d)(2)(B), determined without regard to clause (iii)(II) thereof,

"(VIII) except as otherwise provided by the Secretary, gains from the sale or other disposition of property giving rise to rents or royalties derived in the active conduct of a trade or business, and

"(IX) any disqualified extraterritorial income, over", and

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

"(C) DISQUALIFIED EXTRATERRITORIAL INCOME. —

"(i) IN GENERAL. — For purposes of subparagraph (A)(i)(IX), the term 'disqualified extraterritorial income' means any amount included in the gross income of the corporation with respect to any transaction for any taxable year if any amount could (determined after application of clause (ii) but without regard to any election under section 942(a)(3) as in effect before its repeal) be excluded from the gross income of the corporation with respect to such transaction for such taxable year by reason of section 114 pursuant to the application of subsection (d) or (f) of section 101 of the American Jobs Creation Act of 2004.

"(ii) ELECTION OUT OF EXTRATERRITORIAL INCOME BENEFITS. —

"(I) IN GENERAL. — Except as provided in subclause (II), the corporation referred to in clause (i) may make an irrevocable election (at such time and in such form and manner as the Secretary may provide) to have subsections (d) and (f) of section 101 of the American Jobs Creation Act of 2004 not apply with respect to such corporation for the taxable year for which such election is made and all succeeding taxable years (applicable with respect to all transactions, including transactions occurring before such taxable year).

"(II) EXPANDED AFFILIATED GROUPS. — In the case of any corporation which is a member of an expanded affiliated group, the election described in subclause (I) may be made only by the common parent of such group (or, in the case of a common parent which is not required to file a return of tax under this chapter, the delegate of such common parent) and shall apply with respect to all members of such group.

For purposes of the preceding sentence, the term 'expanded affiliated group' means an affiliated group as defined in section 1504(a), determined without regard to section 1504(b)(3) and by substituting 'more than 50 percent' for 'at least 80 percent' each place it appears.".

(C) Section 250(b)(5)(E) is amended by inserting "(other than paragraph (3)(A)(i)(VIII))" after "For purposes of this subsection".

(2) Section 613A(d)(1) is amended by striking "and" at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting ", and", and by inserting after subparagraph

(E) the following new subparagraph:

"(F) any deduction allowable under section 250.".

(d) EFFECTIVE DATE. —

(1) IN GENERAL. — Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2022.

(2) CERTAIN MODIFICATIONS. — The amendments made by subsection (c) shall apply to taxable years beginning after the date of the enactment of this Act.

(e) NO INFERENCE REGARDING CERTAIN MODIFICATIONS. — The amendments made by subsection (c) shall not be construed to create any inference with respect to the proper application of any provision of the Internal Revenue Code of 1986 with respect to any taxable year beginning before the taxable years to which such amendments apply.

(f) TRANSITION RULE FOR ACCELERATED PERCENTAGE REDUCTION. —

(1) IN GENERAL. — In the case of any taxable year which includes December 31, 2022 (other than a taxable year with respect to which such date is the last day of such taxable year) —

(A) the percentage in effect under section 250(a)(1)(A) of the Internal Revenue Code of 1986 shall be treated as being equal to the sum of —

(i) the pre-effective date percentage of 37.5 percent, plus

(ii) the post-effective date percentage of 24.8 percent, and

(B) the percentage in effect under section 250(a)(1)(B) of such Code shall be treated as being equal to the sum of —

(i) the pre-effective date percentage of 50 percent, plus

(ii) the post-effective date percentage of 28.5 percent.

(2) PRE- AND POST-EFFECTIVE DATE PERCENTAGES. — For purposes of this subsection, with respect to any taxable year —

(A) the term "pre-effective date percentage" means the ratio that the number of days in such taxable year which are before January 1, 2023, bears to the number of days in such taxable year, and

(B) the term "post-effective date percentage" means the ratio that the number of days in such taxable year which are after December 31, 2022, bears to the number of days in such taxable year.

SEC. 138122. REPEAL OF ELECTION FOR 1-MONTH DEFERRAL IN DETERMINATION OF TAXABLE YEAR OF SPECIFIED FOREIGN CORPORATIONS.

(a) IN GENERAL. — Section 898(c) is amended by striking paragraph (2) and redesignating paragraph (3) as paragraph (2).

(b) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years of specified foreign corporations beginning after November 30, 2022.

(c) TRANSITION RULE. — In the case of a corporation that is a specified foreign corporation as of November 30, 2022, such corporation's first taxable year beginning after such date shall end at the same time as the first required year (within the meaning of section 898(c)(1) of the Internal Revenue Code of 1986) ending after such date. If any specified foreign corporation is required by this section (or the amendments made by this section) to change its taxable year for its first taxable year beginning after November 30, 2022 —

(1) such change shall be treated as initiated by such corporation,

(2) such change shall be treated as having been made with the consent of the Secretary, and

(3) the Secretary (including the Secretary's delegate in the case of any reference to the Secretary in this paragraph) shall issue regulations or other guidance for allocating foreign taxes that accrue in such first taxable year between such taxable year and the prior taxable year, including such adjustments as the Secretary determines are necessary or appropriate in applying sections 959, 960, and 961 of such Code in connection with the allocation of such taxes, and providing for such other adjustments as the Secretary determines necessary or appropriate to carry out the purposes of this section.

SEC. 138123. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE TO CERTAIN TAXPAYERS RECEIVING SPECIFIC ECONOMIC BENEFITS.

(a) IN GENERAL. — Section 901 is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following new subsection:

"(n) SPECIAL RULES RELATING TO DUAL CAPACITY TAXPAYERS. —

"(1) GENERAL RULE. — Notwithstanding any other provision of this chapter, any amount paid or accrued by a dual capacity taxpayer to a foreign country or possession of the United States for any period shall not be considered a tax —

"(A) if, for such period, the foreign country or possession does not impose a generally applicable income tax, or

"(B) to the extent such amount exceeds the amount which would be paid or accrued by such dual capacity taxpayer under the generally applicable income tax imposed by such country or possession if such taxpayer were not a dual capacity taxpayer.

Nothing in this paragraph shall be construed to imply the proper treatment of any such amount not in excess of the amount determined under subparagraph (B).

"(2) DUAL CAPACITY TAXPAYER. — For purposes of this subsection, the term 'dual capacity taxpayer' means, with respect to any foreign country or possession of the United States, a person who —

"(A) is subject to a levy of such country or possession, and

"(B) receives (or will receive) directly or indirectly a specific economic benefit from such country or possession (or any political subdivision, agency, or instrumentality thereof).

"(3) GENERALLY APPLICABLE INCOME TAX. — For purposes of this subsection, the term 'generally applicable income tax' means an income tax (or a series of income taxes) which is generally imposed under the laws of a foreign country or possession of the United States on residents of such foreign country or possession that are not dual capacity taxpayers.".

(b) EFFECTIVE DATE. — The amendments made by this section shall apply to amounts paid or accrued after December 31, 2021.

SEC. 138124. MODIFICATIONS TO FOREIGN TAX CREDIT LIMITATIONS.

(a) COUNTRY-BY-COUNTRY APPLICATION OF LIMITATION ON FOREIGN TAX CREDIT BASED ON TAXABLE UNITS. —

(1) IN GENERAL. — Section 904 is amended by inserting after subsection (d) the following new subsection:

"(e) COUNTRY-BY-COUNTRY APPLICATION BASED ON TAXABLE UNITS. —

"(1) IN GENERAL. — Subsection (d) (and the provisions of this title referred to in paragraph (1) of such subsection) shall be applied separately with respect to each country by taking into account the aggregate income properly attributable or otherwise allocable to a taxable unit of the taxpayer which is a tax resident of (or, in the case of a branch, is located in) such country.

"(2) TAXABLE UNITS. —

"(A) IN GENERAL. — Except as otherwise provided by the Secretary, each item shall be attributable or otherwise allocable to exactly one taxable unit of the taxpayer.

"(B) DETERMINATION OF TAXABLE UNITS. — Except as otherwise provided by the Secretary, the taxable units of a taxpayer are as follows:

"(i) GENERAL TAXABLE UNIT. — The person that is the taxpayer and that is not otherwise described in a separate clause of this subparagraph.

"(ii) CERTAIN FOREIGN CORPORATIONS. — Each foreign corporation with respect to which the taxpayer is a United States shareholder.

"(iii) INTERESTS IN PASS-THROUGH ENTITIES. — Each interest held (directly or indirectly) by the taxpayer or any controlled foreign corporation referred to in clause (ii) in a pass-through entity if such pass-through entity is a tax resident of a country other than the country with respect to which such taxpayer or controlled foreign corporation (as the case may be) is a tax resident.

"(iv) BRANCHES. — Each branch (or portion thereof) the activities of which are directly or indirectly carried on by the taxpayer or any controlled foreign corporation referred to in clause (ii) and which give rise to a taxable presence in a country other than the country with respect to which such taxpayer or controlled foreign corporation (as the case may be) is a tax resident.

"(3) DEFINITIONS AND SPECIAL RULES. — For purposes of this subsection —

"(A) TAX RESIDENT. — Except as otherwise provided by the Secretary, the term 'tax resident' means a person or entity subject to tax under the tax law of a country as a resident. If an entity is organized under the law of a country, or resident in a country, that does not impose an income tax with respect to such entities, such entity shall, except as provided by the Secretary, be treated as subject to tax under the tax law of such country for the purposes of the preceding sentence.

"(B) PASS-THROUGH ENTITY. — Except as otherwise provided by the Secretary, the term 'pass-through entity' includes any partnership or other entity to the extent that income, gain, deduction, or loss of the entity is taken into account in determining the income or loss of a person that owns (directly or indirectly) an interest in such entity.

"(C) BRANCH. — Except as otherwise provided by the Secretary, the term 'branch' means a taxable presence of a tax resident in a country other than its country of residence as determined under such other country's tax law. The Secretary shall provide regulations or other guidance applying such term to activities in a country that do not give rise to a taxable presence.

"(D) TREATMENT OF FISCALLY AUTONOMOUS JURISDICTIONS. — Any fiscally autonomous jurisdiction shall be treated as a separate country. Any possession of the United States shall also be treated as a separate country.

"(E) POSSESSION OF THE UNITED STATES. — The term 'possession of the United States' means each of American Samoa, the Commonwealth of the Northern Mariana Islands, the Commonwealth of Puerto Rico, Guam, and the Virgin Islands.

"(4) REGULATIONS. — The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out, or prevent avoidance of, the purposes of this subsection, including regulations or other guidance —

"(A) providing for the application of this subsection to an entity or arrangement that is considered a tax resident of more than one country or of no country,

"(B) providing for the application of this subsection to hybrid entities or hybrid transactions (as such terms are used for purposes of section 267A), pass-through entities, passive foreign investment companies, trusts, and other entities or arrangements not otherwise described in this subsection, and

"(C) providing for the assignment of any item (including foreign taxes and deductions) to taxable units, including in the case of amounts not otherwise taken into account in determining taxable income under this chapter.".

(2) APPLICATION OF RECAPTURE OF OVERALL FOREIGN LOSS. — Section 904(f)(5)(E)(i) is amended by inserting "applied separately with respect to each country (within the meaning of subsection (e)) as provided in subsection (e)" before the period at the end.

(3) APPLICATION OF SEPARATE LIMITATION LOSSES WITH RESPECT TO GLOBAL INTANGIBLE LOW-TAXED INCOME. —

(A) IN GENERAL. — Section 904(f)(5)(B) is amended to read as follows:

"(B) ALLOCATION OF LOSSES. — Except as otherwise provided in this subparagraph, the separate limitation losses for any taxable year (to the extent such losses do not exceed the separate limitation incomes for such year) shall be allocated among (and operate to reduce) such incomes on a proportionate basis. In the case of a separate limitation loss for any taxable year in any category other than subparagraph (d)(1)(A), the amount of such separate limitation loss shall be allocated among (and operate to reduce) separate limitation income in any category other than income described in subparagraph (d)(1)(A) on a proportionate basis (without regard to income described in subparagraph (d)(1)(A)), and only to the extent the aggregate amount of such losses exceeds the aggregate amount of separate limitation incomes (other than income described in subparagraph (d)(1)(A)) for such taxable year, shall any amount of separate limitation losses reduce separate limitation income described in subparagraph (d)(1)(A).".

(B) SEPARATE LIMITATION LOSS. — Section 904(f)(5)(E)(iii) is amended to read as follows:

"(iii) SEPARATE LIMITATION LOSS. — The term 'separate limitation loss' means, with respect to any income category, the amount by which the gross income from sources outside the United States is exceeded by the sum of the deductions properly allocated and apportioned thereto.".

(b) REPEAL OF SEPARATE APPLICATION TO FOREIGN BRANCH INCOME. —

(1) IN GENERAL. — Section 904(d)(1) is amended by striking subparagraph (B) and redesignating subparagraphs (C) and (D) as subparagraph (B) and (C).

(2) COORDINATION WITH DEDUCTION FOR FOREIGN-DERIVED INTANGIBLE INCOME. — Section 250(b)(3)(A) is amended —

(A) by striking subclause (VI) of clause (i) and inserting the following new subclause:

"(VI) the income which is attributable to 1 or more branches (within the meaning of section 904(e)(3)(C)) or pass-through entities (within the meaning of section 904(e)(3)(B)) in 1 or more foreign countries, over", and

(B) by adding at the end the following flush sentence: "For purposes of clause (i)(VI), the amount of income attributable to a branch or pass-through entity shall be determined under rules established by the Secretary.".

(3) AMENDMENTS. —

(A) Section 904(d)(2)(A)(ii) is amended by striking ", foreign branch income,".

(B) Section 904(d)(2)(H) is amended to read as follows:

"(H) TREATMENT OF INCOME TAX BASE DIFFERENCES. — The Secretary shall issue regulations or other guidance assigning to the proper category of income any tax imposed under the law of a foreign country or possession of the United States on an amount which does not constitute income under United States tax principles.".

(C) Section 904(d)(2) is amended by striking subparagraph (J).

(c) MODIFICATION OF FOREIGN TAX CREDIT CARRYBACK AND CARRYFORWARD. —

(1) REPEAL OF CARRYBACK. — Section 904(c) is amended —

(A) by striking "in the first preceding taxable year, and",

(B) by striking "preceding or" each place it appears, and

(C) by striking "CARRYBACK AND" in the heading thereof.

(2) APPLICATION TO LIMITATION ON FOREIGN OIL AND GAS TAXES. — Section 907(f)(1) is amended by striking "in the first preceding taxable year and".

(3) APPLICATION OF CARRYFORWARD TO TAXES ON GLOBAL INTANGIBLE LOW-TAXED INCOME. —

(A) IN GENERAL. — Section 904(c) is amended by striking the last sentence.

(B) TEMPORARY LIMITATION OF CARRYFORWARD TO 5 TAXABLE YEARS. — Section 904(c), as amended by the preceding provisions of this Act, is amended —

(i) by striking "Any amount by which all taxes" and all that precedes it and inserting the following:

"(c) CARRYBACK AND CARRYOVER OF EXCESS TAX PAID. —

"(1) IN GENERAL. — Any amount by which all taxes", and

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

"(2) TEMPORARY LIMITATION ON CARRYFORWARD OF TAXES ON GLOBAL INTANGIBLE LOW-TAXED INCOME. — In the case of taxes paid or accrued during any taxable year beginning after December 31, 2022, and before January 1, 2031, and with respect to amounts described in subsection (d)(1)(A), paragraph (1) shall be applied by substituting '5 succeeding taxable years' for '10 succeeding taxable years'.".

(d) TREATMENT OF CERTAIN TAX-EXEMPT DIVIDENDS. —

(1) CERTAIN TAX-EXEMPT DIVIDENDS TAKEN INTO ACCOUNT IN APPLYING LIMITATIONS ON FOREIGN TAX CREDITS. — Section 904(b) is amended by striking paragraph (4).

(2) CERTAIN TAX-EXEMPT DIVIDENDS NOT TAKEN INTO ACCOUNT IN ALLOCATING INTEREST EXPENSE. — Section 864(e)(3) is amended by striking "or 245(a)" and inserting ", 245(a), or 245A".

(e) RULES FOR ALLOCATION OF CERTAIN DEDUCTIONS TO FOREIGN SOURCE GLOBAL INTANGIBLE LOW TAXED INCOME FOR PURPOSES OF FOREIGN TAX CREDIT LIMITATION. — Section 904(b), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:

"(4) DEDUCTIONS TREATED AS ALLOCABLE TO FOREIGN SOURCE GLOBAL INTANGIBLE LOW-TAXED INCOME. — In the case of a domestic corporation and solely for purposes of the application of subsection (a) with respect to amounts described in subsection (d)(1)(A), the taxpayer's taxable income from sources without the United States shall be determined —

"(A) by allocating and apportioning any deduction allowed under section 250(a)(1)(B) (and any deduction allowed under section 164(a)(3) for taxes imposed on amounts described in section 250(a)(1)(B)) to such income, and

"(B) by allocating and apportioning any other deduction to such income only if the Secretary determines that such deduction is directly allocable to such income.

Any deduction which would (but for subparagraph (B)) have been allocated or apportioned to such income shall only be allocated or apportioned to income which is from sources within the United States.".

(f) TREATMENT OF CERTAIN ASSET DISPOSITIONS. — Section 904(b), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:

"(5) TREATMENT OF CERTAIN ASSET DISPOSITIONS. —

"(A) IN GENERAL. — Except as otherwise provided by the Secretary, in the case of any covered asset disposition, the principles of section 338(h)(16) shall apply in determining the source and character of any item for purposes of this part.

"(B) COVERED ASSET DISPOSITION. — For purposes of this paragraph, the term 'covered asset disposition' means any transaction which —

"(i) is treated as a disposition of assets for purposes of subchapter N of this chapter, and

"(ii) is treated as a disposition of stock of a corporation (or is disregarded) for purposes of the tax laws of a relevant foreign country or possession of the United States.

"(C) REGULATIONS. — The Secretary shall issue such regulations or other guidance as is necessary or appropriate to carry out, or to prevent the avoidance of, the purposes of this paragraph.".

(g) REDETERMINATION OF FOREIGN TAXES AND RELATED CLAIMS. —

(1) IN GENERAL. — Section 905(c) is amended —

(A) in paragraph (1), by striking "or" at the end of subparagraph (B) and by inserting after subparagraph (C) the following new subparagraphs:

"(D) the taxpayer makes a timely change in its choice to claim a credit or deduction for taxes paid or accrued, or

"(E) there is any other change in the amount, or treatment, of taxes, which affects the taxpayer's tax liability under this chapter,",

(B) in paragraph (2)(B), by striking "Any such taxes" and inserting "Except as otherwise provided by the Secretary, any such taxes",

(C) in paragraph (2)(B)(i), by striking "for the taxable year to which such taxes relate" and inserting "for the taxable year in which paid", and

(D) by striking "ACCRUED" in the heading thereof.

(2) MODIFICATION TO TIME FOR CLAIMING CREDIT OR DEDUCTION. — Section 901(a) is amended by striking the second sentence and inserting the following: " Such choice for any taxable year may be made or changed at any time before the expiration of the applicable period prescribed by section 6511 for making a claim for credit or refund of an overpayment of the tax imposed by this chapter for such taxable year that is attributable to such amounts.".

(3) MODIFICATION TO SPECIAL PERIOD OF LIMITATION. — Section 6511(d)(3) is amended —

(A) in subparagraph (A) —

(i) by inserting "change in the liability for" before "any taxes paid or accrued",

(ii) by striking "actually paid" and inserting "paid (or deemed paid under section 960)", and

(iii) by inserting "CHANGE IN THE LIABILITY FOR" before "FOREIGN TAXES" in the heading thereof, and

(B) in subparagraph (B), by inserting "an additional credit by reason of the change in liability for taxes" after "the allowance of".

(h) EFFECTIVE DATES. —

(1) IN GENERAL. — Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning after December 31, 2022.

(2) MODIFICATION OF FOREIGN TAX CREDIT CARRYBACK AND CARRYFORWARD. — The amendments made by subsection (c) shall apply to taxes paid or accrued in taxable years beginning after December 31, 2022.

(3) TREATMENT OF CERTAIN ASSET DISPOSITIONS. — The amendment made by subsection (f) shall apply to transactions after the date of the enactment of this Act.

(4) REDETERMINATION OF FOREIGN TAXES AND RELATED CLAIMS. —

(A) IN GENERAL. — Except as provided in subparagraph (B), the amendments made by subsection (g) shall take effect on the date which is 60 days after the date of the enactment of this Act.

(B) CERTAIN CHANGES. — The amendments made by subsection (g)(1)(A) shall apply to changes that occur on or after the date which is 60 days after the date of the enactment of this Act.

(i) REGULATIONS. — The Secretary shall prescribe rules providing for the application of subsection (e) of section 904 of the Internal Revenue Code of 1986 (as added by this section), and subsections (f) and (g) of such section, to any amounts carried over under subsection (c) of such section from a taxable year with respect to which such subsection (e) did not apply to a taxable year with respect to which such subsection (e) does apply.

SEC. 138125. FOREIGN OIL AND GAS EXTRACTION INCOME AND FOREIGN OIL RELATED INCOME TO INCLUDE OIL SHALE AND TAR SANDS.

(a) IN GENERAL. — Paragraphs (1)(A) and (2)(A) of section 907(c) are each amended by inserting "(or oil shale or tar sands)" after "oil or gas wells".

(b) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 138126. MODIFICATIONS TO INCLUSION OF GLOBAL INTANGIBLE LOW-TAXED INCOME.

(a) COUNTRY-BY-COUNTRY APPLICATION OF SECTION BASED ON CFC TAXABLE UNITS. — Section 951A is amended by adding at the end the following new subsection:

"(g) COUNTRY-BY-COUNTRY APPLICATION OF SECTION BASED ON CFC TAXABLE UNITS. —

"(1) IN GENERAL. — If any CFC taxable unit of a United States shareholder is a tax resident of (or, in the case of a branch, is located in) a country which is different from the country with respect to which any other CFC taxable unit of such United States shareholder is a tax resident (or, in the case of a branch, is located in) —

"(A) such shareholder's global intangible low-taxed income for purposes of subsection (a) shall be the sum of the amounts of global intangible low-taxed income determined separately with respect to each such country, and

"(B) for purposes of determining such separate amounts of global intangible low-taxed income —

"(i) any reference in subsection (b), (c), or (d) to a controlled foreign corporation of such shareholder shall be treated as reference to a CFC taxable unit of such shareholder, and

"(ii) net CFC tested income, net deemed tangible income return, qualified business asset investment, interest expense described in subsection (b)(2)(B), and such other items and amounts as the Secretary may provide, shall be determined separately with respect to each such country by determining such amounts with respect to each CFC taxable unit of such shareholder which is a tax resident of such country.

"(2) DEFINITIONS. — For purposes of this subsection —

"(A) CFC TAXABLE UNIT. — The term 'CFC taxable unit' means any taxable unit described in clause (ii), (iii), or (iv) of section 904(e)(2)(B), determined —

"(i) by substituting 'Each controlled foreign corporation' for 'Each foreign corporation' in clause (ii) of such section, and

"(ii) without regard to the references to the taxpayer in clauses (iii) and (iv) of such section.

"(B) APPLICATION OF OTHER DEFINITIONS. — Terms used in this subsection which are also used in section 904(e) shall have the same meaning as when used in section 904(e).

"(3) SPECIAL RULES. — For purposes of this subsection —

"(A) APPLICATION OF CERTAIN RULES. — Except as otherwise provided by the Secretary, rules similar to the rules of section 904(e) shall apply.

"(B) ALLOCATION OF GLOBAL INTANGIBLE LOW-TAXED INCOME TO CONTROLLED FOREIGN CORPORATIONS. — Except as otherwise provided by the Secretary, subsection (f)(2) shall be applied separately with respect to each CFC taxable unit.".

(b) REGULATORY AUTHORITY. —

(1) IN GENERAL. — Section 951A, as amended by subsection (a), is amended by adding at the end the following new subsection:

"(h) REGULATIONS. — The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out, or prevent the avoidance of, the purposes of this section, including regulations or guidance which provide for —

"(1) the treatment of property if such property is transferred, or held, temporarily,

"(2) appropriate adjustments to the basis of stock and other ownership interests, and to earnings and profits, to reflect tested losses (whether or not taken into account in determining global intangible low-taxed income),

"(3) rules similar to the rules provided under the regulations or guidance issued under section 904(e)(4),

"(4) other appropriate basis adjustments, and

"(5) appropriate adjustments to be made, and appropriate tax attributes and records to be maintained, separately with respect to CFC taxable units.".

(2) CONFORMING AMENDMENT. — Section 951A(d) is amended —

(A) by striking paragraph (4), and

(B) by redesignating the second paragraph (3) (relating to partnership property) as paragraph (4).

(c) CARRYOVER OF NET CFC TESTED LOSS. —

(1) IN GENERAL. — Section 951A(c) is amended by adding at the end the following new paragraph:

"(3) CARRYOVER OF NET CFC TESTED LOSS. —

"(A) IN GENERAL. — If the amount described in paragraph (1)(B) with respect to any United States shareholder for any taxable year of such United States shareholder (determined after the application of this paragraph with respect to amounts arising in preceding taxable years) exceeds the amount described in paragraph (1)(A) with respect to such shareholder of such taxable year, the amount otherwise described in paragraph (1)(B) with respect to such shareholder for the succeeding taxable year shall be increased by the amount of such excess.

"(B) PROPER ADJUSTMENT IN ALLOCATIONS OF GLOBAL INTANGIBLE LOW-TAXED INCOME TO CONTROLLED FOREIGN CORPORATIONS. — Proper adjustments shall be made in the application of subsection (f)(2)(B) to take into account any decrease in global intangible low-taxed income by reason of the application of subparagraph (A).".

(2) COORDINATION WITH COUNTRY-BY-COUNTRY APPLICATION. — Section 951A(g)(1)(B)(ii), as added by subsection (a), is amended by inserting "any increase determined under subsection (c)(3)(A)," after "interest expense described in subsection (b)(2)(B),".

(3) APPLICATION OF RULES WITH RESPECT TO OWNERSHIP CHANGES. — Section 382(d) is amended by adding at the end the following new paragraph:

"(4) APPLICATION TO CARRYOVER OF NET CFC TESTED LOSS. — The term 'pre-change loss' shall include any excess carried over under section 951A(c)(3) under rules similar to the rules of paragraph (1).".

(d) REDUCTION IN NET DEEMED TANGIBLE INCOME RETURN FOR PURPOSES OF DETERMINING GLOBAL INTANGIBLE LOW-TAXED INCOME. —

(1) IN GENERAL. — Section 951A(b)(2)(A) is amended by striking "10 percent" and inserting "5 percent".

(2) APPLICATION TO ASSETS LOCATED IN POSSESSIONS OF THE UNITED STATES. — Section 951A(b) is amended by adding at the end the following new paragraph:

"(3) APPLICATION TO ASSETS LOCATED IN POSSESSIONS OF THE UNITED STATES. — In the case of any specified tangible property located in a possession of the United States, paragraph (2)(A) and subsection (d) shall be applied by substituting '10 percent' for '5 percent' in paragraph (2)(A).".

(e) INCLUSION OF FOREIGN OIL AND GAS EXTRACTION INCOME IN DETERMINING TESTED INCOME AND LOSS. — Section 951A(c)(2)(A) is amended by inserting "and" at the end of subclause (III), by striking "and" at the end of subclause (IV) and inserting "over", and by striking subclause (V).

(f) COORDINATION WITH OTHER PROVISIONS. — Section 951A(f)(1) is amended by adding at the end the following new subparagraph:

"(C) TREATMENT OF CERTAIN REFERENCES. — Except as otherwise provided by the Secretary, references to section 951 or section 951(a) in sections 959, 961, 962, and such other provisions as the Secretary may identify shall include references to section 951A or section 951A(a), respectively.".

(g) EFFECTIVE DATE. —

(1) IN GENERAL. — Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2022, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.

(2) REGULATORY AUTHORITY AND COORDINATION WITH OTHER PROVISIONS. — The amendments made by subsections (b) and (f) shall apply to taxable years of foreign corporations beginning after the date of the enactment of this Act, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.

(h) NO INFERENCE REGARDING CERTAIN MODIFICATIONS. — The amendments made by subsections (b) and (f) shall not be construed to create any inference with respect to the proper application of any provision of the Internal Revenue Code of 1986 with respect to any taxable year beginning before the taxable years to which such amendments apply.

SEC. 138127. MODIFICATIONS TO DETERMINATION OF DEEMED PAID CREDIT FOR TAXES PROPERLY ATTRIBUTABLE TO TESTED INCOME.

(a) INCREASE IN DEEMED PAID CREDIT. — Section 960(d)(1) is amended by striking "80 percent" and inserting "95 percent (100 percent in the case of tested foreign income taxes paid or accrued to a possession of the United States)".

(b) INCLUSION OF TAXES PROPERLY ATTRIBUTABLE TO TESTED LOSS. —

(1) IN GENERAL. — Section 960(d)(3) is amended to read as follows:

"(3) TESTED FOREIGN INCOME TAXES. — For purposes of paragraph (1), the term 'tested foreign income taxes' means, with respect to any domestic corporation which is a United States shareholder of a controlled foreign corporation —

"(A) the foreign income taxes paid or accrued by such foreign corporation which are properly attributable to the tested income or tested loss of such foreign corporation taken into account by such domestic corporation under section 951A, and

"(B) solely to the extent provided in regulations prescribed by the Secretary, the foreign income taxes (as so defined) paid or accrued by a foreign corporation (other than a controlled foreign corporation) which owns, directly or indirectly, 80 percent or more (by vote or value) of the stock in such domestic corporation but only if —

"(i) such foreign income taxes are properly attributable to amounts of such controlled foreign corporation taken into account in determining tested income or tested loss under section 951A(c)(2), and

"(ii) no credit is allowed, in whole or in part, for such foreign taxes in any foreign jurisdiction.".

(2) CONFORMING AMENDMENT. — Section 960(d)(2)(B) is amended by striking "the aggregate amount described in section 951A(c)(1)(A)" and inserting "the net CFC tested income (as defined in section 951A(c)(1))".

(c) APPLICATION OF FOREIGN TAX CREDIT LIMITATION TO AMOUNTS INCLUDED UNDER SECTION 78. —

(1) Section 904(d)(2) is amended by redesignating subparagraph (K) as subparagraph (L) and by inserting after subparagraph (J) the following new subparagraph:

"(K) AMOUNTS INCLUDIBLE UNDER SECTION 78. — Any amount includible in gross income under section 78 shall be treated as income in the same separate category as the related foreign taxes deemed paid.".

(2) Section 904(d)(3)(G) is amended by striking the second sentence and inserting the following: "Any amount included in gross income under section 78 shall not be treated as a dividend.".

(d) DISALLOWANCE OF FOREIGN TAX CREDIT AND DEDUCTION WITH RESPECT TO DISTRIBUTIONS OF PREVIOUSLY TAXED GLOBAL INTANGIBLE LOW-TAXED INCOME. — Section 960(d) is amended by adding at the end the following new paragraph:

"(4) DISALLOWANCE OF FOREIGN TAX CREDIT AND DEDUCTION WITH RESPECT TO DISTRIBUTIONS OF PREVIOUSLY TAXED GLOBAL INTANGIBLE LOW-TAXED INCOME. — No credit shall be allowed under section 901 for 5 percent of any foreign income taxes paid or accrued (or treated as paid or accrued) with respect to any amount excluded from gross income under section 959(a) by reason of an inclusion in gross income under section 951A(a).".

(e) EFFECTIVE DATE. —

(1) IN GENERAL. — Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2022, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.

(2) SUBSECTIONS (c) AND (d). — The amendments made by subsections (c) and (d) shall apply to taxable years of foreign corporations beginning after the date of the enactment of this Act, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.

(f) NO INFERENCE REGARDING CERTAIN MODIFICATIONS. — The amendments made by subsections (c) and (d) shall not be construed to create any inference with respect to the proper application of any provision of the Internal Revenue Code of 1986 with respect to any taxable year beginning before the taxable years to which such amendments apply.

SEC. 138128. DEDUCTION FOR FOREIGN SOURCE PORTION OF DIVIDENDS LIMITED TO CONTROLLED FOREIGN CORPORATIONS, ETC.

(a) IN GENERAL. — Section 245A is amended —

(1) in subsections (a), (c)(1), and (c)(2), by striking "specified 10-percent owned foreign corporation" each place it appears and inserting "controlled foreign corporation", and

(2) by striking subsection (b).

(b) MODIFICATIONS RELATED TO DETERMINATION OF STATUS AS A CONTROLLED FOREIGN CORPORATION. —

(1) Subpart F of part III of subchapter N of chapter 1 is amended by inserting after section 951A the following new section:

"SEC. 951B. AMOUNTS INCLUDED IN GROSS INCOME OF FOREIGN CONTROLLED UNITED STATES SHAREHOLDERS.

"(a) IN GENERAL. — In the case of any foreign controlled United States shareholder of a foreign controlled foreign corporation —

"(1) this subpart (other than sections 951A, 951(b), 957, and 965) shall be applied with respect to such shareholder (separately from, and in addition to, the application of this subpart without regard to this section) —

"(A) by substituting 'foreign controlled United States shareholder' for 'United States shareholder' each place it appears therein, and

"(B) by substituting 'foreign controlled foreign corporation' for 'controlled foreign corporation' each place it appears therein, and

"(2) sections 951A and 965 shall be applied with respect to such shareholder —

"(A) by treating each reference to 'United States shareholder' in such sections as including a reference to such shareholder, and

"(B) by treating each reference to 'controlled foreign corporation' in such sections as including a reference to such foreign controlled foreign corporation.

"(b) FOREIGN CONTROLLED UNITED STATES SHAREHOLDER. — For purposes of this section, the term 'foreign controlled United States shareholder' means, with respect to any foreign corporation, any United States person which would be a United States shareholder with respect to such foreign corporation if —

"(1) section 951(b) were applied by substituting 'more than 50 percent' for '10 percent or more', and

"(2) section 958(b) were applied without regard to paragraph (4) thereof.

"(c) FOREIGN CONTROLLED FOREIGN CORPORATION. — For purposes of this section, the term 'foreign controlled foreign corporation' means a foreign corporation, other than a controlled foreign corporation, which would be a controlled foreign corporation if section 957(a)(1) were applied —

"(1) by substituting 'foreign controlled United States shareholders' for 'United States shareholders', and

"(2) by substituting 'section 958(b) (other than paragraph (4) thereof)' for 'section 958(b)'.

"(d) REGULATIONS. — The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or other guidance —

"(1) to treat a foreign controlled United States shareholder or a foreign controlled foreign corporation as a United States shareholder or as a controlled foreign corporation, respectively, for purposes of provisions of this title other than this subpart, and

"(2) to prevent the avoidance of the purposes of this section.".

(2) Section 957(a) is amended to read as follows:

"(a) CONTROLLED FOREIGN CORPORATION. — For purposes of this title —

"(1) IN GENERAL. — The term 'controlled foreign corporation' means any foreign corporation if more than 50 percent of —

"(A) the total combined voting power of all classes of stock of such corporation entitled to vote, or

"(B) the total value of the stock of such corporation, is owned (within the meaning of section 958(a)), or is considered as owned by applying the rules of ownership of section 958(b), by United States shareholders on any day during the taxable year of such foreign corporation.

"(2) ELECTION TO TREAT A FOREIGN CORPORATION AS A CONTROLLED FOREIGN CORPORATION FOR CERTAIN PURPOSES. —

"(A) IN GENERAL. — In the case of a foreign corporation with respect to which an election is in effect under this paragraph, such foreign corporation shall be treated as a controlled foreign corporation for purposes of this title.

"(B) EXCEPTIONS. — Notwithstanding any other provision of this paragraph —

"(i) COORDINATION WITH RULES FOR FOREIGN CONTROLLED UNITED STATES SHAREHOLDERS OF FOREIGN CONTROLLED FOREIGN CORPORATIONS. —

"(I) IN GENERAL. — Except as provided in subclause (II), a foreign corporation shall not be treated as a controlled foreign corporation by reason of this paragraph for purposes of section 951B(c).

"(II) EXCEPTION FOR UNITED STATES SHAREHOLDERS. — Subclause

(I) shall not apply with respect to any United States shareholder of such foreign corporation.

"(ii) SECRETARIAL AUTHORITY. — A foreign corporation shall not be treated as a controlled foreign corporation by reason of this paragraph for purposes of any provision of this title if the Secretary determines that treatment of such foreign corporation as a controlled foreign corporation for purposes of such provision would be inconsistent with the purposes of this subchapter.

"(C) ELECTION. —

"(i) BY WHOM. — An election under subparagraph (A) shall be effective only if made by the foreign corporation and by all United States shareholders of such foreign corporation (determined as of the time of such election by such foreign corporation).

"(ii) WITH RESPECT TO WHOM. — Any election under this paragraph, once effective, shall apply to such foreign corporation and to all United States shareholders of such foreign corporation (including any person who becomes a United States shareholder of such foreign corporation after such election takes effect).

"(iii) TIME, MANNER, ETC. — The election under this paragraph shall be made at such time and in such manner as the Secretary may provide and, once effective, may be revoked only with the consent of the Secretary.

"(D) REGULATIONS. — The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this paragraph, including regulations or other guidance for the application of this paragraph to an acquisition described in section 381(a) with respect to any corporation to which an election under this paragraph applies.".

(3) Section 958(b) is amended —

(A) by inserting after paragraph (3) the following:

"(4) Subparagraphs (A), (B), and (C) of section 318(a)(3) shall not be applied so as to consider a United States person as owning stock which is owned by a person who is not a United States person.", and

(B) by striking "Paragraph (1)" in the last sentence and inserting "Paragraphs (1) and (4)".

(4) Section 959(b) is amended —

(A) by striking "the earnings and profits of a controlled foreign corporation" and inserting "the earnings and profits of a foreign corporation",

(B) by striking "another controlled foreign corporation" and inserting "a controlled foreign corporation",

(C) by striking "such other controlled foreign corporation" and inserting "such controlled foreign corporation", and

(D) by striking "of such United States shareholder in the controlled foreign corporation" and inserting "of such United States shareholder in the foreign corporation".

(5) The table of sections for subpart F of part III of subchapter N of chapter 1 is amended by inserting after the item relating to section 951A the following new item:

"Sec. 951B. Amounts included in gross income of foreign controlled United States shareholders.".

(c) CERTAIN OTHER MODIFICATIONS. —

(1) Section 245A(e)(4) is amended by striking "an amount received" and all that follows through "for which the controlled foreign corporation received a deduction" and inserting "any dividend received from a controlled foreign corporation for which such controlled foreign corporation received a deduction".

(2) Section 245A(g) is amended to read as follows:

"(g) REGULATIONS. — The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or other guidance for —

"(1) the treatment of United States shareholders owning stock of a controlled foreign corporation through a partnership, and

"(2) the denial of all or a portion of the deduction under this section with respect to dividends received from foreign corporations in situations in which —

"(A) any portion of the dividend is out of earnings and profits arising from transactions with related parties which —

"(i) do not occur in the ordinary course of a trade or business, and

"(ii) occur on or after January 1, 2018, and during a taxable year to which section 951A did not apply, or

"(B) a transfer or issuance of stock on or after January 1, 2018, results in a reduction in a United States shareholder's pro rata share of a controlled foreign corporation's subpart F income or tested income (as defined in section 951A).".

(d) CONFORMING AMENDMENTS. —

(1) Section 91 is amended —

(A) in subsection (a), by striking "specified 10-percent owned foreign corporation (as defined in section 245A)" and inserting "controlled foreign corporation", and

(B) in subsection (e), by striking "specified 10-percent owned foreign corporation" and inserting "controlled foreign corporation".

(2)(A) The heading of section 245A is amended by striking "SPECIFIED 10-PERCENT OWNED FOREIGN CORPORATIONS" and inserting "CONTROLLED FOREIGN CORPORATIONS".

(B) The item relating to section 245A in the table of sections for part VIII of subchapter B of chapter 1 is amended by striking "specified 10-percent owned foreign corporations" and inserting "controlled foreign corporations".

(3) Section 246(c)(5) is amended —

(A) in subparagraph (B), by striking "specified 10-percent owned foreign corporation" each place it appears and inserting "controlled foreign corporation", and

(B) by striking "SPECIFIED 10-PERCENT OWNED FOREIGN CORPORATION" in the heading and inserting "CONTROLLED FOREIGN CORPORATION".

(4) Section 904 is amended —

(A) in subsection (b)(4), by striking "specified 10-percent owned foreign corporation" both places it appears and inserting "controlled foreign corporation", and

(B) in subsection (d)(2)(E) —

(i) in clause (i)(I), by striking "(as defined in section 245A(b))", and

(ii) by redesignating clause (ii) as clause (iii) and by inserting after clause (i) the following new clause:

"(ii) SPECIFIED 10-PERCENT OWNED FOREIGN CORPORATION. — For purposes of this subparagraph —

"(I) IN GENERAL. — The term 'specified 10-percent owned foreign corporation' means any foreign corporation with respect to which any domestic corporation is a United States shareholder with respect to such corporation.

"(II) EXCLUSION OF PASSIVE FOREIGN INVESTMENT COMPANIES. — Such term shall not include any corporation which is a passive foreign investment company (as defined in section 1297) with respect to the shareholder and which is not a controlled foreign corporation.".

(5) Section 909(b) is amended by striking "(as defined in section 245A(b) without regard to paragraph (2) thereof)" and inserting "(as defined in section 904(d)(2)(E)(ii) without regard to subclause (II) thereof)".

(6) Section 961(d) is amended —

(A) by striking "specified 10-percent owned foreign corporation (as defined in section 245A)" and inserting "controlled foreign corporation", and

(B) by striking "SPECIFIED 10-PERCENT OWNED FOREIGN CORPORATION" in the heading and inserting "CONTROLLED FOREIGN CORPORATION".

(e) EFFECTIVE DATES. —

(1) IN GENERAL. — Except as otherwise provided in this subsection, the amendments made by this section shall apply to distributions made after the date of the enactment of this Act.

(2) MODIFICATIONS RELATED TO DETERMINATION OF STATUS AS A CONTROLLED FOREIGN CORPORATION. — The amendments made by subsection

(b) shall apply to taxable years of foreign corporations beginning after the date of the enactment of this Act, and taxable years of United States persons in which or with which such taxable years of foreign corporations end.

(f) NO INFERENCE REGARDING CERTAIN MODIFICATIONS. — The amendments made by subsections (b)(1), (b)(3), (b)(5), and (c) shall not be construed to create any inference with respect to the proper application of any provision of the Internal Revenue Code of 1986 with respect to distributions made, or taxable years beginning, respectively, before the distributions or taxable years, respectively, to which such amendments apply.

SEC. 138129. LIMITATION ON FOREIGN BASE COMPANY SALES AND SERVICES INCOME.

(a) FOREIGN BASE COMPANY SALES INCOME. — Section 954(d)(2) is amended to read as follows:

"(2) LIMITATION AND REGULATORY AUTHORITY. —

"(A) IN GENERAL. — For purposes of this subsection, the term 'related person' shall not include any person unless such person is —

"(i) a taxable unit which is a tax resident of (or, in the case of a branch, is located in) the United States, or

"(ii) is subject to tax under this chapter by reason of such person's activities in the United States.

"(B) REGULATIONS. — The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection (and subsection (e)), including —

"(i) regulations or other guidance providing for the proper application of subparagraph (A) in the case of a transaction (or series of transactions) in which a person described in subparagraph (A) is a party, and

"(ii) regulations or other guidance providing that, for purposes of determining foreign base company sales income in situations in which any activity (including a transaction) or the legal status of a passthrough entity or branch held directly or indirectly by a controlled foreign corporation and that is located outside the country in which the controlled foreign corporation is a tax resident, the pass-through entity or branch shall be treated as a wholly owned subsidiary of the controlled foreign corporation.

"(C) CERTAIN TERMS. — Any term used in this paragraph which is also used in section 904(e) shall have the same meaning as when used in such section.".

(b) FOREIGN BASE COMPANY SERVICES INCOME. — Section 954(e)(1)(A) is amended by striking "subsection (d)(3)" and inserting "subsection (d)".

(c) CERTAIN OTHER MODIFICATIONS. —

(1) Section 78 is amended by striking ", (b),".

(2)(A) Section 951(a) is amended to read as follows:

"(a) AMOUNTS INCLUDED. —

"(1) IN GENERAL. — If a foreign corporation is a controlled foreign corporation for any taxable year, every person who is a United States shareholder of such corporation, and who owns (within the meaning of section 958(a)) stock in such corporation at any time during such taxable year of such corporation, shall include in such shareholder's gross income for such shareholder's taxable year in which or with which such taxable year of such corporation ends —

"(A) his pro rata share (determined under paragraph (2)) of the corporation's subpart F income for such year, and

"(B) if such shareholder owns (within the meaning of section 958(a)) stock of such foreign corporation as of the close of the last relevant day of such foreign corporation's taxable year, the amount determined under section 956 with respect to such shareholder for such year (but only to the extent not excluded from gross income under section 959(a)(2)).

"(2) PRO RATA SHARE OF SUBPART F INCOME. — In the case of any United States shareholder with respect to a foreign corporation, the pro rata share referred to in paragraph (1)(A) is the sum of —

"(A) if such shareholder owns (within the meaning of section 958(a)) stock of such foreign corporation as of the close of the last relevant day of such foreign corporation's taxable year, such shareholder's general pro rata share determined under paragraph (3), plus

"(B) if such shareholder owns (within the meaning of section 958(a)) stock of such foreign corporation during such taxable year but does not own (within the meaning of section 958(a)) such stock as of the close of such last relevant day, such shareholder's nontaxed current dividend share determined under paragraph (4).

"(3) GENERAL PRO RATA SHARE. —

"(A) IN GENERAL. — In the case of any United States shareholder with respect to a foreign corporation, the general pro rata share determined under this paragraph is the excess (if any) of —

"(i) the pro rata current earnings percentage of the amount which bears the same ratio to such corporation's subpart F income for the taxable year (reduced by the aggregate nontaxed current dividend shares determined under paragraph (4) with respect to such shareholder or any other United States shareholder) as the part of such year during which such corporation is a controlled foreign corporation bears to the entire year, over

"(ii) the lesser of —

"(I) the amount of any pre-holding period dividends with respect to stock of such foreign corporation which such shareholder owns (within the meaning of section 958(a)) as of the close of the last relevant day of such foreign corporation's taxable year, or

"(II) the amount which bears the same ratio to the subpart F income of such corporation for the taxable year (reduced by the aggregate nontaxed current dividend shares determined under paragraph (4) with respect to such shareholder or any other United States shareholder) as the part of such year during which such shareholder did not own (within the meaning of section 958(a)) such stock bears to the entire year.

"(B) PRO RATA CURRENT EARNINGS PERCENTAGE. — For purposes of subparagraph (A)(i), the term 'pro rata current earnings percentage' means, in the case of any United States shareholder with respect to a foreign corporation for any taxable year of such foreign corporation, the ratio (expressed as a percentage) of —

"(i) the amount which would have been distributed with respect to the stock which such shareholder owns (within the meaning of section 958(a)) in such corporation if on the last relevant day of such taxable year it had distributed its earnings and profits for such taxable year (computed as of the close of such taxable year without diminution by reason of any distributions made during such taxable year), divided by

"(ii) such corporation's earnings and profits for such taxable year (as so computed).

"(C) PRE-HOLDING PERIOD DIVIDENDS. — For purposes of subparagraph (A)(ii)(I), the term 'pre-holding period dividends' means, in the case of any United States shareholder with respect to a foreign corporation for any taxable year of such foreign corporation, dividends which are —

"(i) made out of such corporation's earnings and profits for the taxable year (other than nontaxed current dividends as defined in paragraph (4)(C)), and

"(ii) received —

"(I) by any other United States person with respect to stock of such foreign corporation which such shareholder owns (within the meaning of section 958(a)) as of the close of the last relevant day of such foreign corporation's taxable year, and

"(II) while such foreign corporation was a controlled foreign corporation and before such shareholder owned (within the meaning of section 958(a)) such stock.

"(4) NONTAXED CURRENT DIVIDEND SHARE. —

"(A) IN GENERAL. — In the case of any United States shareholder with respect to a foreign corporation, the nontaxed current dividend share determined under this paragraph is the nontaxed current dividend percentage of the subpart F income of such foreign corporation for the taxable year.

"(B) NONTAXED CURRENT DIVIDEND PERCENTAGE. — For purposes of this paragraph, the term 'nontaxed current dividend percentage' means, in the case of any United States shareholder with respect to a foreign corporation for any taxable year of such foreign corporation, the ratio (expressed as a percentage) of —

"(i) the amount of nontaxed current dividends with respect to such taxable year received with respect to the stock of such foreign corporation which such shareholder owns (within the meaning of section 958(a)) at the time of the dividend on a day in which such corporation is a controlled foreign corporation, divided by

"(ii) such foreign corporation's earnings and profits for such taxable year (computed as of the close of such taxable year without diminution by reason of any distributions made during such taxable year).

"(C) NONTAXED CURRENT DIVIDENDS. — For purposes of this paragraph, the term 'nontaxed current dividends' means the portion of any amount received with respect to stock to the extent such amount (without regard to amounts included in the gross income of a United States shareholder for the taxable year by reason of this subpart) —

"(i) would result in a dividend out of the corporation's earnings and profits for the taxable year (including a dividend under section 1248 attributable to earnings and profits for the taxable year), and

"(ii) either —

"(I) would give rise to a deduction under section 245A(a), or

"(II) in the case of a dividend paid directly or indirectly to a controlled foreign corporation with respect to stock owned by the shareholder within the meaning of section 958(a)(2), would not result in subpart F income with respect to such controlled foreign corporation by reason of subsection (b)(4), (c)(3), or (c)(6) of section 954.

"(5) LAST RELEVANT DAY OF TAXABLE YEAR OF A CONTROLLED FOREIGN CORPORATION. — For purposes of this subsection, the term 'last relevant day' means, with respect to any taxable year of a foreign corporation, the last day of such taxable year on which such corporation is a controlled foreign corporation.

"(6) REGULATIONS. — The Secretary may prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance —

"(A) to treat a partnership as an aggregate of its partners,

"(B) to provide rules allowing a foreign corporation to close its taxable year upon a change in ownership, and

"(C) to treat a distribution followed by an issuance of stock to a shareholder not subject to tax under this chapter in the same manner as an acquisition of stock.".

(B) Section 951A(a) is amended to read as follows:

"(a) IN GENERAL. — If a foreign corporation is a controlled foreign corporation for any taxable year, every person who is a United States shareholder of such corporation, and who owns (within the meaning of section 958(a)) stock in such corporation at any time during such taxable year of such corporation, shall include in such shareholder's gross income for such shareholder's taxable year in which or with which such taxable year of such corporation ends, such shareholder's global intangible low-taxed income for such taxable year.".

(C) Section 951A(e) is amended to read as follows:

"(e) DETERMINATION OF PRO RATA SHARES. — For purposes of this section, the pro rata shares referred to in subsections (b), (c)(1)(A), and (c)(1)(B), respectively, shall be determined under rules similar to the rules of section 951(a)(2) and shall be taken into account in the taxable year of the United States shareholder in which or with which the taxable year of the controlled foreign corporation ends.".

(D) Section 953(c)(5)(A)(i) is amended —

(i) in subclause (I), by adding "and" at the end,

(ii) in subclause (II) —

(I) by striking "on the last day of the taxable year" and inserting "during the taxable year", and

(II) by striking "and" at the end and inserting "or", and

(iii) by striking subclause (III).

(3) Section 959 is amended by adding at the end the following:

"(g) REGULATIONS. — The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section.".

(4) Section 961(b) is amended by inserting after the first sentence the following: "The Secretary shall prescribe such other reductions to basis as are necessary or appropriate to carry out the purposes of this section.".

(5) Section 961(c) is amended —

(A) by striking "BASIS ADJUSTMENTS IN" in the heading of such subsection and inserting "APPLICATION OF RULES TO", and

(B) by striking "then adjustments similar to" and all that follows in such subsection and inserting "then rules similar to the rules of subsections (a) and (b) shall apply to —

"(1) such stock,

"(2) stock in any other controlled foreign corporation by reason of which the United States shareholder is considered under section 958(a)(2) as owning the stock described in paragraph (1), and

"(3) property by reason of which the United States shareholder is considered as owning stock described in paragraph (1) or (2), but only for purposes of determining the amount included under section 951 in the gross income of such United States shareholder (or any other United States shareholder who acquires from any person any portion of the interest of such United States shareholder by reason of which such shareholder was treated as owning such stock, but only to the extent of such portion, and subject to such proof of identity of such interest as the Secretary may prescribe by regulations). The preceding sentence shall not apply with respect to any stock or property to which subsection (a) or (b) applies.".

(d) EFFECTIVE DATES. — The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2021, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.

(e) NO INFERENCE REGARDING CERTAIN MODIFICATIONS. — The amendments made by paragraphs (1) and

(2) of subsection (c) shall not be construed to create any inference with respect to the proper application of any provision of the Internal Revenue Code of 1986 with respect to any taxable year beginning before the taxable years to which such amendments apply.

Subpart D — Inbound International Provisions

SEC. 138131. MODIFICATIONS TO BASE EROSION AND ANTIABUSE TAX.

(a) MODIFICATIONS TO BASE EROSION MINIMUM TAX AMOUNT. —

(1) MODIFICATION OF RATES. — Section 59A(b)(1)(A) is amended by striking "10 percent (5 percent in the case of taxable years beginning in calendar year 2018)" and inserting "the applicable percentage".

(2) BASE EROSION MINIMUM TAX AMOUNT DETERMINED WITHOUT REGARD TO CREDITS. — Section 59A(b)(1)(B) is amended to read as follows:

"(B) an amount equal to the regular tax liability (as defined in section 26(b)) of the taxpayer for the taxable year.".

(3) APPLICABLE PERCENTAGE. — Section 59A(b)(2) is amended to read as follows:

"(2) APPLICABLE PERCENTAGE. — For purposes of this section, the term 'applicable percentage' means —

"(A) in the case of any taxable year beginning after December 31, 2021, and before January 1, 2023, 10 percent,

"(B) in the case of any taxable year beginning after December 31, 2022, and before January 1, 2024, 12.5 percent,

"(C) in the case of any taxable year beginning after December 31, 2023, 15 percent, and

"(D) in the case of any taxable year beginning after December 31, 2024, 18 percent.".

(4) TAXPAYERS SUBJECT TO RULES FOR BANKS AND SECURITIES DEALERS. — Section 59A(b)(3)(B) is amended to read as follows:

"(B) TAXPAYER DESCRIBED. — A taxpayer is described in this subparagraph if such taxpayer is —

"(i) a bank (as defined in section 585(a)(2)),

"(ii) a securities dealer registered under section 15(a) of the Securities Exchange Act of 1934, or

"(iii) a member of an affiliated group (as defined in section 1504(a)(1), determined without regard to section 1504(b)(3)) which includes any person described in clause (i) or (ii).".

(5) TERMINATION OF INCREASED RATE FOR BANKS AND SECURITIES DEALERS. — Section 59A(b)(3) is amended by adding at the end the following new subparagraph:

"(C) TERMINATION. — Subparagraph (A) shall not apply to any taxable year beginning after December 31, 2024.".

(6) GENERAL BUSINESS CREDIT ALLOWED AGAINST BASE EROSION AND ANTI-ABUSE TAX. — Section 38(c)(1) is amended by striking "the tax imposed by section 55" and inserting "the taxes imposed by sections 55 and 59A".

(7) CONFORMING AMENDMENTS. —

(A) Section 59A(b)(3)(A) is amended by striking "paragraphs (1)(A) and (2)(A) shall each" and inserting "paragraph (2) shall".

(B) Section 59A(b) is amended by striking paragraph (4).

(b) MODIFICATION OF RULES FOR DETERMINING MODIFIED TAXABLE INCOME. —

(1) IN GENERAL. — Section 59A(c) is amended to read as follows:

"(c) MODIFIED TAXABLE INCOME. — For purposes of this section —

"(1) IN GENERAL. — The term 'modified taxable income' means the taxable income of the taxpayer computed under this chapter for the taxable year with the following adjustments:

"(A) BASE EROSION PAYMENTS. — Taxable income shall be determined without regard to any base erosion tax benefit, including for purposes of determining the adjusted basis of property described in subsection (d)(2).

"(B) ADJUSTMENTS WITH RESPECT TO COST OF GOODS SOLD. — Cost of goods sold shall be determined without regard to any base erosion payment described in subparagraph (A) or (B) of subsection (d)(5).

"(C) NET OPERATING LOSSES. — The net operating loss deduction for the taxable year under section 172 shall be determined —

"(i) by substituting 'modified taxable income (as determined under section 59A(c)(1) without regard to subparagraph (A) thereof)' for 'taxable income' in section 172(a)(2)(B)(ii)(I),

"(ii) by determining any net operating loss arising in any taxable year beginning after December 31, 2021, without regard to any base erosion tax benefit (determined with respect to each such taxable year), and

"(iii) by making appropriate adjustments in the application of section 172(b)(2) to take into account clauses (i) and (ii) of this subparagraph.

"(D) APPLICATION OF CERTAIN OTHER ADJUSTMENTS. — Except as otherwise provided by the Secretary, rules similar to the rules of subsections (g) and (h) of section 59 shall apply.

"(2) BASE EROSION TAX BENEFIT. — The term 'base erosion tax benefit' means —

"(A) any deduction allowed under this chapter for the taxable year with respect to any base erosion payment described in subsection (d)(1),

"(B) in the case of a base erosion payment described in subsection (d)(2), any deduction allowed under this chapter for the taxable year for depreciation (or amortization in lieu of depreciation) with respect to the property acquired with such payment,

"(C) in the case of a base erosion payment described in subsection (d)(3) —

"(i) any reduction under section 803(a)(1)(B) in the gross amount of premiums and other consideration on insurance and annuity contracts for premiums and other consideration arising out of indemnity insurance, and

"(ii) any deduction under section 832(b)(4)(A) from the amount of gross premiums written on insurance contracts during the taxable year for premiums paid for reinsurance, and

"(D) in the case of a base erosion payment described in subsection (d)(4), any reduction in gross receipts with respect to such payment in computing gross income of the taxpayer for the taxable year for purposes of this chapter.".

(2) CERTAIN PAYMENTS WITH RESPECT TO INVENTORY TREATED AS BASE EROSION PAYMENTS. — Section 59A(d) is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph:

"(5) CERTAIN PAYMENTS WITH RESPECT TO INVENTORY. —

"(A) INDIRECT COSTS INCLUDED IN INVENTORY UNDER SECTION 263A. — Such term shall also include any amount paid or incurred by the taxpayer to a foreign person which is a related party of the taxpayer if such amount is described in paragraph (2)(B) of section 263A(a) and required to be included in inventory costs of the taxpayer under paragraph (1)(A) of such section.

"(B) CERTAIN COSTS OF FOREIGN RELATED PARTIES. — Such term shall also include so much of any amount paid or incurred by the taxpayer to a foreign person which is a related party of the taxpayer in connection with the acquisition by the taxpayer from such foreign person of property which is inventory in the hands of the taxpayer as exceeds the sum of —

"(i) the direct costs of such property in the hands of such foreign person, plus

"(ii) so much of the costs described in section 263A(a)(2)(B) with respect to such property in the hands of such foreign person as the taxpayer demonstrates to the satisfaction of the Secretary are attributable to amounts —

"(I) paid or incurred by such foreign person to a United States person or a person which is not a related party of the taxpayer, or

"(II) otherwise subject to the tax imposed by this chapter.

"(C) APPLICATION TO RELATED-PARTY TRANSACTIONS. — In the case of direct costs otherwise described in clause (i) of subparagraph (B) which are paid or incurred by the foreign person referred to in such clause to another foreign person which is a related party of the taxpayer, such costs shall be taken into account under such clause only to the extent that the taxpayer demonstrates to the satisfaction of the Secretary that such costs are attributable to amounts —

"(i) paid or incurred (directly or indirectly) to a United States person or a person which is not a related party of the taxpayer, or

"(ii) otherwise subject to the tax imposed by this chapter.

"(D) SAFE HARBOR WITH RESPECT INDIRECT COSTS OF FOREIGN RELATED PARTIES. — In the case of a taxpayer which elects the application of this subparagraph (at such time, in such manner, and with respect to such inventory property, as the Secretary may provide), the amount described in subparagraph (B)(ii) with respect to such property shall be treated for purposes of this section as being equal to 20 percent of the amount paid or incurred by the taxpayer to the related party of the taxpayer in connection with the acquisition of such property.

"(E) APPLICATION OF CERTAIN RULES. — Rules similar to the rules of subparagraphs (B) and (C) of subsection (i)(1) shall apply for purposes of determining whether any amount is treated as subject to the tax imposed by this chapter for purposes of subparagraph (B) or (C) of this paragraph.".

(3) EXPANSION AND CONSOLIDATION OF RULES TO EXEMPT CERTAIN PAYMENTS FROM TREATMENT AS BASE EROSION PAYMENTS. —

(A) IN GENERAL. — Section 59A is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection:

"(i) CERTAIN PAYMENT NOT TREATED AS BASE EROSION PAYMENTS. —

"(1) EXCEPTION FOR PAYMENTS ON WHICH TAX IS IMPOSED. —

"(A) IN GENERAL. — An amount shall not be treated as a base erosion payment if tax is imposed by this chapter with respect to such amount (other than by this section).

"(B) TREATMENT OF CERTAIN DEDUCTIONS. — For purposes of subparagraph (A), tax shall be treated as imposed by this chapter without regard to any deduction allowed under part VIII of subchapter B.

"(C) APPLICATION OF CERTAIN RULES. — The amount not treated as a base erosion payment by reason of this paragraph shall be determined under rules similar to the rules of section 163(j)(5) (as in effect before the date of the enactment of Public Law 115-97).

"(2) EXCEPTION FOR CERTAIN PAYMENTS SUBJECT TO SUFFICIENT FOREIGN TAX. —

"(A) IN GENERAL. — An amount shall not be treated as a base erosion payment if the taxpayer establishes to the satisfaction of the Secretary that such amount was not made to a foreign person which is a related party of the taxpayer that is subject to an effective rate of foreign income tax (as defined in section 904(d)(2)(F)) which is not less than the lesser of —

"(i) 15 percent, or

"(ii) the applicable percentage in effect under subsection (b)(2) (determined without regard to subsection (b)(3)) for the taxable year in which such amount is paid or accrued.

"(B) CERTAIN PAYMENTS TO RELATED PARTIES. — To the extent provided by the Secretary in regulations, an amount paid to a foreign person which is a related party of the taxpayer shall be treated as paid to another foreign person which is a related party of the taxpayer if such second foreign person is subject to an effective rate of foreign income tax (as defined in section 904(d)(2)(F)) which is less than the lesser of 15 percent or the percentage described in subparagraph (A)(ii), to the extent the amount so paid directly or indirectly funds a payment to such second foreign person.

"(C) DETERMINATION ON BASIS OF APPLICABLE FINANCIAL STATEMENTS. — Except as otherwise provided by the Secretary under subparagraph (D), the effective rate of foreign income tax with respect to any amount may be established on the basis of applicable financial statements (as defined in section 451(b)(3)).

"(D) REGULATIONS. — The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this paragraph, including regulations or other guidance providing procedures for determining the effective rate of foreign income tax to which any amount is subject. Such procedures may require that any transaction or series of transactions among multiple parties be recharacterized as one or more transactions directly among any 2 or more of such parties where the Secretary determines that such recharacterization is appropriate to carry out, or prevent avoidance of, the purposes of this section.

"(3) EXCEPTION FOR CERTAIN AMOUNTS WITH RESPECT TO SERVICES. — Subsections (d)(1) and (d)(5)(A) shall not apply to so much of any amount paid or accrued by a taxpayer for services as does not exceed the total services cost of such services. The preceding sentence shall not apply unless such services meet the requirements for eligibility for use of the services cost method under section 482 (determined without regard to the requirement that the services not contribute significantly to fundamental risks of business success or failure).".

(B) CONFORMING AMENDMENT. — Section 59A(d), as amended by paragraph (2), is amended by striking paragraph (6).

(c) TERMINATION OF EXEMPTION FROM BASE EROSION AND ANTI-ABUSE TAX FOR TAXPAYERS WITH LOW BASE EROSION PERCENTAGE. — Section 59A(e)(1)(C) is amended by striking "the base erosion percentage (as determined under subsection (c)(4))" and inserting "in the case of any taxable year beginning before January 1, 2024, the base erosion percentage (as determined under subsection (c)(4) as in effect before the date of the enactment of the Act enacted during the 117th Congress which is entitled 'An Act to provide for reconciliation pursuant to title II of S. Con. Res. 14.')".

(d) TREATMENT OF APPLICABLE TAXPAYERS. — Section 59A(e) is amended by adding at the end the following new paragraph:

"(4) CONTINUATION OF TREATMENT AS APPLICABLE TAXPAYER. — If a taxpayer is an applicable taxpayer with respect to any taxable year beginning after December 31, 2021 (other than by reason of this paragraph), such taxpayer (and any successor of such taxpayer) shall be an applicable taxpayer with respect to each of the 10 succeeding taxable years.".

(e) OTHER MODIFICATIONS. —

(1) Section 59A(b)(1) is amended by striking "Except as provided in paragraphs (2) and (3), the" and inserting "The".

(2) Section 59A(h)(2)(B) is amended by striking "section 6038B(b)(2)" and inserting "section 6038A(b)(2)".

(3) Section 59A(j)(2), as redesignated by subsection (b), is amended by striking "subsection (g)(3)" and inserting "subsection (h)(3)".

(f) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

Subpart E — Other Business Tax Provisions

SEC. 138141. CREDIT FOR CLINICAL TESTING OF ORPHAN DRUGS LIMITED TO FIRST USE OR INDICATION.

(a) IN GENERAL. — Section 45C(b)(2)(B) is amended to read as follows:

"(B) TESTING MUST BE RELATED TO FIRST USE OR INDICATION FOR RARE DISEASE OR CONDITION. — Human clinical testing may be taken into account under subparagraph (A) only to the extent such testing is related to the first use or indication with respect to which a drug for a rare disease or condition is designated under section 526 of the Federal Food, Drug, and Cosmetic Act.".

(b) ELIGIBLE TESTING MUST BE CONDUCTED BEFORE APPROVAL FOR ANY USE OR INDICATION. — Section 45C(b)(2)(A)(ii)(II) is amended to read as follows:

"(II) before the first date on which an application (with respect to any use or indication with respect to any disease or condition) with respect to such drug is approved under section 505(c) of such Act or, if the drug is a biological product, before the first date on which a license (with respect to any use or indication with respect to any disease or condition) for such drug is issued under section 351(a) of the Public Health Service Act, and".

(c) ELIGIBILITY OF BIOLOGICAL PRODUCTS. —

(1) IN GENERAL. — Section 45C(b)(2)(A)(i) is amended by inserting "or, if the drug is a biological product, section 351(a)(3) of the Public Health Service Act" before the comma at the end.

(2) CONFORMING AMENDMENT. — Section 45C(b)(2)(A)(ii)(I) is amended by striking "such Act" and inserting "the Federal Food, Drug, and Cosmetic Act".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 138142. MODIFICATIONS TO TREATMENT OF CERTAIN LOSSES.

(a) LOSSES FROM CERTAIN CAPITAL ASSETS WHICH BECOME WORTHLESS. —

(1) WHEN TREATED AS LOSS. — Section 165(g)(1) is amended by striking "on the last day of the taxable year" and inserting "at the time of the identifiable event establishing worthlessness".

(2) TREATMENT OF PARTNERSHIP INDEBTEDNESS. — Section 165(g)(2)(C) is amended by inserting ", by a partnership," after "by a corporation".

(3) TREATMENT OF ABANDONMENT. — Section 165(g) is amended by adding at the end the following new paragraph:

"(4) TREATMENT OF ABANDONMENT. — For purposes of this subsection and subsection (m), abandonment shall be treated as an identifiable event establishing worthlessness.".

(4) TREATMENT OF PARTNERSHIP INTEREST. — Section 165 is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following new subsection:

"(m) WORTHLESS PARTNERSHIP INTEREST. — If any interest in a partnership becomes worthless during the taxable year, the loss resulting therefrom shall, for purposes of this subtitle, be treated as a loss from the sale or exchange of the interest in the partnership at the time of the identifiable event establishing worthlessness.".

(b) DEFERRAL OF LOSSES IN CERTAIN CONTROLLED GROUP CORPORATE LIQUIDATIONS. — Section 267 is amended by adding at the end the following new subsection:

"(h) DEFERRAL OF LOSSES IN CERTAIN CONTROLLED GROUP LIQUIDATIONS. —

"(1) IN GENERAL. — In the case of any specified controlled group liquidation, no loss shall be recognized by any member of the controlled group on any stock or security of the liquidating corporation until all members of the controlled group which received property in connection with such liquidation have transferred such property to one or more persons who are not related (within the meaning of subsection (b)(3) or section 707(b)(1)) to the member which received such property.

"(2) SPECIFIED CONTROLLED GROUP LIQUIDATION. — For purposes this subsection, the term 'specified controlled group liquidation' means, with respect to any corporation which is member of a controlled group, one or more distributions in complete liquidation (within the meaning of section 346) of such corporation or any other transfer (including any series of transfers) of property of such corporation if any stock or security of such corporation becomes worthless in connection with such transfer.

"(3) REGULATIONS. — The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including to apply the principles of this subsection to liquidating corporation stock or securities owned by a corporation indirectly through 1 or more partnerships.".

(c) CROSS REFERENCE. — Section 331(c) is amended —

(1) by striking "CROSS REFERENCE" and all that follows through "For general rule" and inserting the following: "CROSS REFERENCE. —

"(1) For general rule", and

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

"(2) For losses in controlled group liquidations, see section 267(h).".

(d) EFFECTIVE DATE. —

(1) SUBSECTION (a). — The amendments made by this section shall apply to losses arising in taxable years beginning after December 31, 2021.

(2) SUBSECTION (b). — The amendment made by subsection (b) shall apply to liquidations on or after the date of the enactment of this Act.

SEC. 138143. ADJUSTED BASIS LIMITATION FOR DIVISIVE REORGANIZATION.

(a) IN GENERAL. — Section 361 is amended by adding at the end the following new subsections:

"(d) ADJUSTED BASIS LIMITATION FOR DIVISIVE REORGANIZATIONS. —

"(1) IN GENERAL. — Except as provided in paragraph (2), in the case of a reorganization described in section 368(a)(1)(D) with respect to which stock or securities of the controlled corporation (within the meaning of section 355) are distributed by the distributing corporation (within the meaning of such section) in a transaction which qualifies under such section —

"(A) subsection (b)(3) shall not apply to so much of the amount described in clause (i)(II) as does not exceed the excess (if any) of —

"(i) the sum of —

"(I) the total amount of the liabilities assumed (within the meaning of section 357(c)) by the controlled corporation, and

"(II) the total amount of money and the fair market value of other property transferred to the creditors, over

"(ii) the total adjusted bases of the assets transferred by the distributing corporation to the controlled corporation, and

"(B) subsection (c)(3) shall not apply to so much of the amount described in clause (i)(II) as does not exceed the excess (if any) of —

"(i) the sum of —

"(I) the total amount of the liabilities assumed (within the meaning of section 357(c)) by the controlled corporation, and

"(II) the fair market value of the stock described in section 354(a)(2)(C) and the total principal amount of obligations of the controlled corporation described in subsection (c)(2)(B) which are qualified property (as defined in subsection (c)(2)(B)) transferred to the creditors, over

"(ii) the total adjusted bases of the assets transferred by the distributing corporation to the controlled corporation.

"(2) EXCEPTION REGARDING CERTAIN STOCK OR RIGHTS TO ACQUIRE STOCK. — Paragraph (1) shall not apply to any stock (or right to acquire stock) described in subsection (c)(2)(B).

"(3) REGULATIONS. — The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection and to prevent avoidance of tax through abuse or circumvention of subsection (b)(3), subsection (c)(3), or this subsection, including to determine whether a disposition of property or any other transaction is in connection with the reorganization or pursuant to the plan of reorganization.

"(e) CROSS-REFERENCES. — For provisions providing for the inclusion of income or recognition of gain in certain distributions, see subsections (d), (e), (f), (g), and (h) of section 355.".

(b) CONFORMING AMENDMENTS. —

(1) Section 361(b)(3) is amended —

(A) in the first sentence, by inserting ", and except as provided in subsection (d)" after "paragraph (1)", and

(B) by striking the second and third sentences.

(2) Section 361(c) is amended —

(A) in paragraph (3), by inserting ", and except as provided in subsection (d)" after "this subsection", and

(B) by striking paragraph (5).

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to reorganizations occurring on or after the date of the enactment of this Act.

(d) TRANSITION RULE. — The amendments made by this section shall not apply to any exchange pursuant to a transaction which is —

(1) made pursuant to a written agreement which was binding on the date of the enactment of this Act, and at all times thereafter,

(2) described in a ruling request submitted to the Internal Revenue Service on or before such date, or

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

SEC. 138144. RENTS FROM PRISON FACILITIES NOT TREATED AS QUALIFIED INCOME FOR PURPOSES OF REIT INCOME TESTS.

(a) IN GENERAL. — Section 856(d)(2) is amended by striking "and" at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting ", and", and by adding at the end the following new subparagraph:

"(D) any amount received or accrued, directly or indirectly, with respect to any real or personal property which is primarily used in connection with any correctional, detention, or penal facility.".

(b) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 138145. MODIFICATIONS TO EXEMPTION FOR PORTFOLIO INTEREST.

(a) IN GENERAL. — Section 871(h)(3)(B)(i) is amended to read as follows:

"(i) in the case of an obligation issued by a corporation —

"(I) any person who owns 10 percent or more of the total combined voting power of all classes of stock of such corporation entitled to vote, or

"(II) any person who owns 10 percent or more of the total value of the stock of such corporation, and".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to obligations issued after the date of the enactment of this Act.

SEC. 138146. CERTAIN PARTNERSHIP INTEREST DERIVATIVES.

(a) IN GENERAL. — Section 871(m) is amended by adding at the end the following new paragraph:

"(8) SPECIFIED PARTNERSHIP INTEREST INCOME EQUIVALENT PAYMENTS. —

"(A) IN GENERAL. — For purposes of this subsection, any payment made pursuant to a specified notional principal contract that is determined by reference to any income or gain in respect of an interest in a specified partnership (or any other payment the Secretary determines to be substantially similar) shall be treated as a dividend equivalent. For purposes of the preceding sentence, income or gain includes any income or gain from the deemed disposition of such interest as a result of the termination of such contract (determined in the same manner as under section 864(c)(8)).

"(B) SPECIFIED PARTNERSHIP. — For purposes of this paragraph, the term 'specified partnership' means —

"(i) any publicly traded partnership (as defined in section 7704(b)) which is not treated as a corporation under such section, or

"(ii) any other partnership as the Secretary may by regulation prescribe.

"(C) EXCEPTIONS. —

"(i) CERTAIN PAYMENTS. — Subparagraph (A) shall not apply to any payment the Secretary determines does not have the potential for tax avoidance.

"(ii) CERTAIN INCOME. — Under such regulations as the Secretary shall prescribe, there shall not be taken into account under subparagraph (A) any payment to the extent determined by reference to income or gain in respect of an interest in a specified partnership which would be, if earned by a nonresident alien individual —

"(I) exempt from tax under this chapter, or

"(II) from sources without the United States and not effectively connected with the conduct of a trade or business within the United States.

"(D) TREATMENT OF DEFINITIONS AND SPECIAL RULES WITH RESPECT TO PARTNERSHIPS. — For purposes of this paragraph, rules similar to the rules and definitions in paragraphs (3), (4), (5), (6), and (7) shall apply to an interest in a specified partnership in a manner similar to an underlying security, and to income or gain in respect of an interest in a specified partnership in a manner similar to a dividend.

"(E) REGULATIONS. — The Secretary shall issue such regulations or other guidance as the Secretary determines is necessary or appropriate to carry out the purposes of this paragraph, including to apply this paragraph to payments determined under sale-repurchase agreements or securities lending transactions with respect to interests in specified partnerships, to determine the amount of a distribution by a specified partnership that is income or gain of the partnership (including the portion thereof that is excepted under subparagraph (C)) in a manner consistent with section 1441(g), and to require the provision of information by specified partnerships necessary to determine such amount.".

(b) WITHHOLDING OF TAX ON NONRESIDENT ALIENS. — Section 1441 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:

"(g) DIVIDEND EQUIVALENTS IN CASE OF CERTAIN SPECIFIED PARTNERSHIPS. — The Secretary may prescribe regulations, under rules similar to the rules of section 1446, to determine the amount of a payment in respect of income and gain of a specified partnership (as defined in 871(m)(8)) which is a dividend equivalent.".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to payments made after December 31, 2022.

SEC. 138147. ADJUSTMENTS TO EARNINGS AND PROFITS OF CONTROLLED FOREIGN CORPORATIONS.

(a) IN GENERAL. — Section 312(n) is amended by adding at the end the following new paragraph:

"(9) SPECIAL RULES FOR CONTROLLED FOREIGN CORPORATIONS. — Earnings and profits of any controlled foreign corporation shall be determined without regard to paragraphs (4), (5), and (6).".

(b) CONFORMING AMENDMENT. — Section 952(c) is amended by striking paragraph (3).

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years of foreign corporations ending after the date of the enactment of this Act, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.

SEC. 138148. CERTAIN DIVIDENDS OF CONTROLLED FOREIGN CORPORATIONS TREATED AS EXTRAORDINARY DIVIDENDS.

(a) IN GENERAL. — Section 1059 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:

"(g) TREATMENT OF CERTAIN DIVIDENDS OF CONTROLLED FOREIGN CORPORATIONS. —

"(1) IN GENERAL. — Except as otherwise provided by the Secretary, any disqualified CFC dividend shall be treated as an extraordinary dividend to which paragraph (1) and (2) of subsection (a) applies without regard to the period the taxpayer held the stock with respect to which such dividend is paid.

"(2) DISQUALIFIED CFC DIVIDEND. — For purposes of this subsection —

"(A) IN GENERAL. — The term 'disqualified CFC dividend' means any dividend paid by a controlled foreign corporation to the extent such dividend is attributable to earnings and profits which —

"(i) were earned during any period that such corporation was not a controlled foreign corporation, or

"(ii) are attributable to disqualified CFC dividends received by such controlled foreign corporation from another controlled foreign corporation.

"(B) APPLICATION TO CORPORATIONS NOT WHOLLY OWNED BY UNITED STATES SHAREHOLDERS. — If not all of the stock of any controlled foreign corporation is owned (within the meaning of section 958(a)) by one or more United States shareholders at the time that any earning and profits referred to in subparagraph (A) are earned, the portion of such earnings and profits which is properly attributable to stock not so owned by United States shareholder shall be treated for purposes of subparagraph (A) as earned during a period that such corporation was not a controlled foreign corporation.

"(C) SPECIAL RULE RELATED TO CONSTRUCTIVE OWNERSHIP. — In the case of the last taxable year of a foreign corporation beginning before January 1, 2018, and each subsequent taxable year of such foreign corporation which begins before the date of the enactment of this subsection, if such foreign corporation would not have been a controlled foreign corporation for any such taxable year if section 958(b)(4) (as applicable to taxable years beginning after the date of the enactment of this subsection) had applied to such taxable year, such corporation shall not be treated as a controlled foreign corporation for such taxable year for purposes of this subsection.".

(b) REGULATIONS. — Section 1059(h), as redesignated by subsection (a), is amended —

(1) by striking "regulations" both places it appears and inserting "regulations or other guidance", and

(2) by striking "and" at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting ", and", and by adding at the end the following new paragraph:

"(3) providing for the coordination of subsection (g) with the other provisions of this chapter, including section 1248.".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to dividends paid (or amounts treated as dividends) after the date of the enactment of this Act.

SEC. 138149. LIMITATION ON CERTAIN SPECIAL RULES FOR SECTION 1202 GAINS.

(a) IN GENERAL. — Section 1202(a) is amended by adding at the end the following new paragraph:

"(5) LIMITATION ON CERTAIN SPECIAL RULES. — In the case of the sale or exchange of qualified small business stock after September 13, 2021, paragraphs (3) and (4) shall not apply to any taxpayer if —

"(A) the adjusted gross income of such taxpayer (determined without regard to this section and sections 911, 931, and 933) equals or exceeds $400,000, or

"(B) such taxpayer is a trust or estate.".

(b) EFFECTIVE DATE. — Except as provided in subsection (c), the amendment made by this section shall apply to sales and exchanges after September 13, 2021.

(c) BINDING CONTRACT EXCEPTION. — The amendment made by this section shall not apply to any sale or exchange which is made pursuant to written binding contract which was in effect on September 13, 2021, and is not modified in any material respect thereafter.

SEC. 138150. CONSTRUCTIVE SALES.

(a) APPLICATION TO APPRECIATED DIGITAL ASSETS. —

(1) IN GENERAL. — Section 1259(b)(1) is amended by inserting "digital asset," after "debt instrument,".

(2) EXCEPTION FOR SALES OF NONPUBLICLY TRADED PROPERTY. — Section 1259(c)(2) is amended by adding at the end the following: "A similar rule shall apply in the case of a contract for sale of any digital asset.".

(3) DIGITAL ASSET. — Section 1259(d) is amended by adding at the end the following new paragraph:

"(3) DIGITAL ASSET. — Except as otherwise provided by the Secretary, the term 'digital asset' means any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.".

(b) TREATMENT OF CERTAIN CONTRACTS. — Section 1259(c)(1)(D) is amended by inserting "or enters into a contract to acquire" after "acquires".

(c) EFFECTIVE DATE. —

(1) IN GENERAL. — The amendments made by subsection (a) shall apply to constructive sales (determined after the application of the amendment made by subsection (b)) after the date of the enactment of this Act.

(2) TREATMENT OF CERTAIN CONTRACTS. — The amendment made by subsection (b) shall apply to contracts entered into after the date of the enactment of this Act.

SEC. 138151. RULES RELATING TO COMMON CONTROL.

(a) CLARIFICATION OF TRADE OR BUSINESS. — Section 52(b) is amended by adding at the end the following new sentence: "For purposes of this subsection, the term 'trade or business' includes any activity treated as a trade or business under paragraph (5) or (6) of section 469(c) (determined without regard to the phrase 'To the extent provided in regulations' in such paragraph (6))."

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 138152. MODIFICATION OF WASH SALE RULES.

(a) IN GENERAL. — Section 1091 is amended to read as follows:

"SEC. 1091. LOSS FROM WASH SALES OF SPECIFIED ASSETS.

"(a) DISALLOWANCE OF LOSS DEDUCTION. — In the case of any loss claimed to have been sustained from any sale, disposition, or termination of specified assets where it appears that, within a period beginning 30 days before the date of such sale or disposition and ending 30 days after such date, the taxpayer (or related party) has acquired (by purchase or by an exchange on which the entire amount of gain or loss was recognized by law), or has entered into, or has entered into a contract or option so to acquire or a long principal contract in respect of, substantially identical specified assets, then no deduction shall be allowed under section 165 unless the taxpayer is a dealer in specified assets and the loss is sustained in a transaction made in the ordinary course of such business.

"(b) AMOUNT OF SPECIFIED ASSETS DIFFERENT FROM AMOUNT OF SPECIFIED ASSETS SOLD. — If the amount of specified assets acquired (or covered by the contract or option to acquire or long notional principal contract in respect of) is different from the amount of specified assets sold or otherwise disposed of, then the particular specified assets the acquisition of which (or the contract or option to acquire or long notional principal contract which) resulted in the nondeductibility of the loss shall be determined under regulations prescribed by the Secretary.

"(c) ADJUSTMENT TO BASIS IN CASE OF WASH SALE. — If the taxpayer (or the taxpayer's spouse) acquires or enters into substantially identical specified assets during the period which —

"(1) begins 30 days before the disposition with respect to which a deduction was disallowed under subsection (a), and

"(2) ends with the close of the taxpayer's first taxable year which begins after such disposition, the basis of such specified assets shall be increased by the amount of the deduction so disallowed (reduced by any amount of such deduction taken into account under this subsection to increase the basis of specified assets previously acquired).

"(d) CERTAIN SHORT SALES OF SPECIFIED ASSETS AND CONTRACTS TO SELL. — Rules similar to the rules of subsection (a) shall apply to any loss realized on the closing of a short sale of (or the sale, exchange, or termination of a contract to sell or a short notional principal contract in respect of) specified assets if, within a period beginning 30 days before the date of such closing and ending 30 days after such date —

"(1) substantially identical specified assets were sold or terminated by the taxpayer (or a related party), or

"(2) another short sale of (or contract to sell or short notional principal contract in respect of) substantially identical specified assets was entered into by the taxpayer (or related party).

"(e) CASH SETTLEMENT. — This section shall not fail to apply to a contract or option to acquire or sell specified assets solely by reason of the fact that the contract or option settles in (or could be settled in) cash or property other than such specified assets.

"(f) RELATED PARTY. — For purposes of this section —

"(1) IN GENERAL. — The term 'related party' means —

"(A) the taxpayer's spouse,

"(B) any dependent of the taxpayer and any other taxpayer with respect to whom the taxpayer is a dependent,

"(C) any individual, corporation, partnership, trust, or estate which controls, or is controlled by, (within the meaning of section 954(d)(3)) the taxpayer or any individual described in subparagraph (A) or (B) with respect to the taxpayer (or any combination thereof),

"(D) any individual retirement plan, Archer MSA (as defined in section 220(d)), or health savings account (as defined in section 223(d)), of the taxpayer or of any individual described in subparagraph (A) or (B) with respect to the taxpayer,

"(E) any account under a qualified tuition program described in section 529 or a Coverdell education savings account (as defined in section 530(b)) if the taxpayer, or any individual described in subparagraph (A) or (B) with respect to the taxpayer, is the designated beneficiary of such account or has the right to make any decision with respect to the investment of any amount in such account, and

"(F) any account under —

"(i) a plan described in section 401(a),

"(ii) an annuity plan described in section 403(a),

"(iii) an annuity contract described in section 403(b), or

"(iv) an eligible deferred compensation plan described in section 457(b) and maintained by an employer described in section 457(e)(1)(A), if the taxpayer or any individual described in subparagraph (A) or (B) with respect to the taxpayer has the right to make any decision with respect to the investment of any amount in such account.

"(2) RULES FOR DETERMINING STATUS. —

"(A) RELATIONSHIPS DETERMINED AT TIME OF ACQUISITION. — Determinations under paragraph (1) shall be made as of the time of the purchase or exchange (or entering into a contract, option, or notional principal contract) referred to in subsection (a) except that determinations under subparagraphs (A) and (B) of paragraph (1) shall be made for the taxable year which includes such purchase or exchange (or entering into).

"(B) DETERMINATION OF MARITAL STATUS. —

"(i) IN GENERAL. — Except as provided in clause (ii), marital status shall be determined under section 7703.

"(ii) SPECIAL RULE FOR MARRIED INDIVIDUALS FILING SEPARATELY AND LIVING APART. — A husband and wife who —

"(I) file separate returns for any taxable year, and

"(II) live apart at all times during such taxable year, shall not be treated as married individuals.

"(3) REGULATIONS. — The Secretary shall issue such regulations or other guidance as may be necessary to prevent the avoidance of the purposes of this subsection, including regulations which treat persons as related parties if such persons are formed or availed of to avoid the purposes of this subsection.

"(g) SPECIFIED ASSET. — For purposes of this section, the term 'specified asset' means any of the following:

"(1) Any security described in subparagraph (A), (B), (C), (D), or (E) of section 475(c)(2).

"(2) Any foreign currency.

"(3) Any commodity described in subparagraph (A), (B), or (C) of section 475(e)(2).

"(4) Except as otherwise provided by the Secretary, any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.

Such term shall, except as provided in regulations, include contracts or options to acquire or sell any specified assets.

"(h) EXCEPTION FOR BUSINESS NEEDS AND HEDGING TRANSACTIONS. — Except as provided in regulations prescribed by the Secretary, subsection (a) shall not apply in the case of any sale or other disposition —

"(1) of a foreign currency or commodity described in subsection (h), and

"(2) which —

"(A) is directly related to the business needs of a trade or business of the taxpayer (other than the trade or business of trading foreign currencies or commodities described in subsection (h)), or

"(B) is part of a hedging transaction (as defined in section 1221(b)(2)).".

(b) CLERICAL AMENDMENT. — The table of sections for part VII of subchapter O of chapter 1 is amended by striking the item relation to section 1091 and inserting the following new item:

"Sec. 1091. Loss from wash sales of specified assets.".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to sales, dispositions, and terminations after December 31, 2021.

(d) NO INFERENCE. — Nothing in this section or the amendments made by this section shall be construed to create any inference with respect to the proper treatment of related parties under section 1091 of the Internal Revenue Code of 1986 with respect to sales, dispositions, and terminations before January 1, 2022.

SEC. 138153. RESEARCH AND EXPERIMENTAL EXPENDITURES.

(a) IN GENERAL. — Section 13206 of Public Law 115-97 is amended —

(1) in subsection (b)(3), by striking "2021" and inserting "2025", and

(2) in subsection (e), by striking "2021" and inserting "2025".

(b) EFFECTIVE DATE. — The amendment made by this section shall take effect on the date of the enactment of this Act.

PART 2 — TAX INCREASES FOR HIGH-INCOME INDIVIDUALS

SEC. 138201. APPLICATION OF NET INVESTMENT INCOME TAX TO TRADE OR BUSINESS INCOME OF CERTAIN HIGH INCOME INDIVIDUALS.

(a) IN GENERAL. — Section 1411 is amended by adding at the end the following new subsection:

"(f) APPLICATION TO CERTAIN HIGH INCOME INDIVIDUALS. —

"(1) IN GENERAL. — In the case of any individual whose modified adjusted gross income for the taxable year exceeds the high income threshold amount, subsection (a)(1) shall be applied by substituting 'the greater of specified net income or net investment income' for 'net investment income' in subparagraph (A) thereof.

"(2) PHASE-IN OF INCREASE. — The increase in the tax imposed under subsection (a)(1) by reason of the application of paragraph (1) of this subsection shall not exceed the amount which bears the same ratio to the amount of such increase (determined without regard to this paragraph) as —

"(A) the excess described in paragraph (1), bears to

"(B) $100,000 (1⁄2 such amount in the case of a married taxpayer (as defined in section 7703) filing a separate return).

"(3) HIGH INCOME THRESHOLD AMOUNT. — For purposes of this subsection, the term 'high income threshold amount' means —

"(A) except as provided in subparagraph (B) or (C), $400,000,

"(B) in the case of a taxpayer making a joint return under section 6013 or a surviving spouse (as defined in section 2(a)), $500,000, and

"(C) in the case of a married taxpayer (as defined in section 7703) filing a separate return, 1⁄2 of the dollar amount determined under subparagraph (B).

"(4) SPECIFIED NET INCOME. — For purposes of this section, the term 'specified net income' means net investment income determined —

"(A) without regard to the phrase 'other than such income which is derived in the ordinary course of a trade or business not described in paragraph (2),' in subsection (c)(1)(A)(i),

"(B) without regard to the phrase 'described in paragraph (2)' in subsection (c)(1)(A)(ii),

"(C) without regard to the phrase 'other than property held in a trade or business not described in paragraph (2)' in subsection (c)(1)(A)(iii),

"(D) without regard to paragraphs (2), (3), and (4) of subsection (c), and

"(E) by treating paragraphs (5) and (6) of section 469(c) as applying for purposes of subsection (c) of this section.".

(b) APPLICATION TO TRUSTS AND ESTATES. — Section 1411(a)(2)(A) is amended by striking "undistributed net investment income" and inserting "the greater of undistributed specified net income or undistributed net investment income".

(c) CLARIFICATIONS WITH RESPECT TO DETERMINATION OF NET INVESTMENT INCOME. —

(1) WAGES SUBJECT TO FICA OR RRTA NOT TAKEN INTO ACCOUNT. — Section 1411(c)(6) is amended by inserting "or wages received with respect to employment on which a tax is imposed under section 3101(b) or 3201(a)" before the period at the end.

(2) NET OPERATING LOSSES NOT TAKEN INTO ACCOUNT. — Section 1411(c)(1)(B) is amended by inserting "(other than section 172)" after "this subtitle".

(3) INCLUSION OF CERTAIN FOREIGN INCOME. —

(A) IN GENERAL. — Section 1411(c)(1)(A) is amended by striking "and" at the end of clause (ii), by striking "over" at the end of clause (iii) and inserting "and", and by adding at the end the following new clause:

"(iv) any amount includible in gross income under section 951, 951A, 1293, or 1296, over".

(B) PROPER TREATMENT OF CERTAIN PREVIOUSLY TAXED INCOME. — Section 1411(c) is amended by adding at the end the following new paragraph:

"(7) CERTAIN PREVIOUSLY TAXED INCOME. — The Secretary shall issue regulations or other guidance providing for the treatment of distributions of amounts previously included in gross income for purposes of chapter 1 but not previously subject to tax under this section.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

(e) TRANSITION RULE. — The regulations or other guidance issued by the Secretary under section 1411(c)(7) of the Internal Revenue Code of 1986 (as added by this section) shall include provisions which provide for the proper coordination and application of clauses (i) and (iv) of section 1411(c)(1)(A) with respect to —

(1) taxable years beginning on or before December 31, 2021, and

(2) taxable years beginning after such date.

SEC. 138202. LIMITATIONS ON EXCESS BUSINESS LOSSES OF NONCORPORATE TAXPAYERS.

(a) LIMITATION MADE PERMANENT. —

(1) IN GENERAL. — Section 461(l)(1) is amended to read as follows:

"(1) LIMITATION. — In the case of any taxpayer other than a corporation, any excess business loss of the taxpayer for the taxable year shall not be allowed.".

(2) CONFORMING AMENDMENT. — Section 461 is amended by striking subsection (j).

(b) MODIFICATION OF CARRYOVER OF DISALLOWED LOSSES. — Section 461(l)(2) is amended to read as follows:

"(2) DISALLOWED LOSS CARRYOVER. — Any loss which is disallowed under paragraph (1) for any taxable year shall be treated (solely for purposes of this chapter) as a deduction described in paragraph (3)(A)(i) for the next taxable year.".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2020.

SEC. 138203. SURCHARGE ON HIGH INCOME INDIVIDUALS, ESTATES, AND TRUSTS.

(a) IN GENERAL. — Part I of subchapter A of chapter 1 is amended by inserting after section 1 the following new section:

"SEC. 1A. SURCHARGE ON HIGH INCOME INDIVIDUALS, ESTATES, AND TRUSTS.

"(a) GENERAL RULE. — In the case of a taxpayer other than a corporation, there is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to the sum of —

"(1) 5 percent of so much of the modified adjusted gross income of the taxpayer as exceeds —

"(A) $10,000,000, in the case of any taxpayer not described in subparagraph (B) or (C),

"(B) $5,000,000, in the case of a married individual filing a separate return, and

"(C) $200,000, in the case of an estate or trust, plus

"(2) 3 percent of so much of the modified adjusted gross income of the taxpayer as exceeds —

"(A) $25,000,000, in the case of any taxpayer not described in subparagraph (B) or (C),

"(B) $12,500,000, in the case of a married individual filing a separate return, and

"(C) $500,000, in the case of an estate or trust.

"(b) MODIFIED ADJUSTED GROSS INCOME. — For purposes of this section, the term 'modified adjusted gross income' means adjusted gross income reduced by any deduction (not taken into account in determining adjusted gross income) allowed for investment interest (as defined in section 163(d)). In the case of an estate or trust, adjusted gross income shall be determined as provided in section 67(e).

"(c) SPECIAL RULES. —

"(1) NONRESIDENT ALIEN. — In the case of a nonresident alien individual, only amounts taken into account in connection with the tax imposed under section 871(b) shall be taken into account under this section.

"(2) CITIZENS AND RESIDENTS LIVING ABROAD. — The dollar amount applicable to any taxpayer under paragraph (1), (2), or (3) of subsection (a) (as the case may be) shall be decreased (but not below zero) by the excess (if any) of —

"(A) the amounts excluded from the taxpayer's gross income under section 911, over

"(B) the amounts of any deductions or exclusions disallowed under section 911(d)(6) with respect to the amounts described in subparagraph (A).

"(3) CHARITABLE TRUSTS. — Subsection (a) shall not apply to a trust all the unexpired interests in which are devoted to one or more of the purposes described in section 170(c)(2)(B).

"(4) NOT TREATED AS TAX IMPOSED BY THIS CHAPTER FOR CERTAIN PURPOSES. — The tax imposed under this section shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter or for purposes of section 55.".

(b) CLERICAL AMENDMENT. — The table of sections for part I of subchapter A of chapter 1 is amended by inserting after the item relating to section 1 the following new item:

"Sec. 1A. Surcharge on high income individuals.".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

PART 3 — FUNDING THE INTERNAL REVENUE SERVICE AND IMPROVING TAXPAYER COMPLIANCE

SEC. 138301. ENHANCEMENT OF INTERNAL REVENUE SERVICE RESOURCES.

(a) APPROPRIATIONS. —

(1) IN GENERAL. — The following sums are appropriated, out of any money in the Treasury not otherwise appropriated, for the fiscal year ending September 30, 2022:

(A) INTERNAL REVENUE SERVICE. —

(i) IN GENERAL. —

(I) TAXPAYER SERVICES. — For necessary expenses of the Internal Revenue Service to provide taxpayer services, including pre-filing assistance and education, filing and account services, taxpayer advocacy services, and other services as authorized by 5 U.S.C. 3109, at such rates as may be determined by the Commissioner, $1,931,500,000, to remain available until September 30, 2031: Provided, That these amounts shall be in addition to any other funds made available for this purpose.

(II) ENFORCEMENT. — For necessary expenses for tax enforcement activities of the Internal Revenue Service to determine and collect owed taxes, to provide legal and litigation support, to conduct criminal investigations (including investigative technology), to provide cryptocurrency monitoring and compliance activities, to enforce criminal statutes related to violations of internal revenue laws and other financial crimes, to purchase and hire passenger motor vehicles (31 U.S.C. 1343(b)), and to provide other services as authorized by 5 U.S.C. 3109, at such rates as may be determined by the Commissioner, $44,887,500,000, to remain available until September 30, 2031: Provided, That these amounts shall be in addition to any other funds made available for this purpose.

(III) OPERATIONS SUPPORT. — For necessary expenses of the Internal Revenue Service to support taxpayer services and enforcement programs, including rent payments; facilities services; printing; postage; physical security; headquarters and other IRS-wide administration activities; research and statistics of income; telecommunications; information technology development, enhancement, operations, maintenance, and security; the hire of passenger motor vehicles (31 U.S.C. 1343(b)); the operations of the Internal Revenue Service Oversight Board; and other services as authorized by 5 U.S.C. 3109, at such rates as may be determined by the Commissioner, $27,376,300,000, to remain available until September 30, 2031: Provided, That these amounts shall be in addition to any other funds made available for this purpose.

(IV) BUSINESS SYSTEMS MODERNIZATION. — For necessary expenses of the Internal Revenue Service's business systems modernization program, including development of callback technology and other technology to provide a more personalized customer service but not including the operation and maintenance of legacy systems, $4,750,700,000, to remain available until September 30, 2031: Provided, That these amounts shall be in addition to any other funds made available for this purpose.

(ii) TASK FORCE TO DESIGN AN IRSRUN FREE "DIRECT EFILE" TAX RETURN SYSTEM. — For necessary expenses of the Internal Revenue Service to deliver to Congress a report on (I) the cost (including options for differential coverage based on taxpayer adjusted gross income and return complexity) of developing and running a free direct e-file tax return system, including costs to build and administer each release, with a focus on multi-lingual and mobile-friendly features and safeguards for taxpayer data; (II) taxpayer opinions, expectations, and level of trust, based on surveys, for such a free direct e-file system; and (III) the opinions of an independent third-party on the overall feasibility, approach, schedule, cost, organizational design, and Internal Revenue Service capacity to deliver such a direct e-file tax return system, $15,000,000, to remain available until September 30, 2023: Provided, That these amounts shall be in addition to any other funds made available for this purpose.

(B) TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION. — For necessary expenses of the Treasury Inspector General for Tax Administration in carrying out the Inspector General Act of 1978, as amended, including purchase and hire of passenger motor vehicles (31 U.S.C. 1343(b)); and services authorized by 5 U.S.C. 3109, at such rates as may be determined by the Inspector General for Tax Administration, $403,000,000, to remain available until September 30, 2031: Provided, That these amounts shall be in addition to any other funds made available for this purpose.

(C) OFFICE OF TAX POLICY. — For necessary expenses of the Office of Tax policy of the Department of the Treasury to carry out functions related to promulgating regulations under the Internal Revenue Code of 1986, $104,533,803, to remain available until September 30, 2031: Provided, That these amounts shall be in addition to any other funds made available for this purpose.

(D) UNITED STATES TAX COURT. — For necessary expenses, including contract reporting and other services as authorized by 5 U.S.C. 3109, and not to exceed $3,000 for official reception and representation expenses; $153,000,000, to remain available until September 30, 2031: Provided, That these amounts shall be in addition to any other funds made available for this purpose.

(2) MULTI-YEAR OPERATIONAL PLAN. —

(A) IN GENERAL. — Not later than 6 months after the date of the enactment of this Act, the Commissioner of Internal Revenue shall submit to Congress a plan detailing how the funds appropriated under paragraph (1)(A)(i) will be spent over the ten-year period ending with fiscal year 2031.

(B) QUARTERLY UPDATES. —

(i) IN GENERAL. — Not later than the last day of each calendar quarter beginning during the applicable period, the Commissioner of Internal Revenue shall submit to Congress a report on the plan established under subparagraph (A), including —

(I) any updates to the plan;

(II) progress made in implementing the plan; and

(III) any changes in circumstances or challenges in implementing the plan.

(ii) APPLICABLE PERIOD. — For purposes of clause (i), the applicable period is the period beginning 1 year after the date the report under subparagraph (A) is due and ending on September 30, 2031.

(C) REDUCTION IN APPROPRIATION. —

(i) IN GENERAL. — In the case of any failure to submit a plan required under subparagraph (A) or a report required under subparagraph (B) by the required date, the amounts made available under paragraph (1)(A)(i) shall be reduced by $100,000 for each day after such required date that report has not been submitted to Congress.

(ii) REQUIRED DATE. — For purposes of clause (i), the required date is the date that is 60 days after the date the plan or report is required to be submitted under subparagraph (A) or (B), as the case may be.

(3) NO TAX INCREASES ON CERTAIN TAXPAYERS. — Nothing in this subsection is intended to increase taxes on any taxpayer with a taxable income below $400,000.

(b) PERSONNEL FLEXIBILITIES. — The Secretary of the Treasury (or the Secretary's delegate) may use the funds made available under subsection (a)(1)(A), subject to such policies as the Secretary (or the Secretary's delegate) may establish, to take such personnel actions as the Secretary (or the Secretary's delegate) determines necessary to administer the Internal Revenue Code of 1986, including —

(1) utilizing direct hire authority to recruit and appoint qualified applicants, without regard to any notice or preference requirements, directly to positions in the competitive service;

(2) in addition to the authority under section 7812(1) of the Internal Revenue Code of 1986, appointing not more than 200 individuals to positions in the Internal Revenue Service under streamlined critical pay authority, except that —

(A) the authority to offer streamlined critical pay under this paragraph shall expire on September 30, 2031; and

(B) the positions for which streamlined critical pay is authorized under this paragraph may include positions critical to the purposes described in subclauses (I), (II), and (III) of subsection (a)(1)(A)(i); and

(3) appointing, without approval of the Office of Personnel Management, not more than 300 individuals to critical pay positions in the Internal Revenue Service for which —

(A) the rate of basic pay may not exceed the salary set in accordance with section 104 of title 3, United States Code; and

(B) the total annual compensation paid to an employee in such a position, including allowances, differentials, bonuses, awards, and similar cash payments, may not exceed the maximum amount of total annual compensation payable at the salary set in accordance with section 104 of title 3, United States Code.

SEC. 138302. APPLICATION OF BACKUP WITHHOLDING WITH RESPECT TO THIRD PARTY NETWORK TRANSACTIONS.

(a) IN GENERAL. — Section 3406(b) is amended by adding at the end the following new paragraph:

"(8) OTHER REPORTABLE PAYMENTS INCLUDE PAYMENTS IN SETTLEMENT OF THIRD PARTY NETWORK TRANSACTIONS ONLY WHERE AGGREGATE FOR CALENDAR YEAR IS $600 OR MORE. — Any payment in settlement of a third party network transaction required to be shown on a return required under section 6050W which is made during any calendar year shall be treated as a reportable payment only if —

"(A) the aggregate amount of such payment and all previous such payments made by the third party settlement organization to the participating payee during such calendar year equals or exceeds $600, or

"(B) the third party settlement organization was required under section 6050W to file a return for the preceding calendar year with respect to payments to the participating payee.".

(b) CONFORMING AMENDMENT. — Section 6050W(e) is amended by inserting "equal or" before "exceed $600".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to calendar years beginning after December 31, 2021.

(d) TRANSITIONAL RULE FOR 2022. — In the case of payments made during calendar year 2022, section 3406(b)(8)(A) of the Internal Revenue Code of 1986 (as added by this section) shall be applied by inserting "and the aggregate number of third party network transactions settled by the third party settlement organization with respect to the participating payee during such calendar year exceeds 200" before the comma at the end.

SEC. 138303. MODIFICATION OF PROCEDURAL REQUIREMENTS RELATING TO ASSESSMENT OF PENALTIES.

(a) REPEAL OF APPROVAL REQUIREMENT. — Section 6751, as amended by the preceding provision of this Act, is amended by striking subsection (b).

(b) QUARTERLY CERTIFICATIONS OF COMPLIANCE WITH PROCEDURAL REQUIREMENTS. — Section 6751, as amended by subsection (a) of this section, is amended by inserting after subsection (a) the following new subsection:

"(b) QUARTERLY CERTIFICATIONS OF COMPLIANCE. — Each appropriate supervisor of employees of the Internal Revenue Service shall certify quarterly by letter to the Commissioner of Internal Revenue whether or not the requirements of subsection (a) have been met with respect to notices of penalty issued by such employees.".

(c) EFFECTIVE DATES. —

(1) REPEAL OF APPROVAL REQUIREMENT. — The amendment made by subsection (a) shall take effect as if included in section 3306 of the Internal Revenue Service Restructuring and Reform Act of 1998.

(2) QUARTERLY CERTIFICATIONS OF COMPLIANCE WITH PROCEDURAL REQUIREMENTS. — The amendment made by subsection (b) shall apply to notices of penalty issued after the date of the enactment of this Act.

PART 4 — OTHER PROVISIONS

SEC. 138401. MODIFICATIONS TO LIMITATION ON DEDUCTION OF EXCESSIVE EMPLOYEE REMUNERATION.

(a) IN GENERAL. — Section 162(m) is amended by adding at the end the following new paragraph:

"(7) SPECIAL RULES RELATED TO LIMITATION ON DEDUCTION OF EXCESSIVE EMPLOYEE REMUNERATION. —

"(A) AGGREGATION RULE. — A rule similar to the rule of paragraph (6)(C)(ii) shall apply for purposes of paragraph (1).

"(B) REGULATIONS. — The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of paragraph (1), including regulations or other guidance to prevent the avoidance of such purposes, including through the performance of services other than as an employee or by providing compensation through a passthrough or other entity.".

(b) APPLICABLE EMPLOYEE REMUNERATION. — Section 162(m)(4)(A) is amended —

(1) by inserting "(including performance-based compensation, commissions, post-termination compensation, and beneficiary payments)" after "remuneration for services", and

(2) by inserting "and whether or not such remuneration is paid directly by the publicly held corporation" after "whether or not during the taxable year".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

SEC. 138402. EXTENSION OF TAX TO FUND BLACK LUNG DISABILITY TRUST FUND.

(a) IN GENERAL. — Section 4121(e)(2)(A) is amended by striking "December 31, 2021" and inserting "December 31, 2025".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to sales after December 31, 2021.

SEC. 138403. PROHIBITED TRANSACTIONS RELATING TO HOLDING DISC OR FSC IN INDIVIDUAL RETIREMENT ACCOUNT.

(a) IN GENERAL. — Section 4975(c)(1) is amended by striking "or" at the end of subparagraph (E), by striking the period at the end of subparagraph (F) and inserting "; or", and by adding at the end the following new subparagraph:

"(G) investment, at the direction of a disqualified person, by an individual retirement account in an interest in a DISC or FSC that receives any commission, or other payment, from an entity any stock or interest in which is owned by the individual for whose benefit the account is maintained.".

(b) SPECIAL RULES OF APPLICATION. — Section 4975(c) is amended by adding at the end the following new paragraph:

"(8) SPECIAL RULES OF APPLICATION FOR DISC AND FSC INVESTMENTS. —

"(A) INDIRECT HOLDING OF DISC OR FSC. — For purposes of paragraph (1)(G), investment by an individual retirement account in an interest in an entity that owns (directly or indirectly) an interest in a DISC or FSC shall be treated as investment by such account in an interest in such DISC or FSC.

"(B) CONSTRUCTIVE OWNERSHIP. — For purposes of determining ownership of stock (or any other interest) in an entity under paragraph (1)(G) and ownership of an interest in a DISC or FSC under subparagraph (A), the rules prescribed by section 318 for determining ownership shall apply, except that such section shall be applied by substituting '10 percent' for '50 percent' each place it appears.

"(C) DISC AND FSC. — For purposes of this subsection, the terms 'DISC' and 'FSC' shall have the respective meanings given such terms by section 992(a)(1)) and section 922(a) (as in effect before its repeal by the FSC Repeal and Extraterritorial Income Exclusion Act of 2000).".

(c) APPLICATION OF TAX TO TERMINATED INDIVIDUAL RETIREMENT ACCOUNTS. — Section 4975(c)(3) is amended by adding at the end the following: "The preceding sentence shall not apply in the case of a prohibited transaction described in paragraph (1)(G).".

(d) RELATED RULES FOR INDIVIDUAL RETIREMENT ACCOUNTS. —

(1) IN GENERAL. — Section 408(a) is amended by inserting after paragraph (6) the following new paragraph:

"(7) No part of the trust funds will be invested in any interest in a DISC or a FSC that receives any commission, or other payment, from an entity any stock or interest in which is owned by the individual for whose benefit the trust is maintained. For purposes of the preceding sentence, the definitions and rules of section 4975(c)(8) shall apply.".

(e) LOSS OF EXEMPTION OF ACCOUNT. — Section 408(e)(2) is amended —

(1) by striking "established" each place it appears in subparagraph (A) and inserting "maintained",

(2) by redesignating subparagraph (B) as subparagraph (C),

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

"(B) PROHIBITED INVESTMENT. — If, during any taxable year of the individual for whose benefit any individual retirement account is maintained, the investment of any part of the funds of such individual retirement account does not comply with subsection (a)(7), such account ceases to be an individual retirement account as of the first day of such taxable year. Rules similar to the rules of clauses (i) and (ii) of subparagraph (A) shall apply for purposes of this subparagraph.",

(4) by striking "WHERE EMPLOYEE ENGAGES IN PROHIBITED TRANSACTION" in the heading and inserting "IN CASE OF CERTAIN PROHIBITED TRANSACTIONS AND INVESTMENTS",

(5) by striking "IN GENERAL" in the heading of subparagraph (A) and inserting "EMPLOYEE ENGAGING IN PROHIBITED TRANSACTION", and

(6) by striking "(A)" in subparagraph (C), as so redesignated, and inserting "(A) or (B)".

(f) CONFORMING AMENDMENTS. —

(1) Section 408(c)(1) is amended by striking "(1) through (6)" and inserting "(1) through (7)".

(2) Section 4975(c)(3) is amended —

(A) striking "established" and inserting "maintained",

(B) by striking "transaction" both places it appears and inserting "transaction or investment", and

(C) by striking "section 408(e)(2)(A)" and inserting "subparagraph (A) or (B) of section 408(e)(2)".

(g) EFFECTIVE DATE. — The amendments made by this section shall apply to stock and other interests acquired or held on or after December 31, 2021.

SEC. 138404. CLARIFICATION OF TREATMENT OF DISC GAINS AND DISTRIBUTIONS OF CERTAIN FOREIGN SHAREHOLDERS.

(a) IN GENERAL. — Section 996(g) of the Internal Revenue Code of 1986 is amended by striking "of such shareholder" and inserting "deemed to be had by such shareholder".

(b) EFFECTIVE DATE. — The amendments made by subsection (a) shall apply to gains and distributions after December 31, 2021.

(c) APPLICATION TO FOREIGN SALES CORPORATIONS. — In the case of any distribution after December 31, 2021, section 926(b)(1) of the Internal Revenue Code of 1986 (prior to its repeal by the FSC Repeal and Extraterritorial Income Exclusion Act of 2000) shall be applied by substituting "deemed to be had by such shareholder" for "of such shareholder".

Subtitle H — Supplemental Security Income for the Territories

SECTION 131001. EXTENSION OF THE SUPPLEMENTAL SECURITY INCOME PROGRAM TO PUERTO RICO, THE UNITED STATES VIRGIN ISLANDS, GUAM, AND AMERICAN SAMOA.

(a) IN GENERAL. — Section 303 of the Social Security Amendments of 1972 (86 Stat. 1484) is amended by striking subsection (b).

(b) CONFORMING AMENDMENTS. —

(1) DEFINITION OF STATE. — Section 1101(a)(1) of the Social Security Act (42 U.S.C. 1301(a)(1)) is amended by striking the 5th sentence and inserting the following: "Such term when used in title XVI includes Puerto Rico, the United States Virgin Islands, Guam, and American Samoa.".

(2) ELIMINATION OF LIMIT ON TOTAL PAYMENTS TO THE TERRITORIES. — Section 1108 of such Act (42 U.S.C. 1308) is amended —

(A) in the section heading, by striking "; LIMITATION ON TOTAL PAYMENTS";

(B) by striking subsection (a); and

(C) in subsection (c), by striking paragraphs (2) and (4) and redesignating paragraphs (3) and (5) as paragraphs (2) and (3), respectively.

(3) UNITED STATES NATIONALS TREATED THE SAME AS CITIZENS. — Section 1614(a)(1)(B) of such Act (42 U.S.C. 1382c(a)(1)(B)) is amended —

(A) in clause (i)(I), by inserting "or national of the United States," after "citizen";

(B) in clause (i)(II), by adding "; or" at the end; and

(C) in clause (ii), by inserting "or national" after "citizen".

(4) TERRITORIES INCLUDED IN GEOGRAPHIC MEANING OF UNITED STATES. — Section 1614(e) of such Act (42 U.S.C. 1382c(e)) is amended by striking "and the District of Columbia" and inserting ", the District of Columbia, Puerto Rico, the United States Virgin Islands, Guam, and American Samoa".

(c) WAIVER AUTHORITY. — The Commissioner of Social Security may waive or modify any statutory requirement relating to the provision of benefits under the Supplemental Security Income Program under title XVI of the Social Security Act in Puerto Rico, the United States Virgin Islands, Guam, or American Samoa, to the extent that the Commissioner deems it necessary in order to adapt the program to the needs of the territory involved.

(d) EFFECTIVE DATE. — This section and the amendments made by this section shall take effect on January 1, 2024.

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