ACTION

FROM THE COMMITTEE ON WAYS AND MEANS

FOR IMMEDIATE RELEASE, Contact: (202) 225-3625
October 9, 1998
No. FC-35A

DESCRIPTION OF H.R. 4738 AS APPROVED:

Title I--Extension of Expiring Provisions

Extension of Research Tax Credit--The research tax credit would be extended for the period July 1, 1998, through December 31, 1999.

Extension of Work Opportunity Tax Credit--The bill would extend the work opportunity tax credit through December 31, 1999.

Exceptions under Subpart F for Certain Active Financing Income--The bill would modify the present-law temporary exceptions from Subpart F for income that is derived in the active conduct of a banking, financing, insurance or similar business. These exceptions (as modified) would be applicable only for taxable years beginning in 1999.

Extension of the Generalized System of Preferences (GSP)--The bill would reauthorize the GSP trade program for a temporary period, to terminate after December 31, 1999.

Permanent Extension of Income Averaging for Farmers-- The bill would make permanent the income averaging provision for farmers.

Extension of Deduction for Contributions of Appreciated Stock to Private Foundations--The bill would extend permanently the deduction for contributions for qualified appreciated stock to private foundations.

Public Inspection of Private Foundation Annual Returns-- Private foundations would be subject to the public inspection requirements that currently apply to all other tax-exempt organizations that file annual information returns.

Disclosure of Return Information of Department of Education in Connection with Income Contingent Loans--This bill would reinstate the disclosure authority under section 6103(1)(13) with respect to requests made after the date of enactment and before October 1, 2003.

Title II -- Other Provisions

Farm Production Flexibility Contract Payments--The time a production flexibility contract under the Federal Agriculture Improvement and Reform Act of 1996 (the "FAIR Act") is properly includible in income would be determined without regard to the options granted in that Act. The proposal would be effective for production flexibility contract payments made under the FAIR Act in taxable years ending after December 31, 1995.

Increase Deduction for Health Insurance Expenses of Self-Employed Individuals--The bill would increase the deduction of health insurance for self-employed individuals to 75 percent for taxable years beginning in 2002 and to 100 percent for taxable years beginning in 2003 and thereafter.

Increase State Volume Limits on Private Activity Tax-Exempt Bonds--The bill would increase the present-law annual State private activity bond volume limit to $75 per resident of each State or $225 million (if greater) beginning in calendar year 2007. The increase would be phased in over a five year period beginning in calendar year 2003.

Modification of Individual Estimated Tax Safe Harbors--For taxable years beginning in 2000 and 2001, the 105 percent of last year's liability safe harbor for any individual with an adjusted gross income of more than $150,000 as shown on the return for the preceding taxable year would be a 106 percent of last year's liability safe harbor.

Exemption for Students Employed by State Schools, Colleges, or Universities--The bill would allow a limited window of time (January 1 through March 31, 1999) for States to modify existing State agreements to exempt from Social Security coverage students (including graduate assistants) who are employed by a public school, university, or college in a non-exempted State.

Comprehensive Study of Recovery Periods and Depreciation Methods Under Section 168--The Secretary of the Treasury would be directed to conduct a comprehensive study of the recovery periods and depreciation methods under section 168 of the Code, and to provide recommendations for determining such periods and methods in a more rational manner.

Title III--Revenue Offsets

Treatment of Certain Deductible Liquidating Distributions of Regulated Investment Companies (RICs) and Real Estate Investment Trusts (REITs)--Any amount which a liquidating RIC or REIT may take as a deduction for dividends paid with respect to an otherwise tax-free liquidating distribution to an 80-percent corporate owner would be includible in the income of the recipient corporation. The includible amount would be treated as a dividend received from the RIC or REIT. The liquidating corporation may designate the amount distributed as a capital gain dividend or, in the case of a RIC, a dividend eligible for the 70-percent dividends received deduction, or an exempt interest dividend to the extent provided by the RIC or REIT provisions of the Code.

Add Vaccines Against Rotavirus Gastroenteritis to the List of Taxable Vaccines-- The bill would add vaccines against rotavirus gastroenteritis to the list of taxable vaccines. The proposal would be effective for vaccines purchased after the date of enactment.

Clarify and Expand Mathematical Error Procedures--The Internal Revenue Service (IRS) would be authorized to use the mathematical and clerical error procedure to deny eligibility for the dependent care tax credit, the child tax credit, and the earned income credit even though a correct Taxpayer Identification Number has been supplied if the IRS determines that the statutory age restrictions for eligibility for any of the respective credits is not satisfied. The proposal would be effective for taxable years ending after the date of enactment.

Restrict 10-Year Net Operating Loss Carryback Rules for Specified Liability Losses--Specified liability losses would be limited to product liability losses and amounts allowable as a deduction that are in satisfaction of a liability under a Federal or State law requiring the reclamation of land, decommissioning of a nuclear power plant, dismantlement of a drilling platform, remediation of environmental contamination, or a payment under any workers compensation act, if the act giving rise to such liability occurs at least 3 years before the beginning of the taxable year. This proposal would be effective for net operating losses arising in taxable years ending after the date of enactment.

Title IV--Technical Corrections--The bill includes various technical corrections to previously enacted tax legislation.