ACTION

FROM THE COMMITTEE ON WAYS AND MEANS

FOR IMMEDIATE RELEASE, Contact: (202) 225-3625
October 21, 1998
No. FC-36A

Archer Announces Ways and Means Provisions
Included in the Conference Agreement for H.R. 4328,
the "Omnibus Consolidated and Emergency Supplemental
Appropriations Act, 1999"

Congressman Bill Archer (R-TX), Chairman of the Committee on Ways and Means, today announced the details of major provisions within the jurisdiction of the Committee on Ways and Means that have been included in the revenue and Medicare part of the conference agreement for H.R. 4328, the "Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999."   Specifically, the bill's revenue and Medicare provisions contained in other legislation considered by the Committee on Ways and Means, and recently passed by the House, including H.R. 4738, a bill to extend certain expiring provisions and provide tax relief for farmers and small businesses, as well as H.R. 4567, the "Medicare Home Health Care Interim Payment Refinement Act."

DESCRIPTION OF REVENUE PROVISIONS:

Extension of Expiring Tax Provisions

• Extension of Research and Experimentation Tax Credit--The research tax credit would be extended for the period July 1, 1998, through June 30, 1999.

• Extension of Work Opportunity Tax Credit--The work opportunity tax credit would be extended for the period July 1, 1998, through June 30, 1999.

• Extension of the Welfare-To-Work Tax Credit--The welfare-to-work tax credit would be extended from its expiration date on April 30, 1999, through June 30, 1999.

• Extension of Deduction for Contributions of Appreciated Stock to Private Foundations--Deduction for contributions of qualified appreciated stock to private foundations would be extended permanently.

• 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.

• Exceptions under Subpart F for Certain Active Financing Income--The provision 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.

• Disclosure of Return Information of Department of Education in Connection with Income Contingent Loans--The disclosure authority under section 6103(1)(13) would be reinstated with respect to requests made before October 1, 2003.

Extension of Expiring Trade Provisions

• Extension of the Generalized System of Preferences (GSP)--The GSP trade program would be reauthorized for a temporary period through June 30 1999, retroactive to June 30, 1998.

• Extension of the Trade Adjustment Assistance (TAA) Program--The proposal would reauthorize the following three TAA programs through June 30, 1999: (1) the general program for workers that provides training and income support to workers adversely affected by import competition, (2) the program for firms that provides technical assistance to qualifying firms; and (3) the North American Free Trade Agreement program for workers that provides training and income support for workers adversely affected by imports from, or production shifts to, Canada and/or Mexico.

Other Tax Provisions

• Personal Credits Fully Allowed Against Regular Tax Liability During 1998--The child credit, adoption credit, HOPE and lifetime learning credits, and other nonrefundable personal credits would be allowed to offset the individual's regular tax in full for taxable years that begin in  1998 (as opposed to only the amount by which the regular tax exceeds the tentative minium tax, as under present law).

• Increase Deduction for Health Insurance Expenses of Self-Employed Individuals--The deduction for health insurance for self-employed individuals would be 60 percent for taxable years beginning in 1999 through 2001, 70 percent in 2002, and 100 percent for taxable years beginning in 2003 and thereafter.

• 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 106 percent of last year's liability safe harbor.

• Increase State Volume Limits on Private Activity Tax-Exempt Bonds--The present-law annual State private activity bond volume limit would be increased 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.

• Comprehensive Study of Recovery Periods and Depreciation Methods Under Section 168--The Secretary of the Treasury would be directed to conduct a comprehensive study by March 31, 2000, 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.

• Exemption for Students Employed by State Schools, Colleges, or Universities--A limited window of time (January 1 through March 31, 1999) would be allowed 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.

Revenue Offset Provisions

• 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-- Vaccines against rotavirus gastroenteritis would be added 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 are 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 three 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.

Tax Technical Corrections Provisions--Various technical corrections to previously enacted tax legislation are included.

Emergency Tax Relief for Farmers

• Permanent Extension of Income Averaging for Farmers--The income averaging provision for farmers would be made permanent.

• Farm Production Flexibility Contract Payments--The time a production flexibility contract payment 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. This provision would be effective for production flexibility contract payments made under the FAIR Act in taxable years ending after December 31, 1995.

• Extend the Net Operating Loss Carryback Period for Farmer Losses--A special five-year carryback period would be provided for net operating losses attributable to a farming business, which would be effective in taxable years beginning after December 31, 1997.

DESCRIPTION OF MEDICARE PROVISIONS:

Medicare Home Health Provisions

The Medicare home health provisions would increase the per beneficiary limit for those home health care agencies whose per beneficiary limit is below the input price adjusted national median limit. The adjustment would be equal to one third of the difference between the agency's per beneficiary limit and the input price adjusted national median limit. Home health agencies who begin treating Medicare patients on or after October 1, 1998, would have per beneficiary limits equaling 75 percent of the input price adjusted national median limit. In addition, the Medicare home health care per visit limit would increase to 106 percent of the national median cost. The 15 percent reduction applied to home health care agencies beginning October 1, 1999, would be delayed one year to coincide with the implementation of the Propsective Payment System.

These provisions would also require the Secretary of Health and Human Services (HHS) to submit to Congress a report describing: (1) all of the research to date on the development of a prospective payment system for Medicare home health services, and (2) a schedule for implementation of the Balanced Budget Act of 1997 (BBA) (P.L. 105-33) mandated prospective payment system. The Medicare Payment Advisory Commission (MedPAC) would have to include in its June 1999 report an analysis of whether changes in law made by the BBA, and amended by this provision, would impede access to home health services. The U.S. General Accounting Office would be required to conduct an audit of the Health Care Financing Administration's expenditures for research related to the development of a prospective payment system for Medicare home health services.

Revenue Offset

The Medicare home health provisions would be offset by a change in the tax rules for gambling winnings. The existence of a "qualified prize option" would be disregarded in determining the taxable year in which any portion of a qualified prize is to be included in income. The proposal would apply with respect to any qualified prize to which a person first becomes entitled after the date of enactment, or on or before the date of enactment if the person has an option to receive a lump-sum payment only during some portion of the 18-month period beginning on July 1, 1999.

Exceptions to the Imposition of Civil Money Penalties

These provisions would modify a provision in the Health Insurance Portability and Accountability Act (HIPAA) (P.L. 104-191) in two ways: (1) the Inspector General of HHS would be able to create exceptions -- known as "safe harbors" -- to the fraud and abuse rules so as to exclude specific practices from the HIPAA provisions, and (2) medical facilities would be allowed to obtain advisory opinions from the Inspector General. These opinions would provide legal and regulatory guidance to medical facilities as to whether payment of coinsurance or other premiums violates HIPAA's fraud and abuse provisions. The Secretary of HHS would be given interim final rule-making authority which would speed up the process whereby these "safe harbors" and advisory opinions become effective. These provisions would place limits on the Inspector General's safe harbor authority relating to providers or health care facilities providing Medicare supplemental coverage to end-stage renal disease beneficiaries. The duration of the safe harbor authority for this particular issue would be limited to a two-year period which commences on the date that the rule is promulgated. These provisions also would stipulate that the Comptroller General shall conduct a study that compares any disproportionate impact on specific issuers of the purchase of Medicare supplemental policies for end-stage renal disease patients.

Expansion of the Medicare Payment Advisory Commission

The number of commissioners appointed to the MedPAC would be increased to 17 from the current 15.