It is anticipated that the Disaster Response Team would be staffed by IRS employees with relevant knowledge and experience. It is anticipated that the Disaster Response Team would staff a toll-free number dedicated to responding to taxpayers affected by a Presidentially declared disaster and provide relevant information via the IRS website. Effective date.-The provision is effective on the date of enact ment. CONFERENCE AGREEMENT The conference agreement expands the period of time with respect to which the Secretary may postpone certain deadlines from 90 days to 120 days. The conference agreement does not include the provision of the Senate amendment that provides for a Permanent Disaster Response Team. C. INCOME TAX TREATMENT OF CERTAIN RESTITUTION PAYMENTS TO HOLOCAUST VICTIMS (SEC. 803 OF THE SENATE AMENDMENT) PRESENT LAW Under the Code, gross income means "income from whatever source derived" except for certain items specifically exempt or excluded by statute (sec. 61). There is no explicit statutory exception from gross income provided for amounts received by Holocaust victims or their heirs. No provision. HOUSE BILL SENATE AMENDMENT The Senate amendment provides that excludable restitution payments made to an eligible individual (or the individual's heirs or estate) are: (1) excluded from gross income; and (2) not taken into account for any provision of the Code which takes into account excludable gross income in computing adjusted gross income (e.g., taxation of Social Security benefits). The basis of any property received by an eligible individual (or the individual's heirs or estate) that is excluded under this provision is the fair market value of such property at the time of receipt by the eligible individual (or the individual's heirs or estate). The Senate amendment provides that any excludible restitution payment is disregarded in determining eligibility for, and the amount of benefits and services to be provided under, any Federal or federally assisted program which provides benefit or service based, in whole or in part, on need. Under the Senate amendment, no officer, agency, or instrumentality of any government may attempt to recover the value of excessive benefits or services provided under such a program before January 1, 2000, by reason of failure to take account of excludable restitution payments received before that date. Similarly, the Senate amendment requires a good faith effort to notify any eligible individual who may have been denied such benefits or services of their potential eligibility for such benefits or services. The Senate amendment also provides coordination between this bill and Public Law 103-286, which also disregarded certain restitution payments in determining eligibility for, and the amount of certain needs-based benefits and services. Eligible restitution payments are any payment or distribution made to an eligible individual (or the individual's heirs or estate) which: (1) is payable by reason of the individual's status as an eligible individual (including any amount payable by any foreign country, the United States, or any foreign or domestic entity or fund established by any such country or entity, any amount payable as a result of a final resolution of legal action, and any amount payable under a law providing for payments or restitution of property); (2) constitutes the direct or indirect return of, or compensation or reparation for, assets stolen or hidden, or otherwise lost to, the individual before, during, or immediately after World War II by reason of the individual's status as an eligible individual (including any proceeds of insurance under policies issued on eligible individuals by European insurance companies immediately before and during World War II); or (3) interest payable as part of any payment or distribution described in (1) or (2), above. An eligible individual is a person who was persecuted for racial or religious reasons by Nazi Germany, or any other Axis regime, or any other Nazi-controlled or Nazi-allied country. Effective date.-The provision is effective for any amounts received on or after January 1, 2000. No inference is intended with respect to the income tax treatment of any amount received before January 1, 2000. CONFERENCE AGREEMENT The conference agreement follows the Senate amendment, with three changes. First, the definition of eligible individuals is expanded to also include individuals persecuted on the basis of physical or mental disability or sexual orientation. Second, interest earned by enumerated escrow or settlement funds are also excluded from tax. Third, the provision disregarding excludible restitution in determining eligibility for and the benefit calculation of certain Federal or Federally assisted programs is deleted. D. TREATMENT OF SURVIVOR ANNUITY PAYMENTS WITH RESPECT TO PUBLIC SAFETY OFFICERS (SEC. 804 OF THE SENATE AMENDMENT) PRESENT LAW The Taxpayer Relief Act of 1997 provided that an amount paid as a survivor annuity on account of the death of a public safety officer who is killed in the line of duty is excludable from income to the extent the survivor annuity is attributable to the officer's service as a law enforcement officer. The survivor annuity must be provided under a governmental plan to the surviving spouse (or former spouse) of the public safety officer or to a child of the officer. The provision does not apply with respect to the death of a public safety officer if it is determined by the appropriate supervising authority that (1) the death was caused by the intentional misconduct of the officer or by the officer's intention to bring about the death, (2) the officer was voluntarily intoxicated at the time of death, (3) the officer was performing his or her duties in a grossly negligent manner at the time of death, or (4) the actions of the individual to whom payment is to be made were a substantial contributing factor to the death of the officer. For purposes of the exclusion, "public safety officer" is defined as in section 1204 of the Omnibus Crime Control and Safe Streets Act of 1968 (as amended). Under that Act, a public safety officer is an: (1) individual serving a public agency (with or without compensation) as a law enforcement officer, firefighter, rescue squad member, or ambulance crew member; (2) employee of the Federal Emergency Management Agency (FEMA) performing hazardous duties with respect to a Federally declared disaster area; and (3) employee of a State, local, or tribal emergency agency who is performing hazardous duties in cooperation with FEMA in a Federally declared disaster area. The provision applies to amounts received in taxable years beginning after December 31, 1996, with respect to individuals dying after that date. HOUSE BILL No provision. However, H.R. 1727, the "Fallen Hero Survivor Benefit Fairness Act of 2001," as passed by the House, extends the present-law treatment of survivor annuities with respect to public safety officers killed in the line of duty with respect to individuals dying on or before December 31, 1996. Effective date. The provision is effective with respect to payments received after December 31, 2001. SENATE AMENDMENT The Senate amendment provision is the same as H.R. 1727. Effective date.-The provision is effective with respect to payments received after December 31, 2000. CONFERENCE AGREEMENT The conference agreement does not include the provisions of H.R. 1727 or the Senate amendment provision. E. CIRCUIT BREAKER (SEC. 805 OF THE SENATE AMENDMENT) PRESENT LAW The Congressional Budget Act of 1974 contains numerous rules enforcing the scope of items permitted to be considered under the budget reconciliation process. No provision. HOUSE BILL SENATE AMENDMENT The Senate amendment provides that, in any fiscal year beginning with fiscal year 2004, if the level of debt held by the public at the end of that fiscal year (as projected by the Office of Management and Budget sequestration update report on August 20th preceding the beginning of that fiscal year) would exceed the level of debt held by the public for that fiscal year set forth in the concur rent resolution on the budget for fiscal year 2002, any Member of Congress may move to proceed to a bill that would make changes in law to reduce discretionary spending and direct pending (except for changes in Social Security, Medicare and COLA's) and increase revenues in a manner that would reduce the debt held by the public for the fiscal year to a level not exceeding the level provided in that concurrent resolution for that fiscal year. A bill considered pursuant to this provision would be considered as provided in section 310(e) of the Congressional Budget Act. The Senate amendment provides that it shall not be in order in the Senate to consider any bill, joint resolution, motion, amendment, or conference report pursuant to the provision that contains any provisions other than those enumerated in sections 310(a)(1) and 310(a)(2) of the Congressional Budget Act. This point of order may be waived or suspended in the Senate only by the affirmative vote of three-fifths of the Members. An affirmative vote of threefifths of the Members shall be required in the Senate to sustain an appeal of the ruling of the Chair on a point of order raised pursuant to the provision. Effective date.-The provision is effective on the date of enact ment. CONFERENCE AGREEMENT The conference agreement does not include the Senate amendment provision. F. ACCELERATION OF HEALTH INSURANCE DEDUCTION FOR SELF-EMPLOYED INDIVIDUALS (SECS. 806 AND 807 OF THE SENATE AMENDMENT AND SEC. 162(L) OF THE CODE) PRESENT LAW Under present law, the individual income tax treatment of health insurance expenses depends on depends on the individual's circumstances. Self-employed individuals may deduct a portion of health insurance expenses for the individual and his or her spouse and dependents. The deductible percentage of health insurance expenses of a self-employed individual is 60 percent in 2001, 70 percent in 2002, and 100 percent in 2003 and thereafter. The deduction for health insurance expenses of self-employed individuals is not available for any month in which the individual is eligible to participate in a subsidized health plan maintained by the employer of the individual or the individual's spouse. The self-employed health deduction also applies to qualified long-term care insurance premiums treated as medical care for purposes of the itemized deduction for medical expenses, described below. Employees can exclude from income 100 percent of employerprovided health insurance. Individuals who itemize deductions may deduct their health insurance expenses only to the extent that the total medical expenses of the individual exceed 7.5 percent of adjusted gross income (sec. 213). Subject to certain dollar limitations, premiums for qualified long-term care insurance are treated as medical expenses for purposes of the itemized deduction for medical expenses (sec. 213). The amount of qualified long-term care insurance premiums that may be taken into account for 2001 is as follows: $230 in the case of an individual 40 years old or less; $430 in the case of an individual who is over 40 but not more than 50; $860 in the case of an individual who is more than 50 but not more than 60; $2,290 in the case of an individual who is more than 60 but not more than 70; and $2,860 in the case of an individual who is more than 70. These dollar limits are indexed for inflation. HOUSE BILL No provision. SENATE AMENDMENT The Senate amendment increases the deduction for health insurance expenses (and qualified long-term care insurance expenses) of self-employed individuals to 100 percent beginning in 2002. The Senate amendment also provides that the deduction is not available for any month in which the self-employed individual participates in (rather than is eligible for) a subsidized health plan maintained by ay employer of the individual or his or her spouse. Effective date. The provision is effective for taxable years beginning after December 31, 2001. CONFERENCE AGREEMENT The conference agreement does not include the Senate amendment provision. G. ENHANCED DEDUCTION FOR CHARITABLE CONTRIBUTION OF LITERARY, MUSICAL, AND ARTISTIC COMPOSITIONS (SEC. 808 OF THE SENATE AMENDMENT AND SEC. 170 OF THE CODE) PRESENT LAW In the case of a charitable contribution of inventory or other ordinary-income or short-term capital gain property, the amount of the deduction is limited to the taxpayer's basis in the property. In the case of a charitable contribution of tangible personal property, the deduction is limited to the taxpayer's basis in such property if the use by the recipient charitable organization is unrelated to the organization's tax-exempt purpose. In cases involving contributions to a private foundation (other than certain private operating foundations), the amount of the deduction is limited to the taxpayer's basis in the property. Under present law, charitable contributions of literary, musical, and artistic compositions are considered ordinary income property and a taxpayer's deduction of such property is limited to the taxpayer's basis (typically, cost) in the property. To be eligible for the deduction, the contribution must be of an undivided portion of the donor's entire interest in the property. For purposes of the charitable income tax deduction, the copyright and the work in which the copyright is embodied are not treated as separate property interests. Accordingly, if a donor owns a work of art and the copyright to the work of art, a gift of the artwork without the copyright or the copyright without the artwork will constitute a gift of |