Responsible Fatherhood and Healthy Families Act of 2006 - Amends part A (Temporary Assistance for Needy Families) (TANF) of title IV of the Social Security Act (SSA) with respect to: (1) funding for responsible fatherhood programs; (2) requirements to ensure procedures to address domestic violence; (3) activities promoting responsible fatherhood; (4) grants to healthy family partnerships for domestic violence prevention, for services for families and individuals affected by domestic violence, and for developing and implementing best practices; and (5) elimination of separate TANF work participation rate for two-parent families.
Amends SSA title IV part D (Child Support and Establishment of Paternity), as amended by the Deficit Reduction Act of 2005, to prohibit a state from collecting any amount owed to the state by reason of costs it has incurred for the birth of a child for whom support rights have been assigned.
Requires a state to make a full distribution of collected child support to the family.
Directs the Secretary of Health and Human Services to award grants to states for three employment demonstration projects, including: (1) a court- or state child support agency-supervised program for noncustodial parents so they can pay child support obligations; (2) a transitional jobs program combining temporary subsidized employment with skill development activities; and (3) public-private career pathways partnerships.
Conditions continued approval of a state plan under part D upon state assessment of its policies with respect to barriers to employment and financial support of children.
Amends the Food Stamp Act of 1977 with respect to: (1) deductions from family income for child support received in order to qualify for food stamps; (2) verification of child support payments; and (3) inclusion of economic opportunities programs in qualifying work programs.
Amends the Internal Revenue Code to: (1) modify the earned income tax credit; (2) provide an additional tax credit for certain workers required to make child support payments; (3) revise the formula to increase the earned income tax credit for joint returns; (4) revise tax treatment of inverted entities, especially expatriated entities; (5) treat controlled foreign corporations established in tax havens as domestic corporations for tax purposes; and (6) prescribe the taxation of income of controlled foreign corporations attributable to imported property.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3607 Introduced in Senate (IS)]
109th CONGRESS
2d Session
S. 3607
To amend title IV of the Social Security Act to ensure funding for
grants to promote responsible fatherhood and strengthen low-income
families, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 29, 2006
Mr. Bayh (for himself and Mr. Obama) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend title IV of the Social Security Act to ensure funding for
grants to promote responsible fatherhood and strengthen low-income
families, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Responsible
Fatherhood and Healthy Families Act of 2006''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
TITLE I--PROMOTING RESPONSIBLE FATHERHOOD AND STRENGTHENING LOW-INCOME
FAMILIES
Sec. 101. Healthy marriage promotion and responsible fatherhood
programs.
Sec. 102. Grants to healthy family partnerships for domestic violence
prevention, for services for families and
individuals affected by domestic violence,
and for developing and implementing best
practices.
Sec. 103. Elimination of separate TANF work participation rate for 2-
PARENT families.
Sec. 104. Ban on Recovery of Medicaid Costs for Births.
Sec. 105. Improved collection and distribution of child support.
Sec. 106. Grants to States to conduct demonstration projects to promote
economic opportunity for low-income
parents.
Sec. 107. State assessments of barriers to employment and financial
support of children.
Sec. 108. Collection of child support under the food stamp program.
TITLE II--REVENUE PROVISIONS
Sec. 201. Modifications to the earned income tax credit.
Sec. 202. Tax treatment of inverted entities.
Sec. 203. Tax treatment of controlled foreign corporations established
in tax havens.
Sec. 204. Taxation of income of controlled foreign corporations
attributable to imported property.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) The most important factor in a child's upbringing is
whether the child is brought up in a loving, healthy,
supportive environment.
(2) Children who grow up with both parents are more likely
to finish high school, be economically self-sufficient, and to
have a healthier lifestyle than their peers who grow up in
single-parent homes.
(3) Father-child interaction has been shown to promote the
positive physical, social, emotional, and mental development of
children.
(4) Children typically live without both parents when their
parents are divorced or did not marry. More than \1/3\ of all
first marriages end in divorce, and 60 percent of divorcing
couples have children. More than \1/3\ of all births are to
unmarried women.
(5) More than 1 in 4 families with children have only 1
parent present, and more than 1 in 3 children live absent their
biological father.
(6) Recent studies demonstrate that most unwed fathers in
urban areas are highly involved with the mother of their child
before and after the child's birth, with 80 percent involved
during the mother's pregnancy, and 50 percent living with the
child's mother at the time of the child's birth. However, the
relationship between the parents often does not last, and
fathers do not maintain contact with their children as the
children grow up.
(7) An estimated 40 percent of the children who live in
households without their father have not seen their fathers in
at least 1 year.
(8) The inability of parents to sustain a healthy
relationship with their child's other parent and remain
involved in their child's life can have severe negative
consequences for the parents, the child, their community, and
taxpayers.
(9) Single-parent families are 5 times as likely to be poor
as married-couple families.
(10) Children raised in single-parent families are more
likely than children raised in 2-parent families to do poorly
in school, have emotional and behavioral problems, become
teenage parents, commit crimes, smoke cigarettes, abuse drugs
and alcohol, and have poverty-level incomes as adults.
(11) Male unemployment and low wages are primary reasons
why parents do not marry, why 2-parent families break up, and
why fathers fail to remain involved with their children. In
2004, half of African-American young men lacked jobs.
(12) Domestic violence is also a significant problem
leading to the non-formation or break-up of 2-parent families.
(13) A history of incarceration is a major barrier to
employment. 60 percent of African-American men who dropped out
of high school have served time. When these men leave prison,
they often have difficulty finding a job and supporting their
children.
(14) Over \1/2\ of State prison inmates are parents. When
parents go to prison, their child support obligations continue,
even though they have little ability to pay the support. When
these parents leave prison, they typically owe more than
$20,000 in child support debt. Parents leaving prison often re-
enter the underground economy because of financial pressures or
to avoid the child support system, making it less likely that
they will successfully rejoin society and reunite with their
families.
(15) Children should receive the child support paid by
their parents, and the government should not keep the money to
recover welfare costs. Regular child support income appears to
have a greater positive impact on children dollar for dollar
than other types of income. Researchers in Wisconsin found that
when monthly child support was passed through to families
receiving assistance under the Temporary Assistance for Needy
Families program established under part A of title IV of the
Social Security Act (TANF) and disregarded 100 percent in
determining assistance for the families, fathers paid more
child support, established their legal relationship with their
children more quickly, and worked less in the underground
economy. Moreover, the State costs of a full pass-through and
disregard of child support were fully offset by increased
payments by fathers and decreased public assistance use by
families.
(16) Current law permits States to apply the cost of
passing through child support to families receiving assistance
under the TANF program toward their maintenance of effort (MOE)
requirements, but only to the extent that the State disregards
the child support payments in determining the amount and type
of TANF assistance.
(17) Programs that increase employment opportunity and
reduce barriers by increasing employment opportunity and
reducing recidivism will benefit children and families.
(18) Transitional jobs programs have shown promise in
reducing unemployment among chronically unemployed or
underemployed population groups, including formerly
incarcerated individuals, the homeless, and young African-
American men.
(19) To strengthen families it is important to improve the
upward economic mobility of the custodial and noncustodial
parent wage-earners, as well as youth at risk of early
fatherhood or incarceration, by providing the skills and
experience necessary to access jobs with family-sustaining
wages and benefits. In families in which all the members do not
live together, this is important to enable the prompt and
consistent payment of adequate child support.
(20) It is important and useful to foster local and
regional economic development and job advancement for workers,
especially young custodial and noncustodial parents, by funding
local collaborations among business, education, and the
community in the development of pathways for preparing
disadvantaged citizens to meet the workforce needs of the local
and regional economy.
(21) Employers benefit from working with and being
supported by the local education, post-secondary and workforce
systems in identifying the academic and occupational skill sets
needed to fill the skilled jobs in the changing economy. Local
economic and community development is enhanced when residents
have access to higher wage employment, thus increasing the tax
base, fueling the economy, and contributing to greater family
economic security.
(22) Public-private career pathways partnerships are an
important tool for linking employers and workers with the
workforce education services they need and for integrating
community economic development and workforce education
services. Transitional jobs programs can serve as the first
step in a career pathway by giving unemployed individuals with
multiple barriers to employment, valuable work experience and
related services.
(23) The purpose of child support is to provide necessary
income support for and increase the well-being of children
living apart from a parent. To improve the ability of low-
income fathers to provide long-term support and care for their
children throughout their entire childhood, it is important
that child support polices support parental efforts to pursue
education and employment and to stay involved with their
children
(24) Responsible fatherhood includes active participation
in financial support and child-rearing, as well as the
formation and maintenance of a positive, healthy, and
nonviolent relationship between father and child and a
cooperative, healthy, and nonviolent relationship between
parents.
(25) States should be encouraged to implement voluntary
programs that provide support for responsible parenting,
including by increasing the employment, financial security, and
parental involvement of noncustodial parents.
(26) Promoting responsible fatherhood saves the government
money by reducing the need for public assistance, increasing
the educational attainment of children, juvenile delinquency
and crime, reducing substance abuse, and lowering rates of
unemployment.
(27) Responsible fatherhood programs should promote and
provide support services for--
(A) fostering loving and healthy relationships
between parents and children;
(B) increasing responsibility of noncustodial
parents for the long-term care and financial well-being
of their children;
(C) increasing employment of low-income,
noncustodial parents and improving compliance with
child support obligations; and
(D) reducing barriers to active 2-parent
involvement and cooperative parenting.
(28) The promotion of responsible fatherhood should not
denigrate the standing or parenting efforts of single mothers
or other caregivers, lessen the protection of children from
abusive parents, or compromise the safety or health of the
custodial or noncustodial parent, but should increase the
chance that children will have 2 caring parents to help them
grow up healthy and secure.
TITLE I--PROMOTING RESPONSIBLE FATHERHOOD AND STRENGTHENING LOW-INCOME
FAMILIES
SEC. 101. HEALTHY MARRIAGE PROMOTION AND RESPONSIBLE FATHERHOOD
PROGRAMS.
(a) Ensuring Funding for Responsible Fatherhood Programs.--Section
403(a)(2)(C) of the Social Security Act (42 U.S.C. 603(a)(2)(C)) is
amended--
(1) in the subparagraph heading, by striking ``Limitation
on use of'' and inserting ``Requirement to use certain''; and
(2) in clause (i), by striking ``may not award more than
$50,000,000'' and inserting ``shall award at least
$100,000,000''.
(b) Requirements To Ensure Procedures To Address Domestic Violence
Prevention.--
(1) In general.--Section 403(a)(2) of the Social Security
Act (42 U.S.C. 603(a)(2)) is amended--
(A) by redesignating subparagraph (D) as
subparagraph (G); and
(B) by inserting after subparagraph (C) the
following new subparagraphs:
``(D) Requirements for receipt of funds.--An entity
may not be awarded a grant under this paragraph unless
the entity, as a condition of receiving funds under
such a grant--
``(i) consults with domestic violence
organizations that have demonstrated expertise
working with survivors of domestic violence in
developing policies, procedures, programs and
training necessary to appropriately address
domestic violence in families served by
programs and activities funded under such
grant;
``(ii) describes in the application for a
grant under this paragraph--
``(I) how the programs or
activities proposed to be conducted
will appropriately address issues of
domestic violence; and
``(II) what the entity will do, to
the extent relevant, to ensure that
participation in such programs or
activities is voluntary, and to inform
potential participants that their
involvement is voluntary;
``(iii) establishes a written protocol for
providers and administrators of programs and
activities relevant to the grant that--
``(I) provides for helping identify
instances or risks of domestic
violence; and
``(II) specifies the procedures for
making service referrals and providing
protections and appropriate assistance
for identified individuals and
families; and
``(iv) submits the annual reports required
under subparagraph (E).
``(E) Annual reports to the secretary.--Each entity
awarded a grant under this paragraph shall submit to
the Secretary an annual report on the programs and
activities funded under the grant that includes the
following:
``(i) A description of the written
protocols developed in accordance with the
requirements of subparagraph (D)(iii) for each
program or activity funded under the grant and
how such protocols are used, including specific
policies and procedures for addressing domestic
violence issues within each program or activity
funded under the grant and how confidentiality
issues are addressed.
``(ii) The name of each individual,
organization, or entity that was consulted in
the development of such protocols.
``(iii) A description of each individual,
organization, or entity (if any) that provided
training on domestic violence for the entity or
for any subgrantees.
``(iv) A description of any implementation
issues identified with respect to domestic
violence and how such issues were addressed.
``(F) Domestic violence defined.--In this
paragraph, the term `domestic violence' has the meaning
given that term in section 402(a)(7)(B).''.
(2) Conforming amendments.--Section 403(a)(2) of such Act
(42 U.S.C. 603(a)(2)) is amended--
(A) in subparagraph (A)(i)--
(i) by striking ``(B) and (C)'' and
inserting ``(B), (C), (D), and (E)''; and
(ii) by striking ``subparagraph (D)'' and
inserting ``subparagraph (G)'';
(B) in subparagraphs (B)(i) and (C)(i), by striking
``(D)'' each place it appears and inserting ``(G)'';
and
(C) in subparagraph (G) (as redesignated by
paragraph (1)(A)), by striking ``$150,000,000 for each
of fiscal years 2006 through 2010'' and inserting
``$150,000,000 for fiscal year 2006 and $200,000,000
for each of fiscal years 2007 through 2010''.
(c) Assurance of Voluntary Participation.--Section
403(a)(2)(A)(ii)(II) of the Social Security Act (42 U.S.C.
603(a)(2)(A)(ii)(II)) is amended--
(1) in item (aa), by striking ``and'' at the end;
(2) in item (bb), by striking the period at the end and
inserting a semicolon; and
(3) by adding at the end the following new items:
``(cc) to not condition the
receipt of assistance under the
program funded under this part,
under a program funded with
qualified State expenditures
(as defined in section
409(a)(7)(B)(i)), or under any
other program funded under this
title on enrollment in any such
programs or activities; and
``(dd) to permit any
individual who has begun to
participate in a particular
program or activity funded
under this paragraph, including
an individual whose
participation is specified in
the individual responsibility
plan developed for the
individual in accordance with
section 408(b), to transfer to
another such program or
activity funded under this
paragraph upon notification to
the entity and the State agency
responsible for administering
the State program funded under
this part.''.
(d) Activities Promoting Responsible Fatherhood.--Section
403(a)(2)(C)(ii) of the Social Security Act (42 U.S.C.
603(a)(2)(C)(ii)) is amended--
(1) in subclause (I), by striking ``marriage or sustain
marriage'' and insert ``healthy relationships and marriages or
to sustain healthy relationships or marriages'';
(2) in subclause (II), by inserting ``educating youth who
are not yet parents about the economic, social, and family
consequences of early parenting, helping participants in
fatherhood programs work with their own children to break the
cycle of early parenthood,'' after ``child support payments,'';
and
(3) in subclause (III), by striking ``fathers'' and
inserting ``low-income fathers and other low-income
noncustodial parents whom are not eligible for assistance under
the State program funded under this part''.
(e) Effective Date.--The amendments made by this section shall take
effect on October 1, 2006.
SEC. 102. GRANTS TO HEALTHY FAMILY PARTNERSHIPS FOR DOMESTIC VIOLENCE
PREVENTION, FOR SERVICES FOR FAMILIES AND INDIVIDUALS
AFFECTED BY DOMESTIC VIOLENCE, AND FOR DEVELOPING AND
IMPLEMENTING BEST PRACTICES.
Section 403(a) of the Social Security Act (42 U.S.C. 603(a)) is
amended by adding at the end the following new paragraph:
``(6) Grants to healthy family partnerships for domestic
violence prevention, for services for families and individuals
affected by domestic violence, and for developing and
implementing best practices.--
``(A) In general.--The Secretary shall award grants
on a competitive basis to healthy family partnerships
to--
``(i) conduct programs and activities that
are designed to prevent domestic violence;
``(ii) provide services for victims of
domestic violence; and
``(iii) develop and implement best
practices for preventing domestic violence,
particularly as a barrier to economic security,
and for providing services to families and
individuals affected by such violence including
through caseworker training and the provision
of technical assistance.
``(B) Education services.--In awarding grants under
subparagraph (A), the Secretary shall ensure that 10
percent of the funds made available under such grants
are used for high schools and other secondary
educational institutions and institutions of higher
education to provide education services on the value of
healthy relationships, responsible parenting, and
healthy marriages characterized by mutual respect and
non-violence, and the importance of building
relationships skills such as communication, conflict
resolution, and budgeting.
``(C) Application.--The respective entity and
organization of a healthy family partnership entered
into for purposes of receiving a grant under this
paragraph shall submit a joint application to the
Secretary, at such time and in such manner as the
Secretary shall specify, containing--
``(i) a description of how the partnership
intends to carry out the activities described
in subparagraph (A);
``(ii) an assurance that funds made
available under the grant shall be used to
supplement, and not supplant, other funds used
by the entity or organization to carry out
programs, activities, or services described in
subparagraph (A) or (B); and
``(iii) such other information as the
Secretary may require.
``(D) General rules governing use of funds.--The
rules of section 404, other than subsection (b) of that
section, shall not apply to a grant made under this
paragraph.
``(E) Definitions.--In this paragraph:
``(i) Domestic violence.--The term
`domestic violence' has the meaning given that
term in section 402(a)(7)(B).
``(ii) Healthy family partnership.--The
term `healthy family partnership' means a
partnership between--
``(I) an entity receiving funds
under a grant made under paragraph (2)
to promote healthy marriage or
responsible fatherhood; and
``(II) an organization described in
paragraph (2)(D)(i).
``(F) Appropriation.--Out of any money in the
Treasury of the United States not otherwise
appropriated, there are appropriated for each of fiscal
years 2007 through 2010, $25,000,000 for purposes of
awarding grants to healthy family partnerships under
this paragraph.''.
SEC. 103. ELIMINATION OF SEPARATE TANF WORK PARTICIPATION RATE FOR 2-
PARENT FAMILIES.
(a) In General.--Section 407 of the Social Security Act (42 U.S.C.
607) is amended--
(1) in subsection (a)--
(A) beginning in the heading, by striking
``Participation Rate Requirements'' and all that
follows through ``A State'' in paragraph (1) and
inserting ``Participation Rate Requirements.--A
State''; and
(B) by striking paragraph (2);
(2) in subsection (b)--
(A) in paragraph (1)(A), by striking ``subsection
(a)(1)'' and inserting ``subsection (a)'';
(B) in paragraph (2), by striking the paragraph
heading and all that follows through ``A family'' and
inserting ``Special rule.--A family'';
(C) in paragraph (4), by striking ``paragraphs
(1)(B) and (2)(B)'' and inserting ``determining monthly
participation rates under paragraph (1)(B)''; and
(D) in paragraph (5), by striking ``rates'' and
inserting ``rate''; and
(3) in subsection (c)--
(A) in paragraph (1)(B), in the matter preceding
clause (i), by striking ``subsection (b)(2)(B)'' and
inserting ``subsection (b)(1)(B)(i)''; and
(B) in paragraph (2)(D)--
(i) by striking ``paragraphs (1)(B)(i) and
(2)(B) of subsection (b)'' and inserting
``subsection (b)(1)(B)(i)''; and
(ii) by striking ``and in 2-parent
families, respectively,''.
(b) Effective Date.--
(1) In general.--The amendments made by subsection (a)
shall take effect on the date of enactment of this Act and
shall apply to the determination of minimum participation rates
for months beginning on or after that date.
(2) Limitation on penalty imposition.--Notwithstanding
section 409(a)(3) of the Social Security Act, the Secretary of
Health and Human Services shall not impose a penalty against a
State under that section on the basis of the State's failure to
satisfy the participation rate required for fiscal year 2006 if
the State demonstrates that the State would have met such
requirement if, with respect to those months of fiscal year
2006 that began prior to or on the date of enactment of this
Act, the State were permitted to count 2-parent families that
met the requirements of section 407(c)(1)(A) of the Social
Security Act (42 U.S.C. 607(c)(1)(A)) in the determination of
monthly participation rates under section 407(b)(1)(B)(i) of
such Act (42 U.S.C. 607(b)(1)(B)(i)).
SEC. 104. BAN ON RECOVERY OF MEDICAID COSTS FOR BIRTHS.
(a) Ban on Recovery.--
(1) In general.--Section 454 of the Social Security Act (42
U.S.C. 654), as amended by section 7301(B)(1)(C) of the Deficit
Reduction Act of 2005 (Public Law 109-171), is amended--
(A) by striking ``and'' at the end of paragraph
(33);
(B) by striking the period at the end of paragraph
(34) and inserting ``; and''; and
(C) by inserting after paragraph (34) the
following:
``(35) provide that, except as provided in section
1902(a)(25)(F)(ii), the State shall not use the State program
operated under this part to collect any amount owed to the
State by reason of costs incurred under the State plan approved
under title XIX for the birth of a child for whom support
rights have been assigned pursuant to section 471(a)(17) or
1912.''.
(2) Rule of construction.--Nothing in section 454(35) of
the Social Security Act (42 U.S.C. 654(35)), as added by
paragraph (1), shall be construed as affecting the application
of section 1902(a)(25) of such Act (42 U.S.C. 1396a(a)(25))
with respect to a State (relating to the State Medicaid plan
requirement for the State to take all reasonable measures to
ascertain the legal liability of third parties to pay for care
and services available under the plan).
(b) Clarification That Ban on Recovery Does Not Apply With Respect
to Insurance of a Parent With an Obligation To Pay Child Support.--
Section 1902(a)(25)(F) of the Social Security Act (42 U.S.C.
1396a(a)(25)(F)) is amended--
(1) in clause (i), by adding ``add'' after the semicolon;
and
(2) in clause (ii), by inserting ``only if such third-party
liability is derived through insurance,'' before ``seek''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section take effect on October 1, 2006.
(2) Extension of effective date for state law amendment.--
In the case of a State plan under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.) which the Secretary of
Health and Human Services determines requires State legislation
in order for the plan to meet the additional requirements
imposed by the amendments made by this section, the State plan
shall not be regarded as failing to comply with the
requirements of such title solely on the basis of its failure
to meet these additional requirements before the first day of
the first calendar quarter beginning after the close of the
first regular session of the State legislature that begins
after the date of enactment of this Act. For purposes of the
previous sentence, in the case of a State that has a 2-year
legislative session, each year of the session is considered to
be a separate regular session of the State legislature.
SEC. 105. IMPROVED COLLECTION AND DISTRIBUTION OF CHILD SUPPORT.
(a) Distribution of Child Support.--
(1) Full distribution of child support collected; reform of
rules for distribution of child support collected on behalf of
children in foster care.--
(A) In general.--Section 457 of the Social Security
Act (42 U.S.C. 657) is amended--
(i) by striking subsection (a) and
inserting the following:
``(a) Full Distribution of Amounts Collected on Behalf of Any
Family.--Subject to subsection (c), the entire amount collected on
behalf of any family as support by a State pursuant to a plan approved
under this part shall be paid by the State to the family.''; and
(ii) by striking subsections (c) through
(e) and inserting the following:
``(c) Amounts Collected for Child for Whom Foster Care Maintenance
Payments Are Made.--Notwithstanding the preceding provisions of this
section, amounts collected by a State as child support for months in
any period on behalf of a child for whom a public agency is making
foster care maintenance payments under part E shall be paid to the
public agency responsible for supervising the placement of the child,
which may use the payments in the manner it determines will serve the
best interests of the child, including setting such payments aside for
the child's future needs, depositing the funds in a child asset
account, or making all or a part thereof available to the person
responsible for meeting the child's day-to-day needs.''.
(B) Foster care state plan amendment.--Section
471(a)(17) of the Social Security Act (42 U.S.C.
671(a)(17)) is amended--
(i) by inserting ``and consistent with the
child's case plan'' after ``where
appropriate''; and
(ii) by striking ``secure an assignment to
the State of any rights to support'' and
inserting ``establish and enforce child support
obligations''.
(2) Conforming amendments.--
(A) Section 409(a)(7)(B)(i)(I)(aa) of such Act (42
U.S.C. 609(a)(7)(B)(i)(I)(aa)) is amended by striking
``457(a)(1)(B)'' and inserting ``457(a)''.
(B) Section 454(5) of such Act (42 U.S.C. 654(5))
is amended by striking ``(A) in any case'' and all that
follows through ``(B)''.
(C) Paragraphs (1)(B) and (2)(B) of section 457(b)
of such Act (42 U.S.C. 657(b)), as amended by section
7301(c) of the Deficit Reduction Act of 2005 (Public
Law 109-171; 120 Stat. 141), is amended by striking
``in accordance with subsection (a)(4)'' each place it
appears.
(D) Section 466(a)(3)(B) of such Act (42 U.S.C.
666(a)(3)(B)) is amended by striking ``408(a)(3) or''.
(3) Repeal of certain dra amendments.--Effective on the
date of enactment of this Act, subsections (a) and (b) of
section 7301 of the Deficit Reduction Act of 2005 (Public Law
109-171; 120 Stat. 141) are repealed and parts A and D of title
IV of the Social Security Act shall be applied as if the
amendments made by such subsections had not been enacted.
(b) Prohibition on Conditioning Receipt of TANF on Assignment of
Support.--Section 408(a)(3) of the Social Security Act (42 U.S.C.
608(a)(3)) is amended--
(1) in the paragraph heading, by striking ``No assistance
for families not'' and inserting ``Prohibition on conditioning
assistance for families on'';
(2) by inserting ``not'' after ``shall'';
(3) by inserting ``or under a program funded with qualified
State expenditures (as defined in section 409(a)(7)(B)(i))''
after ``this part''; and
(4) by striking ``, not exceeding the total amount of
assistance so paid to the family,''.
(c) Requirement To Disregard Percentage of Child Support Collected
in Determining Amount and Type of TANF Assistance.--Section 408(a) of
the Social Security Act (42 U.S.C. 608(a)) is amended by adding at the
end the following new paragraph:
``(12) Requirement to disregard percentage of child support
collected in determining amount and type of tanf assistance.--A
State to which a grant is made under section 403 shall
disregard at least the same percentage of amounts collected as
support on behalf of a family as the percentage of earned
income that the State disregards in determining the amount or
type of assistance provided to the family under the State
program funded under this part or under a program funded with
qualified State expenditures (as defined in section
409(a)(7)(B)(i)).''.
(d) Restoration of Federal Funding.--Effective on the date of
enactment of this Act, section 7309 of the Deficit Reduction Act of
2005 (Public Law 109-171; 120 Stat. 147) is repealed and part D of
title IV of the Social Security Act shall be applied as if the
amendment made by subsection (a) of that section had not been enacted.
(e) Repeal of Mandatory Fee for Child Support Collection.--
Effective on the date of enactment of this Act, section 7310 of the
Deficit Reduction Act of 2005 (Public Law 109-171; 120 Stat. 147) is
repealed and part D of title IV of the Social Security Act shall be
applied as if the amendments made by that section had not been enacted.
(f) Prohibition on Considering a Period of Incarceration Voluntary
Unemployment.--Section 466(a) of the Social Security Act (42 U.S.C.
666(a)) is amended by inserting after paragraph (19) the following new
paragraph:
``(20) Procedures relating to periods of incarceration of
noncustodial parents.--
``(A) In general.--Procedures which require that,
in determining or modifying the amount of, or terms and
conditions of, any support obligation of a noncustodial
parent, the State--
``(i) shall not consider any period of
incarceration of such parent as a period of
voluntary employment that disqualifies the
parent from obtaining a review and adjustment,
if appropriate, of the support obligation; and
``(ii) subject to subparagraph (B) in the
case of an incarcerated parent, shall--
``(I) temporarily suspend any
support obligation on the parent and
the enforcement of any support
obligation of the parent existing prior
to the period of incarceration; and
``(II) temporarily prohibit the
accrual of any interest on any support
obligation of the parent existing prior
to the period of incarceration during
any such period.
``(B) Notice and opportunity to challenge
suspension.--Such procedures shall require the State to
provide a custodial parent with--
``(i) notice of any suspension of review,
adjustment, or enforcement of a support
obligation and of any prohibition on interest
accrual on such obligation that is imposed in
accordance with subparagraph (A)(ii); and
``(ii) an opportunity to request that the
suspension or prohibition be terminated or
modified on the basis that the noncustodial
parent has sufficient income or resources to
continue payment of the support obligation
during the noncustodial parent's period of
incarceration.''.
(g) Forgiving or Other Modification of Child Support Arrearages
Assigned to the State.--Section 466(a)(9) of the Social Security Act
(42 U.S.C. 666(a)(9)) is amended in the flush matter following
subparagraph (C), by inserting the following new sentence at the end:
``Nothing in this paragraph shall be construed as prohibiting a State
from forgiving, compromising, reducing or waiving arrearages
permanently assigned to the State under part A or E of this title or
under title XIX.''.
(h) Review and Adjustment of Child Support Arrearages Upon
Request.--Section 466(a)(10) of the Social Security Act (42 U.S.C.
666(a)(10)) is amended by adding at the end the following new
subparagraph:
``(D) Review and adjustment of arrearages.--
Procedures which require the State to review, and if
appropriate, reduce the balance of arrearages
permanently assigned to the State under part A or E of
this title, or under title XIX , pursuant to standards
and procedures established by the State, in cases where
the obligor lacks sufficient ability to pay the
arrears, adjustment will promote timely payment of
current support, or barriers, such as incarceration,
may have limited the ability of the obligor to timely
seek a modification of the order, and it is in the best
interests of the child to make such reduction. Nothing
in the preceding sentence shall be construed as
affecting arrearages that have not been permanently
assigned to the State under such part or title.''.
(i) Study and Report.--Not later than October 1, 2007, the
Secretary of Health and Human Services shall study and submit a report
to Congress regarding the following:
(1) The effect of age eligibility restrictions for the
earned income tax credit established under section 32 of the
Internal Revenue Code of 1986 for individuals without
qualifying children on--
(A) the ability of young parents to pay child
support;
(B) compliance with child support orders; and
(C) the relationship between young noncustodial
parents and their children.
(2) The impact of State earned income tax credit programs,
especially such programs with targeted benefits for
noncustodial parents, on--
(A) the ability of noncustodial parents to pay
child support;
(B) compliance with child support orders; and
(C) the relationship between noncustodial parents
and their children.
(3) The challenges faced by legal immigrants and
individuals for whom English is not their primary language in
fulfilling child support and other noncustodial parenting
obligations.
(j) Effective Date.--
(1) In general.--Except as otherwise provided in this
section, the amendments made by this section shall take effect
on October 1, 2009, and shall apply to payments under parts A
and D of title IV of the Social Security Act for calendar
quarters beginning on or after that date, and without regard to
whether regulations to implement the amendments are promulgated
by such date.
(2) State option to accelerate effective date.--
Notwithstanding paragraph (1), a State may elect to have the
amendments made by the preceding provisions of this section
apply to the State and to amounts collected by the State (and
to payments under parts A and D of title IV of such Act), on
and after such date as the State may select that is not earlier
than October 1, 2006, and not later than September 30, 2009.
SEC. 106. GRANTS TO STATES TO CONDUCT DEMONSTRATION PROJECTS TO PROMOTE
ECONOMIC OPPORTUNITY FOR LOW-INCOME PARENTS.
(a) Authority To Award Grants.--The Secretary of Health and Human
Services, in consultation with the Secretary of Labor, shall award
grants to States to conduct demonstration projects to carry out one or
more of the purposes described in subsection (b).
(b) Purposes Described.--For purposes of subsection (a), the
purposes described in this subsection are the following:
(1) Court-supervised or iv-d agency-supervised employment
programs for noncustodial parents.--
(A) In general.--To establish, in coordination with
counties and other local or tribal governments, court-
supervised or IV-D agency supervised-employment
programs for noncustodial parents who have barriers to
employment and a history of nonpayment of child support
obligations, as determined by a court or the IV-D
agency, and who are determined by the court or agency
to be in need of employment services or placement in
order to pay such child support obligations. A
noncustodial parent described in the preceding sentence
who is an ex-offender shall be eligible to participate
in a program established to carry out this purpose.
(B) Requirements.--
(i) Option to participate prior to contempt
finding.--A State shall not be eligible to
receive a grant under this section to carry out
this purpose unless any program established
with funds made available under the grant
provides noncustodial parents described in
subparagraph (A) with an option to participate
in the program prior to the court or agency
entering a finding that the noncustodial parent
is in contempt for failure to pay a child
support obligation and, potentially subject to
criminal penalties.
(ii) Program goals.--An employment program
established with funds made available under a
grant awarded under this section to carry out
this purpose shall be designed to do the
following:
(I) To assist noncustodial parents
described in subparagraph (A) obtain
and maintain unsubsidized employment.
(II) To increase the amount of
financial support received by children.
(III) To help noncustodial parents
described in subparagraph (A) improve
relationships with their children and
their children's custodial parent.
(iii) 6 months of continuous, timely
payments.--An employment program established
with funds made available under this section to
carry out this purpose shall not permit a
noncustodial parent placed in the program to
graduate from the program and avoid penalties
for failure to pay a child support obligation
until the noncustodial parent completes at
least 6 months of continuous, timely payment of
the parent's child support obligations.
(iv) Use of funds.--Services provided under
an employment program established with funds
made available under a grant made to carry out
this purpose may include one or more of the
following:
(I) Job development.
(II) Supervised job search.
(III) Job placement.
(IV) Case management.
(V) Court liaison services.
(VI) Educational assessment.
(VII) Remedial education services
or educational referral.
(VIII) Vocational assessment or
services.
(IX) Counseling on responsible
fatherhood.
(X) Support funds for services such
as transportation or short-term
training.
(XI) Referral for support services.
(XII) Employment retention
services.
(XIII) Transitional jobs programs.
(XIV) Public-private career pathway
partnerships established in accordance
with paragraph (3).
(v) Administration.--A State that receives
a grant under this section to carry out this
purpose may contract with a public or private
nonprofit organization, including a faith-based
or community-based organization, to administer
(in conjunction with the court of jurisdiction
or the IV-D agency) the court-supervised or IV-
D agency-supervised employment program.
(2) Transitional jobs grants.--
(A) In general.--To establish and expand
transitional jobs programs for eligible individuals,
including such programs conducted by local governments,
State employment agencies, nonprofit organizations, and
faith-based or community-based organizations or
intermediaries, that--
(i) combine time-limited employment in
transitional jobs that may be subsidized with
public funds, with activities that promote
skill development and remove barriers to
employment, such as case management services
and education, training, child support-related
services, and other activities, pursuant to
individual plans; and
(ii) provide such individuals with--
(I) transitional jobs placements
and job placement assistance, to help
the individuals make the transition
from subsidized employment in
transitional jobs to stable
unsubsidized employment; and
(II) retention services after the
transition to unsubsidized employment.
(B) Eligible individuals.--For purposes of this
paragraph, the term ``eligible individuals'' means
individuals within any of the following categories of
disproportionately chronically unemployed individuals:
(i) Individuals who have attained age 16,
but not attained age 36, and who have
documented barriers to employment, particularly
such individuals who are parents or expectant
parents.
(ii) Formerly incarcerated individuals.
(iii) Homeless or formerly homeless
individuals.
(iv) Individuals with disabilities.
(v) Individuals designated by a court or
the IV-D agency to participate in transitional
jobs programs.
(C) Limitations on use of funds.--
(i) Allowable activities.--A State that
receives a grant to carry out this purpose (or
a subgrantee of such State) (referred to in
this paragraph as the ``program operator'')
shall use the funds made available under the
grant to operate a transitional jobs program
for eligible individuals consistent with the
following requirements:
(I) Jobs.--The program operator
shall place eligible individuals in
temporary jobs, the incomes from which
may be subsidized in whole or in part
with public funds. An eligible
individual placed in such a job
(referred to in this paragraph as ``a
participant'') shall perform work
directly for the program operator or
another public, nonprofit, or private
sector organization (which operator or
organization may be referred to in this
paragraph as a ``worksite employer'')
within the community involved.
(II) Hours.--
(aa) In general.--Subject
to item (bb), the transitional
jobs program shall provide a
participant with not less than
30, and not more than 40, hours
per week of a combination of
paid employment and the
services described in
subclauses (III), (IV), and
(V).
(bb) Accommodation of
special circumstances.--The
number of hours per week
required under item (aa) may be
adjusted in the case of a
participant who requires a
modified work week to
accommodate special
circumstances.
(III) Job preparation and
services.--The program operator shall--
(aa) develop an individual
plan for each participant,
which shall contain a goal that
focuses on preparation of the
participant for unsubsidized
jobs in demand in the local
economy that offer the
potential for advancement and
growth (including increases in
wages and benefits);
(bb) develop transitional
jobs placements for
participants that will best
prepare them for jobs described
in item (aa) or participation
in the public-private career
pathway partnerships
established in accordance with
paragraph (3); and
(cc) provide case
management services and ensure
that appropriate education,
training, and other activities
are available to participants,
consistent with each
participant's individual plan.
(IV) Job placement assistance and
retention services.--The program
operator shall provide job placement
assistance to help participants obtain
unsubsidized employment and shall
provide retention services to the
participants for a minimum of 6 months
after entry into the unsubsidized
employment.
(V) Education or training.--In any
workweek in which a participant is
scheduled to work at least 30 hours in
the program, not less than 20 percent
of the scheduled hours and not more
than 50 percent of the scheduled hours
shall involve participation in--
(aa) education or training
activities designed to improve
the participant's employability
and potential earnings;
(bb) other activities
designed to reduce or eliminate
any barriers that may impede
the participant's ability to
secure and advance in
unsubsidized employment; or
(cc) activities designed to
promote financial literacy and
the use of products and
services that increase personal
savings and build financial
assets for family support,
education, homeownership, and
retirement.
(VI) Duration.--
(aa) In general.--Subject
to item (bb), the duration of
any placement in the program
shall be for a period of 6
consecutive months.
(bb) 3 month extension.--A
program placement may be
extended on a one-time basis
for an additional period of 3
consecutive months upon the
conclusion of the original 6-
month placement period if such
extension would be consistent
with the individual's plan for
transition to unsubsidized
employment.
(VII) Supervision.--The worksite
employer or program operator shall
supervise program participants,
consistent with the goal of addressing
the limited work experience and skills
of the participants.
(D) Reports.--Not later than 120 days after the end
of the grant period, the program operator shall submit
a report to the Secretary of Health and Human Services
and the Secretary of Labor that contains information on
the number of participants in the program who have
entered unsubsidized employment, rates of retention in
such employment for those participants, demographic
information regarding the participants, and information
regarding the wages and benefits received by the
participants.
(E) Technical assistance.--The Secretary of Health
and Human Services, in consultation with the Secretary
of Labor, shall enter into contracts with entities with
demonstrated experience in the provision of
transitional jobs to provide technical assistance to
the program operators and worksite employers for the
programs assisted under this paragraph.
(3) Public-private career pathways partnerships.--
(A) In general.--To allow workforce education
providers representing career pathway partnerships--
(i) to create or expand career pathways
with specific employers for disadvantaged
workers, which may include any mix of such
employers' existing lower wage employees, new
hires or potential hires; or
(ii) to fill in gaps in career pathways in
particular localities or regions as needed to
ensure that career pathways are accessible to
unemployed disadvantaged workers and at risk
youth who have lower skills or limited English
proficiency, including through the creation of
workforce education services, such as
``bridge'' programs that contextualize basic
skills, English language, or college remedial
education services to specific career pathways,
and efforts to create opportunities for gaining
work experience in a career pathway.
(B) Use of funds.--Funds made available under a
grant under this section to carry out this purpose may
be used by career pathways partnerships for any expense
reasonably related to the accomplishment of the
specific objectives of the partnership and the purpose
described in this paragraph, including any of the
activities described in paragraph (1)(B)(iv).
(C) Limitations.--
(i) In general.--Of the funds made
available to a career pathway partnership to
carry out the purpose described in this
paragraph--
(I) not more than 30 percent of
such funds may be used to pay or
subsidize wages during a period of work
experience or internship, not to exceed
90 days; and
(II) not more than 10 percent of
such funds may be used for
administrative purposes.
(ii) Prohibition on subsidizing wages of
current employees.--No funds made available to
carry out this paragraph shall be used to
subsidize the wages of any individual who, as
of the date of the establishment of the career
pathway partnership, is an employee of any
employer participating in the partnership.
(D) Requirements for awarding of subgrants.--
(i) In general.--Funds shall be made
available to career pathway partnerships to
carry out the purpose described in this
paragraph based on a performance-based
accountability system that includes the
following measures of performance:
(I) The number of individuals to be
trained.
(II) The percentage of such
individuals who complete the program.
(III) The percentage of such
individuals who enter or advance in
employment.
(IV) The wage and benefit gains of
individuals who complete the program
before and within 6 months after their
program completion, including the
extent to which the individuals
achieved economic self-sufficiency.
(V) The percentage of individuals
who complete the program and are placed
in jobs who retain employment for at
least 6 months.
(VI) The percentage of individuals
who owe child support and complete the
program who improve in their payment of
child support within 6 months after
their program completion.
In establishing goals for such measures, due
consideration shall be given to the education,
work experience, and job readiness of the
individuals expected to participate in the
program; the barriers of such individuals to
employment, and the local job market.
(ii) Considerations for funding renewals.--
A subgrantee's level of success in achieving
employment, advancement, wage, and employment
retention goals shall be a primary
consideration for determining whether to renew
a grant made to such entity and the funding
level for such grant.
(iii) Priorities for awards of subgrants.--
In awarding subgrants to carry out this
purpose, a State shall give priority to
applications that--
(I) propose to serve areas of high
poverty, high youth unemployment, high
drop out rates, or high rates of low-
income single-parent families;
(II) include a substantial cash or
in-kind match by all employers,
including joint labor-management
programs where applicable, in the
partnerships, such as paid release time
for employed workforce education
participants;
(III) use instructional materials
and instructors directly used in the
specific business or industry sectors
of the partnership employers;
(IV) link successful completion of
workforce education services to wage
increases, promotions or job hires;
(V) will result in attainment of
employer-recognized occupational and
educational credentials;
(VI) address career guidance and
adult basic education and English
language needs as well as job-specific
skills;
(VII) demonstrate a blending of
resources from partner agencies in the
workforce system and other sectors and
Federal programs, including superior
procedures for coordinating responsible
fatherhood promotion activities, where
appropriate, to support the development
of high quality pathways;
(VIII) identify how the subgrantee
will maximize services to unemployed
disadvantaged workers who also face
other barriers in the labor market,
such as high school dropout, offender
status, aging out of foster care, low
basic skill level, including limited
English proficiency, learning
disabilities, physical, emotional or
behavior disabilities, or substance
abuse recovery, which may be through
direct relationships with local
providers of transitional jobs programs
under which in appropriate
circumstances transitional jobs
participants may access career pathways
programs upon completion of the
transitional jobs program; and
(IX) support collaboration, as
appropriate, between employers and
labor organizations and other workforce
development professionals, including
joint labor management training and
education programs where appropriate.
(E) Definitions.--In this paragraph:
(i) Adult education.--The term ``adult
education'' has the meaning given that term in
section 203 of the Workforce Investment Act of
1998 (20 U.S.C. 9202).
(ii) Career pathway.--The term ``career
pathway'' means a linked set of workforce
education and job opportunities within a
specific business or industry sector, or for an
occupational sector that cuts across multiple
business and industry sectors, which begins at
the lowest skill and English language levels,
and extends through for-credit college
opportunities such as earning relevant
associate or bachelor's degrees, and prepares
individuals for advancement in jobs in demand
in the local or regional labor market.
(iii) Community-based provider.--The term
``community-based provider'' means a not-for-
profit organization, with local boards of
directors, that directly provides workforce
education services.
(iv) Institution of higher education.--The
term ``institution of higher education'' has
the meaning given that term in section 101 of
the Higher Education Act of 1965 (20 U.S.C.
1001).
(v) Charter school.--The term ``charter
school'' has the meaning given that term in
section 5210 of the Elementary and Secondary
Education Act of 1965 (20 U.S.C. 7221i).
(vi) Area vocational education school.--The
term ``area vocational and technical education
school'' has the meaning given that term in
section 3 of the Carl D. Perkins Vocational and
Technical Education Act of 1998 (20 U.S.C.
2302).
(vii) Disadvantaged workers.--The term
``disadvantaged workers'' means unemployed
individuals in households whose income is at or
below the lower living standard or employed
individuals with wages at or below \2/3\ of the
median wage for the State or region applying
for the grant or the partnership applying for a
subgrant.
(viii) Career pathway partnership.--The
term ``career pathway partnership'' means
collaborations of 1 or more workforce education
providers, 1 or more employers, 1 or more labor
organizations, where applicable, as a result of
such organization's representation of employees
at the worksite who have skills in which the
training or employment programs are proposed,
and may include optional additional entities as
needed to provide a comprehensive range of
workforce education and ancillary support
services.
(ix) Workforce education.--The term
``workforce education'' means a set of career
guidance and exploration, adult education, job
training, registered apprenticeship programs,
and for-credit postsecondary education services
aimed at preparing individuals to enter and
sustain employment in specific occupations and
to have the sufficient skills to respond to
shifting employment opportunities.
(x) Workforce education provider.--The term
``workforce education provider'' means
community-based providers, institutions of
higher education, area vocational and technical
education schools, charter schools, and other
public nonprofit entities that provide
workforce education.
(c) Matching Requirement.--
(1) In general.--The Secretary of Health and Human Services
may not award a grant to a State under this section unless the
State agrees that, with respect to the costs to be incurred by
the State in conducting a demonstration project with funds
provided under the grant, the State will make available non-
Federal contributions in an amount equal to 10 percent of the
amount of Federal funds paid to the State under such grant.
(2) Non-federal contributions.--In this subsection, the
term ``non-Federal contributions'' includes contributions by
the State and by public and private entities that may be in
cash or in kind, but does not include any amounts provided by
the Federal Government, or services assisted or subsidized to
any significant extent by the Federal Government, or any amount
expended by a State before October 1, 2006.
(d) Worker Protections and Labor Standards.--
(1) Rate of pay; benefits and working conditions.--
(A) In general.--A worksite employer of a
participant in a program or activity funded under this
section shall pay the participant at the rate paid to
employees of the worksite employer who are not
participants in such program or activity and who
perform comparable work at the worksite, including
periodic increases where appropriate. If no other
employees of the worksite employer perform comparable
work at the worksite, the worksite employer shall pay
the participant not less than the applicable Federal or
State minium wage, whichever is higher.
(B) Benefits and conditions.--An individual
employed through participation in a program or activity
funded under this section shall be provided with
benefits and working conditions at the same level and
to the same extent as such benefits and conditions are
provided to other employees of the employer of the
individual who have worked a similar length of time and
perform the same work
(2) Nonduplication.--
(A) In general.--Funds provided through a grant
made under this paragraph shall be used only for a
program or activity that does not duplicate, and is in
addition to, a program or activity otherwise available
in the locality of the program or activity funded under
this section.
(B) Private, nonprofit entity.--Funds provided
through a grant made under this section shall not be
provided to a private nonprofit entity to conduct
programs or activities that are the same as or
substantially equivalent to activities provided by a
State or local government agency in the area in which
such entity is located, unless the requirements of
paragraph (3) are met.
(3) Nondisplacement.--
(A) In general.--A worksite employer shall not
displace an employee or position (including partial
displacement such as reduction in hours, wages, or
employment benefits) or impair contracts for services
or collective bargaining agreements, as a result of the
use by such employer of a participant in a program or
activity funded under this section, and no participant
in the program or activity shall be assigned to fill
any established unfilled position vacancy.
(B) Job opportunities.--A job opportunity shall not
be created under this paragraph that will infringe in
any manner on the promotional opportunity of an
employed individual.
(C) Limitation on services.--
(i) Supplantation of hiring.--A participant
in any program or activity funded under this
section shall not perform any services or
duties, or engage in activities, that will
supplant the hiring of employees that are not
participants in the program or activity.
(ii) Duties formerly performed by another
employee.--A participant in any program or
activity funded under this section shall not
perform services or duties, or engage in
activities, that are services, duties, or
activities that had been performed by or were
assigned to any employee who recently resigned
or was discharged, who is subject to a
reduction in force, who has recall rights
pursuant to a collective bargaining agreement
or applicable personnel procedures, who is on
leave (such as terminal, temporary, vacation,
emergency, or sick leave), who is on strike, or
who is being locked out.
(D) Concurrence of local labor organization.--No
placement shall be made under a program or activity
funded under this section until the entity conducting
the program or activity has obtained the written
concurrence of any local labor organization
representing employees who are engaged in the same or
substantially similar work as that proposed to be
carried out for the worksite employer with whom a
participant is to be placed under the program or
activity.
(4) No impact on union organizing.--A State conducting a
demonstration project funded under this section and any entity
conducting a program or activity funded under this section
shall provide the Secretary with a certified assurance that
none of such funds shall be used to assist or deter union
organizing.
(5) Accountability.--
(A) In general.--Funds provided under this section
shall not be used to subsidize training or employment
with an employer that has a demonstrable record of
noncompliance with Federal labor, civil rights,
workplace safety, or related laws.
(B) Certified satisfactory record.--Employers who
receive training or wage subsidies under programs or
activities funded under this section shall have a
satisfactory record in labor relations and employment
practices, as certified by the Secretary of Labor.
(C) Application of worker protection laws.--A
participant in a program or activity funded under this
section shall be considered to be an employee of any
employer that the participant is placed with for all
purposes under Federal and State law, including laws
relating to health and safety, civil rights, and
worker's compensation.
(6) Grievance procedure.--An entity conducting a program or
activity funded under this section shall establish and maintain
a procedure for the filing and adjudication of grievances by
employees of worksite employers who are not participants in the
program, or such employees' representatives, or by participants
in such a program or activity alleging a violation of a
provision of this subsection that is similar to the grievance
procedure established by a State for purposes of section
407(f)(3) of the Social Security Act (42 U.S.C. 607(f)(3)).
(7) Nonpreemption of state law.--The provisions of this
subsection shall not be construed to preempt any provision of
State law that affords greater protections to employees or
participants than are afforded by this subsection.
(8) Treatment of amounts paid to participants.--Amounts
paid to a participant in a program or activity funded under
this section shall be--
(A) considered earned income for purpose of
determining the participant's eligibility for the child
tax credit established under section 24 of the Internal
Revenue Code of 1986, the earned income tax credit
established under section 32 of such Code, and any
other tax benefit established under such Code the
eligibility for which is based on earned income; and
(B) disregarded for purposes of determining the
participant's, the participant's family's, or the
participant's household's eligibility for, or amount
of, assistance or benefits provided under any means-
tested program funded in whole or in part with Federal
funds.
(e) Application.--
(1) Requirements for all applications.--
(A) In general.--A State desiring to receive a
grant to conduct a demonstration project under this
section to carry out one or more of the purposes
described in subsection (b) shall submit an application
to the Secretary of Health and Human Services at such
time, in such manner, and containing such information
or assurances as the Secretary may require.
(B) Compliance with worker protections and labor
standards.--The application shall include an assurance
that the State and any entity conducting a program or
activity under the project shall comply with the worker
protections and labor standards established in
accordance with such protections under subsection (d),
(C) Nondiscrimination.--The application shall
include an assurance that the State and any entity
conducting a program or activity under the
demonstration project shall comply with section
188(a)(2) of the Workforce Investment Act of 1998 (29
U.S.C. 2938(a)(2)) to the same extent that such section
would apply to the entity if the program or activity
conducted under the demonstration project was
considered to be funded or otherwise financially
assisted under that Act.
(D) Assurance grant will supplement, not supplant,
other state funding.--The application shall include an
assurance from the chief executive officer of the State
that funds made available under the grant will
supplement, and not supplant, other funds used by the
State to establish or support employment placements for
low-income parents.
(2) Specific demonstration project requirements.--
(A) Court-supervised or iv-d agency-supervised
employment programs for noncustodial parents.--In order
to conduct a demonstration project described in
paragraph (1) of subsection (b), a State shall include
in the application submitted to the Secretary of Health
and Human Services, the following:
(i) Evidence of an agreement between the
State and 1 or more counties to establish an
employment program that meets the requirements
of subsection (b)(2).
(ii) The number of potential noncustodial
parents to be served by the program.
(iii) The purposes specific to that State's
program.
(iv) The median income of the target
population.
(B) Public-private career pathways partnerships.--
In order to conduct a demonstration project described
in paragraph (3) of subsection (b), a State shall
include in the application submitted to the Secretary
of Health and Human Services a description of--
(i) the number, characteristics, and
employment and earnings status of disadvantaged
individuals in the State or applicable region
where the program is to be conducted;
(ii) which business and industry sectors,
or occupational clusters that cut across
sectors, will be targeted by the career
pathways partnership, based on overall economic
benefit to the community, the current and
future demand for workers, the advancement
opportunities for workers, the wages at each
step of the career pathway, and availability of
worker benefits;
(iii) the interventions that will be put in
place to address any educational deficits or
learning disabilities of individuals who
participate in the program and to ensure that
such individuals have the academic, technical,
communications, and other job skills to
function in the jobs targeted by the
partnership;
(iv) how the members of the partnership
will collaborate on the development of
curriculum and delivery of training that will
provide the necessary occupational, academic
and other work-related skills and credentialing
needed for the specific labor market areas;
(v) the supports that will be used to
provide counseling, mentoring or other support
to individuals while in training or to assist
them in navigating in complicated work
environments;
(vi) the set of career exposure activities
that will be put in place to provide hands-on
experience such as work experience, on the job
training, internships, or work-study;
(vii) the agreements that are in place with
employers, industry groups, and labor
organizations, where applicable, to ensure
access to jobs and advancement opportunities in
the targeted businesses, industry or
occupations;
(viii) how the workforce education
providers in the partnership will assess the
employment barriers and needs of local
disadvantaged individuals who participate in
the program and will identify resources for
meeting those needs;
(ix) how the workforce education providers
will work with partnership employers, business
and industry groups, labor organizations, where
applicable, and local economic development
organizations to identify the priority
workforce needs of the local industry;
(x) how the partnerships will ensure that
the appropriate program delivery models and
formal agreements are in place to ensure
maximum benefits to the individuals receiving
career pathway partnership services and to the
employers and labor organizations, where
applicable, in the partnership and the
industries or businesses they represent; and
(xi) how partnership employers and labor
organizations, where applicable, will be
actively involved in identifying specific
workforce education needs, planning the
curriculum, assisting in training activities,
providing job opportunities, and coordinating
job retention for individuals hired after
training through the program and follow-up
support.
(3) Applications by indian tribes or tribal
organizations.--The Secretary of Health and Human Services may
exempt an Indian tribe or tribal organization from any
requirement of this section that the Secretary determines would
be inappropriate to apply to the Indian tribe or tribal
organization, taking into account the resources, needs, and
other circumstances of the Indian tribe or tribal organization.
(f) Priorities and Requirements for Awarding Grants.--
(1) In general.--Subject to paragraphs (2) and (3), the
Secretary of Health and Human Services, in consultation with
the Secretary of Labor, shall give priority to making grants to
carry out the purposes described in subsection (b) to entities
that--
(A) demonstrate a plan for implementing measures to
track their performance with respect to meeting the
goals of quality job placement, long-term unsubsidized
job retention, increasing child support payments,
decreasing unpaid child support arrearages, and
increasing the involvement of low-income noncustodial
parents with their children; and
(B) coordinate with, and link individuals to, other
public and private benefits and employment services for
low-income, noncustodial parents among the different
systems or programs in which such parents are involved,
including the criminal justice system, the State
programs funded under each part of title IV of the
Social Security Act (42 U.S.C. 601 et seq.) (including
programs and activities funded under section 403(a)(2)
of the Social Security Act (42 U.S.C. 603(a)(2)),
educational assistance programs, and job training or
employment programs, including State employment
agencies.
(2) Reflective of target populations.--In making grants to
carry out these purposes, the Secretary of Health and Human
Services, in consultation with the Secretary of Labor, shall
give priority to States with proposed demonstration projects
that are designed to target low-income parents, including
custodial and noncustodial parents, and low-income married
couples.
(3) Substantial funding for each of the purposes.--In
making grants under this section, the Secretary of Health and
Human Services, in consultation with the Secretary of Labor,
shall ensure that a substantial share of the amount
appropriated under subsection (i) for a fiscal year is used for
carrying out each of the purposes described in subsection (b).
(g) Evaluation.--The Secretary of Health and Human Services, in
consultation with the Secretary of Labor, shall provide for an
independent and rigorous evaluation of the demonstration projects
conducted under this section that includes, to the maximum extent
feasible, random assignment or other appropriate statistical
techniques, in order to assess the effectiveness of the projects.
(h) General Definitions.--In this section:
(1) State.--The term ``State'' means each of the 50 States,
the District of Columbia, the Commonwealth of Puerto Rico, the
United States Virgin Islands, Guam, American Samoa, and
includes an Indian tribe or tribal organization.
(2) IV-D agency.--The term ``IV-D agency'' means the State
or local agency responsible for administering the State program
established under part D of title IV of the Social Security Act
(42 U.S.C. 651 et seq.).
(3) Indian tribe; tribal organization.--The terms ``Indian
tribe'' and ``tribal organization'' have the meaning given such
terms in section 4 of the Indian Self-Determination and
Education Assistance Act (25 U.S.C. 450b).
(i) Appropriation.--Out of any money in the Treasury of the United
States not otherwise appropriated, there are appropriated to carry out
this section, $50,000,000 for each of fiscal years 2007 through 2009.
SEC. 107. STATE ASSESSMENTS OF BARRIERS TO EMPLOYMENT AND FINANCIAL
SUPPORT OF CHILDREN.
(a) State Assessments and Reports.--As a condition of the continued
approval of a State plan under part D of title IV of the Social
Security Act (42 U.S.C. 651 et. seq.), each State with an approved such
plan, acting through the appropriate State agencies, shall assess the
State policies with respect to the issues described in subsection (b)
and submit a report to the Secretary of Health and Human Services on
the results of such assessment not later than March 15, 2008.
(b) Issues Described.--For purposes of subsection (a), the issues
described in this subsection are the following:
(1) The process of setting and modifying child support
obligations, particularly with respect to low-income parents,
including--
(A) the role and criteria for using imputed income
in determining child support obligations;
(B) the process of modifying obligations;
(C) the consideration of income and employment
status, including efforts to identify unreported
income;
(D) the consideration of incarceration;
(E) the consideration of disability;
(F) the treatment of arrearages, including interest
charged, and laws or procedures that interfere with
forgiveness, adjustment, waiver, or compromise of
arrears owed to the State by low-income noncustodial
parents who lack sufficient ability to pay such
arrearages;
(G) the procedures related to retroactive support;
and
(H) State pass-through and disregard policies for
recipients of means tested public benefits.
(2) The impact of state criminal laws and law enforcement
practices on the employment acquisition, retention, and
advancement prospects of individuals following arrest,
conviction, or incarceration, including--
(A) any efforts, including counseling or employment
support, to assist ex-prisoners with reentry to a
community and successful reunification with their
families; and
(B) an assessment of any efforts to seal or expunge
arrest and conviction records and any efforts to grant
certificates or other acknowledgments of rehabilitation
to ex-prisoners, and to examine State occupational
licensing and certification procedures.
(3) Identification of any other barriers to healthy family
formation or sustainable economic opportunity for custodial and
noncustodial parents that are created or exacerbated by Federal
or State laws, policies, or procedures, including an
examination of the rules of Federal and State means-tested
programs, the operation of the State workforce system, the
availability of financial education services, and the
availability of domestic violence services and child support
procedures to help victims of domestic violence stay safe and
obtain the child support they are owed.
(c) Grants to States for Commissions on State Law Improvements in
the Best Interest of Children and Families.--The Secretary of Health
and Human Services shall award grants to States to establish or support
commissions to review the State assessment conducted in accordance with
subsection (a) and to make recommendations on ways to improve State law
in the best interest of children and families.
(d) Appropriations.--Out of any money in the Treasury of the United
States not otherwise appropriated, there are appropriated to the
Secretary of Health and Human Services for the period of fiscal years
2007 through 2008, $3,000,000, to remain available until expended, for
the purpose of making--
(1) payments to States to offset all or a portion of the
costs of conducting the State assessments and reports required
under subsection (a); and
(2) grants to States under subsection (c).
SEC. 108. COLLECTION OF CHILD SUPPORT UNDER THE FOOD STAMP PROGRAM.
(a) Encouragement of Collection of Child Support.--Section 5 of the
Food Stamp Act of 1977 (7 U.S.C. 2014) is amended--
(1) in subsection (e)--
(A) by redesignating paragraphs (5) and (6) as
paragraphs (6) and (7), respectively;
(B) in paragraph (4)(B), by striking ``paragraph
(6)'' and inserting ``paragraph (7)''; and
(C) by inserting after paragraph (4) the following:
``(5) Deduction for child support received.--
``(A) In general.--A household shall be allowed a
deduction of 20 percent of all legally obligated child
support payments received from an identified or
putative parent of a child in the household if that
parent is not a household member.
``(B) Order of determining deductions.--A deduction
under this paragraph shall be determined before the
computation of the excess shelter deduction under
paragraph (7).''; and
(2) in subsection (k)(4)(B), by striking ``subsection
(e)(6)'' and inserting ``subsection (e)(7)'';
(b) Simplified Verification of Child Support Payments.--Section
5(n) of the Food Stamp Act of 1977 (7 U.S.C. 2014(n)) is amended--
(1) in the subsection heading, by striking ``State Options
to Simplify'', and inserting ``Simplified''; and
(2) by striking ``Regardless of whether'' and inserting the
following:
``(1) In general.--A household that is paying legally
obligated child support through the program under part D of
title IV of the Social Security Act (42 U.S.C. 651 et seq.)
shall receive--
``(A) a deduction under subsection (e)(4); or
``(B) an exclusion for paid child support under
subsection (d)(3).
``(2) State options.--Regardless of whether''.
(c) Inclusion of Economic Opportunities Programs in Definition of
Work Program.--Section 6(o)(2) of the Food Stamp Act of 1977 (7 U.S.C.
2015(o)(2)) is amended--
(1) in subparagraph (C), by striking ``or'' at the end;
(2) in subparagraph (D), by striking the period at the end
and inserting ``; or''; and
(3) by adding at the end the following:
``(E) participate in and comply with the
requirements of a demonstration project under section
106 of the Responsible Fatherhood and Healthy Families
Act of 2006;''.
(d) Effective Date.--
(1) In general.--This section and the amendments made by
this section take effect on October 1, 2007.
(2) State option.--A State may implement the amendments
made by subsections (a) and (b) for participating households at
the first recertification of the households that occurs on or
after October 1, 2007.
TITLE II--REVENUE PROVISIONS
SEC. 201. MODIFICATIONS TO THE EARNED INCOME TAX CREDIT.
(a) Increase in Phaseout Amount for Workers With No Qualifying
Children.--
(1) In general.--The table under section 32(b)(2)(A) of the
Internal Revenue Code of 1986 is amended by striking ``$5,280''
and inserting ``$10,712''.
(2) Inflation adjustment.--
(A) In general.--Subsection (j) of section 32 of
such Code is amended by redesignating paragraph (2) as
paragraph (3) and by inserting after paragraph (1) the
following new paragraph:
``(2) Phaseout amount for individuals with no qualifying
children.--In the case of any taxable year beginning after
calendar year 2007, the `$10,712' dollar amount in section
(b)(2)(A) 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 2006' for `calendar year 1992' in
subparagraph (B) thereof.''.
(B) Conforming amendment.--Clause (i) of section
32(j)(1)(B) of such Code is amended by inserting
``(other than the amount described in paragraph (2))''
after ``subsections (b)(2)(A)''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years ending after December 31, 2005.
(b) Enhanced Credit for Certain Workers With No Qualifying
Children.--
(1) In general.--Section 32 of the Internal Revenue Code of
1986 is amended by adding at the end the following new
subsection:
``(n) Additional Credit for Certain Workers.--
``(1) In general.--In the case of a qualified individual,
the credit allowed under subsection (a) shall be increased by
an amount equal to 100 percent of the amount of the credit
allowed under this section (without regard to this subsection).
``(2) Qualified individual.--For purposes of this
subsection, the term `qualified individual' means an eligible
individual who--
``(A) is described in clause (ii) of subsection
(c)(1)(A),
``(B) is the parent of a child who meets the age
requirements of section 152(c)(3) before the end of the
taxable year of the eligible individual,
``(C) is required to make child support payments
with respect to such child--
``(i) pursuant to an order which is in
effect for not less than one-half of the
taxable year of such individual, and
``(ii) through a State agency responsible
for administering the State plan under part D
of title IV of the Social Security Act, and
``(D) has paid child support during the taxable
year in an amount not less than the amount of child
support due during the taxable year for every order
requiring the individual to make child support
payments.
``(3) Regulations.--The Secretary shall establish
regulations to carry out the purposes of this subsection,
including regulations which provide for the verification of the
payment of child support in accordance with paragraph
(2)(D).''.
(2) Verification of payment.--
(A) In general.--The Secretary of Health and Human
Services, in consultation with the Secretary of the
Treasury, shall include in the Federal Case Registry of
Child Support Orders established under section 453(h)
of the Social Security Act (42 U.S.C. 653(h)) such
information as the Secretary of the Treasury determines
necessary to allow for verification of the status of
individuals as qualified individuals (as defined under
section 32(n) of the Internal Revenue Code of 1986, as
added by paragraph (1)).
(B) Additional federal procedures.--In addition to
the authority provided under subparagraph (A), the
Secretary of Health and Human Services and the
Secretary of the Treasury may establish such additional
procedures as are appropriate to ensure that the
Secretary of the Treasury has the information that the
Secretary of the Treasury needs to verify payment of
child support obligations in a timely fashion.
(C) State procedures.--The Secretary of Health and
Human States, in consultation with the States, shall
establish procedures for informing a noncustodial
parent in a timely fashion when the parent has paid the
amount of child support owed by the parent for a
taxable year so that the parent may determine the
extent to which the parent is a qualified individual
for purposes of qualifying for the additional credit
established under section 32(n) of the Internal Revenue
Code of 1986, as added by paragraph (1).
(3) Effective date.--The amendment made by paragraph (1)
shall apply to taxable years beginning after December 31, 2007.
(c) Marriage Penalty Relief.--
(1) In general.--Subparagraph (B) of section 32(b)(2) of
the Internal Revenue Code of 1986 is amended--
(A) in clause (ii), by striking ``, 2006, and 2007,
and'' and inserting ``and 2006'',
(B) in clause (iii) by striking ``after 2007.'' and
inserting ``in 2007, and'', and
(C) by adding at the end the following new clause:
``(iv) $4,000 in the case of taxable years
beginning after 2007.''.
(2) Inflation adjustment.--Clause (ii) of section
32(j)(1)(B) of such Code is amended--
(A) by striking ``$3,000'' and inserting
``$4,000'', and
(B) by striking ``subsection (b)(2)(B)(iii)'' and
inserting ``subsection (b)(2)(B)(iv)''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31, 2005.
SEC. 202. TAX TREATMENT OF INVERTED ENTITIES.
(a) In General.--Section 7874 of the Internal Revenue Code of 1986
is amended--
(1) by striking ``March 4, 2003'' in subsection
(a)(2)(B)(i) and in the matter following subsection
(a)(2)(B)(iii) and inserting ``March 20, 2002'',
(2) by striking ``at least 60 percent'' in subsection
(a)(2)(B)(ii) and inserting ``more than 50 percent'',
(3) by striking ``80 percent'' in subsection (b) and
inserting ``at least 80 percent'',
(4) by striking ``60 percent'' in subsection (b) and
inserting ``more than 50 percent'',
(5) by adding at the end of subsection (a)(2) the following
new sentence: ``Except as provided in regulations, an
acquisition of properties of a domestic corporation shall not
be treated as described in subparagraph (B) if none of the
corporation's stock was readily tradeable on an established
securities market at any time during the 4-year period ending
on the date of the acquisition.'', and
(6) by redesignating subsection (g) as subsection (h) and
by inserting after subsection (f) the following new subsection:
``(g) Special Rules Applicable to Expatriated Entities.--
``(1) Increases in accuracy-related penalties.--In the case
of any underpayment of tax of an expatriated entity--
``(A) section 6662(a) shall be applied with respect
to such underpayment by substituting `30 percent' for
`20 percent', and
``(B) if such underpayment is attributable to one
or more gross valuation understatements, the increase
in the rate of penalty under section 6662(h) shall be
to 50 percent rather than 40 percent.
``(2) Modifications of limitation on interest deduction.--
In the case of an expatriated entity, section 163(j) shall be
applied--
``(A) without regard to paragraph (2)(A)(ii)
thereof, and
``(B) by substituting `25 percent' for `50 percent'
each place it appears in paragraph (2)(B) thereof.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years ending after March 20, 2002.
SEC. 203. TAX TREATMENT OF CONTROLLED FOREIGN CORPORATIONS ESTABLISHED
IN TAX HAVENS.
(a) In General.--Subchapter C of chapter 80 of the Internal Revenue
Code of 1986 (relating to provisions affecting more than one subtitle)
is amended by adding at the end the following new section:
``SEC. 7875. CONTROLLED FOREIGN CORPORATIONS IN TAX HAVENS TREATED AS
DOMESTIC CORPORATIONS.
``(a) General Rule.--If a controlled foreign corporation is a tax-
haven CFC, then, notwithstanding section 7701(a)(4), such corporation
shall be treated for purposes of this title as a domestic corporation.
``(b) Tax-Haven CFC.--For purposes of this section--
``(1) In general.--The term `tax-haven CFC' means, with
respect to any taxable year, a foreign corporation which--
``(A) was created or organized under the laws of a
tax-haven country, and
``(B) is a controlled foreign corporation
(determined without regard to this section) for an
uninterrupted period of 30 days or more during the
taxable year.
``(2) Exception.--The term `tax-haven CFC' does not include
a foreign corporation for any taxable year if substantially all
of its income for the taxable year is derived from the active
conduct of trades or businesses within the country under the
laws of which the corporation was created or organized.
``(c) Tax-Haven Country.--For purposes of this section--
``(1) In general.--The term `tax-haven country' means any
of the following:
``Andorra Guernsey Panama
Anguilla Isle of Man Samoa
Antigua and Barbuda Jersey San Marino
Aruba Liberia Federation of
Commonwealth of the Principality of Saint Christ-
Bahamas Liechtenstein opher
Bahrain Republic of the and Nevis
Barbados Maldives Saint Lucia
Belize Malta Saint Vincent
Bermuda Republic of the and the
British Virgin Islands Marshall Islands Grenadines
Cayman Islands Mauritius Republic of the
Cook Islands Principality of Monaco Seychelles
Cyprus Montserrat Tonga
Commonwealth of the Republic of Nauru Turks and Caicos
Dominica Netherlands Republic of
Gibraltar Antilles Vanuatu
Grenada Niue ..............................
``(2) Secretarial authority.--The Secretary may remove or
add a foreign jurisdiction from the list of tax-haven countries
under paragraph (1) if the Secretary determines such removal or
addition is consistent with the purposes of this section.''.
(b) Conforming Amendment.--The table of sections for subchapter C
of chapter 80 of such Code is amended by adding at the end the
following new item:
``Sec. 7875. Controlled foreign corporations in tax havens treated as
domestic corporations.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2007.
SEC. 204. TAXATION OF INCOME OF CONTROLLED FOREIGN CORPORATIONS
ATTRIBUTABLE TO IMPORTED PROPERTY.
(a) General Rule.--Subsection (a) of section 954 of the Internal
Revenue Code of 1986 (defining foreign base company income) is amended
by striking ``and'' at the end of paragraph (4), by striking the period
at the end of paragraph (5) and inserting ``, and'', and by adding at
the end the following new paragraph:
``(6) imported property income for the taxable year
(determined under subsection (j) and reduced as provided in
subsection (b)(5)).''.
(b) Definition of Imported Property Income.--Section 954 of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new subsection:
``(j) Imported Property Income.--
``(1) In general.--For purposes of subsection (a)(6), the
term `imported property income' means income (whether in the
form of profits, commissions, fees, or otherwise) derived in
connection with--
``(A) manufacturing, producing, growing, or
extracting imported property;
``(B) the sale, exchange, or other disposition of
imported property; or
``(C) the lease, rental, or licensing of imported
property.
Such term shall not include any foreign oil and gas extraction
income (within the meaning of section 907(c)) or any foreign
oil related income (within the meaning of section 907(c)).
``(2) Imported property.--For purposes of this subsection--
``(A) In general.--Except as otherwise provided in
this paragraph, the term `imported property' means
property which is imported into the United States by
the controlled foreign corporation or a related person.
``(B) Imported property includes certain property
imported by unrelated persons.--The term `imported
property' includes any property imported into the
United States by an unrelated person if, when such
property was sold to the unrelated person by the
controlled foreign corporation (or a related person),
it was reasonable to expect that--
``(i) such property would be imported into
the United States; or
``(ii) such property would be used as a
component in other property which would be
imported into the United States.
``(C) Exception for property subsequently
exported.--The term `imported property' does not
include any property which is imported into the United
States and which--
``(i) before substantial use in the United
States, is sold, leased, or rented by the
controlled foreign corporation or a related
person for direct use, consumption, or
disposition outside the United States; or
``(ii) is used by the controlled foreign
corporation or a related person as a component
in other property which is so sold, leased, or
rented.
``(3) Definitions and special rules.--
``(A) Import.--For purposes of this subsection, the
term `import' means entering, or withdrawal from
warehouse, for consumption or use. Such term includes
any grant of the right to use intangible property (as
defined in section 936(h)(3)(B)) in the United States.
``(B) United states.--For purposes of this
subsection, the term `United States' includes the
Commonwealth of Puerto Rico, the Virgin Islands of the
United States, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands.
``(C) Unrelated person.--For purposes of this
subsection, the term `unrelated person' means any
person who is not a related person with respect to the
controlled foreign corporation.
``(D) Coordination with foreign base company sales
income.--For purposes of this section, the term
`foreign base company sales income' shall not include
any imported property income.''.
(c) Separate Application of Limitations on Foreign Tax Credit for
Imported Property Income.--
(1) Before 2007.--
(A) In general.--Paragraph (1) of section 904(d) of
the Internal Revenue Code of 1986 (relating to separate
application of section with respect to certain
categories of income), as in effect for taxable years
beginning before January 1, 2007, is amended by
striking ``and'' at the end of subparagraph (H), by
redesignating subparagraph (I) as subparagraph (J), and
by inserting after subparagraph (H) the following new
subparagraph:
``(I) imported property income, and''.
(B) Imported property income defined.--Paragraph
(2) of section 904(d) of such Code, as so in effect, is
amended by redesignating subparagraphs (H) and (I) as
subparagraphs (I) and (J), respectively, and by
inserting after subparagraph (G) the following new
subparagraph:
``(H) Imported property income.--The term `imported
property income' means any income received or accrued
by any person which is of a kind which would be
imported property income (as defined in section
954(j)).''.
(C) Look-thru rules to apply.--Subparagraph (F) of
section 904(d)(3) of such Code, as so in effect, is
amended by striking ``or (D)'' and inserting ``(D), or
(I)''.
(2) After 2006.--
(A) In general.--Paragraph (1) of section 904(d) of
the Internal Revenue Code of 1986 (relating to separate
application of section with respect to certain
categories of income), as in effect for taxable years
beginning after December 31, 2006, is amended by
striking ``and'' at the end of subparagraph (A), by
redesignating subparagraph (B) as subparagraph (C), and
by inserting after subparagraph (A) the following new
subparagraph:
``(B) imported property income, and''.
(B) Imported property income defined.--Paragraph
(2) of section 904(d) of such Code, as so in effect, is
amended by redesignating subparagraphs (J) and (K) as
subparagraphs (K) and (L), respectively, and by
inserting after subparagraph (I) the following new
subparagraph:
``(J) Imported property income.--The term `imported
property income' means any income received or accrued
by any person which is of a kind which would be
imported property income (as defined in section
954(j)).''.
(C) Conforming amendment.--Clause (ii) of section
904(d)(2)(A) of such Code, as so in effect, is amended
by inserting ``or imported property income'' after
``passive category income''.
(d) Technical Amendments.--
(1) Clause (iii) of section 952(c)(1)(B) of such Code
(relating to certain prior year deficits may be taken into
account) is amended--
(A) by redesignating subclauses (II), (III), (IV),
and (V) as subclauses (III), (IV), (V), and (VI), and
(B) by inserting after subclause (I) the following
new subclause:
``(II) imported property income,''.
(2) Paragraph (5) of section 954(b) of such Code (relating
to deductions to be taken into account) is amended by striking
``and the foreign base company oil related income'' and
inserting ``the foreign base company oil related income, and
the imported property income''.
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section 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
within which or with which such taxable years of such foreign
corporations end.
(2) Subsection (c).--The amendments made by subsection
(c)(1) shall apply to taxable years beginning after the date of
the enactment of this Act and before January 1, 2007, and the
amendments made by subsection (c)(2) shall apply to taxable
years beginning after December 31, 2006.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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