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H.R.134
Simplified USA Tax Act of 1999 (Introduced in the House)
`SEC. 20. USA TAX CREDITS.
`(a) IN GENERAL- The USA tax credits are and shall be applied in the
following order:
`(1) The foreign tax credit as prescribed by the Secretary under rules
similar to the rules of subpart A of part III of subchapter N of chapter 1
of the Internal Revenue Code of 1986, but only with respect to foreign taxes
on amounts that are included in the gross income of the taxpayer.
`(2) The payroll tax credit under section 21.
`(3) The taxes-paid tax credit under section 22.
`(b) REFUNDABLE CREDITS- If a taxpayer's USA tax credits (other than the
foreign tax credit) for a taxable year exceed the taxpayer's tax liability for
the taxable year (after application of the foreign tax credit but before
application of the other USA tax credits), the taxpayer shall be entitled to a
refund for such excess. The taxpayer may elect in lieu of a refund to apply
such excess as a tax paid for the following taxable year.
`SEC. 21. PAYROLL TAX CREDIT.
`(a) IN GENERAL- A taxpayer shall be allowed a payroll tax credit in an
amount equal to the sum of--
`(1) the employee's share of the basic FICA tax,
`(2) the employee's share of the basic Tier 1 railroad retirement tax,
and
`(3) one-half of the basic SECA tax payable with respect to the
taxpayer's compensation or earnings during the taxable year.
`(1) EMPLOYEE'S SHARE OF THE BASIC FICA TAX- `Employee's share of the
basic FICA tax' means the old-age, survivors and disability insurance tax
imposed by section 3101(a) and the portion of the hospital insurance tax
imposed by section 3101(b) that is attributable to the wage base on which
the section 3101(a) tax is imposed.
`(2) EMPLOYEE'S SHARE OF THE BASIC TIER 1 RAILROAD RETIREMENT TAX-
Employee's share of the basic Tier 1 railroad retirement tax' means--
`(A) the portion of the tax imposed by section 3201 with respect to
compensation below the applicable base (as defined in section 3231(e)(2));
and
`(B) the portion of the tax imposed by section 3211(a)(1) on railroad
employee representatives attributable to the tax imposed by section
3101(a) and the portion of the hospital insurance tax imposed by section
3101(b) that is attributable to the wage base on which the section 3101(a)
tax is imposed.
`(3) BASIC SECA TAX- `Basic SECA tax' means the old-age, survivors and
disability insurance tax
imposed by section 1401(a) on self-employment income and the portion of the
hospital insurance tax imposed by section 1401(b) on self-employment income that
is attributable to the amount of self-employment income (as determined under
section 1402(b)) on which the section 1401(a) tax is imposed.
`(c) NO CREDIT FOR REFUNDABLE TAX- No credit shall be allowed with respect
to any FICA tax or railroad retirement tax for which a taxpayer is entitled to
a refund because of overpayment of tax on the applicable wage base.
`SEC. 22. TAXES-PAID TAX CREDIT.
`The taxes-paid tax credit shall equal the sum of--
`(1) WAGE WITHHOLDING- The amount withheld as tax under chapter
24.
`(2) SPECIAL REFUNDS OF SOCIAL SECURITY TAX WHEN WAGES EARNED FROM MORE
THAN 1 EMPLOYER- The amount allowable under section 6413(c) as a special
refund of taxes imposed on wages.
`(3) OVERPAYMENTS OF PRIOR-YEAR TAX- Any overpayment of a prior tax
obligation that the taxpayer or the Secretary applies to the tax for the
taxable year.
`(4) ESTIMATED TAXES- Any estimated taxes paid by the taxpayer with
respect to the taxpayer's tax liability for the taxable year which are
treated as payment on account of income tax for purposes of section 6315
(relating to estimated taxes).
`SEC. 23. INDEXING FOR INFLATION.
`(a) PUBLICATION OF TABLES AND NUMBERS- Not later than December 15 of
1999, and each subsequent calendar year, the Secretary shall prescribe tables
and dollar amounts which shall apply in the immediately following calendar
year in lieu of the tables and dollar amounts that are required to be adjusted
for inflation in accordance with this section.
`(b) METHOD OF ADJUSTMENT-
`(1) IN GENERAL- The dollar amounts which are required to be adjusted
pursuant to this section for a calendar year shall be the dollar amounts as
stated in this chapter multiplied by the cost of living adjustment for such
calendar year, rounded as provided in subsection (d).
`(2) TAX RATE TABLES- In the case of a tax rate table, the dollar
amounts to be adjusted in accordance with paragraph (1) are the minimum and
maximum dollar amounts for each rate bracket for which a tax is imposed. The
amounts setting forth the bottom tax for each bracket shall be adjusted to
the extent necessary to reflect the adjustments in the rate brackets.
`(c) COST-OF-LIVING ADJUSTMENT-
`(1) IN GENERAL- The cost-of-living adjustment for any calendar year is
the percentage (if any) by which--
`(A) the CPI for the preceding calendar year, exceeds
`(B) the CPI for the calendar year 1998.
`(2) CPI FOR ANY CALENDAR YEAR- For purposes of paragraph (1), the CPI
for any calendar year is the average of the Consumer Price Index as of the
close of the 12-month period ending on August 31 of such calendar
year.
`(3) CONSUMER PRICE INDEX- For purposes of paragraph (2), `Consumer
Price Index' means the last Consumer Price Index for all-urban consumers
published by the Department of Labor. For purposes of the preceding
sentence, the revision of the Consumer Price Index which is most consistent
with the Consumer Price Index for calendar year 1999 shall be used.
`(1) IN GENERAL- If any increase determined under subsection (b) is not
a multiple of $50, such increase shall be rounded to the next lowest
multiple of $50.
`(2) MULTIPLES OF $25- Paragraph (1) shall be applied by substituting
`$25' for `$50' in the case of--
`(A) amounts for married individuals filing separately, and
`(B) any other dollar amount that is to be adjusted for inflation if
that dollar amount is less than $1,000.
`Subchapter B--Roth IRA and Other Savings Provisions
`Sec. 31. Deductible IRAs.
`Sec. 32. Effect of repeal of special savings provisions.
`SEC. 30. ROTH IRAS.
`(a) GENERAL RULE- Except as provided in this section, a Roth IRA shall be
treated for purposes of this title in the same manner as an individual
retirement plan.
`(b) ROTH IRA- `Roth IRA' means an individual retirement plan (as defined
in section 7701(a)(37)) which is designated (in such manner as the Secretary
may prescribe) at the time of establishment of the plan as a Roth IRA. Such
designation shall be made in such manner as the Secretary may prescribe.
`(c) TREATMENT OF CONTRIBUTIONS-
`(1) NO DEDUCTION ALLOWED- No deduction shall be allowed for a
contribution to a Roth IRA.
`(2) CONTRIBUTION LIMIT- The aggregate amount of contributions for any
taxable year to all Roth IRAs maintained for the benefit of an individual
(or, in the case of individuals filing a joint return, either spouse) shall
not exceed the taxpayer's adjusted gross income for the taxable year.
`(A) ROLLOVER CONTRIBUTIONS- No rollover contribution may be made to a
Roth IRA unless it is a qualified rollover contribution.
`(B) LIMITS- A taxpayer shall not be allowed to make a qualified
rollover contribution to a Roth IRA from an individual retirement plan
other than a Roth IRA during any taxable year if--
`(i) the taxpayer's adjusted gross income for such taxable year
exceeds $100,000, or
`(ii) the taxpayer is a married individual filing a separate
return.
`(C) MARITAL STATUS- Section 31(g)(4) shall apply for purposes of this
paragraph.
`(4) CONTRIBUTIONS PERMITTED AFTER AGE 70 1/2 - Contributions to a Roth
IRA may be made even after the individual for whom the account is maintained
has attained age 70 1/2 .
`(5) MANDATORY DISTRIBUTION RULES NOT TO APPLY BEFORE DEATH-
Notwithstanding subsections (a)(6) and (b)(3) of section 408 (relating to
required distributions), the following provisions shall not apply to any
Roth IRA:
`(A) Section 401(a)(9)(A).
`(B) The incidental death benefit requirements of section
401(a).
`(6) TIME WHEN CONTRIBUTIONS MADE- A taxpayer shall be deemed to have
made a contribution to a Roth IRA during a year if the contribution is made
on account of such year and is made not later than April 15 of the following
year.
`(d) EXCLUSION FROM INCOME- For purposes of this chapter--
`(1) GENERAL RULES- A distribution from a Roth IRA shall not be
includible in gross income.
`(2) NONQUALIFIED DISTRIBUTION- The automatic exclusion from gross
income under paragraph (1) shall not apply to any distribution, other than a
qualified special purpose distribution if--
`(A) it is made within the 5-taxable year period beginning with the
1st taxable year for which the individual made a contribution to a Roth
IRA (or such individual's spouse made a contribution to a Roth IRA)
established for such individual, or
`(B) in the case of a payment or distribution properly allocable (as
determined in the manner prescribed by the Secretary) to a qualified
rollover contribution from an individual retirement plan other than a Roth
IRA (or income allocable thereto), it is made within the 5-taxable year
period beginning with the taxable year in which the rollover contribution
was made.
`(3) NONQUALIFIED DISTRIBUTIONS- In applying section 33 to any
distribution from a Roth IRA described in paragraph (2), such distribution
shall be treated as made from contributions to the Roth IRA to the extent
that such distribution, when added to all previous distributions from the
Roth IRA, does not exceed the aggregate amount of contributions to the Roth
IRA. Only distributions attributable to earnings on accounts (as opposed to
distributions of contributions) shall be included in gross income.
`(4) Rollovers from an ira other than a roth ira-
`(A) IN GENERAL- Notwithstanding section 408(d)(3), in the case of any
distribution to which this paragraph applies there shall be included in
gross income any amount which would be includible were it not part of a
qualified rollover contribution.
`(B) DISTRIBUTIONS TO WHICH PARAGRAPH APPLIES- This paragraph shall
apply to a distribution from an individual retirement plan (other than a
Roth IRA) maintained for the benefit of an individual which is contributed
to a Roth IRA maintained for the benefit of such individual in a qualified
rollover contribution.
`(C) CONVERSIONS- The conversion of an individual retirement plan
(other than a Roth IRA) to a Roth IRA shall be treated for purposes of
this paragraph as a distribution to which this paragraph applies.
`(D) CONVERSION OF EXCESS CONTRIBUTIONS- If, no later than the due
date for filing
the return of tax for any taxable year (without regard to extensions), an
individual transfers, from an individual retirement plan (other than a Roth
IRA), contributions for such taxable year (and any earnings allocable thereto)
to a Roth IRA, no such amount shall be includible in gross income to the extent
no deduction was allowed with respect to such amount.
`(E) ADDITIONAL REPORTING REQUIREMENTS- Trustees of Roth IRAs,
trustees of individual retirement plans, or both, whichever is
appropriate, shall include such additional information in reports required
under section 408(i) as the Secretary may require to ensure that amounts
required to be included in gross income under subparagraph (A) are so
included.
`(4) COORDINATION WITH INDIVIDUAL RETIREMENT ACCOUNTS- Section 408(d)(2)
shall be applied separately with respect to Roth IRAs and other individual
retirement plans.
`(5) QUALIFIED SPECIAL PURPOSE DISTRIBUTION- `Qualified special purpose
distribution' means--
`(i) DISTRIBUTIONS UPON DEATH- Distributions made to a beneficiary
(or to the estate of the individual) on or after the death of the
individual.
`(ii) DISTRIBUTIONS UPON DISABILITY- Distributions attributable to
the individual's being disabled.
`(iii) DISTRIBUTIONS TO PAY MEDICAL EXPENSES- Distributions made to
the individual for amounts paid during the year for medical care, but
only to the extent that the amounts paid for medical care exceed 7.5% of
the adjusted gross income of the taxpayer. (determined without regard to
whether the employee itemizes deductions for such taxable
year).
`(iv) QDROS- Any distribution to an alternate payee pursuant to a
qualified domestic relations order (within the meaning of section
414(p)(1)).
`(v) DISTRIBUTIONS TO UNEMPLOYED INDIVIDUALS FOR HEALTH INSURANCE
PREMIUMS- Distributions to an individual--
`(I) if such individual has received unemployment compensation for
12 consecutive weeks under any Federal or State unemployment
compensation law by reason of such separation (or in the case of a
self-employed individual, to the extent provided in regulations, if
the individual would have received unemployment compensation but for
the fact the individual was self-employed),
`(II) if such distributions are made during any taxable year
during which such unemployment compensation is paid or the succeeding
taxable year,
`(III) to the extent such distributions do not exceed the amount
paid during the taxable year for insurance for the diagnosis, cure,
mitigation, treatment, or prevention of disease, or for the purpose of
affecting any structure or function of the body (or for transportation
primarily for and essential to such medical care) (including amounts
paid as premiums under part B of title XVIII of the Social Security
Act, relating to supplementary medical insurance for the aged) or for
any qualified long-term care insurance contract (as defined in section
7702B(b)) with respect to the individual and the individual's spouse
and dependents, and
`(IV) such distributions are not made after the individual has
been employed for at least 60 days after the separation from
employment to which clause (I) applies.
`(v) DISTRIBUTIONS TO PAY HIGHER EDUCATION EXPENSES- Distributions
to the extent such distributions do not exceed the qualified higher
education expenses (as defined in section 10(a)(2)) of--
`(II) the taxpayer's spouse, or
`(III) any child or grandchild of the taxpayer or the taxpayer's
spouse.
`(vi) DISTRIBUTIONS FOR FIRST HOME PURCHASES- Distributions which
are qualified first-time homebuyer distributions (as defined in
paragraph (6)).
`(6) Qualified first-time homebuyer distributions-
`(A) IN GENERAL- `Qualified first-time homebuyer distribution' means
any payment or distribution received by an individual to the extent such
payment or distribution is used by the individual before the close of the
120th day after the day on which such payment or distribution is received
to pay qualified acquisition costs with respect to a principal residence
of a first-time homebuyer who is such individual, the spouse of such
individual, or any child, grandchild, or ancestor of such individual or
the individual's spouse.
`(B) LIFETIME DOLLAR LIMITATION- The aggregate amount of payments or
distributions received by an individual which may be treated as qualified
first-time homebuyer distributions for any taxable year shall not exceed
the excess (if any) of--
`(ii) the aggregate amounts treated as qualified first-time
homebuyer distributions with respect to such individual for all prior
taxable years.
`(C) QUALIFIED ACQUISITION COSTS- `Qualified acquisition costs' means
the costs of acquiring, constructing, or reconstructing a residence. Such
term includes any usual or reasonable settlement, financing, or other
closing costs.
`(D) FIRST-TIME HOMEBUYER; OTHER DEFINITIONS- For purposes of this
paragraph--
`(i) FIRST-TIME HOMEBUYER- `First-time homebuyer' means any
individual if such individual (and if married, such individual's spouse)
had no present ownership interest in a principal residence during the
2-year period ending on the date of acquisition of the principal
residence to which this paragraph applies, and
`(ii) DATE OF ACQUISITION- `Date of acquisition' means the
date--
`(I) on which a binding contract to acquire the principal
residence to which subparagraph (A) applies is entered into,
or
`(II) on which construction or reconstruction of such a principal
residence is commenced.
`(E) SPECIAL RULE WHERE DELAY IN ACQUISITION- The Secretary shall
prescribe rules under which a distribution will not be penalized if made
in anticipation of being a qualified first-time homeowner distribution but
construction delays or other unanticipated factors delay the
closing.
`(e) QUALIFIED ROLLOVER CONTRIBUTION- For purposes of this section, the
term qualified rollover contribution means a rollover contribution to a Roth
IRA from another such account, or from an individual retirement plan, but only
if such rollover contribution meets the requirements of section 408(d)(3). For
purposes of section 408(d)(3)(B), there shall be disregarded any qualified
rollover contribution from an individual retirement plan (other than a Roth
IRA) to a Roth IRA.
`(f) Permitted Investments-
`(1) INVESTMENT PERMITTED- A Roth IRA shall not cease to be an
individual retirement account pursuant to section 408(e)(2) solely because
funds from such account are used to make a debt or equity investment in a
controlled business entity.
`(2) Loans to a controlled business entity-
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