Tax Equity and Fiscal Responsibility Act of 1982

(Conference report filed in Senate, S. Rept. 97-530) Tax Equity and Fiscal Responsibility Act of 1982 - Title I: Provisions Relating to Savings in Health and Income Security Programs - Subtitle A: Medicare - Amends title XVIII (Medicare) of the Social Security Act to prohibit the Secretary of Health and Human Services from recognizing as reasonable payments for the operating costs of inpatient hospital services to the extent such costs exceed (by 110 percent for periods on or after October 1, 1984) the average of such costs for all hospitals in the same group for a comparable time period. Authorizes the Secretary to provide for exemptions from such limitation as appropriate. Exempts hospitals which: (1) are located outside of a standard metropolitan statistical area; and (2) have less than 50 beds. Authorizes the Secretary to provide that payment with respect to services provided by a hospital in a State may be made in accordance with a hospital reimbursement control system in a State, rather than as provided under Medicare, if the State requests such treatment and if the Secretary: (1) determines that the system, if approved, will apply to substantially all nonfederal acute care hospitals in the State and to the review of at least 75 percent of all revenues or expenses in the State for inpatient hospital services and of revenues or expenses for inpatient hospital services provided under title XIX of the Act (Medicaid); (2) has been provided satisfactory assurances as to the equitable treatment under the system of all entities that pay hospitals for inpatient hospital services, of hospital employees, and of hospital patients; and (3) has been provided satisfactory assurances that under the system, over 36-month periods, the amount of payments made under such system will not exceed the amount of payments which would otherwise have been made not using such system. Directs the Secretary to develop proposals for legislation which would provide for reimbursement on a prospective basis. Provides that any determination of reasonable cost with respect to services provided by hospital-based skilled nursing facilities shall be made on the basis of a single standard based on the reasonableness of costs incurred by free standing skilled nursing facilities (SNF). Repeals the inpatient routine nursing salary cost differential paid to hospitals and skilled nursing facilities. Authorizes the Secretary to take into account overhead costs associated with a physician providing hospital outpatient services in determining the limitation on the reasonable cost of outpatient services. Requires that in the determination of the limit on reimbursement to home health agencies such limit must be based on the costs of free standing facilities. Prohibits payments for services provided by a provider under provisions of the Public Health Service Act whereby the provider makes available a reasonable volume of services to individuals who cannot pay for them. Prohibits reimbursement to health care providers for costs incurred which are directly related to influencing employees respecting proposed unionization. Directs the Secretary of Health and Human Services to determine which services performed in hospitals and SNF's: (1) constitute professional medical services personally rendered to an individual patient which may be reimbursed as physicians' services under part B; and (2) constitute professional medical services rendered for the general benefit of hospital or SNF patients and may be reimbursed only on a reasonable cost basis. Directs the Secretary, for purposes of cost reimbursement, to recognize as a reasonable cost of a hospital or SNF only that portion of the costs attributable to services rendered by a physician in a hospital or SNF which are general benefit services as described above, apportioned on the basis of the amount of time actually spent by the physician rendering the services. Prohibits, in the case of a provider paid on the basis of reasonable cost, the inclusion of costs determined on the basis of a percentage of the provider's charges. Excludes from such prohibition: (1) physician services constituting professional services rendered for the general benefit to patients in a hospital or SNF; and (2) any amount which is reasonable and where either to charge in such a manner is a customary commercial practice or it provides incentives for the efficient and economical operation of the provider of services. Provides that lesser-of-cost-or-charges provisions will not apply in the case of services provided by a class of provider of services if it is determined that the failure to apply such services provided by that class of providers will not result in any increase in the amount of payments made for those services under Medicare. Prohibits as a reasonable cost the estimated amount by which the costs incurred by a hospital or SNF for nonmedically necessary private accommodation for Medicare beneficiaries exceeds the costs which would have been incurred by such facility for semiprivate accommodations. Reduces Medicare reimbursement for inpatient radiology and pathology services from 100 to 80 percent. Prohibits reimbursement for an assistant at surgery if the hospital has a training program relating to the medical specialty of the surgical procedure and a qualified individual is on the hospital staff to provide such services, except that payment may be made if: (1) there are exceptional medical circumstances; (2) a team of physicians is needed for complex procedures; or (3) a physician of another specialty is required during surgery. Revises the method of reimbursement to health maintenance organizations (HMO's). Provides instead for payments to an eligible organization, as defined in this Act. Directs the Secretary of Health and Human Services to determine annually a per capita rate of payment for each class of individuals entitled to benefits: (1) under parts A (Hospital Insurance) and B (Supplementary Medical Insurance) of title XVIII who are enrolled under the provisions of this Act with an eligible organization with which he or she has entered into a risk-sharing contract; and (2) under part B alone who are enrolled with such an organization. Directs the Secretary to define appropriate classes of members on the basis of such factors as age, disability, and other appropriate factors. Provides that the payment rate for each class shall be equal to 95 percent of the adjusted average per capita cost for that class, and that the rate shall be paid monthly in advance. Defines adjusted average per capita cost to mean the average per capita amount estimated in advance that would be payable in any contract year for services covered under parts A and B, or part B only, and types of expenses otherwise reimbursable under parts A and B, or part B only, if the services were furnished by other than an eligible organization. Provides that payment to an eligible organization under this Act for individuals enrolled with the organization and entitled to benefits under part A and enrolled under part B shall be made from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund. Defines an eligible organization as a public or private entity (which may be an HMO or a competitive medical plan (CMP)) organized under the laws of any State which is a qualified HMO. Provides, in addition, that an entity meets the definition if it: (1) provides at least specified services; (2) is compensated on a periodic basis; (3) provides physicians' services through physicians who are employees or partners; (4) assumes the financial risk for the provision of services; and (5) makes adequate provision against the risk of insolvency. Permits an organization to offer services in addition to those required. Requires an organization to have an open enrollment period of at least 30 days duration annually. Prohibits an organization from refusing an individual because of the individual's health status (except end stage renal disease). Entitles an enrolled individual to a hearing before the Secretary when the amount in controversy exceeds $100. Requires an organization to have arrangements for an ongoing quality assurance program for health care services. Requires each organization to have an enrolled membership at least one half of which consists of individuals not entitled to either Medicare or Medicaid. Authorizes a waiver of this requirement where special circumstances warrant such a modification. Authorizes the Secretary, in order to carry out this Act, to enter into a risk sharing contract with any organization which has at least 5,000 members. Requires each contract to provide either: (1) additional benefits; (2) reduced premiums; or (3) both, if an organization's adjusted community rate (as defined in this Act) is less than the average per capita rates of payment. Authorizes the Secretary to reimburse an organization on the basis of reasonable cost if: (1) the Secretary is not satisfied that an organization has the capacity to bear the risk of potential losses under a risk sharing contract; or (2) the organization so elects or has an insufficient number of members to be eligible for a risk sharing contract. Requires any organization reimbursed on a reasonable cost basis to report to the Secretary as specified. Authorizes the Secretary to inspect and audit an organization. Includes within the definition of medical and other health services under title XVIII, services furnished pursuant to a CMP contract to a member of a CMP by a physician assistant or nurse practitioner. Directs the Secretary to: (1) study the additional benefits selected by an organization; and (2) study why Medicare beneficiaries terminate their memberships with organizations. Provides for the implementation of provisions of the Omnibus Reconciliation Act of 1981 which prohibit payment under the Supplementary Medical Insurance Program for prescription drugs which the Secretary has found to be ineffective. Amends the Age Discrimination in Employment Act of 1967 to require an employer to provide any employee aged 65 through 69 with coverage under any group health plan offered to employees under age 65. Prohibits payment under Medicare to the extent that payment can be expected under a group health plan. Provides that there shall be interest charges whenever a payment to a provider was in excess of or less than the payment due and payment of such excess or deficit is not made (or offset) within 30 days. Transfers $45,000,000 from payments to Medicare intermediaries and carriers from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Fund for FY 1983, 1984, and 1985 to be used exclusively to carry out audits and claims reviews. Directs the Secretary to undertake an initiative to improve medical review by Medicare intermediaries and carriers and to encourage similiar review efforts by private insurers. Directs the Secretary, with respect to the last 21 days of FY 1983 and 1984, in the case of a hospital which is paid periodic interim payments, to defer such payments until FY 1984 and 1985 respectively. Amends title XVIII (Medicare) of the Social Security Act to permit an individual to elect hospice care, in lieu of certain other benefits, during two periods of 90 days each and one subsequent period of 30 days during the individual's lifetime. Provides for full reimbursement of reasonable costs to a hospice program, subject to a ceiling. Defines hospice care as including items and services furnished to the terminally ill in their homes, on an outpatient basis, and on a short term inpatient basis. Sets forth reporting requirements relating to the hospice program. Directs the Secretary to provide for extended care services which are not post-hospital extended care services at such time and for so long as such services will not result in increased Medicare payments and will not alter the acute care nature of the benefit. Provides that the monthly premium under the Supplementary Medical insurance program for each month after June 1983 and prior to July 1985 shall be equal to 50 percent of the monthly actuarial rate for enrollees age 65 and over. Permits any merchant seaman entitled to treatment and hospitalization under the Public Health Service Act and who as of September 30, 1981, was eligible for Medicare to enroll in Medicare. Extends until December 31, 1983, the period during which the Secretary shall conduct a program which determines the proficiency of health care personnel who do not meet formal educational requirements. Provides that unless regulations relating to access of the books and records of certain subcontractors are published by January 1, 1983, such regulations shall not be retroactive. Makes technical corrections to the Omnibus Reconciliation Act of 1981. Subtitle B: Medicaid - Amends title XIX (Medicaid) of the Act to prohibit a State from imposing an enrollment fee, premium, or deduction with respect to categorically needy: (1) children under 18 or under 21 at the option of a State; (2) pregnant women, for services related to pregnancy; (3) hospital or SNF inpatients, if they are required to spend all but a minimal amount of their income as a condition of receiving Medicaid; or (4) individuals furnished emergency services. Provides that any deduction or similar charge with respect to other individuals shall be nominal. Prohibits a provider from denying care or services to a Medicaid recipient because of the recipient's inability to pay a deduction or similar charge. Permits a deduction or similar charge only for the purposes of a unique demonstration project in which participation is voluntary and which is limited to a duration of two years. Provides that no lien may be imposed against an individual's property because of Medicaid paid on the individual's behalf, except: (1) pursuant to a court judgment because of benefits incorrectly paid; or (2) in the case of an individual who is an inpatient in a SNF who is required to spend all but a minimal amount of his or her income in order to receive care and who fails to show that he or she reasonably expects to be discharged. Prohibits a lien in the case of the individual in the SNF (as described in the preceding sentence) if such individual's spouse, child under 21, or sibling lives in the home. Dissolves any lien imposed upon the individual's discharge from the SNF. Permits a State to deny Medicaid to an individual who is not eligible because such individual sold his or her house for less than its fair market value. Provides that the denial shall not be more restrictive than that provided under the Supplemental Security Income program (title XVI of the Act) under similar circumstances. Permits a State to provide for a period of ineligibility in excess of 24 months if the uncompensated value of disposed resources exceeds $12,000. Sets the Medicaid target error rate at three percent. Prohibits payments to a State for any fiscal quarter with respect to so much of the erroneous excess payments exceeding three percent. Authorizes the Secretary to waive the reduction if the State made a good faith effort to reach the three percent level. Permits a State to provide Medicaid coverage for the home care of disabled children under 18 who qualify as disabled under the SSI program. Prohibits the Secretary from implementing prior to six months following enactment proposed changes regarding survey and certification requirements for skilled nursing facilities and intermediate care facilities. Provides for Federal Medicaid funding of up to $750,000 annually for American Samoa. Makes technical corrections to the Omnibus Reconciliation Act of 1981. Subtitle C: Utilization and Quality Control Peer Review Peer Review Improvement Act of 1982 - Replaces the present professional standards review program (part B of title XI of the Social Security Act) with the program established by this Act. Amends title XVIII (Medicare) of the Social Security Act to direct the Secretary to contract with utilization and quality control peer review organizations (organizations) as defined in title XI (General Provisions) of the Act. Amends title XI to redesignate part B - Peer Review of the Utilization and Quality of Health Care Services (currently, Professional Standards Review). Defines a utilization and quality control peer review organization as an entity which: (1) is composed of a substantial number of the licensed doctors of medicine or osteopathy engaged in the practice of medicine or surgery within designated areas established by the Secretary; and (2) is able to perform review functions as required by this Act. Directs the Secretary to establish geographic areas with respect to which contracts will be made. Requires such areas to be the same as those established under part B prior to enactment of the Utilization and Quality Control Peer Review Act of 1982, except that such areas shall be consolidated according to specified criteria. Requires each contract to provide that: (1) the organization shall perform the functions required under this Act; (2) the initial contract shall be for two years and shall be renewable annually afterwards; (3) the Secretary may evaluate the organization's effectiveness; (4) the contract may be terminated by the organization upon 90 days notice; (5) if the Secretary intends not to renew the contract the Secretary must notify the organization at least 90 days prior to the expiration of the contract term; (6) the Secretary may terminate a contract upon 90 days notice to the organization; and (7) the Secretary and the organization shall include negotiated objectives in the contract. Sets forth procedures the Secretary must follow prior to terminating a contract. Requires an organization to perform the following functions: (1) review the professional activities of area health care practitioners and determine whether the services provided were necessary, met professional standards, and could have been provided more economically; (2) determine whether payment shall be made under Medicare; (3) notify a practitioner or provider whenever the organization determines that any services furnished or to be furnished are disapproved; (4) determine the types and kinds of cases with respect to which the organization will exercise review authority; (5) apply professionally developed norms of care, diagnosis, and treatment within its area; (6) examine the records of any practitioner or provider with respect to which the organization has a responsibility for review; (7) collect appropriate information; and (8) coordinate information exchanges. Prohibits a physician from reviewing health care services provided by the physician or any organization to which the physician is associated. Entitles any dissatisfied Medicare beneficiary and any provider or practitioner dissatisfied with an organizaions' findings to a reconsideration of the findings. Requires practitioners and providers providing services under Medicare to assure that services provided will be provided economically and will be of a quality which meets professionally recognized standards of care. Authorizes the Secretary to exclude a practitioner or provider from participating in Medicare if the practitioner or provider fails to meet stated standards. Provides that no person providing information to any organization having a contract shall be held to have violated any civil or criminal law, unless: (1) the information is unrelated to the performance of the contract; or (2) the information is false and the person knew or had reason to believe the information was false. Exempts health care practitioners and providers from civil liability to any person on account of any action taken pursuant to a contract if due care was exercised in the performance of his or her profession. Directs the Secretary to make payment to an organization incurred in connection with the defense of any suit related to the performance of its duties. Authorizes a State plan approved under title XIX of the Social Security Act to provide for contracting with an organization to perform review functions. Provides that the Federal share of such expenditures shall be 75 percent. Provides for payment from the trust funds of the Medicare program to cover review expenses under Medicare. Declares that an organization shall not be a Federal agency for purposes of the Freedom of Information Act. Prohibits disclosure of any information acquired by an organization except for specified purposes. Sets forth criminal penalties for any person violating the disclosure provisions. Sets forth reporting requirements. Exempts Christian Science sanatoriums. Requires providers to provide an organization the data necessary for the organization to carry out its functions. States that any provider furnishing items or services which are not covered under Medicare shall be deemed to have knowledge that such items or services are not covered if the provider has been notified that a pattern of inappropriate utilization has ocurred in the past and the provider has been allowed a reasonable time to correct the inappropriate utilization. Makes conforming amendments to title XIX (Medicaid). Provides for demonstration projects to determine whether the use of competitive bidding under part B of title XI would be beneficial. Prohibits the Secretary from terminating any agreement in effect with a professional standards review organization (PSRO) under part B of title XI of the Social Security Act on the earlier of enactment or September 30, 1982, until the Secretary contracts with a utilization and quality control peer review organization. Subtitle D: Aid to Families With Dependent Children - Amends part A (Aid to Families with Dependent Children) of title IV of the Social Security Act to provide that both benefit and eligibility amounts shall be rounded to the next lower whole dollar when such amounts are not a whole dollar amount. Provides that AFDC benefits shall not be effective before the date of application for such benefits. Prohibits the classification of a child as a needy child solely because the parent is absent from home due to active duty in a uniformed service. Permits a State to require that as a condition of eligibility for AFDC an individual required to register for the WIN (Work Incentive Program, part C of title IV) must participate in a program of employment search beginning at the time application for aid is made. Provides that any individual required to look for employment will be furnished with transportation as necessary to participate in an employment search program. Subjects an individual who fails to comply with the search requirements to the same sanctions as are applied under the WIN. Authorizes a State AFDC plan to provide that, in determining the need of any dependent child or relative claiming aid who is living with others as a household, the amount included in the standard of need, and the payment standard applied to such child and relative for shelter, utilities, and similar needs may be prorated on a reasonable basis. Provides that if a State's AFDC error rate exceeds three percent beginning with FY 1984, then the Secretary is prohibited from making payment with respect to that part of the erroneous excess payments as exceeds the allowable error rate. Authorizes the Secretary to waive the reduction if the State cannot reach such error rate despite a good faith effort. Excludes from income certain amounts paid to a family in recognition of the difference between their current or anticipated needs for a month (based upon actual income for their month) and their needs as determined under the retrospective accounting procedure (as set forth in an amendment made to AFDC under the Omnibus Budget Reconciliation Act of 1981). Grants a State until June 30, 1984, to start a WIN demonstration program. Excludes from income payments made under a State program to meet the needs of children receiving AFDC, if: (1) the payments are made with Federal financial participation; and (2) the State program has been in effect since January 1, 1979. Makes technical amendments to titles XI (part A, General Provisions), XX (Grants to States for Services), and IV (part E, Foster Care and Adoption Assistance) of the Act. Sets forth the effective date for a State to comply with AFDC amendments requiring State legislation. Subtitle E: Child Support Enforcement - Amends part D (Child Support and Establishment of Paternity) of title IV of the Act to repeal the requirement that a State charge a ten percent fee (chargeable to the non-paying spouse) for child support enforcement services furnished to a non-AFDC family. Permits a State to charge a fee to a non-AFDC family and to collect any costs in excess of the fee from either: (1) the parent owing the support; or (2) the parent benefiting from the services, but only if all individuals in the State having authority to order support services are informed that the costs are to be collected from the individual benefiting from the services. Requires a member of the uniformed services on active duty to make allotments from his or her pay as support payments whenever such individual has failed to make periodic payments under a support order. Provides that child support payments collected which would make an AFDC family ineligible shall be paid to the family (instead of the State) in the month following the first month of ineligibility. (Currently such payments are made to the family beginning with the first month of ineligibility.) Reduces the Federal matching rate from 75 to 70 percent for a State's costs of operation under part D. Repeals Federal payments for the costs of court personnel. Reduces child support incentive payments from 15 to 12 percent. Sets forth the effective date for a State to comply with part D amendments requiring State legislation. Subtitle F: Supplemental Security Income - Amends title XVI (Supplemental Security Income) to provide that the first month's benefit shall be prorated from the later of the date of application or the date of eligibility. Provides that SSI benefit and eligibility amounts shall be rounded to the next lower dollar amount. Includes in the income of an SSI recipient any cost of living increases received under title II (Old Age, Survivors and Disability Insurance) of the Act. Phases out "hold harmless" provisions applicable to State SSI supplementary benefits so that by fiscal year 1985 a hold harmless State would be paying for the entire cost of supplementary payments. Adds the value of a burial plot to the items excludable from an individual's resources in determining SSI eligibility. Provides that a State has met the requirement that it pass through Federal SSI cost of living increases if the State does not decrease the State supplementation payment below the level of the previous December. Subtitle G: Unemployment Compensation - Amends the Federal-State Extended Unemployment Compensation Act of 1970 to prohibit payment of the Federal share of extended unemployment benefits unless a State provides for the rounding of benefits to the next lowest full dollar amount. Amends title IX (Employment Security) of the Social Security Act to extend the period during which certain amounts transferred to State unemployment funds may be used to administer a State's unemployment compensation law and public employment offices. Amends the Internal Revenue Code to permit the payment of retroactive unemployment compensation benefits to nonteaching, nonresearch, or nonadministrative employees of institutions of higher education who were reasonably assured of employment between school terms (and therefore denied benefits for such period) but upon the commencement of the subsequent term were not offered a position with the institution. Directs the Secretary of Labor to: (1) develop legislation which may be used by States as a model in developing and enacting short-time compensation programs; (2) provide technical assistance to States to develop, enact, and implement such programs; and (3) study and evaluate the operation, costs, effect on the State insured rate of unemployment, and other effects of such programs. Terminates the guideline and grant provisions of this Act after a three-year experimental period. Encourages States to experiment, but to consider requiring specified provisions to assure minimum uniformity. Defines a "short-time compensation program" as one under which: (1) individuals whose workweek has been reduced by at least ten percent pursuant to a qualified employer plan will be eligible for at least a pro rata portion of the unemployment benefits payable if such individuals were totally unemployed; (2) eligible employees may apply for and collect short-time compensation or regular unemployment compensation benefits, as needed, but shall not collect more than the maximum unemployment compensation benefit for full-time unemployment or be eligible for short-time compensation for more than 26 weeks in any 12-month period; and (3) eligible employees will not be expected to meet the availability for work or work search test requirement while collecting short-time compensation, but must be available for their normal workweek. Defines "qualified employer plan" as one under which there is a reduction in the number of hours worked by employees rather than total layoffs if: (1) such plan is approved by the State agency; (2) the employer or employers' association which is party to a collective bargaining agreement certifies that the aggregate reduction in work hours pursuant to such plan is in lieu of total layoffs which would result in an equivalent reduction of work hours; (3) the employer continues to provide health and pension benefits to employees whose workweek is reduced under such plan at the same level provided before such reduction; (4) the exclusive bargaining representative (if there is one) of the employees has consented to the plan; and (5) during the previous four months the work force in the affected unit or units has not been reduced by temporary layoffs of more than ten percent. Requires a State to review, at least annually, any plan put into effect to assure that it continues to meet the requirements of this Act and of any applicable State law. Requires that such short-time compensation benefits be charged in a manner consistent with State law. Directs the Secretary to study State short-time compensation programs and to consult with employee and employer representatives in developing guidelines to measure specified factors. Directs the Secretary to submit a final report to the Congress and the President on the implementation of the short-time compensation program, with a program evaluation and recommendations. Title II: Revenue Measures - Subtitle A: Provisions Relating to Individuals - Amends the Internal Revenue Code to revise rules for the computation of the alternative minimum tax on individual taxpayers. Provides for a maximum tax rate of 20 percent on minimum taxable income. Repeals the add-on minimum tax on individual taxpayers. Increases from three to five percent the floor for medical expense deductions. Eliminates the medical expense deduction for health insurance premiums. Limits the deduction for medicine and drugs to prescription drugs or insulin, beginning in 1984. Provides that nonbusiness casualty losses shall be deductible only to the extent that they exceed ten percent of adjusted gross income. Subtitle B: Provisions Primarily Relating to Business - Reduces by 15 percent the following corporate tax preferences: (1) accelerated depreciation on buildings; (2) percentage depletion for coal and iron ore; (3) excess bad debt reserves of banks; (4) deferred income of domestic international sales corporations (DISC); (5) amortization of pollution control facilities; (6) intangible drilling costs of integrated oil companies; (7) mineral exploration and development costs; and (8) interest on debt used to carry tax-exempt securities after 1982. Specifies basis adjustments for property eligible for the investment tax credit. Reduces from 90 to 85 percent the amount of income tax liability that may be offset by the investment tax credit. Repeals provisions for accelerated depreciation in 1985 and 1986. Extends applicability of requirements for the amortization of construction period interest and taxes to all types of corporations, except corporations (other than subchapter S, personal holding, and foreign personal holding companies) involved in residential housing construction. Requires the Secretary of the Treasury to prescribe regulations for the allocation of interest to real property under construction. Imposes limitations and additional requirements on leases between businesses under the accelerated cost recovery system. Repeals safe-harbor leasing provisions, beginning in 1984. Provides that motor vehicle operating leases shall not be denied characterization as leases merely because they contain terminal rental adjustment clauses. Requires the recapture of foreign oil and gas extraction losses by providing for the aggregation of losses from one country with gains realized in another country. Requires the current taxation of the oil-related income of foreign subsidiaries of U.S. multinational oil companies. Revises requirements for the U.S. possessions tax credit. Places restrictions on the issuance of small issues of industrial development bonds used for private activities for purposes of the tax exclusion of interest on such bonds. Terminates the small issue exemption after December 31, 1986. Requires public hearings and approval by elected officials prior to the issuance of industrial development bonds. Limits the depreciation of property funded by industrial development bonds to the straight line method, with certain exceptions. Provides that research and experimental expenditures shall not be taken into account for purposes of determining the aggregate face value of industrial development bonds which otherwise qualify for the small issue exemption. Permits the financing of district heating or cooling facilities with tax-exempt bonds. Specifies that interest on certain industrial development bonds may be excluded from gross income if such bonds are used for the local furnishing of gas (previously just electric) energy. Permits the financing of ferries with tax-exempt bonds issued for the financing of mass commuting vehicles. Includes as an exempt activity the acquisition of an existing air or water pollution control facility with the proceeds of an obligation issued by a qualified regional pollution control authority. Sets forth special requirements for certain refunding obligations. Prescribes limits on the maturity of tax-exempt industrial development bonds. Revises requirements for the exclusion of interest on mortgage subsidy bonds. Revises the arbitrage requirements to increase the amount by which interest rates on tax-exempt mortgage subsidy bonds may exceed the interest rates on mortgages financed with such bonds. Changes the method of determining the yield on a bond issue. Specifies that issuers are not required to dispose of any investment and realize a loss in order to satisfy arbitrage restrictions. Limits the requirement that financing may only be provided to a mortgagor who did not own a residence within the three preceding years to 90 percent of bond-financed mortgages. Increases the amount by which the acquisition cost of bond-financed residences may exceed the average area purchase price of other homes in the same statistical area. Prescribes special rules for cooperative housing corporations. Revises requirements for residential rental property bond issues relating to the median income level of occupants and the term of the lower income occupancy. Repeals provisions which allow distributions made in partial liquidation of a corporation to be treated as part payment in exchange for the shareholders stock (i.e. capital gains) rather than taxed as dividends at ordinary income rates. Repeals provisions for the nonrecognition of gain and loss by a corporation on distributions of property in partial liquidation (thereby limiting nonrecognition to complete liquidations). Provides that redemptions of stock from noncorporate shareholders attributable to a corporation's ceasing to conduct an active trade or business shall be treated as an exchange and not taxed as a dividend. Repeals the definitional section on partial liquidations. Specifies that a distribution shall be considered as in complete liquidation if it is one of a series of distributions in redemption of all of a corporation's stock under a plan. Directs the Secretary of the Treasury to prescribe regulations to ensure that the repeal of the special tax treatment for partial liquidations is not circumvented through the use of other Code provisions. Disallows the nonrecognition of gain by a corporation which distributes appreciated property in redemption of its stock in the case of: (1) complete redemptions of the stock of a ten-percent shareholder; (2) redemptions of stock of a 50 percent or more subsidiary of the redeeming corporation; (3) distributions pursuant to antitrust judgments. Provides for such nonrecognition in the case of: (1) certain distributions to corporate shareholders; (2) certain distributions in partial liquidation; and (3) certain distributions of stock or obligations of a controlled corporation. Repeals provisions under which property distributed to an acquiring corporation in the liquidation of an acquired subsidiary receives a stepped-up basis. Allows a purchasing corporation to elect to treat a target corporation as having sold all of its assets in a 12-month liquidation and then reincorporated (thereby requiring depreciation and investment tax credit recapture). Specifies that acquisitions by a purchasing corporation shall include acquisitions by affiliated corporations. Revises the definition of "corporate reorganization" in the case of reorganizations constituting only changes in form. Restricts the availability of provisions allowing tax-exempt incorporations in the case of certain redemptions of stock through the use of related corporations and holding companies. Revises the application of attribution rules in the case of preferred stock or other property received in certain reorganizations. Permits the waiver of family attribution rules by an entity (previously only by an individual) if certain related persons or beneficiaries join in the waiver. Requires the Secretary to modify specified income tax regulations relating to the completed contract method of accounting. Allows certain partnerships made up of corporations engaged in farming to use the annual accrual method of accounting. Requires that original issue discount on certain corporate and noncorporate bonds be included ratably in the income of the holder on the basis of a constant interest rate. Exempts obligations issued by natural persons and certain tax-exempt obligations from such requirement. Requires the inclusion in gross income of stripped bonds and coupons in the same manner as original issue discount bonds. Authorizes the Secretary by regulation to allow an alternative method of inclusion. Extends the targeted job tax credit through 1984. Includes qualified summer youth employees as a targeted group subject to such credit. Eliminates involuntarily terminated CETA employees as an eligible targeted group. Eliminates the ceiling on appropriations authorized for administrative expenses for the targeted jobs income tax credit program. Increases the amount of estimated tax a corporation is required to pay from 80 to 90 percent of its total tax liability. Eliminates the election by a corporation to make installment payments of tax. Prescribes an installment method for decedents' estates. Revises the method of computing an addition to tax for underpayments. Exempts certain corporations with seasonal incomes from underpayment penalties. Subtitle C: Pensions - Reduces the annual limit on benefits payable under a tax-qualified defined benefit pension plan. Reduces the annual limit on contributions on behalf of an employee to a tax-qualified defined contribution plan. Freezes cost of living adjustments to such limits until 1986. Provides cost-of-living adjustments in 1986 based on Social Security benefit payments rather than primary insurance amounts. Provides for lower contribution limits where an individual is covered by both a defined benefit and a defined contribution plan. Sets forth special age limits for certain actuarial adjustments for early retirement. Limits the employer's deduction for contributions to pension plans to the above annual limits on benefits and contributions. Treats certain loans made from qualified retirement plans as distributions. Exempts certain loans required to be repaid within five years from such treatment if they do not exceed a specified amount. Waives the five-year repayment requirement for home loans. Repeals certain special qualification requirements for trusts and retirement plans benefiting owner-employees. Repeals: (1) limitations on the amount of compensation taken into account; (2) certain requirements for defined benefit plans; and (3) the excise tax on excess contributions for self-employed individuals. Applies certain special rules only to plans which benefit key employees (top-heavy plans). Repeals the special limitations on the retirement plan deduction for self-employed individuals and subchapter S corporations. Revises certain other requirements for such retirement plans. Extends the tax exclusion of lump sum distributions of death benefits to beneficiaries of self-employed individuals. Prescribes special rules for top-heavy retirement plans relating to vesting, minimum benefits, annual contributions, non-key employees, and the amount of a participant's includable compensation. Prescribes rules for required distributions in the case of qualified employer retirement plans and individual retirement plans. Provides that the tax exclusion for employer-provided group-term life insurance shall only apply to nondiscriminatory plans. Limits the estate tax exclusion for annuities to $100,000. Provides that certain organizations performining management functions shall be considered a single employer for purposes of certain tax-qualified pension plans. Provides for the tax treatment of certain personal service corporations upon liquidation. Sets forth rules for employee leasing for purposes of tax-qualified pension requirements. Authorizes the Secretary to allocate income and deductions to shareholders in the case of personal service corporations formed to avoid income tax. Provides for the coordination of defined contribution plans with old age, survivors, and disability insurance (OASDI) benefits under the Social Security Act. Permits churches to provide certain retirement savings plans to their employees. Sets forth special rules and qualifications for deferred compensation plans for State judges. Permits an employer to provide additional contributions on behalf of disabled participants (other than officers, shareholders and highly compensated individuals) based upon their pre-disability compensation. Permits government retirement plans to participate in a tax- exempt group trust. Subtitle D: Taxation of Life Insurance Companies and Annuities - Repeals the optional treatment of policies reinsured under modified coinsurance contracts. Sets forth special rules for dividends paid to policyholders under reinsurance agreements. Sets forth special accounting rules relating to tax treatment of such modified coinsurance contracts. Denies an interest deduction on indebtedness incurred in connection with reinsurance agreements. Authorizes the allocation or recharacterization of income, deductions, and other items in the case of coinsurance contracts involving tax avoidance or evasion. Sets forth temporary rules for the taxation of life insurance companies from 1982 to 1984. Increases the amount of the dividend deduction from $250,000 to $1,000,000. Reduces permanently from $21 to $19 per $1,000 the computation of approximate revaluation of certain reserves computed on a preliminary term basis. Allows consolidated returns to be computed on a bottom line basis. Sets forth special rules applicable to transactions before the effective date of such temporary rules. Allows a deduction to insurance companies for qualified guaranteed interest paid on qualified contracts. Revises tax treatment of amounts received under annuity contracts before the annuity starting date. Limits the exclusion for proceeds of flexible premium life insurance contracts payable by reason of death. States that no addition to tax shall be imposed for underpayment of estimated tax in 1982 by a corporation if the underpayment was a result of taxes increased under this Act. Subtitle E: Employment Taxes - Provides that real estate agents and direct sellers shall be considered nonemployees for purposes of the employment taxes. Sets forth requirements for such classification. Sets forth procedures for determining an employer's liability for employment taxes which were not withheld or reported. Increases the wage base for purposes of the Federal unemployment tax from $6000 to $7000, effective in 1983. Increases the unemployment tax rate from 3.4 to 3.5 percent effective in 1983 and to 6.2 percent (a permanent tax of 6.0 percent and an extended benefit tax of 0.2 percent) effective in 1985. Increases the credit which employers receive against such tax to 5.4 percent effective in 1985. Allows States to make Federal unemployment loan repayments from State trust fund accounts in lieu of further reductions in the credit against unemployment taxes, provided certain requirements are met. Eliminates the additional credit reduction that begins in the fifth year a State is subject to reductions because of outstanding Federal unemployment loans. Permits States with high unemployment to defer interest on Federal unemployment loans. Specifies when repayments should be made from extended unemployment compensation accounts. Exempts full-time students from unemployment taxes. Extends the exclusion from such taxes of certain alien farmworkers. Subjects Federal employes to the FICA hospital insurance tax. Extends Medicare coverage to Federal employees. Subtitle F: Excise Taxes - Increases the excise tax on gasoline fuels used in noncommerical aviation from 3 cents to 8 cents per gallon. Increases the excise tax on nongasoline fuels used in noncommercial aviation from 7 cents to 14 cents per gallon. Exempts from such excise taxes fuels used by helicopters used in hard mineral resource exploration and timber operations which land at non-Federal aid airports. Revises certain rules with respect to the tax on transportation by air. Establishes in the Treasury the "Airport and Airway Trust Fund" (Trust Fund). Appropriates to such Trust Fund amounts equal to such excise taxes and the excise tax presently imposed on aircraft tires and tubes. Authorizes expenditures from such Trust Fund for specified purposes relating to airport and airway maintenance and improvement. Repeals certain provisions of the Airport and Airway Revenue Act of 1970. Increase the excise tax on small cigarettes from $4 to $8 per thousand. Increases the excise tax on large cigarettes from $8.40 to $16.80 per thousand. Increases the excise tax on local telephone service, toll telephone service and teletypewriter exchange service from 1 percent to 3 percent in 1983 through 1984 and 1985. Terminates such tax in 1986. Repeals the Trans-Alaska Pipeline System (TAPS) adjustment applicable to oil produced in Alaska at Prudhoe Bay. Subjects such oil to the windfall profit tax. Subtitle G: Miscellaneous - Extends for two years from 1981 to 1983 the exclusion from gross income of National Research Service Awards. Allows tax-exempt status for certain amateur sports organizations involved in national and international competition. Provides that the New Jersey Franchise and Gross Receipts Tax shall be deemed an adjusted tax of units of local government within New Jersey for the entitlement period beginning October 1, 1982. Allows a business expense deduction for any payment to foreign officials or agents of a foreign government provided such payments would be deemed lawful under the Foreign Corrupt Practices Act. Amends the Second Liberty Bond Act to authorize the Secretary of the Treasury, with the approval of the President, to fix the investment yield on any United States savings bonds. Authorizes the payment of $50,000 to the Jefferson County Mental Health Center, Lakewood, Colorado, in full settlement of its claims against the United States. Makes a technical change relating to the windfall profit tax on Alaska Native Corporations. Permits reasonable litigation costs, including attorneys' fees, to be awarded to the prevailing party (other than the United States or a creditor of the prevailing party) in any civil proceeding in any court of the United States for the determination, collection, or refund of any tax, interest, or penalty imposed under the Internal Revenue Code if it is determined that the position of the United States was unreasonable. Requires such party to have exhausted the available administrative remedies within the Internal Revenue Service. Limits such award to $25,000. Disallows costs of proceedings involving declaratory judgments, except those involving the revocation of any organization's status as a tax-exempt public charity. Includes as attorney' fees any amounts paid to an individual who is not an attorney but who is authorized to practice before the Tax Court. Defines "prevailing party" as a party who substantially prevails with respect to the amount in controversy or the most significant issue or set of issues. Disqualifies costs of proceedings commenced after September 30, 1984. Increases from $500 to $5,000 the maximum penalty for instituting Tax Court proceedings for purposes of delay and imposes such penalty for the bringing of proceedings which are frivolous or groundless. Revises the test for whether proceedings are brought for purposes of delay. Revises the formula used for purposes of the personal holding company tax to determine whether the sum of the deductions directly allocable to the conduct of a lending or finance business allows the exclusion of such a business from the definition of a personal holding company. Increases from 60 to 144 months the limitation on the maturity of commercial paper and loans dealt in or made by a lending or finance business. Excepts from the definition of "lending or finance business" the making of loans, notes, or installment obligations under open end credit agreements. Amends the Energy Tax Act of 1978, with respect to refunds resulting from the repeal of the manufacturers excise tax on buses, to extend to December 31, 1982, the period for reimbursement of tax to the ultimate purchaser and revise requirements regarding proof of reimbursement. Title III: Taxpayer Compliance - Subtitle A: Withholding on Interest and Dividends - Imposes a ten percent withholding of tax requirement on payments of interest, dividends, and patronage dividends. Exempts certain individuals and entities from such withholding requirement, including low-income and elderly individuals. Sets forth administrative provisions for the collection and enforcement of withholding requirements. Subtitle B: Improved Information Reporting - Requires the filing of an informational return by every individual who: (1) makes payments of interest aggregating $10 or more to any other individual; (2) receives payments of interest as a nominee and makes payments of interest aggregating $10 or more to any other individual; or (3) withholds tax from a payment of interest. Requires registration of all obligations of the United States (or any agency or instrumentality thereof) except those which: (1) are not of a type offered to the public; or (2) have a maturity of not more than one year. Requires governmental obligations which are presently tax-exempt to be in registered from in order to maintain tax-exempt status. Denies tax deductions for interest and losses on obligations which are not in registered form. Denies capital gain tax treatment to unregistered obligations. Imposes a tax penalty on issuers of registration-required obligations not in registered form. Revises requirements for brokers' information returns. Sets forth requirements for information returns for payments of remuneration for services and direct sales. Requires States to report payments of State and local income tax refunds. Sets forth new requirements for employer reporting of tips. Increases penalties for failure to file certain information returns and statements. Increases the penalty for failure to furnish taxpayer identification numbers. Requires withholding of payments of income where the taxpayer fails to furnish an identification number or furnishes an incorrect number. Imposes a minimum penalty for failure to file an income tax return within 60 days of its due date. Requires the Secretary to prescribe regulations for determining which tax returns must be filed on magnetic media or in other machine-readable form. Subtitle C: Abusive Tax Shelter, Etc.; Substantial Underpayments; False Documents; Frivolous Returns - Imposes a new penalty for promoting abusive tax shelters. Permits the government to seek injunctions against promoters of abusive tax shelters. Imposes a ten percent penalty for a substantial understatement of tax liability. Imposes civil penalties on individual aiding and abetting the understatement of tax liability. Imposes a $500 penalty for filing a frivolous tax return. Absolves taxpayers from criminal penalties for failure to file estimated tax returns if civil penalties for such failure do not apply. Exempts taxpayers from civil penalties for failure to file estimated tax returns if such taxpayers had no tax liability for the preceding taxable year, such taxable year consisted of 12 months, and the taxpayer was a U.S. citizen or resident for the entire year. Terminates requirements for filing a declaration of estimated tax after 1982. Increases criminal fines for attempts to evade or defeat taxes, willful failure to file returns, and false or fraudulent statements. Establishes a presumption of jeopardy (procedure for immediate assessment of tax liability) in cases where individuals possess amounts of cash over $10,000 for which they disclaim ownership and fail to identify the true owner. Subtitle D: Administrative Summons - Revises requirements for compliance with summonses for third-party recordkeepers. Requires a recordkeeper to assemble subpoened records upon receipts of a summons. Prohibits the issuance of a third-party summons if the case has been referred to the Attorney General with a recommendation for prosecution. Subtitle E: Withholding on Pensions and Other Retirement Income - Requires withholding of periodic and lump sum payments from pension, individual retirement accounts, and other deferred compensation plans. Permits a recipient of pension or other retirement income to elect out of the withholding requirements of this subtitle.. Requires employers, plan administrators, and other payors of deferred compensation to make returns and reports regarding deferred compensation plans to which withholding requirements apply. Prescribes penalties for failure to keep records necessary to meet such return or reporting requirements. Permits partial tax-free rollovers of distributions from individual retirement accounts, beginning in 1983. Subtitle F: Transactions Outside the United States or Involving Foreign Persons - Treats a U.S. citizen or resident residing outside of the United States as residing in the District of Columbia for tax purposes relating to jurisdiction of courts or enforcement of summons. Requires courts to prohibit a taxpayer from admitting into evidence any foreign-based documentation which the taxpayer has failed to provide the IRS in its tax investigation. Permits the taxpayer to show reasonable cause for failure to supply such documentation. Imposes a $1,000 penalty for failure to furnish required information on controlled foreign corporations. Imposes additional penalties for continued noncompliance. Establishes reporting requirements for certain foreign-owned corporations. Revises requirements for the filing of information returns for foreign personal holding companies. Prescribes penalties for failure to file such returns. Authorizes the IRS to delay the date for filing certain information returns relating to foreign corporations and foreign trusts. Requires the Secretary of the Treasury to prescribe regulations establishing certification procedures, refund procedures, or other procedures for the withholding of tax on nonresident aliens and foreign corporations covered by treaties. Subtitle G: Modification of Interest Provisions - Requires the daily compounding of interest payable by or to the United States under the tax laws, beginning in 1983. Requires a semiannual determination of interest rates under the tax laws. Restricts the payment of interest on delinquent tax returns and returns which are not in processible form. Subtitle H: Taxpayer Safeguard Amendments - Increases exemption amounts applicable to tax levies on the personal effects and business assets of taxpayers. Requires the release of tax liens filed after 1982 which are satisfied or have become unenforceable or for which a bond has been accepted. Revises requirements for giving notice to taxpayers subject to a tax levy. Extends from 120 to 180 days the time period during which levied property may be redeemed. Permits the recovery of damages in the case of a wrongful tax levy for the greater of the amount recovered by the United States from the sale of the property or the fair market value of such property immediately before the levy. Subtitle I: Other Provisions - Disallows all deductions and credits for amounts paid or incurred in the illegal trafficking of drugs listed in the Controlled Substances Act. Expresses the sense of the Congress that additional funds be appropriated to the Internal Revenue Service for additional staff to increase collection and improve enforcement. Requires the Secretary to study and report to the Congress on methods for modifying IRS forms to achieve greater accuracy in the reporting of income and compliance. Modifies requirements for the tax exemption of veterans' organizations to grant tax exempt status to veterans' organization which have a membership consisting of 75 percent past or present members of the Armed Forces. Grants a tax exemption for veterans' organization organized before 1880 which have a 25 percent membership of present or past member of the Armed Forces and have a principal purpose of providing insurance and other benefits to veterans or their dependents. Amends the Communications Act of 1934 to provide for at least one VHF television broadcasting station in each State. Revises requirement for the disclosure of tax return information in criminal investigations. Title IV: Tax Treatment of Partnership Items - Tax Treatment of Partnership Items Act of 1982 - Amends the Internal Revenue Code to revise the tax treatment of partnership items. States that such treatment shall be determined at the partnership level. Requires that an individual partner treat a partnership item the same way the item is treated on the partnership's tax return. Requires a partner to notify the Secretary of the Treasury of any inconsistent treatment of a partnership item. Provides that a failure to notify the Secretary will result in a computational adjustment to make the treatment of partnership items consistent. Requires the Secretary to notify partners individually of the beginning of an administrative proceeding at the partnership level and of the final administrative adjustment resulting from such proceeding. Provides that such notice requirement shall not apply to partnerships with more than 100 partners and an individual partner has less than one percent interest in the partnership profits. Requires the Secretary to give notice to a "notice group" of partners having an aggregate interest of five percent of more in the partnership. Specifies that if the Secretary fails to give notice to a partner, the partner may elect the final partnership administrative adjustment or may treat items to which the proceeding relates as nonpartnership items. Requires tax matters partners and pass- thru partners to keep other partners informed of partnership proceedings. Grants all partners the right to participate in administrative proceedings. Allows partners to waive their rights and allows the Secretary to waive restrictions. Provides that settlement agreements between a partner and the Secretary shall bind all partners, with certain exceptions. Gives other partners the right to enter into consistent agreements with the Secretary. Permits the tax matters partner to bind certain other partners unless a partner files a statement that the tax matters partner has no such authority. Provides that deficiency assessments may only be made after the partnership level proceedings are completed. Sets forth procedures for judicial review of final partnership administrative adjustments. Permits a partner to file a request for an administrative adjustment of partnership items. Prescribes procedures for filing such requests. Provides for judicial review where the administrative adjustment request is disallowed by the Secretary. Limits the period for making deficiency assessments. Provides that such limitation shall not apply in the case of fraudulent partnership returns and substantial omissions of income information. States that prescribed deficiency proceedings do not apply to computational adjustments. Prescribes procedures for the filing of claims arising out of erroneous computational adjustments by the Secretary. Includes certain windfall profit tax items as partnership items. Sets forth miscellaneous definitions and special rules. Prescribes penalties for failure to file partnership returns, fraud, negligence, and under payments attributable to partnership items. Requires that all partnerships with U.S. partners file tax returns. Requires any U.S. person with an interest in a foreign partnership to file a return if their interest in the partnership changes. Sets forth special rules for international satellite partnerships. Title V: Airport and Airway Improvement - Airport and Airway Improvement Act of 1982 - Directs the Secretary of Transportation, not later than two years after enactment of this title and every two years thereafter, to publish the status of the existing national airport system plan to provide for the development of public-use airports. Renames such plan the national plan of integrated airport systems. Requires the Administrator of the Federal Aviation Administration to submit to Congress, not later than 90 days after enactment of this title, a ten-year national airways system plan setting forth programs and facilities necessary to meet forecasted needs of civil aeronautics, to support national defense, and to provide the highest degree of safety in air commerce. Requires the Comptroller General, not later than 180 days after enactment of this Act, to submit to Congress an evaluation of the feasibility of making domestic military airports available for joint civil and military use. Directs the Secretary of Defense and the Secretary of Transportation to submit to Congress, not later than one year after enactment of this Act, a plan for such joint use. Authorizes appropriations from the Airport and Airway Trust Fund for FY 1982 through FY 1987 for the airport improvement program. Sets forth the method of apportionment of such funds. Authorizes the Secretary to incur obligations from the Fund in the form of project grants, block grants, and block grant supplements for eligible recipients to acquire, establish, or improve air navigation facilities. Requires the Secretary, upon approving a grant application to enter into an agreement with the sponsor of the application, on the terms and conditions necessary to meet the requirements of this Act, including an offer for the United States share of 75 to 90 percent of allowable project costs. Makes construction work for airport development under a project grant application subject to inspection and approval by the Secretary. Requires that contracts for such work establish minimum rates of pay as predetermined by the Secretary of Labor and include provisions for employment preference to veterans of the Vietnam era and disabled veterans. Directs the Secretary of Transportation to assist in the acquisition of Government-owned lands where necessary for projects at public airports. Excludes certain public-use lands from such acquisition. Sets forth recordkeeping requirements, penalties for false statements, and nondiscrimination provisions for activities funded under this Act. Requires the Secretary, not later than one year after enactment of this Act, to report to Congress on whether airports which have the ability to finance their capital and operating needs without Federal assistance should be made ineligible for Federal assistance for development and planning. Amends the Federal Aviation Act of 1958 to authorize the Secretary to prescribe standards for airport runway friction. Declares that the providing of aeronautical access services at an airport by a single fixed-based operator shall not be construed as an exclusive right if it would be unreasonably costly, burdensome, or impractical for more than one such operator to provide the services and if it would require a reduction in the existing operator's leased space. Amends the Airport and Airways Development Act Amendments of 1976 to authorize appropriations from the Airport and Airway Trust Fund to compensate air carriers for security screening in foreign air commerce. Requires the Secretary to report to Congress on the amounts due to such air carriers. Revises provisions relating to safety certification of airports. Prohibits States from levying specified taxes on air carriers. Restricts the Secretary's authority to close or provide for part-time operation of flight service stations operated by the Federal Aviation Administration. Directs the Secretary, in contracting out for the operation of an airport facility by a State or political subdivision, to assure that the U.S. Government is held harmless from liability for acts or omissions of an employee or agent of such State or political subdivision. Requires the Secretary to appoint a task force to study the problem of allocating the use of airport facilities and airspace. Authorizes appropriations from the Airport and Airway Trust Fund for FY 1982 through FY 1987 for the Secretary to make grants for the continuation of the Explosive Detection K-9 Team Training Program. Grants the release of certain deed restrictions to the following airports: (1) Crystal City, Texas; (2) Brownwood, Texas; (3) Grand Junction, Colorado; and (4) Newport, Arkansas. Continues for two years beyond the date of expiration any certificate to engage in temporary air transportation issued under specified provisions of the Federal Aviation Act of 1958 or pursuant to certain route proceedings. Title VI: Federal Supplemental Compensation Program - Subtitle A: Extension of Benefits - Federal Supplemental Compensation Act of 1982 - Extends unemployment compensation benefits for an additional ten weeks to unemployed workers in States in which extended benefits are being paid or have been paid at any time since June 1, 1982. Provides that the period for extended benefits begins on September 12, 1982, and expires on March 31, 1983. Extends unemployment compensation benefits for an additional 8 weeks to unemployed workers in States in which the extended benefit trigger rate equals or exceeds 3.5 percent. Extends such benefits for an additional 6 weeks in all other States. Provides for financing of supplemental unemployment compensation under this Act from general revenues. Specifies civil and criminal penalties for fraud in obtaining extended unemployment compensation benefits. Subtitle B: Taxation of Unemployed Compensation - Amends the Internal Revenue Code to reduce from $20,000 to $12,000 ($25,000 to $18,000 for joint returns) the threshold amount over which unemployment compensation benefits are subject to income taxation. Specifies that this change applies to unemployment compensation benefits paid after January 1, 1982.

(Reported to Senate from the Committee on Finance with amendment, S. Rept. 97-474) Tax Equity and Fiscal Responsibility Act of 1982 - Title I: Provisions Relating to Savings in Health and Income Security Programs - Subtitle A: Medicare - Amends titles II (Old Age, Survivors and Disability Insurance) and XVIII (Medicare) of the Social Security Act to provide that Medicare coverage shall not begin until the first day of the month following the month in which an individual actually becomes age 65. Amends the Age Discrimination in Employment Act of 1967 to require an employer to provide any employee aged 65 through 69 with coverage under any group health plan offered to employees under age 65. Prohibits payment under Medicare to the extent that payment can be expected under a group health plan. Imposes a copayment charge for each home health services visit equal to five percent of the estimated average reasonable cost of a home health care visit. Reduces Medicare reimbursement for inpatient radiology and pathology services from 100 to 80 percent. Indexes the part B (Supplementary Medical Insurance) of title XVIII deductible to the Consumer Price Index. Limits the prevailing charge levels used for determining reimbursement for physicians' services. Repeals the inpatient routine nursing salary cost differential paid to hospitals and skilled nursing facilities (SNF's). Directs the Secretary of Health and Human Services to determine which services performed in hospitals and SNF's: (1) constitute professional medical services personally rendered to an individual patient which may be reimbursed as physicians' services under part B; and (2) constitute professional medical services rendered for the general benefit of hospital or SNF patients and may be reimbursed only on a reasonable cost basis. Directs the Secretary, for purposes of cost reimbursement, to recognize as a reasonable cost of a hospital or SNF only that portion of the costs attributable to services rendered by a physician in a hospital or SNF which are general benefit services as described above, apportioned on the basis of the amount of time actually spent by the physician rendering the services. Directs the Secretary to maintain the part B premium at 25 percent of program costs. Limits Medicare reimbursement to a hospital by not recognizing as reasonable any costs for hospital services exceeding 110 percent of the average of such costs for all hospitals in the same category. Excludes rural hospitals of less than 50 beds. Permits other exemptions as appropriate. Limits the allowable annual rate of increase in inpatient operating costs for a hospital to the limitation ceiling established for such a hospital, plus two percent. Provides that the provisions of the preceding sentence shall expire within three years, or earlier if a prospective reimbursement system for hospitals is enacted. Directs the Secretary to develop proposals for legislation under which hospitals and SNF's would be reimbursed on a prospective basis. Prohibits as a reasonable cost the estimated amount by which the costs incurred by a hospital or SNF for nonmedically necessary private accommodations for Medicare beneficiaries exceeds the costs which would have been incurred by such facility for semiprivate accommodations. Provides that any determination of reasonable cost with respect to services provided by hospital-based skilled nursing facilities shall be made on the basis of a single standard based on the reasonableness of costs incurred by free standing skilled nursing facilities. Requires that in the determination of the limit on reimbursement to home health agencies such limit must be based on the costs of free standing facilities. Directs the Secretary to take into account overhead costs associated with a physician providing hospital outpatient services in determining the limitation on the reasonable cost of outpatient services. Authorizes appropriations from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Fund in the amount of $45,000,000 for each of the fiscal years 1983, 1984, and 1985 for payments to Medicare intermediaries and carriers to be used exclusively to carry out audits and claims reviews. Directs the Secretary, with respect to the last 21 days of fiscal years 1983 and 1984, in the case of a hospital which is paid periodic interim payments, to defer such payments until fiscal years 1984 and 1985 respectively. Prohibits reimbursement for an assistant at surgery if the hospital as a training program relating to the medical specialty of the surgical procedure and a qualified individual is on the hospital staff to provide such services, except that payment may be made if: (1) there are exceptional medical circumstances; (2) a team of physicians is needed for complex procedures; or (3) a physician of another specialty is required during surgery. Permits Federal judicial review of adverse decisions of the Provider Reimbursement Review Board involving several providers to be brought in the judicial district in which the principal provider is located. Provides for the implementation of provisions of the Omnibus Budget Reconciliation Act of 1981 which prohibit payment under the Supplementary Medical Insurance Program for prescription drugs which the Secretary has found to be ineffective. Revises the method of reimbursement to health maintenance organizations (HMO's). Provides instead for payments to competitive medical plans (CMP's). Directs the Secretary to determine annually a per capita rate of payment for each class of individuals entitled to benefits: (1) under parts A (Hospital Insurance) and B of title XVIII who are enrolled under the provisions of this Act with a CMP which he or she has entered into a risk-sharing contract; and (2) under part B alone who are enrolled with a CMP. Directs the Secretary to define appropriate classes of members on the basis of such factors as age, sex, and disability status. Provides that the payment rate for each class shall be equal to 95 percent of the adjusted average per capita cost for that class, and that the rate shall be paid monthly in advance. Defines adjusted average per capita cost to mean the average per capita amount estimated in advance that would be payable in any contract year for services covered under parts A and B, or part B only, and types of expenses otherwise reimbursable under parts A and B, or part B only, if the services were furnished by other than a CMP. Provides that payment to a CMP under this Act for individuals enrolled with a CMP and entitled to benefits under part A and enrolled under part B shall be made from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund. Defines a CMP as a public or private entity which: (1) is a qualified HMO; or (2) is a licensed HMO in the State in which it operates. Provides, in addition, that an entity meets the definition if it: (1) provides at least specified services; (2) is compensated on a periodic basis; (3) provides physicians' services through physicians who are employees or partners; (4) assumes the financial risk for the provision of services; and (5) makes adequate provision against the risk of insolvency. Requires a CMP to have an open enrollment period of at least 30 days duration annually. Prohibits a CMP from refusing an individual because of the individual's health status (except end stage renal disease). Entitles an enrolled individual to a hearing before the Secretary when the amount in controversy exceeds $100. Requires a CMP to have a procedure to review care and identify problems. Sets limits on a CMP's premiums and other charges. Requires each CMP to have an enrolled membership at lest one half of which consists of individuals not entitled to either Medicare and Medicaid. Authorizes a waiver of this requirement where special circumstances warrant such a modification. Authorizes the Secretary, in order to carryout this Act, to enter into a risk sharing contract with any CMP which has at least 1,000 members. Requires each contract to provide either: (1) additional benefits to enrollees; (2) reduced premiums, deductibles, or copayments; or (3) rebates or dividends to enrollees, if a CMP's reimbursement exceeds a rate defined as the adjusted community rate. Requires a CMP to report to the Secretary as specified. Authorizes the Secretary to inspect a CMP. Includes within the definition of medical and other health services under title XVIII services furnished, pursuant to a CMP contract, to a member of a CMP by a physician assistant or nurse practitioner. Provides that the above provisions relating to CMP's shall not apply unless: (1) an individual presently enrolled with an HMO requests that they apply; or (2) the Secretary determines that they should apply to all members of an HMO. Requires three new Medicare members to enroll in a CMP for every current Medicare enrollee converting from the HMO to the CMP, in order for the CMP to receive payment under the new contract with respect to a current enrollee. Makes technical corrections to the Omnibus Budget Reconciliation Act of 1981. Subtitle B: Medicaid - Amends title XIX (Medicaid) of the Act to prohibit a State from imposing an enrollment fee, premium, or deduction with respect to categorically needy: (1) children under 18; (2) pregnant women, for services related to pregnancy; or (3) any hospital or SNF inpatient, if such individual is required to spend all but a minimal amount of his or her income as a condition of receiving Medicaid. Provides that any deduction or similar charge with respect to other individuals shall be nominal. Prohibits a provider from denying emergency care to a Medicaid recipient because of the recipient's inability to pay a deduction or similar charge. Eliminates Federal matching payments to States for part B of title XVIII premium payments, except for individuals eligible to enroll under part B who are not enrolled. Provides that no lien may be imposed against an individual's property because of Medicaid paid on the individual's behalf except: (1) pursuant to a court judgment because of benefits incorrectly paid; or (2) in the case of an individual who is an inpatient in a SNF and who fails to show that he or she reasonably expects to be discharged. Provides that in the case of any individual in a SNF who at any time within the 24 month period prior to admission disposed of a home for less than fair market value, the State plan may provide either: (1) that such individual shall be ineligible for a reasonable period; or (2) that such individual shall be ineligible for 24 months, or longer in certain instances. Provides that an individual shall not be ineligible if: (1) the individual can reasonably be expected to be discharged to return home; (2) title was transferred to a spouse or a child who is under 21, or is blind or disabled; (3) it can be shown that the individual intended to dispose of the home at fair market value; or (4) denial of eligibility would cause undue hardship. Sets the Medicaid target error rate at three percent. Prohibits payments to a State for any fiscal quarter with respect to so much of the erroneous excess payments exceeding three percent. Authorizes the Secretary to waive the reduction if the State made a good faith effort to reach the three percent level. Authorizes a State to treat, for purposes of Medicaid eligibility, as an individual receiving Aid to Families with Dependent Children (part A of title IV of the Act) an individual who would be eligible for AFDC but for specified income limitations made under the Omnibus Budget Reconciliation Act of 1981, if the individual meets specified alternative requirements as the State may provide. Makes technical corrections from the Omnibus Budget Reconciliation Act of 1981. Subtitle C: Utilization and Quality Control Peer Review - Peer Review Improvement Act of 1982 - Replaces the present professional standards review program (part B of title XI of the Social Security Act) with the program established by this Act. Amends title XVIII (Medicare) of the Social Security Act to direct the Secretary to contract with utilization and quality control peer review organizations (organizations) as defined in title XI (General Provisions) of the Act. Amends title XI to redesignate part B - Peer Review of the Utilization and Quality of Health Care Services (currently, Professional Standards Review). Defines a utilization and quality control peer review organization as an entity which: (1) is composed of a substantial number of the licensed doctors of medicine or osteopathy engaged in the practice of medicine or surgery within designated areas established by the Secretary; and (2) is able to perform review functions as required by this Act. Directs the Secretary to establish geographic areas with respect to which contracts will be made. Requires such areas to be the same as those established under part B prior to enactment of the Utilization and Quality Control Peer Review Act of 1982, except that such areas shall be consolidated according to specified criteria. Requires each contract to provide that: (1) the organization shall perform the functions required under this Act; (2) the initial contract shall be for two years and shall be renewable annually afterwards; (3) the Secretary may evaluate the organization's effectiveness; (4) the contract may be terminated by the organization upon 90 days notice; (5) the Secretary may terminate a contract upon 90 days notice to the organization; and (6) the Secretary and the organization shall include negotiated objectives in the contract. Sets forth procedures the Secretary must follow prior to terminating a contract. Requires an organization to perform the following functions: (1) review the professional activities of area health care practitioners and determine whether the services provided were necessary, met professional standards and could have been provided more economically; (2) determine whether payment shall be made under Medicare; (3) notify a practitioner or provider whenever the organization determines that any services furnished or to be furnished are disapproved; (4) determine the types and kinds of cases with respect to which the organization will exercise review authority; (5) apply professionally developed norms of care, diagnosis, and treatment within its area; (6) examine the records of any practitioner or provider with respect to which the organization has a responsibility for review; (7) collect appropriate information; and (8) coordinate information exchanges. Prohibits a physician from reviewing health care services provided by the physician or any organization to which the physician is associated. Entitles any dissatisfied Medicare beneficiary and any provider or practitioner dissatisfied with an organizations's findings to a reconsideration of the findings. Requires practitioners and providers providing services under Medicare to assure that services provided will be provided economically and will be of a quality which meets professionally recognized standards of care. Authorizes the Secretary to exclude a practitioner or provider from participating in Medicare if the practitioner or provider fails to meet stated standards. Provides that no person providing information to any organization having a contract shall be held to have violated any civil or criminal law, unless: (1) the information is unrelated to the performance of the contract; or (2) the information is false and the person knew or had reason to believe the information was false. Exempts health care practitioners and providers from civil liability to any person on account of any action taken pursuant to a contract if due care was exercised in the performance of his or her profession. Directs the Secretary to make payment to an organization incurred in connection with the defense of any suit related to the performance of its duties. Authorizes a State plan approved under any title of the Social Security Act to provide for contracting with an organization to perform review functions. Provides that the Federal share of such expenditures shall be 75 percent. Provides for payment from the trust funds of the Medicare program to cover review expenses under Medicare. Declares that an organization shall not be a Federal agency for purposes of the Freedom of Information Act. Prohibits disclosure of any information acquired by an organization except for specified purposes. Sets forth criminal penalties for any person violating the disclosure provisions. Sets forth reporting requirements. Exempts Christian Science sanatoriums. Requires providers to provide an organization the data necessary for the organization to carry out its functions. States that any provider furnishing items or services which are not covered under Medicare shall be deemed to have knowledge that such items or services are not covered if the provider has been notified that a pattern of inappropriate utilization has occurred in the past and the provider has been allowed a reasonable time to correct the inappropriate utilization. Makes conforming amendments to title XIX (Medicaid). Provides for demonstration projects to determine whether the use of competitive bidding under part B of title XI would be beneficial. Prohibits the Secretary from reducing the number of agreements in effect under part B of title XI of the Social Security Act below the number of agreements in effect on the earlier of enactment or September 30, 1982. Subtitle D: Aid to Families With Dependent Children - Amends part A (Aid to Families with Dependent Children) of title IV of the Social Security Act to provide that both benefit and eligibility amounts shall be rounded to the next lower whole dollar when such amounts are not a whole dollar amount. Provides that AFDC benefits shall not be effective before the date of application for such benefits. Prohibits the classification of a child as a needy child solely because the parent is absent from home due to active duty in a uniformed service. Provides for the application of specified sanctions, including the denial of AFDC to all family members in certain instances, if an individual: (1) refuses a bona fide employment offer which an individual could have accepted; or (2) terminates or reduces his or her employment without good cause. Requires that as a condition of eligibility for AFDC an individual required to register for the Work Incentive Program (part C of title IV) must participate in a program of employment search beginning at the time application for aid is made. Provides that for purposes of determining eligibility for AFDC the income and resources of the following shall be included: (1) the parents of a dependent child, but only until the youngest child becomes 16; (2) the relative (if not the parent) with the dependent child lives, but only if the relative claims aid for himself or herself as well as the child; (3) all siblings of the dependent child under a certain age who live with the child, except a sibling receiving Supplemental Security Income (title XVI of the Act); (4) a grandparent of a dependent child if the parent is a minor and the grandparent lives in the household; and (5) any individual living with the dependent child and the child's parent who is not related to the child or parent. Repeals the AFDC emergency assistance program. Authorizes a State AFDC plan to provide that, in determining the need of any dependent child or relative claiming aid who is living with others as a household, the amount included in the standard of need, and the payment standard applied to such child and relative for shelter, utilities, and similar needs may be prorated on a reasonable basis. Provides that if a State's AFDC error rate exceeds three percent beginning with FY 1984, then the Secretary is prohibited from making payment with respect to that part of the erroneous excess payments as exceeds the allowable error rate. Authorizes the Secretary to waive the reduction if the State cannot reach such error rate despite a good faith effort. Requires an unmarried minor caring for a dependent child to live in the residence of his or her parent(s) in order to receive AFDC, unless: (1) the minor was married at the time of the child's birth; (2) the minor has no parent(s) or the parent(s) whereabouts are unknown; (3) the health and safety of the minor or the minors child would be in jeopardy; or (4) the minor has lived apart from his or her parent(s) for at least one year prior to the child's birth. Excludes from income certain amounts paid to a family in the first or second months preceding an AFDC payment. Grants a State until June 30, 1984, to start a Work Incentive (WIN) demonstration program (part C of title IV of the Act). Subtitle E: Child Support Enforcement - Amends part D (Child Support and Establishment of Paternity) of title IV of the Act to repeal the requirement that a State charge a ten percent fee (chargeable to the non-paying spouse) for child support enforcement services furnished to a non-AFDC family. Permits a State to charge a fee to a non-AFDC family and to collect any costs in excess of the fee from either: (1) the parent owing the support; or (2) the parent benefiting from the services, but only if all individuals in the State having authority to order support services are informed that the costs are to be collected from the individual benefiting from the services. Requires a member of the uniformed services on active duty to make allotments from his or her pay as support payments whenever such individual has failed to make periodic payments under a support order. Provides that child support payments collected which would make an AFDC family ineligible shall be paid to the family (instead of the State) in the month following the first month of ineligibility (currently such payments are made to the family beginning with the first month of ineligibility). Subtitle F: Supplemental Security Income - Amends title XVI (Supplemental Security Income) to provide that the first month's benefit shall be prorated from the later of the date of application or the date of eligibility. Provides that SSI benefit and eligibility amounts shall rounded to the next lower dollar amount. Includes in the income of an SSI recipient any cost of living increases received under title II (Old Age, Survivors and Disability Insurance) of the Act. Phases out "hold harmless" provisions applicable to State SSI supplementary benefits so that by fiscal year 1985 a hold harmless State would be paying for the entire cost of supplementary payments. Provides for the recovery of SSI overpayments from benefits paid to an individual under other programs administered by the Social Security Administration. Subtitle G: Unemployment Compensation - Amends the Federal-State Extended Unemployment Compensation Act of 1970 to prohibit payment of the Federal share of extended unemployment benefits unless a State provides for the rounding of benefits to the next lowest full dollar amount. Title II: Revenue Measures - Subtitle A: Provisions Relating to Individuals - Amends the Internal Revenue Code to repeal the add-on minimum tax and increase the alternative minimum tax on individual taxpayers. Sets forth rules for the calculation of alternative minimum taxable income. Exempts the first $30,000 of minimum taxable income ($40,000 for joint returns) from the alternative minimum tax. Raises the floor amount for deductible medical expenses from three to ten percent of adjusted gross income. Provides that casualty and theft losses shall be deductible only to the extent total losses exceed 10 percent of adjusted gross income. Revises rules for the limitation of mortgage interest on mortgage subsidy bonds. Subtitle B: Provisions Primarily Relating to Business - Reduces by 15 percent corporate tax preferences for: (1) capital gain tax treatment of certain depreciable realty; (2) percentage depletion for coal and iron ore; (3) certain financial institution preference items; (4) deferred domestic international sales corporation (DISC) income; (5) amortization of pollution control facilities; (6) intangible drilling costs of integrated oil companies; and (7) mineral exploration and development costs. Requires taxpayers to reduce the basis of assets by 50 percent of the amount of regular, historic rehabilitation and energy investment tax credits taken for such assests. Reduces from 90 percent to 85 percent the limit on the amount of tax which may be offset by the investment tax credit for both individuals and corporations. Repeals the 1985 and 1986 increases in accelerated cost recovery deductions. Requires corporations to amortize over 10 years interest and real property taxes incurred in the construction of nonresidential real property. Revises certain rules pertaining to sale-lease back arrangements between corporations. Imposes a 50 percent limitation on the percentage of tax liability that a lessor may avoid through the use of such lease arrangements. Requires that cost recovery of leased property be determined by using the straight line method over specified recovery periods. Allows investment tax credits earned on leased property to be taken over three years. Prohibits the carryback of credits or net operating losses allocable to leased property. Limits the deduction for interest paid by a lessor to a lessee in a sale-leaseback arrangement. Reduces the maximum allowable lease term from 150 percent to 100 percent of the present class life of the property. Limits the maximum percentage of eligible property that may be leased to 45 percent in 1982 and 1983 and 40 percent in 1984 and 1985. Sets forth special rules for leases with economic substance. Sets forth special rules for motor vehicle operating leases. Prohibits the use of such sale-leaseback arrangements after September 30, 1985. Repeals the foreign oil and gas extraction per country loss limitation. Requires recharacterization of a specified portion of foreign oil and gas extraction income as ordinary income. Subjects oil companies to tax on foreign oil nonextraction income carried on in countries other than those where such oil and gas is extracted or consumed. Increases from 50 to 90 percent (in annual increments through 1984) the amount of gross income a domestic corporation must derive from business activity in a U.S. possession in order to qualify for the Puerto Rico and possession tax credit. Provides that income of a corporation that qualifies for such credit shall not include income allocable to intangibles. Allocates such income to the shareholders of a corporation on a pro rata basis. Provides similar rules for Virgin Islands corporations. Places limitations on the treatment of tax-exempt obligations which are part of the same issue. Disallows a small issue exemption where obligations are issued as part of an issue exempt from tax as other than a small issue. Terminates the small issue exemption after 1985. Excludes certain research expenditures from the limitation on certain industrial development bonds. Requires public hearings and approval by an elected official or legislative for issuance of industrial development bonds. Provides information reporting requirements for all private activities bonds. Requires that the cost of bond-financed property be recovered under the straight-line depreciation method. Allows tax-exempt industrial development bonds for local district heating or cooling facilities which use water or steam and for facilities that provide gas to a service area comprised of no more than a city and one contiguous county or two contiguous counties. Revises the tax treatment of partial liquidations and certain distributions of appreciated property by corporations. Requires that amounts received by a shareholder in a distribution in complete liquidation of a corporation shall be treated as full payment in exchange for the stock. Limits to complete liquidations the nonrecognition of gain or loss on distributions by a liquidating corporation. Treats as redemptions certain distributions to noncorporate shareholders which qualify as partial liquidations. Repeals certain exceptions relating to the recognition of gain on the distribution of appreciated property in redemption stock. Allows a purchasing corporation to elect (within 75 days after the purchase of 80 percent or more of the stock of an acquired corporation) to treat the acquired corporation as if it had sold all of its assests in a complete liquidation on the date of the stock purchase. Requires consistent treatment where an acquiring corporation or affiliated group of corporations acquires stock in two or more corporations that are members of the same affiliated group. Requires the Secretary of the Treasury to modify specified regulations with respect to the completed contract method of accounting in order to: (1) clarify the time at which a contract is to be considered completed; (2) clarify when one agreement will be treated as more than one contract and when two or more agreements will be treated as one contract; and (3) allocate all costs which directly benefit, or are incurred by reason of, the extended period long-term contract. Sets forth interim rules until such regulations are effective. Allows the annual accrual method of accounting for partnerhips of corporations engaged in farming. Requires that the original issue discount on corporate and non-corporate bonds be included in the gross income of the holder on the basis of a constant interest rate. Exempts state and local bonds, short-term government obligations, and U.S. savings bonds from such requirement. Revises tax treatment of stripped bonds. Treats purchases of stripped bonds as having purchased original issue discount bonds requiring inclusion in gross income. Requires taxpayers who strip coupons from bonds to allocate basis between the coupons and the corpus of the bonds. Extends the targeted jobs tax credit for three years from 1982 to 1985. Includes qualified summer youth employees as a targeted group for purposes of such tax credit. Increases from 80 to 90 percent the amount of estimated tax required to be paid by a corporation. Repeals the exclusion for dividend reinvestment in public utilities stock. Subtitle C: Pensions - Reduces the maximum annual benefit under a defined benefit plan from $136,425 to $90,000. Reduces the maximum annual contribution to a defined contribution plan from $45,475 to $30,000. Freezes cost-of-living adjustments for such plans until 1986. Provides cost-of-living adjustment, beginning in 1986, based on social security benefit payments rather than primary insurance amounts. Sets lower limits where an individual is covered by both a defined benefit plan and a defined contribution plan. Increases the amount of the self-employed retirement plan deduction from $15,000 to $30,000 in annual increments through 1985. Provides cost-of-living adjustments in such amount based on social security benefit payments. Treats as distributions loans made from qualified plans aggregating $10,000 or more. Sets forth special rules for loans made from insurance companies. Requires reports by qualified employer plans with respect to loan transactions. Permits churches to provide certain retirement savings plans to their employees. Sets forth special rules and qualifications for deferred compensation plans for State judges. Permits an employer to provide additional contributions on behalf of disabled participants (other than officers, shareholders and highly compensated individuals) based upon their pre-disability compensation. Subtitle D: Taxation of Life Insurance Companies and Annuities - Repeals the optional treatment of policies reinsured under modified coinsurance contracts. Sets forth special rules for dividends paid to policyholders under reinsurance agreements. Sets forth special accounting rules relating to tax treatment of such modified coinsurance contracts. Denies an interest deduction on indebtedness incurred in connection with reinsurance agreements. Authorizes the allocation or recharacterization of income, deductions, and other items in the case of coinsurance contracts involving tax avoidance or evasion. Sets forth temporary rules for the taxation of life insurance companies from 1982 to 1985. Increases the amount of the dividend deduction from $250,000 to $1,000,000. Reduces from $21 to $19 per $1,000 the computation of approximate revaluation of certain reserves computed on preliminary term basis. Allows consolidated returns to be computed on a bottom line basis. Sets forth special rules applicable to transactions before the effective date of such temporary rules. Allows a deduction to insurance companies for qualified guaranteed interest paid on qualified contracts. Revises tax treatment of amounts received under annuity contracts before annuity starting date. Limits the exclusion for proceeds of flexible premium life insurance contracts payable by reason of death. Subtitle E: Employment Taxes - Establishes standards to classify an individual as an independent contractor for Federal employment tax purposes (other than the Railroad Tax Act). Sets forth procedures for the assessment, collection, and refund of employment taxes in cases involving disputes as to whether individuals are employees. Specifies that participation in a home-health care program shall not be treated as employment. Increases the wage base for purposes of the Federal unemployment tax from $6,000 to $7,000 effective in 1983. Increases the unemployment tax rate from 3.4 to 3.5 percent effective in 1983 and to 6.2 percent (a permanent tax of 6.0 percent and extended benefit tax of 0.2 percent) effective in 1985. Increases the credit which employers receive against such tax to 5.4 percent effective in 1985. Subjects Federal employees to the FICA hospital insurance tax. Extends Medicare coverage to Federal employees. Subtitle F: Excise Taxes - Increases the excise tax on gasoline fuels used in noncommercial aviation from 3 cents to 8 cents per gallon. Increases the excise tax on nongasoline fuels used in noncommercial aviation from 7 cents to 14 cents per gallon. Exempts from such excise taxes fuels used by helicopters used in natural resources and timber operations. Increases the airline passenger ticket tax from 5 percent to 8 percent. Imposes a $3 per person international departure ticket tax. Establishes in the Treasury the "Airport and Airway Trust Fund" (Trust Fund). Appropriates to such Trust Fund amounts equal to such excise taxes and the excise tax presently imposed on aircraft tires and tubes. Authorizes expenditures from such Trust Fund for specified purposes relating to airport and airway maintenance and improvement. Increases the excise tax on local telephone service, toll telephone service and teletypewriter exchange service from 1 percent to 2 percent in 1983, 3 percent in 1984 and 1985, and 2 percent in 1986 and thereafter. Increases the excise tax on small cigarettes from $4 to $8 per thousand. Increases the excise tax on large cigarettes from $8.40 to $16.80 per thousand. Expands the articles of fishing equipment subject to the 10 percent manufacturers excise tax. Imposes a 3 percent manufacturers excise tax on recreational boats and boating equipment. Earmarks funds raised by such taxes for aid to the States in fish restoration and management projects. Repeals the Trans-Alaska Pipeline System (TAPS) adjustment applicable to oil produced in Alaska at Prudhoe Bay. Subjects such oil to the windfall profit tax. Subtitle G: Miscellanous - Extends for two years from 1981 to 1983 the exclusion from gross income of National Research Service Awards. Exempts particular foundations from the divestiture requirements of the excess business holdings provision imposed on private foundations by the Tax Reform Act of 1969. Provides that the New Jersey Franchise and Gross Receipts Tax shall be deemed an adjusted tax of units of local government within New Jersey for the entitlement period beginning October 1, 1982. Allows a business expense deduction for any payment to foreign officials or agents of a foreign government provided such payments would be deemed lawful under the Foreign Corrupt Practices Act. Amends the Second Liberty Bond Act to authorize the Secretary of the Treasury, with the approval of the President, to fix the investment yield on any United States savings bonds. Increases from $70,000,000,000 to $110,000,000,000 the aggregate value of bonds which may be issued paying interest rates above statutory ceilings. Directs the Secretary to conduct a study of alternative income tax systems. Requires that such study include an evaluation of: (1) a simplified income tax based on gross income; (2) a consumption tax; (3) a consumption- based tax; and (4) the broadening of the base and lowering of the rates of the current income tax. Directs the Secretary to conduct a study of the effects on capital markets of substituting for the measures of the growth of the money supply: (1) a measure for the growth of debt as the long-term target of monetary policy; and (2) a measure of total liquid assets as an interim target of monetary policy. Authorizes the payment of $50,000 to the Jefferson County Mental Health Center, Lakewood, Colorado, in full settlement of its claims against the United States. Title III: Taxpayer Compliance Subtitle A: Withholding on Interest and Dividends; Holding Period for Capital Assets - Imposes a ten percent withholding tax on payments of interest, dividends, and patronage dividends. Specifies certain exemptions from such withholding. Sets forth administrative provisions for the collection and enforcement of such withholding tax. Decreases the holding period required for long-term capital gain or loss from one year to six months. Subtitle B: Improved Information Reporting - Requires the filing of an informational return by every person who: (1) makes payments of interest aggregating $10 or more to any other person; (2) receives payments of interest as a nominee and makes payments of interest aggregating $10 or more to any other person; or (3) withholds tax from a payment of interest. Requires registration of all obligations of the United States (or any agency or instrumentality thereof) except those which: (1) are not of a type offered to the public; or (2) have a maturity of not more than one year. Requires governmental obligations which are presently tax-exempt to be in registered form in order to maintain tax-exempt status. Requires registration of non-governmental obligations. Denies an interest tax deduction to issuers of obligations offered to the public if such obligations are in non-registered form. Imposes a tax penalty on issuers of registration-required obligations not in registered form. Sets forth requirements for information returns filed by brokers. Sets forth requirements for information returns concerning payments of remuneration for services and direct sales. Requires reporting of State and local income tax refunds. Expands the requirements with respect to employer reporting of tips to employees. Increases penalties for failure to file information returns. Increases penalties for failure to supply information numbers. Extends withholding requirements to payments where identifying numbers are not furnished or are inaccurate. Sets a minimum penalty of not less than $100 for extended failure to file a tax return or pay tax. Requires the Secretary to prescribe regulations providing standards for determining which returns must be filed on magnetic media or in other machine-readable form. Subtitle C: Abusive Tax Shelters, etc.; Substantial Underpayments; False Documents; Frivolous Returns - Imposes penalties on individuals promoting abusive tax shelters. Sets such penalty at the greater of $1,000 or 10 percent of the gross income derived from such activity. Authorizes the Secretary to seek injunctions in order to enjoin promoters of abusive tax shelters. Sets forth procedural rules applicable to penalties on: (1) promoters of abusive tax shelters; (2) persons assisting in the presentation of false or fradulent documents; and (3) persons filing frivolous returns. Imposes a ten percent tax penalty for a substantial understatement of tax liability. Imposes civil penalties on persons aiding and abetting the understatement of tax liability. Imposes an immediately assessible penalty of $500 on any individual who files a frivolous income tax return. Sets forth special procedures with respect to third-party summonses to record keepers. Specifies the duties of a third-party recordkeeper served with a third-party summons. Limits the use of an administrative summons in cases referred to the Department of Justice for a grand jury investigation or a criminal prosecution. Requires withholding from periodic payments of pensions, annuities, and certain deferred income as if such payments were wages paid by an employer. Requires withholding from nonperiodic distributions of pensions, and annuities at a rate of ten percent of such distribution. Allows individuals to elect not to have such amounts withheld. Requires reporting of necessary information by employees, plan administrators, and issuers of insurance or annuity contracts. Imposes penalties for failure to keep records necessary to meet such reporting requirements. Permits partial rollovers of individual retirement account distributions. Requires withholding of tax on dispositions by foreign persons of United States real property interests. Establishes jurisdiction in the U.S. District Court for the District of Columbia for summons enforcement actions involving U.S. citizens or residents living abroad. Imposes a fixed-dollar penalty for failure to furnish information with respect to foreign corporations (present law requires a percentage reduction in creditable foreign taxes). Sets such penalty at $1,000 for each failure to furnish information for an annual accounting period of the foreign corporation. Imposes reporting requirements on 10 percent (reduced from 50 percent) shareholders of a foreign personal holding company. Imposes a civil penalty for failure to file a foreign personal holding company information return. Authorizes the Secretary to delay the reporting of transactions involving foreign corporations and foreign trusts until a date after the 90th day the transaction must be reported. Requires that all interest payable to or by the United States under the internal revenue laws shall be compounded daily. Requires the Secretary to redetermine such interest rate semiannually. Requires that such redetermination be made on the basis of the average adjusted prime rate charged by commercial banks. Restricts the payment of interest by the United States with respect to refunds, overpayments, and refunds caused by late returns, returns in nonprocessible form, and certain carrybacks. Disallows all deductions and credits for amounts paid or incurred in the illegal trafficking in drugs listed in the Controlled Substances Act. Expresses the sense of the Congress that additional funds be appropriated to the Internal Revenue Service in order to provide improved enforcement. Requires the Secretary to study and report to the Congress on methods of modifying the design of the forms used by the Internal Revenue Service to achieve greater accuracy in the reporting of income and the matching of information reports and returns with actual income tax returns. Title IV: Airport and Airway System Development - Directs the Secretary of Transportation to review and revise as necessary the existing national airport system plan to provide for the development of public-use airports. Requires the Comptroller General, not later than 180 days after enactment of this Act, to submit to Congress an evaluation of the feasibility of making domestic military airports available for joint civil and military use. Directs the Secretary of Defense and the Secretary of Transportation to submit to Congress, not later than one year after enactment of this Act, a plan for such joint use. Authorizes appropriations from the Airport and Airway Trust Fund for fiscal years 1982 through 1987 for the airport improvement program. Sets forth the method of apportionment of such funds. Authorizes the Secretary to incur obligations from the Fund in the form of project grants, block grants, and block grant supplements for eligible recipients to acquire, establish, or improve air navigation facilities. Requires the Secretary, upon approving a grant application, to enter into an agreement with the sponsor of the application, on the terms and conditions necessary to meet the requirements of this Act, including an offer for the U.S. share of allowable project costs. Makes construction work for airport development under a project grant application subject to inspection and approval by the Secretary. Requires that contracts for such work establish minimum rates of pay as predetermined by the Secretary of Labor and include provisions for employment preference to veterans of the Vietnam era and disabled veterans. Directs the Secretary of Transportation to assist in the acquisition of Government-owned lands where necessary for projects at public airports. Excludes certain public-use lands from such acquisition. Sets forth recordkeeping requirements, penalties for false statements, and nondiscrimination provisions for activities funded under this Act. Grants jurisdiction to the U.S. district courts for the enforcement of provisions of this Act. Allows any airport otherwise eligible for Federal planning or development assistance to elect voluntarily not to receive such assistance. Disqualifies any airport which so elects from eligibility for future assistance, except as specified. Requires the Secretary, not later than one year after enactment of this Act, to report to Congress on whether airports which have the ability to finance their capital and operating needs without Federal assistance should be made ineligible for Federal assistance for development and planning. Authorizes the waiver of certain obligations to airports which elect not to receive Federal assistance. Directs the Secretary to report to Congress on or before the first day of March of each year on the revenues and expenditures of the Airport and Airway Trust Fund for the preceding fiscal year. Amends the Federal Aviation Act of 1958 to authorize the Secretary to prescribe standards for airport runway friction. Provides for equal aeronautical access at all airports upon which Federal funds have been expended. Amends the Airport and Airways Development Act Amendments of 1976 to authorize appropriations from the Airport and Airway Trust Fund to compensate air carriers for security screening in foreign air commerce. Requires the Secretary to report to Congress on the amounts due to such air carriers. Revises provisions relating to safety certification of airports. Prohibits States from levying specified taxes on air carriers. Restricts the Secretary's authority to close or provide for part-time operation of flight service stations operated by the Federal Aviation Administration.

(Measure passed House, amended) Title I: Tax Provisions - Miscellaneous Revenue Act of 1981 - Amends the Internal Revenue Code to provide that the limitations placed on income tax deductions for expenses in connection with the business or rental use of a home shall not apply to rentals to a family member or a person who has an interest in the dwelling unit pursuant to a shared equity financing agreement if such person pays a fair rental and uses such residence as his principal place of residence. Defines "shared equity financing agreement" for purposes of this Act. Permits reasonable litigation costs, including attorneys' fees, to be awarded to the prevailing party (other than the United States or a creditor of the prevailing party) in any civil proceeding in any court of the United States for the determination, collection, or refund of any tax, interest, or penalty imposed under the Internal Revenue Code if it is determined that the position of the United States was unreasonable. Requires such party to have exhausted the available administrative remedies within the Internal Revenue Service. Limits such award to $50,000. Disallows costs of proceedings involving declaratory judgments, except those involving the revocation of an organization's status as a tax-exempt public charity. Includes as attorneys' fees any amounts paid to an individual who is not an attorney but who is authorized to practice before the Tax Court. Defines "prevailing party" as a party who substantially prevails with respect to the amount in controversy or the most significant issue or set of issues. Disqualifies costs of proceedings commenced after September 30, 1984. Increases from $500 to $5,000 the maximum penalty for instituting Tax Court proceedings for purposes of delay and imposes such penalty for the bringing of proceedings which are frivolous or groundless. Revises the test for whether proceedings are brought for purposes of delay. Exempts accrual basis taxpayers from the application of tax rules limiting the acceleration of accrual of taxes by a taxing jurisdiction if they so elect or if they were not liable for any tax prior to the effective period of acceleration. Sets forth rules for the accounting of accruals in the case of taxpayers who make such an election. Revises the formula used for purposes of the personal holding company tax to determine whether the sum of the deductions directly allocable to the conduct of a lending or finance business allows the exclusion of such a business from the definition of a personal holding company. Increases from 60 to 144 months the limitation on the maturity of commercial paper and loans dealt in or made by a lending or finance business. Excepts from the definition of "lending or finance business" the making of loans, notes, or installment obligations under open end credit agreements. Amends the Tax Reform Act of 1976 to defer until 1984 the effective date of special rules limiting net operating loss carryovers. Amends the Energy Tax Act of 1978, with respect to refunds resulting from the repeal of the manufacturers excise tax on buses, to extend to December 31, 1982, the period for reimbursement of tax to the ultimate purchaser and revise requirements regarding proof of reimbursement. Title II: Unemployment Compensation and Welfare Provisions - Amends title IX (Employment Security) of the Social Security Act to extend the period during which certain amounts transferred to State unemployment funds may be used to administer a State's unemployment compensation law and public employment offices. Amends the Internal Revenue Code to exclude any work-study student (as opposed to any work-study student under age 22) from coverage under the Federal Unemployment Tax Act. Extends for two years the exclusion of wages paid to aliens admitted to the United States to perform agricultural work, pursuant to the Immigration and Nationality Act, from Federal unemployment taxes. Restores unemployment benefits eligibility for members of the armed services who leave the service at the end of their enlistment. Limits unemployment benefits to ex-service members who have served 730 or more continuous days in military service. Requires a four week waiting period between the week in which the individual is separated from the service and the week in which he becomes entitled to compensation. Limits an eligible ex-service member's benefits to 13 weeks. Substitutes a one-month prospective accounting period in the Supplemental Security Income (SSI) program for the retrospective accounting period required by the Omnibus Budget Reconciliation Act of 1981. Amends title XVI of the Social Security Act (SSI) to credit States for unnegotiated benefit checks which are "State supplement-only" checks. Repeals the provisions of the Omnibus Budget Reconciliation Act of 1981 that require all States, in cases involving non-AFDC families, to charge any absent parent who is obligated to pay child support through the State Child Support Enforcement Agency a fee equal to 10 percent of the child support payment to cover administrative costs. Allows States to: (1) charge a fee of up to $20 for a non-AFDC collection and retain an amount equal to administrative costs not covered by the fee; or (2) collect from the parent who owed child or spousal support an amount to cover administrative costs, in addition to the child support payment.

(Reported to House from the Committee on Ways and Means with amendment, H. Rept. 97-404) Title I: Tax Provisions - Miscellaneous Revenue Act of 1981 - Amends the Internal Revenue Code to provide that the limitations placed on income tax deductions for expenses in connection with the business or rental use of a home shall not apply to rentals to a family member or a person who has an interest in the dwelling unit pursuant to a shared equity financing agreement if such person pays a fair rental and uses such residence as his principal place of residence. Defines "shared equity financing agreement" for purposes of this Act. Permits reasonable litigation costs, including attorneys' fees, to be awarded to the prevailing party (other than the United States or a creditor of the prevailing party) in any civil proceeding in any court of the United States for the determination, collection, or refund of any tax, interest, or penalty imposed under the Internal Revenue Code if it is determined that the position of the United States was unreasonable. Requires such party to have exhausted the available administrative remedies within the Internal Revenue Service. Limits such award to $50,000. Disallows costs of proceedings involving declaratory judgments, except those involving the revocation of an organization's status as a tax-exempt public charity. Includes as attorneys' fees any amounts paid to an individual who is not an attorney but who is authorized to practice before the Tax Court. Defines "prevailing party" as a party who substantially prevails with respect to the amount in controversy or the most significant issue or set of issues. Disqualifies costs of proceedings commenced after September 30, 1984. Increases from $500 to $5,000 the maximum penalty for instituting Tax Court proceedings for purposes of delay and imposes such penalty for the bringing of proceedings which are frivolous or groundless. Revises the test for whether proceedings are brought for purposes of delay. Exempts accrual basis taxpayers from the application of tax rules limiting the acceleration of accrual of taxes by a taxing jurisdiction if they so elect or if they were not liable for any tax prior to the effective period of acceleration. Sets forth rules for the accounting of accruals in the case of taxpayers who make such an election. Revises the formula used for purposes of the personal holding company tax to determine whether the sum of the deductions directly allocable to the conduct of a lending or finance business allows the exclusion of such a business from the definition of a personal holding company. Increases from 60 to 144 months the limitation on the maturity of commercial paper and loans dealt in or made by a lending or finance business. Excepts from the definition of "lending or finance business" the making of loans, notes, or installment obligations under open end credit agreements. Amends the Tax Reform Act of 1976 to defer until 1984 the effective date of special rules limiting net operating loss carryovers. Amends the Energy Tax Act of 1978, with respect to refunds resulting from the repeal of the manufacturers excise tax on buses, to extend to December 31, 1982, the period for reimbursement of tax to the ultimate purchaser and revise requirements regarding proof of reimbursement. Title II: Unemployment Compensation and Welfare Provisions - Amends title IX (Employment Security) of the Social Security Act to extend the period during which certain amounts transferred to State unemployment funds may be used to administer a State's unemployment compensation law and public employment offices. Amends the Internal Revenue Code to exclude any work-study student (as opposed to any work-study student under age 22) from coverage under the Federal Unemployment Tax Act. Extends for two years the exclusion of wages paid to aliens admitted to the United States to perform agricultural work, pursuant to the Immigration and Nationality Act, from Federal unemployment taxes. Restores unemployment benefits eligibility for members of the armed services who leave the service at the end of their enlistment. Limits unemployment benefits to ex-service members who have served 730 or more continuous days in military service. Requires a four week waiting period between the week in which the individual is separated from the service and the week in which he becomes entitled to compensation. Limits an eligible ex-service member's benefits to 13 weeks. Substitutes a one-month prospective accounting period in the Supplemental Security Income (SSI) program for the retrospective accounting period required by the Omnibus Budget Reconciliation Act of 1981. Amends title XVI (Supplemental Security Income) of the Social Security Act to credit States for unnegotiated benefit checks which are "State supplement-only" checks. Repeals the provisions of the Omnibus Budget Reconciliation Act of 1981 that require all States, in cases involving non-AFDC families, to charge any absent parent who is obligated to pay child support through the State Child Support Enforcement Agency a fee equal to 10 percent of the child support payment to cover administrative costs. Allows States to: (1) charge a fee of up to $20 for a non-AFDC collection and retain an amount equal to administrative costs not covered by the fee; or (2) collect from the parent who owed child or spousal support an amount to cover administrative costs, in addition to the child support payment.

Miscellaneous Revenue Act of 1981 - Amends the Internal Revenue Code to provide that the limitations placed on income tax deductions for expenses in connection with the business or rental use of a home shall not apply to rentals to a family member or a person who has an interest in the dwelling unit pursuant to a shared equity financing agreement if such person pays a fair rental and uses such residence as his principal place of residence. Defines "shared equity financing agreement" for purposes of this Act. Permits reasonable litigation costs, including attorneys' fees, to be awarded to the prevailing party (other than the United States or a creditor of the prevailing party) in any civil proceeding in any court of the United States for the determination, collection, or refund of any tax, interest, or penalty imposed under the Internal Revenue Code if it is determined that the position of the United States was unreasonable. Requires such party to have exhausted the available administrative remedies within the Internal Revenue Service. Disallows costs of proceedings involving declaratory judgments, except those involving the revocation of an organization's status as a tax-exempt public charity. Includes as attorneys' fees any amounts paid to an individual who is not an attorney but who is authorized to practice before the Tax Court. Defines "prevailing party" as a party who substantially prevails with respect to the amount in controversy or the most significant issue or set of issues. Disqualifies costs of proceedings commenced after September 30, 1984. Increases from $500 to $5,000 the maximum penalty for instituting Tax Court proceedings for purposes of delay and imposes such penalty for the bringing of proceedings which are frivolous or groundless. Revises the test for whether proceedings are brought for purposes of delay. Exempts accrual basis taxpayers from the application of tax rules limiting the acceleration of accrual of taxes by a taxing jurisdiction if they so elect or if they were not liable for any tax prior to the effective period of acceleration. Sets forth rules for the accounting of accruals in the case of taxpayers who make such an election. Revises the formula used for purposes of the personal holding company tax to determine whether the sum of the deductions directly allocable to the conduct of a lending or finance business allows the exclusion of such a business from the definition of a personal holding company. Increases from 60 to 144 months the limitation on the maturity of commercial paper and loans dealt in or made by a lending or finance business. Excepts from the definition of "lending or finance business" the making of loans, notes, or installment obligations under open end credit agreements. Amends the Tax Reform Act of 1976 to defer until 1984 the effective date of special rules limiting net operating loss carryovers. Amends the Energy Tax Act of 1978, with respect to refunds resulting from the repeal of the manufacturers excise tax on buses, to extend to December 31, 1982, the period for reimbursement of tax to the ultimate purchaser and revise requirements regarding proof of reimbursement.