Joint Statement of Managers Accompanying
the Line Item Veto Act
TITLE X—IMPOUNDMENT CONTROL
PART C—LINE ITEM VETO
Sec. 1026. [Legislative text omitted.]
Joint Statement of Managers on the Line Item Veto Act of 1996: The Conference Report on the Line Item Veto Act of 1996 (H. Rept. 104-491):
Sec. 1026. Definitions
(1) Appropriation Law. As used in this Act, the term “appropriation law” includes any Act which provides general, special, supplemental, deficiency, or continuing appropriations of federal funds, which has been presented to the President in accordance with Article I, section 7 of the Constitution of the United States, and which has been affirmatively signed into law by the President.
(2) Calendar Day. The term “calendar day” means a standard 24-hour period beginning at midnight.
(3) Calendar Day of Session. The term “calendar day of session” means only those days on which both Houses of Congress are in session. This definition excludes periods of recess and adjournment by either House.
(4) Cancel. In the case of discretionary budget authority, the term “cancel” means to rescind an entire dollar amount. The term rescind is clearly understood through long experience between the Executive and Legislative branches with respect to appropriated funds. The conferees do not intend that any new interpretation be applied to the term rescind, but rather intend to narrow the scope of cancellation authority as compared with the authority provided under section 1012 of the Budget Act.
For items of new direct spending, three definitions are provided to specifically tailor the cancellation authority to the type of direct spending involved. In the case of direct spending that is budget authority provided by law other than an appropriation law, the term cancel means to prevent that budget authority from having legal force or effect. For example, in the case of budget authority that provides authority to contract for a particular project, the effect of a cancellation by the President would be to foreclose the ability of the Federal Government to enter into an agreement to pay the amount of money provided in the law. The cancellation affects only the money that would otherwise be spent, and may not be used to alter or terminate any condition contained in the law.
For entitlement authority, the term cancel means that the President may prevent the specific provision that results in the deficit-increasing obligation of the Federal Government from having legal force or effect. The cancellation affects only the legal obligation to pay a benefit, and does not change or affect any other aspect of the law.
With respect to direct spending that is conducted through the food stamp program, the term cancel means that the President may prevent the specific provision of law that results in an increase in expenditures from having legal force or effect. Again, the authority is narrowly defined, and is limited only to eliminating the increase in food stamp obligations that would otherwise occur. No other aspect of the law could be altered, terminated or otherwise affected.
Finally, with respect to limited tax benefits, the term cancel means to prevent the specific provision of law that provides the benefit from having legal force or effect. Again, the authority granted the President is very narrow—only to collect the tax that would otherwise not be collected or to deny the credit that would otherwise be provided. The President may not change, alter, or modify any other aspect of the law.
(5) Direct Spending. The term “direct spending” is an existing term that is defined in section 250(8) of the Balanced Budget and Emergency Deficit Control Act of 1985. The conference report makes technical modifications to the definition to make it appropriate for use in part C of title X, but the conferees intend the term “direct spending” to have the same meaning as it does under the Balanced Budget and Emergency Deficit Control Act.
(6) Disapproval Bill. For the purposes of the conference report, the term “disapproval bill” is defined as a bill or a joint resolution which only disapproves one or more cancellations of dollar amounts of discretionary budget authority, items of new direct spending or limited tax benefits in a special message transmitted by the President under section 1022.
The disapproval bill is defined to include a list by reference number of one or more of the cancellations in the President’s special message, allowing the opportunity for amendments relating to specific cancellations. The structure of the disapproval bill is carefully defined and proscribed to ensure that only a list of reference numbers identifying cancellations from a particular special message, and nothing, more are included in a bill that is eligible for the expedited procedures that are provided under section 1025. Since it is the intent of the conferees to ensure that the expedited procedures are reserved for bills that only disapprove any or all of the President’s cancellations, the definition is designed to ensure that matters beyond the scope of the President’s special message are not permitted to be added to a disapproval bill. However, the conferees recognize the legitimate interest members may have in limiting the focus of a disapproval bill to include only a subset of the cancellations in a President’s special message.
Specifically, a disapproval bill referencing the President’s cancellations has the following title: “A bill disapproving the cancellations transmitted by the President on ________,” with the blank space being filled with the date of transmission of the relevant special message and the number of the relevant public law.
The disapproval bill does not have a preamble and provides only the following: “That Congress disapproves of cancellations ________, as transmitted by the President in a special message on ________, regarding ________.” The first blank space is to be filled in with a list by reference number of one or more of the cancellations contained in the President’s special message. The second blank space is to be filled in with the date of transmission of the President’s special message. The third blank space is to be filled in with the number of the public law to which the special message relates.
(7) Dollar Amount of Discretionary Budget Authority. The term “dollar amount of discretionary budget authority” is carefully defined in section 1026(7) in order to ensure that the President’s authority to cancel discretionary spending in appropriation laws is clearly delineated. The conference report delegates the authority to the President to cancel in whole any dollar amount specified in an appropriation law.
In addition, to increase the President’s discretion, the conference report allows the President to cancel a dollar amount of budget authority provided in an appropriation law by specific amounts identified by the Congress in the statement of managers, the governing committee report, or other law. By limiting the delegation of authority, the conferees intend to preclude arguments between the Executive and Legislative Branches and to ensure that the delegation is not overbroad or vague. As is described in further detail below, the conferees have sought to provide the President the ability to rescind entire dollar amounts, even if not specified as a dollar amount in the law itself, so long as the dollar amount can be clearly identified and is in an indivisible whole with which Congress has previously agreed.
The conferees note that the definition specifically excludes certain types of budget authority that are addressed by other provisions in part C of title X, as well as any restriction, condition, or limitation that Congress places on the expenditure of budget authority or activities involving such expenditure. The exclusion of restrictions, conditions, or limitations is included to make clear that the President may not use the authority delegated in section 1021(a) to cancel anything other than a specific dollar amount of budget authority.
The cancellation authority cannot be used to change, alter, modify, or terminate any policy included by Congress, other than by rescinding a dollar amount. Obviously, if the Congress has included a restriction in the law that prohibits the expenditure of budget authority for any activity, there is no dollar amount to be rescinded by the President, nor would any money be saved for use in reducing the federal budget deficit, which is a requirement for the use of the authority provided under section 1021(a).
As described in subparagraph (A)(i), the President may cancel the entire dollar amount of budget authority specified in an appropriation law. The term “entire” means just that; the President may rescind, or “line out” the dollar amount of budget authority specified in the law, so that the dollar amount provided in the law becomes zero after the cancellation. For example, in Public Law 104-37, the Agriculture Appropriations Act for Fiscal Year 1996, $49,486,000 was provided in the law for special grants for agriculture research. Using the authority granted under section 1021(a)(1), as defined under section 1026(7)(A)(i), the President could cancel only the entire $49,486,000.
Further, again under subparagraph (A)(i), if the appropriation law does not include a specific dollar amount, but does include a specific proviso that requires the allocation of a specific dollar amount, then the President may rescind the entire dollar amount that is required by the proviso. A fictitious example of what the conferees intend in this case follows:
An appropriation law includes a provision that states “for the operation and maintenance of the Army, $1,400,000,000, provided Fort Fictitious is maintained at Fiscal Year 1995 levels,”. In this instance, the President could ascertain what the operation of Fort Fictitious cost in FY 1995, and could rescind that entire amount from the $1.4 billion provided for Army O&M.; The conferees note that the President would have to take the entire dollar amount required to operate Fort Fictitious in FY 1995, and could not simply take part of that amount. It is intended to be an all or nothing decision.
As a further specific illustration, the conferees note that the General Construction Account in Public Law 104-46, the Energy and Water Development Appropriations Act, 1996, states:
“$804,573,000 to remain available until expended, of which such sums as necessary pursuant to Public Law 99-662 shall be derived from the Inland Waterways Trust Fund, for one-half of the costs of construction and rehabilitation of inland waterways projects, including rehabilitation costs for the Lock and Dam 25, Mississippi River, Illinois and Missouri * * *”
In this example, the President could cancel the entire $804,573,000 or could cancel an amount equal to the entire dollar amount that would be required to fund the rehabilitation costs of the Lock and Dam 25 project, noting in his message all information as required by section 1022.
In subparagraph (A)(ii) the President is given the authority to rescind the entire dollar amount represented separately in any table, chart, or explanatory text included in the statement of managers or the governing committee report that accompanies an appropriation law. The term “governing committee report” is included to address the fact that the current practice in preparing the statement of managers for a conference report on an appropriation law is to simply address changes that were made in the statutory language and the accompanying committee reports, thus leaving intact and incorporating by reference tables, charts, and explanatory text in one of the two committee reports that were not modified by the conference.
An example of the authority described in subparagraph (A)(ii) is found in the Conference Report accompanying the FY 1996 Military Construction Appropriations Act (Public Law 104-32). The statement of managers accompanying the conference report contains a chart denoting allocations of dollars to various installations and projects. On page 38 there is an allocation of $10,400,000 for a physical fitness center at the Bremerton Puget Sound Naval Shipyard. Except for this chart there is no other reference to the physical fitness center in either the statute or narrative explanation in the Conference Report. Under the authority provided by the definition in subparagraph (A)(ii), the President could cancel the entire $10,400,000 provided for the physical fitness center, but could not cancel only a part of that amount.
The inclusion of subparagraph (A)(ii) is not intended to give increased legal weight or authority to documents that accompany the law that is enacted. Rather, as an exercise of its authority to specify the terms of the delegation to the President, Congress is choosing to use those documents as a means of allowing the President increased discretion to reduce dollar amounts of discretionary budget authority provided in an appropriation law. In order to ensure that the delegated authority is clear, the conferees have limited that authority to dollar amounts identified by Congress in the appropriation law, the accompanying statement of managers, the governing committee report or other law. Since Congress often provides detailed identification of dollar amounts in the accompanying documents, they represent an agreed upon set of dollar amounts that the President may rescind in their entirety.
Subparagraph (A)(iii) has been included by the conferees to address a specific circumstance where neither the appropriation law nor the accompanying statement of managers or committee reports include any itemization of a dollar amount provided in that appropriation law. However, another law mandates that some portion of the dollar amount provided in the appropriation law be allocated to a specific program, project, or activity that can be quantified as a specific dollar amount. In this case, the President could rescind the entire dollar amount required to be allocated by the other law, since that dollar amount has been identified by Congress as a specific dollar amount that must be spent. As is the case with the earlier provisions, the President could not rescind part of the dollar amount mandated by the other law. It is an all or nothing decision. Likewise, the President could not use the cancellation authority to change, alter, or modify in any way the other law.
An example of the authority provided in subparagraph (A)(iii) is found in section 132 of Public Law 104-106, the National Defense Authorization Act for Fiscal Year 1996. Section 132 states that “Of the amounts appropriated for Fiscal Year 1996 in the National Defense Sealift Fund, $50,000,000 shall be available only for the Director of the Advanced Research Projects Agency for advanced submarine technology activities.” In this example the President could “look through” the appropriation law to the authorization law that mandates that $50 million is available only for advanced submarine technology activities, and could cancel the entire $50 million.
However, had the appropriation law contained a provision that contradicted or otherwise made the mandate in the authorization law ineffective with respect to the allocation of the National Sealift Fund, then the President would not be able to use the amount in the authorization law as the basis for the cancellation of a dollar amount of discretionary budget authority. As with appropriation laws, the President cannot use the authority in subparagraph (A)(iii) to change, alter, or modify any provision of the authorization law.
Subparagraphs (A)(iv) and (A)(v) are variations on the authority granted in clauses (i) through (iii), and are intended to address the circumstance where Congress does not specify in the appropriation law, the accompanying documents, or other law a specific dollar amount, choosing instead to require the purchase of a particular quantity of goods. Subparagraphs (A)(iv) and (A)(v) allow the President to rescind the entire dollar amount of discretionary budget authority represented by the quantity specified in the law or documents. To determine the specific dollar amount, the President is required to multiply the estimated procurement cost by the total quantity of items specified in the law or documents. The President may then rescind the entire dollar amount represented by the product of those two figures. The conferees expect that the President will use the best available information, as represented by the President’s budget submission or binding contract documents, to estimate the procurement cost.
The conferees have included the following examples in order to more clearly explain the definition of dollar amount of discretionary budget authority as defined by section 1026(7). These examples are used solely for illustrative purposes and the conferees are in no way commenting on the merit of any of these programs. The conferees do not intend for these examples to represent all instances where cancellation authority may be used.
The FY 1996 Agriculture Appropriations Act (Public Law 104-37) appropriates $49,846,000 in special grants for agriculture research. The Conference Report accompanying this law contains a table that allocates the $49,846,000 total into lesser dollar amounts all of which correspond to individual research programs. This table, for example, contains a $3,758,000 allocation for “Wood Utilization Research (OR, MS, MN, ME, MI)”.
Using the definition in section 1026(7)(A) (i) and (ii), the President could cancel either the entire $49,846,000 specified in the statute or the entire $3,758,000 described in the chart in the Conference Report. However, because the Congress did not break down the allocations for each state associated with this project the President would not have the authority to take a portion of the $3,758,000 allocated to wood utilization research.
The conferees intend that cancellation authority only applies to whole items. If an item (or project) occurs in more than one state, and the law or a report that accompanies an appropriation law lists an item (project) and then lists a series of states, it is the entire item that must be canceled.
In the example listed above, “Wood Utilization Research” appears in the report as: “Wood Utilization Research (OR, MS, NC, MN, ME, MI).”
The conferees believe it is important to note that this line in the report must be canceled in its entirety. The President’s cancellation authority is strictly limited. The President has no authority in this example to cancel wood utilization research for Michigan only.
To further illustrate this example, the conferees submit the following example that corresponds to a chart contained in the same conference report: “Aflatoxin (IL), 133,000; Human Nutrition (AR), 425,000; Human Nutrition (IA), 473,000; Wool Research (TX, MT, WY) 212,000.”
In this case, the President may cancel aflatoxin (IL), Human Nutrition (AR), Human Nutrition (IA), and/or Wool Research (TX, MT, WY). Although there are two human nutrition research projects listed in two different states, because of the manner in which they are listed, each project may be separately canceled. Again, the President may only cancel the entire wool research program and may not cancel only wool research in Texas.Section 1026(7)(B) describes what is not included in the definition of “dollar amount of discretionary budget authority.” Subparagraphs (B)(i) and (B)(ii) exclude items of new direct spending, for which cancellation authority is provided under other sections of part C of title X.
Subparagraph (B)(iii) excludes from the definition any budget authority canceled or rescinded in an appropriation law in order to ensure that those cancellations or rescissions cannot be undone by the President using the cancellation authority.As described earlier, subparagraph (B)(iv) excludes from the definition any restriction, condition, or limitation in an appropriation law or the accompanying statement of managers or governing committee report on the expenditure of budget authority or on activities involving such expenditure. The following two examples illustrate the conferees’ intent that the President cannot use the cancellation authority to alter the Congressional policies included in these restrictions, conditions, or limitations.
The Labor, Health and Human Services and Education and Related Agencies Appropriations Act, H.R. 1217, as amended by the Senate Appropriations Committee contained the following section:
“Sec. 103. No amount of funds appropriated in this Act for fiscal year 1996 may be used to implement, administer, or enforce any executive order, or other rule or order, that prohibits Federal contracts with, or requires that debarment of, or imposes other sanction on, a contractor on the basis that such contractor or organizational unit thereof has permanently replaced lawfully striking workers.”
The President’s cancellation authority only applies to entire dollar amounts. The above example of “fencing language” is a limitation and contains no dollar amount. Therefore, the President has no authority to alter or cancel this statement of Congressional policy.
If a limitation or condition on spending – “fencing language” – is not written as a separate numbered or unnumbered paragraph, but instead is written as a proviso to an appropriated amount, the President still has no power to cancel the proviso.
The Energy and Water Development Appropriations Act, 1996, (Public Law 104-46), Title II, Department of the Interior, General Administrative Expenses, states:
“For necessary expenses of general administration and related functions in the office of the Commissioner, the Denver office, and offices in the five regions of the Bureau of Reclamation, $48,150,000, of which $1,400,000 shall remain available until expended, the total amount to be derived from the reclamation fund and to be nonreimbursable pursuant to the Act of April 19, 1945 (43 U.S.C. 377); Provided, that no part of any other appropriation in this Act shall be available for activities or functions budgeted for the current fiscal year as general administrative expenses.
Using this example, the President may cancel $48,150,000 or the $1,400,000 noted, but may not cancel or alter in any way the proviso restricting the use of other appropriated funds contained in this Act.
The conference report also allows the President to cancel the entire amount of budget authority required to be allocated by a specific proviso in an appropriation law for which a specific dollar figure was not included. The conferees recognize that from time to time, budget authority may be mandated to be spent on a specific program or project without a specific dollar amount being listed. However, in order to comply with the proviso, the President would have to expend appropriated funds.
(8) Item of New Direct Spending. The term “item of new direct spending” means a provision of law that results in an increase in budget authority or outlays relative to the baseline set forth pursuant to section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985. Under the Balanced Budget and Emergency Deficit Control Act of 1985, a reauthorization or an extension of a major entitlement program would not result in an increase in direct spending. As a consequence, such legislation would not constitute an item of new direct spending pursuant to the conference report. This does not mean that legislation must result in a net increase in spending in order to be subject to this cancellation authority. A provision of a future law that increases direct spending would be subject to the President’s cancellation authority whether or not it is offset by another provision that reduces direct spending or increases revenues in the same law.
Unlike an appropriation law, which specifically designates a dollar amount for a specific program, direct spending can arise from a number of interactions among provisions in a new law, other provisions in that same new law, and underlying law. The conference report provides the President with the authority to cancel the legal obligation provided by the new law that results in new direct spending. The cancellation authority is limited to the specific provisions in the new law signed by the President that result in the legal obligation to expend funds and does not extend to other previously enacted laws.
The following are examples of direct spending increases that have been enacted. These examples are given to illustrate how cancellation authority could apply to similar items of new direct spending if included in a law to which part C of title X would apply. These examples are used solely for illustrative purposes and the conferees are in no way commenting on the merit of any of these programs. The conferees do not intend for these examples to represent all instances where cancellation authority may be used.
The 1995 Balanced Budget Act included provisions that increased direct spending, but this Act was vetoed in its entirety by the President using his Constitutional authority and thus no provisions of that Act would be subject to the cancellation authority under part C. In the Omnibus Budget Reconciliation Act of 1993, the Congress enacted provisions that led to a net reduction in direct spending of $78.8 billion over five years. While this law led to a net reduction in direct spending, it included several provisions that increased direct spending. More specifically, the following are selected examples of provisions that increased direct spending that illustrate how the President’s cancellation authority could be applied:
Section 13982 increased Forest Service payments and section 13983 increased Bureau of Land Management (BLM) payments to counties affected by the Northern Spotted Owl. These provisions were estimated to increase direct spending by $43 million in fiscal year 1994 and $215 million over the period of fiscal years, 1994-1998. The President could cancel the entire amount of the legal obligation created by section 13982 for the Forest Service to make payments or the entire amount of the legal obligation in section 13983 for BLM to make payments.
Sections 13811 through 13813 dealt with Customs overtime pay, additional benefits, and user fees. Section 13812(c) provided cash awards for foreign language proficiency to Customs Officers that was estimated to increase direct spending by $2 million in fiscal year 1994 and $10 million over the period of fiscal years 1994-1998. The President could cancel that legal obligation for the entire amount of funding provided for cash awards to Customs Officers. However, the President could not reach to provisions that reduced direct spending, such as the extension of Customs fees and overtime reform or other provisions that did not directly deal with an increase in direct spending.
Sections 13901 through 13971 of that law made a number of changes to the food stamp program that were estimated to lead to a net increase in direct spending of $56 million in fiscal year 1994 and $2.7 billion over the period of fiscal years 1994-1998. More specifically, section 13923 increased direct spending by raising the asset test and indexed this asset test for inflation for determining eligibility for food stamps. The President would have the authority to cancel the entire specific legal obligation so that the increase in the asset test would have no legal force or effect. In addition, the President could cancel the entire legal obligation to make the inflation adjustment so that this asset test would not be indexed for inflation. However, the President’s cancellation authority would not apply to provisions that did not affect direct spending or reduced direct spending, such as section 13951 that expedited claim collections and adjustments to error rate calculations.
(9) Limited Tax Benefit. In general, a “limited tax benefit” is any provision under the Internal Revenue Code that is either (1) a revenue-losing provision that provides a Federal tax deduction, credit, exclusion, or preference to 100 or fewer beneficiaries (unless the effect of the provision is that all similarly situated persons receive the same treatment); or (2) a provision that provides transitional relief to 10 or fewer beneficiaries.
The number of beneficiaries affected by a provision is determined by considering each fiscal year in which the provision will be in effect; if the number of beneficiaries falls below the requisite threshold for any one of those fiscal years, the provision could be identified as a limited tax benefit. For purposes of determining the number of beneficiaries, certain individuals and businesses would be aggregated: all businesses and associations which are related (within the meaning of Internal Revenue Code sections 707(b) and 1563(a)) would be treated as one beneficiary; all qualified plans of a single employer would be treated as one beneficiary; all holders of the same bond issue would be treated as one beneficiary. However, individual shareholders of a corporation, partners of a partnership, members of an association, or beneficiaries of a trust would not be counted as separate beneficiaries simply because a benefit is provided to the respective corporation, partnership, association, or trust.
Revenue-losing Provisions that Affect 100 or Fewer Beneficiaries. A provision is defined as “revenue-losing” if it results in a reduction in federal tax revenues for any one of the following two periods: (1) the first fiscal year for which the provision is effective; or (2) the period of the five fiscal years beginning with the first fiscal year for which the provisions is effective.
A revenue losing provision that affects 100 or fewer beneficiaries is not a limited tax benefit if one of the exceptions is met. First, if a provision has the effect of providing all persons in the same industry or engaged in the same activity with the same treatment, the item is not a limited tax benefit even if there are 100 or fewer persons in the affected industry. For example, a provision that sets forth the depreciation treatment for equipment that is used only by automobile manufacturers will not be treated as a limited tax benefit solely because there are fewer than 100 automakers located in the United States.
Similarly, a provision that provides the same treatment for all persons who engage in research and development activities, or all persons who adopt children, or all persons who engage in drug testing, would not be treated as a limited tax benefit simply because 100 or fewer persons are expected to engage in that activity in any of the fiscal years in which the provision is effective. In such circumstances, the benefit is provided as an incentive to anyone who chooses to engage in the activity rather than to a closed group of specific taxpayers.
A second exception applies to provisions that have the effect of extending all persons owning the same type of property, or issuing the same type of investment instrument, the same treatment. For example, a provision that sets forth the depreciation treatment for a highly-specialized type of computer equipment that is owned by fewer than 100 taxpayers (who are not necessarily in the same industry) would not be treated as a limited tax benefit as long as any person who purchases such equipment is entitled to the same treatment. Similarly, a provision that affects the deductibility of interest with respect to certain types of debt instruments would not be a limited tax benefit, as long as any person who issued that type of debt instrument receives the same treatment.
The conference report further clarifies that a provision is not a limited tax benefit if the only reason the provision affects different persons differently is because of (1) the size or form of the business or association involved (e.g., a provision that gives preferential treatment to small businesses); (2) general demographic conditions affecting individuals, such as their income level, marital status, number of dependents, or tax return filing status; (3) the amount involved (e.g., a cap based on the dollar amount of a taxpayer’s investment or the number of units produced by a taxpayer); or (4) a generally-available election provided under the Internal Revenue Code (e.g., if taxpayers who engage in a certain activity are given a choice between two alternative treatments, and fewer than 100 taxpayers are expected to choose one of the alternatives).
Any Federal tax provision that provides temporary or permanent transitional relief to 10 or fewer beneficiaries in any fiscal year would be a limited tax benefit except to the extent that the provision provides for the retention of prior law for all binding contracts (or other legally enforceable obligations) in existence on a date contemporaneous with Congressional action specifying such a date. For example, a provision in a chairman’s mark which retains current law with respect to binding contracts in existence on the date the mark is released would not be a limited tax benefit. In addition, a technical correction to previously enacted law (if it is scored as having no revenue effect) would not be a limited tax benefit for this purpose.
This provision covering transition rules is intended to address the type of special rules used extensively in prior tax legislation. For example, in the Tax Reform Act of 1986 (the “1986 Act”), which included a number of revenue raising tax provisions, various specifically identified taxpayers were provided special rules that exempted them from treatment under the general revenue raising provisions. One provision in the 1986 Act changed the rules for how multinational corporations could allocate interest expenses for foreign tax credit purposes. The provision included a favorable rule for banks, and also included a special exception allowing “certain” non-banks to use the favorable bank rule. The special exception applied to any corporation if “(A) such corporation is a Delaware corporation incorporated on August 20, 1959, and (B) such corporation was primarily engaged in the financing of dealer inventory or consumer purchases on May 29, 1985, and at all times thereafter before the close of the taxable year.” Public Law 99-514, 100 Stat. 2548, sec. 1215(c)(5). If 10 or fewer taxpayers were expected to benefit from the special exception, this provision would constitute a limited tax benefit under the conference agreement definition, and would be subject to the President’s cancellation authority.
The conferees submit the following two examples for what may or may not be a limited tax benefit. All examples are used solely for illustrative purposes and the conferees are in no way commenting on their merit. Furthermore, the conferees do not intend for these examples to represent all instances where cancellation authority may be used.
The Omnibus Reconciliation Act of 1993 included a provision that created an income tax credit for entities that make qualified cash contributions to one of 20 “community development corporations” to be selected by the Secretary of Housing and Urban Development using certain selection criteria.
Under the conference report, the Joint Committee on Taxation (JCT) would estimate how many contributions would be designated as eligible for the credit, based on the information available to the Committee at the time the legislation was being considered. If the JCT determined more than 100 contributors would benefit from the credit, then the provision could not be canceled. If fewer than 100 contributors were estimated to benefit from the provision, then the provision could be canceled.
If the conference report did not include the information from JCT in the required form, then the President would have the authority to make the determination.
H.R. 831 (enacted in the 104th Congress) included a provision to restore a prior-deduction for 25 percent of the amount paid for health insurance for self-employed individuals and the individuals’ spouses. The 25 percent deduction had expired after December 31, 1993. H.R. 831 restored the 25-percent deduction for 1994 and increased the deduction to 30 percent for taxable years beginning after 1994.
Under the conference report, this provision would not be a limited tax benefit because it applies to all self-employed individuals who purchase their own health insurance, and thus this provision would benefit more than 100 individuals.
(10) OMB. The term “OMB” means the Director of the Office of Management and Budget.