,,ii  #aac? ,,congress  #a/ ,session    
,s4 #afea  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,novemb] #e1 #bjac,mr4 
,blum5?al 7= himself & ,mr4 ,murphy7    
introduc$ ! foll[+ bill2 :i* 0 read     
twice & ref]r$ to ! ,committee on       
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to all[           
manufactur+ bus9esses to e/abli%        
tax-free manufactur+ re9ve/m5t acc\nts  
to assi/ !m 9 provid+ = new equipm5t &  
facilities & work=ce tra9+4  #a4 ,%ort  
title ,?is ,act may be cit$ z !         
,manufactur+ ,re9ve/m5t ,acc\nt ,act (  
#bjac4  #b4 ,manufactur+ re9ve/m5t      
acc\nts  7a7 ,9 g5]al ,"p ,,vi (        
sub*apt] ,b ( *apt] #a ( ! ,int]nal     
,rev5ue ,code ( #aihf 7relat+ to itemiz$
 d$uctions = individuals & corporations7
 is am5d$ by ins]t+ aft] section #aii ! 
foll[+ new section3  #aii;,a4           
,manufactur+ re9ve/m5t acc\nts  7a7     
,d$uction all[$ ,9 ! case ( a taxpay]   
engag$ 9 a manufactur+ bus9ess1 !re %all
 be all[$ z a d$uction = ! taxable ye> !

 am\nt paid 9 ca% by ! taxpay] dur+ !   
taxable ye> to a manufactur+ re9ve/m5t  
acc\nt 7h]e9aft] ref]r$ to z an ,,mra7 =
 ! taxpay]'s b5efit4  7b7 ,limitation   
7#a7 ,9 g5]al ,! am\nt :i* a taxpay] may
 pay into an ,,mra = ! taxable ye> %all 
n exce$ ! less] (-- 7,a7 ! dome/ic      
manufactur+ gross receipts ( ! taxpay] =
 ! taxable ye>1 or  7,b7 #ejj1jjj4  7#b7
 ,controll$ gr\ps  7,a7 ,9 g5]al ,=     
purposes ( ?is subsection1 all p]sons   
treat$ z a s+le employ] "u subsection   
7a7 or 7b7 ( section #eb or subsection  
7m7 or 7o7 ( section #dad %all be treat$
 z a s+le manufactur]4  7,b7 ,inclusion 
( =eign corporations ,= purposes (      
subp>agraph 7,a71 9 apply+ subsections  
7a7 & 7b7 ( section #eb to ?is section1 
section #aefc %all be appli$ )\t reg>d  
to subsection 7b77#b77;,c7 !re(4  7c7   
,,mra ,= purposes ( ?is section1 ! t]m  
,,mra means a tru/ creat$ or organiz$ 9 
! ,unit$ ,/ates = ! exclusive b5efit ( !
 taxpay]1 b only if ! writt5 gov]n+     
in/rum5t creat+ ! tru/ meets ! foll[+   

requirem5ts3 7#a7 ,no contribution w be 
accept$ = any taxable ye> unless x is 9 
ca%4  7#b7 ,contributions w n be accept$
 = any taxable ye> 9 excess ( ! am\nt   
all[$ z a d$uction "u subsection 7a7 =  
su* ye>4  7#c7 ,! tru/ee is an eligible 
in/itution4  7#d7 ,no "p ( ! tru/ assets
 w be inve/$ 9 life insurance contracts4
  7#e7 ,no "p ( ! tru/ assets w be      
inve/$ 9 any collectible 7z def9$ 9     
section #djh7m774  7#f7 ,! assets ( !   
tru/ w n be comm+l$ ) o!r prop]ty except
 9 a common tru/ fund or common inve/m5t
 fund4  7d7 ,tax treatm5t ( acc\nts     
7#a7 ,9 g5]al ,an ,,mra is exempt f     
taxation "u ?is subtitle unless ! acc\nt
 has ceas$ to be an ,,mra4 ,not)/&+ !   
prec$+ s5t5ce1 an ,,mra is subject to ! 
taxes impos$ by section #eaa 7relat+ to 
imposition ( tax on unrelat$ bus9ess    
income ( *>itable1 etc4 organizations74 
7#b7 ,acc\nt t]m9ations ,rules simil> to
 ! rules ( p>agraphs 7#b7 & 7#d7 (      
section #djh7;e7 %all apply to ,m,r,as1 
& any am\nt treat$ z di/ribut$ "u su*   

rules %all be treat$ z n us$ to pay     
qualifi$ re9ve/m5t exp5ses4  7e7        
,treatm5t ( di/ributions  7#a7 ,9 g5]al 
,except z provid$ 9 p>agraphs 7#c7 &    
7#d71 !re %all be includible 9 ! gross  
income ( ! taxpay] = any taxable ye>--  
7,a7 any am\nt di/ribut$ f an ,,mra ( ! 
taxpay] dur+ su* taxable ye>1 &  7,b7   
any deem$ di/ribution "u-- 7i7          
subsection 7g77#a7 7relat+ to deposits n
 di/ribut$ )9 #g ye>s71  7ii7 subsection
 7g77#b7 7relat+ to cessation 9         
manufactur+ bus9ess71 &  7iii7          
subp>agraph 7,a7 or 7,b7 ( subsection   
7g77#c7 7relat+ to prohibit$            
transactions & pl$g+ acc\nt z security74
  7#b7 ,additional tax  7,a7 ,9 g5]al ,!
 tax impos$ by ?is *apt] on ! taxpay] = 
any taxable ye> 9 :i* !re is a          
di/ribution f an ,,mra %all be increas$ 
by #aj p]c5t ( ! am\nt ( su* di/ribution
 :i* is includible 9 gross income4  7,b7
 ,exception ,subp>agraph 7,a7 %all n    
apply to di/ributions dur+ ! taxable ye>
 to ! ext5t necess>y1 "u regulations    

prescrib$ by ! ,secret>y1 to avoid      
bankruptcy4  7#c7 ,r$uc$ inclusion =    
am\nts re9ve/$ ,only #dc p]c5t ( !      
aggregate am\nt di/ribut$ f an ,,mra    
dur+ ! taxable ye> %all be includible 9 
income "u p>agraph 7#a77;,a7 to ! ext5t 
t su* aggregate am\nt does n exce$ !    
aggregate am\nt ( qualifi$ re9ve/m5t    
exp5ses paid or incurr$ by ! taxpay]    
dur+ su* ye>4  7#d7 ,di/ribution (      
excess contributions ,p>agraph 7#a7 %all
 n apply to ! di/ribution ( any         
contribution paid dur+ a taxable ye> to 
an ,,mra to ! ext5t t su* contribution  
exce$s ! limitation applicable "u       
subsection 7b7 if requirem5ts simil> to 
! requirem5ts ( section #djh7;d77#d7 are
 met4  7f7 ,def9itions ,= purposes ( ?is
 section-- 7#a7 ,manufactur+ bus9ess ,! 
t]m manufactur+ bus9ess means any trade 
or bus9ess hav+ dome/ic manufactur+     
gross receipts4  7#b7 ,dome/ic          
manufactur+ gross receipts ,! t]m       
dome/ic manufactur+ gross receipts means
 gross receipts ( ! taxpay] :i* are     

d]iv$ f any lease1 r5tal1 lic5se1 sale1 
ex*ange1 or o!r disposition ( tangible  
p]sonal prop]ty :i* 0 manufactur$ by !  
taxpay] 9 :ole or 9 significant "p )9 ! 
,unit$ ,/ates4 ,rules simil> to ! rules 
( section #aii %all apply 9 det]m9+ !   
gross receipts ( ! taxpay] = purposes ( 
! prec$+ s5t5ce4  7#c7 ,qualifi$        
re9ve/m5t exp5ses ,! t]m qualifi$       
re9ve/m5t exp5ses means-- 7,a7 exp5ses =
 prop]ty to be us$ by ! taxpay] 9 a     
manufactur+ bus9ess1 &  7,b7 exp5ses =  
job tra9+ & work=ce developm5t =        
employees ( ! taxpay]4  7#d7 ,eligible  
in/itution  7,a7 ,9 g5]al ,! t]m        
eligible in/itution means-- 7i7 any     
insur$ depository in/itution1 :i*-- 7,i7
 is n controll$ by a bank hold+ company 
or sav+s & loan hold+ company t is also 
an eligible in/itution1  7,,ii7 has     
total assets ( equal to or less ?an     
#be1jjj1jjj1jjj1 z report$ 9 ! call     
report z ( ! end ( ! f\r? qu>t] ( cal5d>
 ye> #bjab1 &  7,,iii7 is n directly or 
indirectly controll$ by any company or  

o!r entity t has total consolidat$      
assets ( m ?an #be1jjj1jjj1jjj1 z s     
report$2  7ii7 any bank hold+ company   
:i* has total consolidat$ assets ( equal
 to or less ?an #be1jjj1jjj1jjj2  7iii7 
any sav+s & loan hold+ company :i* has  
total consolidat$ assets ( equal to or  
less ?an #be1jjj1jjj1jjj2  7iv7 any     
community developm5t f9ancial in/itution
 loan fund :i* has total assets ( equal 
to or less ?an #be1jjj1jjj1jjj2 &  7v7  
any small bus9ess l5d+ company t has    
total assets ( equal to or less ?an     
#be1jjj1jjj1jjj4  7,b7 ,insur$          
depository in/itution ,! t]m insur$     
depository in/itution has ! mean+ giv5  
su* t]m "u section #c7;c77#b7 ( ! ,f$]al
 ,deposit ,insurance ,act 7#ab ,u4,s4,c4
 #ahac7;c77#b774  7,c7 ,bank hold+      
company ,! t]m bank hold+ company has ! 
mean+ giv5 su* t]m "u section #b7;a77#a7
 ( ! ,bank ,hold+ ,company ,act ( #aief 
7#ab ,u4,s4,c4 #ahda7b77;a77#a774  7,d7 
,call report ,! t]m call report means-- 
7i7 reports ( ,condition & ,income      

submitt$ to ! ,(fice ( ! ,comptroll] ( !
 ,curr5cy1 ! ,bo>d ( ,gov]nors ( !      
,f$]al ,res]ve ,sy/em1 & ! ,f$]al       
,deposit ,insurance ,corporation2  7ii7 
! ,(fice ( ,?rift ,sup]vision ,?rift    
,f9ancial ,report2  7iii7 any report t  
is designat$ by ! ,(fice ( ! ,comptroll]
 ( ! ,curr5cy1 ! ,bo>d ( ,gov]nors ( !  
,f$]al ,res]ve ,sy/em1 ! ,f$]al ,deposit
 ,insurance ,corporation1 or ! ,(fice ( 
,?rift ,sup]vision1 z applicable1 z a   
successor to any report ref]r$ to 9     
clause 7i7 or 7ii72  7iv7 /&>d reports (
 ,condition & ,income submitt$ by       
,community ,developm5t ,f9ancial        
,in/itution loan funds to ! ,community  
,developm5t ,f9ancial ,in/itutions      
,fund2 &  7v7 ) respect to an eligible  
in/itution = :i* no report exi/s t is   
describ$ "u clause 7i71 7ii71 or 7iii71 
su* o!r report or set ( in=mation z !   
,secret>y1 9 consultation ) !           
,adm9i/rator ( ! ,small ,bus9ess        
,adm9i/ration1 may prescribe4  7g7      
,special rules  7#a7 ,tax on deposits 9 

acc\nt :i* are n di/ribut$ )9 #g ye>s   
7,a7 ,9 g5]al ,if1 at ! close ( any     
taxable ye>1 !re is a nonqualifi$       
balance 9 any ,,mra-- 7i7 !re %all be   
deem$ di/ribut$ f ! ,,mra dur+ su*      
taxable ye> an am\nt equal to su*       
balance1 &  7ii7 ! taxpay]'s tax impos$ 
by ?is *apt] = su* taxable ye> %all be  
increas$ by #aj p]c5t ( su* deem$       
di/ribution4  7,b7 ,nonqualifi$ balance 
,= purposes ( subp>agraph 7,a71 ! t]m   
nonqualifi$ balance means any balance 9 
! ,,mra on ! la/ day ( ! taxable ye> :i*
 is attributable to am\nts deposit$ 9   
su* acc\nt be=e ! #f? prec$+ taxable    
ye>4  7,c7 ,ord]+ rule ,= purposes ( ?is
 p>agraph1 di/ributions f an ,,mra %all 
be treat$ z made f deposits 7& income   
!reon7 9 ! ord] 9 :i* su* deposits 7    
made1 beg9n+ ) ! e>lie/ deposits4  7#b7 
,cessation ( manufactur+ bus9ess ,if !  
taxpay] ceases to be engag$ 9 a         
manufactur+ bus9ess1 !re %all be deem$  
di/ribut$ f ! ,,mra ( ! taxpay] at !    
close ( ! fir/ taxable ye> beg9n+ aft]  

su* cessation an am\nt equal to !       
balance 9 ! ,,mra 7if any7 at su* close4
  7#c7 ,c]ta9 rules to apply ,rules     
simil> to ! foll[+ rules %all apply =   
purposes ( ?is section3 7,a7 ,section   
#djh7;e77#b7 7relat+ to loss ( exemption
 ( acc\nt :]e taxpay] engages 9         
prohibit$ transaction74  7,b7 ,section  
#djh7;e77#d7 7relat+ to effect ( pl$g+  
acc\nt z security74  7,c7 ,section      
#djh7;h7 7relat+ to cu/odial acc\nts74  
7#d7 ,"t :5 paym5ts deem$ made ,=       
purposes ( ?is section1 a taxpay] %all  
be deem$ to h made a paym5t to an ,,mra 
on ! la/ day ( a taxable ye> if su*     
paym5t is made on acc\nt ( su* taxable  
ye> & is made on or be=e ! due date 7)\t
 reg>d to ext5sions7 = fil+ ! return (  
tax = su* taxable ye>4  7#e7 ,d$uction n
 all[$ = self-employm5t tax ,! d$uction 
all[able by reason ( subsection 7a7 %all
 n be tak5 into acc\nt 9 det]m9+ an     
individual's net e>n+s f self-employm5t 
7)9 ! mean+ ( section #adjb7;a77 =      
purposes ( *apt] #b4  7h7 ,reports ,!   

tru/ee ( an ,,mra %all make su* reports 
reg>d+ su* acc\nt to ! ,secret>y & to ! 
p]son = ^: b5efit ! acc\nt is ma9ta9$ ) 
respect to contributions1 di/ributions1 
& su* o!r matt]s z ! ,secret>y may      
require "u regulations4 ,! reports      
requir$ by ?is subsection %all be fil$  
at su* "t & 9 su* mann] & furni%$ to su*
 p]sons at su* "t & 9 su* mann] z may be
 requir$ by su* regulations4  7i7       
,t]m9ation ,no d$uction %all be all[$ "u
 ?is section = any taxable ye> beg9n+ m 
?an #aj ye>s aft] ! date ( ! enactm5t ( 
?is section4  4  7b7 ,tax on excess     
contributions  7#a7 ,9 g5]al ,subsection
 7a7 ( section #digc ( su* ,code 7relat+
 to tax on excess contributions to c]ta9
 tax-favor$ acc\nts & annuities7 is     
am5d$ by /rik+ or at ! end ( p>agraph   
7#d71 by add+ or at ! end ( p>agraph    
7#e71 & by ins]t+ aft] p>agraph 7#e7 !  
foll[+ new p>agraph3  7#f7 an ,,mra 7)9 
! mean+ ( section #aii;,a7c771  4  7#b7 
,excess contribution def9$ ,section     
#digc ( su* ,code is am5d$ by add+ at ! 

end ! foll[+ new subsection3  7h7       
,excess contributions to ,m,r,as ,=     
purposes ( ?is section1 9 ! case (      
,m,r,as 7)9 ! mean+ ( section           
#aii;,a7c771 ! t]m excess contributions 
means ! am\nt by :i* ! am\nt contribut$ 
= ! taxable ye> to ! ,m,r,as ( ! taxpay]
 exce$s ! am\nt :i* may be contribut$ to
 su* ,m,r,as "u section #aii;,a7b7 = su*
 taxable ye>4 ,= purposes ( ?is         
subsection1 any contribution :i* is     
di/ribut$ out ( an ,,mra 9 a di/ribution
 to :i* section #aii;,a7e77#c7 applies  
%all be treat$ z an am\nt n contribut$4 
4  7c7 ,tax on prohibit$ transactions   
7#a7 ,9 g5]al ,p>agraph 7#a7 ( section  
#dige7;e7 ( su* ,code is am5d$ by /rik+ 
or at ! end ( subp>agraph 7,f71 by      
r$esignat+ subp>agraph 7,g7 z           
subp>agraph 7,h71 & by ins]t+ aft]      
subp>agraph 7,f7 ! foll[+3  7,g7 an     
,,mra describ$ 9 section #aii;,a7c71 or 
4  7#b7 ,special rule ,subsection 7c7 ( 
section #dige ( su* ,code 7relat+ to tax
 on prohibit$ transactions7 is am5d$ by 

add+ at ! end ! foll[+3  7#g7 ,special  
rule = manufactur+ re9ve/m5t acc\nts ,a 
p]son = ^: b5efit an ,,mra 7)9 ! mean+ (
 section #aii;,a7c77 is e/abli%$ %all be
 exempt f ! tax impos$ by ?is section ) 
respect to any transaction conc]n+ su*  
acc\nt 7:i* w\ld o!rwise be taxable "u  
?is section7 if1 ) respect to su*       
transaction1 ! acc\nt ceases to be an   
,,mra by reason ( ! application (       
section #aii;,a7g77#c77;,a7 to su*      
acc\nt4  4  7d7 ,failure ,to provide    
reports on ,m,r,as ,p>agraph 7#b7 (     
section #ffic7;a7 ( su* ,code 7relat+ to
 failure to provide reports on c]ta9    
tax-favor$ acc\nts or annuities7 is     
am5d$ by r$esignat+ subp>agraphs 7,a7   
?r\gh 7,e7 z subp>agraphs 7,b7 & 7,f71  
respectively1 & by ins]t+ be=e          
subp>agraph 7,b71 z s r$esignat$1 !     
foll[+ new subp>agraph3  7,a7 section   
#aii;,a7h7 7relat+ to manufactur+       
re9ve/m5t acc\nts71  4  7e7 ,cl]ical    
am5dm5t ,! table ( sections = "p ,,vi ( 
sub*apt] ,b ( *apt] #a ( su* ,code is   

am5d$ by ins]t+ aft] ! item relat+ to   
section #aii ! foll[+ new item3 ,sec4   
#aii;,a4 ,manufactur+ re9ve/m5t         
acc\nts44  7f7 ,effective date ,!       
am5dm5ts made by ?is section %all apply 
to taxable ye>s beg9n+ aft] ! date ( !  
enactm5t ( ?is ,act4