CONTENTS Page 1. S. 169 (Senators Heinz, Randolph, and Glenn): Tax treatment of industrial development bonds for pollution control or waste disposal facilities and expensing of pollution control facilities. 2. S. 532 (Senator Heflin) and S. 791 (Senators Mitchell, Mathias, and Heflin): Unemployment tax status of certain fishing boat services. 3. S. 721 (Senator Humphrey): Imposition of tax by a State on income derived from services performed at the Portsmouth Naval Shipyard by individuals who are not residents or domiciliaries of Maine.. 4. S. 979 (Senators Lugar and Quayle) and S. 1382 INTRODUCTION The bills described in this pamphlet have been scheduled for a public hearing on June 26, 1981, by the Subcommittee on Taxation and Debt Management of the Senate Committee on Finance. There are six bills scheduled for the hearing: S. 169 (relating to tax-exempt financing for pollution control and solid waste disposal facilities, and expensing of amounts paid in connection with the construction of pollution control facilities), S. 532 and S. 791 (relating to the unemployment tax status of certain fishing boat services), S. 721 (relating to the imposition of State income taxes on income derived from services performed at the Portsmouth Naval Shipyard by individuals who are not residents or domiciliaries of the State of Maine), and S. 979 and S. 1382 (relating to the treatment of interest on obligations of certain volunteer fire departments). The first part of the pamphlet is a summary of the bills. This is followed by a more detailed description of the bills, including present law, issues, explanation of the provisions of the bills, effective dates, and estimated revenue effects. (1) I. SUMMARY 1. S. 169-Senators Heinz, Randolph, and Glenn Tax Treatment of Industrial Development Bonds for Pollution Control or Waste Disposal Facilities and Expensing of Pollution Control Facilities a. Title I. Industrial development bonds for pollution control or waste disposal facilities Present law allows tax-exempt industrial development bonds to be issued for solid waste disposal facilities and for air or water pollution control facilities (Code sec. 103(b) (4)). Treasury Regulations restrict the exemption to bonds which are issued to finance pollution control facilities that remove, alter, dispose, or store a pollutant. Tax exemption is not available with respect to bonds which are issued to finance a facility which prevents the creation of a pollutant. Furthermore, Treasury Regulations take the position that pollution control does not include facilities used in the handling or disposal of hazardous waste. The bill would expand the type of facilities for which tax-exempt industrial development bonds could be issued to include facilities which prevent the creation of a pollutant. In general, a facility would be considered a pollution control facility if it were certified by a Federal or State authority as meeting or furthering pollution control requirements. The bill contains special rules to limit the amount of eligible costs to specified dollar amounts in the case of new plants. The bill also would provide that tax-exempt industrial development bonds could be issued for hazardous waste and solid waste disposal facilities that have no significant purpose other than to comply with the Solid Waste Disposal Act. The bill would apply to obilgations issued after the date of enact ment. b. Title II. Expensing of pollution control facilities Present law allows special 5-year amortization of pollution control facilities (Code sec. 169). Pollution control facilities for this purpose are facilities, used in connection with property placed in operation prior to January 1, 1976, which control, remove, alter, dispose, store, or prevent the creation of pollutants. The bill would allow immediate expensing of certified pollution control facilities. Furthermore, there would be no recapture of the amount expensed upon the disposition of a certified pollution control facility. The bill would apply to amounts paid or incurred after December 31, 1980. (2) 2. S. 532-Senator Heflin and S. 791-Senators Mitchell, Mathias, and Heflin Unemployment Tax Status of Certain Fishing Boat Services Under present law, certain crew members of fishing boats are treated as self-employed individuals rather than as employees for purposes of the Federal Insurance Contributions Act (FICA) and income tax withholding. However, services which are not subject to FICA taxes are not exempt for purposes of the Federal Unemployment Tax Act (FUTA) if the services are related to catching halibut or salmon for commercial purposes or if the services are performed on a vessel of more than ten net tons. The bills would exclude from coverage, for purposes of FUTA, those services of fishing boat crew members which currently are excluded for purposes of FICA and income tax withholding. The bills would apply to services performed in taxable years beginning after December 31, 1980. 3. S. 721-Senator Humphrey Imposition of Tax by a State on Income Derived From Services Performed at the Portsmouth Naval Shipyard by Individuals Who Are Not Residents or Domiciliaries of Maine Under present law, States in which Federal areas are located may impose State income tax on the income derived from services performed in such areas, regardless of the residence or domicile of the individual performing such services. The bill would prohibit Maine from imposing State income tax on the income derived from services performed in the Portsmouth Naval Shipyard unless the individual performing such services is a resident or domiciliary of Maine during the period services were performed. The bill would benefit individuals who work at the Portsmouth Naval Shipyard who are not residents or domiciliaries of the State of Maine. The bill would apply with respect to services performed after December 31, 1980. 4. S. 979-Senators Lugar and Quayle and S. 1382-Senator D'Amato Tax Exemption for Interest on Obligations of Certain Volunteer Fire Departments In general, present law excludes from gross income interest on obligations of a State or of its political subdivisions (Code sec. 103 (a)(1)). A political subdivision generally includes any division of a |