REPEAL OF THE FACIUTY-OF-PAYMENT PROVISION.

SEC. 309. REPEAL OF THE FACIUTY-OF-PAYMENT PROVISION. (a) Repeal of Rule Precluding Redistribution Under Family Maximum.— Section 203(i) of the Social Security Act (42 U.S.C. 403(i)) is repealed. (b) Coordination Under Family Maximum of Reduction in Beneficiary’s Auxiliary Benefits With Suspension of Auxiliary Benefits of Other Beneficiary Under Earnings Test.— Section 203(a)(4) of such Act (42 U.S.C. 403(a)(4)) is amended by striking “section 222(b). Whenever” and inserting the following: “section 222(b). Notwithstanding the preceding sentence, any reduction under this subsection in the case of an individual who is entitled to a benefit under subsection (b), (c), (d), (e), (f), (g), or (h) of section 202 for any month on the basis of the same wages and self-employment income as another person— “(A) who also is entitled to a benefit under subsection (b), (c), (d), (e), (f), (g), or (h) of section 202 for such month, “(B) who does not live in the same household as such individual, and “(C) whose benefit for such month is suspended (in whole or in part) pursuant to subsection (h)(3) of this section, shall be made before the suspension under subsection (h)(3). Whenever”. (c) Conforming Amendment Applying Earnings Reporting Requirement Despite Suspension of Benefits.— The third sentence of section 203(h)(1)(A) of such Act (42 U.S.C. 403(h)(1)(A)) is amended by striking “Such report need not be made” and all that follows through “The Secretary may grant” and inserting the following: “Such report need not be made for any taxable year— “(i) beginning with or after the month in which such individual attained age 70, or “(ii) if benefit payments for all months (in such taxable year) in which such individual is under age 70 have been suspended under the provisions of the first sentence of paragraph (3) of this subsection, unless— “(I) such individual is entitled to benefits under subsection (b), (c), (d), (e), (f), (g), or (h) of section 202, “(II) such benefits are reduced under subsection (a) of this section for any month in such taxable year, and “(III) in any such month there is another person who also is entitled to benefits under subsection (b), (c), (d), (e), (f), (g), or (h) of section 202 on the basis of the same wages and self-employment income and who does not live in the same household as such individual. The Secretary may grant”. (d) Conforming Amendment Deleting Special Income Tax Treatment of Benefits No Longer Required by Reason of108 STAT. 1524 Repeal.— Section 86(d)(1) of the Internal Revenue Code of 1986 (relating to income tax on social security benefits) is amended by striking the last sentence. (e) Effective Dates.— (1) The amendments made by subsections (a), (b), and (c) shall apply with respect to benefits payable for months after December 1995. (2) The amendment made by subsection (d) shall apply with respect to benefits received after December 31, 1995, in taxable years ending after such date.