Charitable Giving Act of 2003 - Title I: Charitable Giving Incentives - (Sec. 101) Amends the Internal Revenue Code to allow non-itemizers to deduct, until December 31, 2005, charitable contributions exceeding $250 but not exceeding $500. Requires a study of such amendment.
(Sec. 102) Allows tax-free distributions from individual retirement plans for qualified charitable distributions.
(Sec. 103) Phases-in an increase, from 10 to 20 percent (by 2012), on the percentage limitation on corporate charitable deductions.
(Sec. 104) Permits any taxpayer engaged in a trade or business, whether or not a C corporation, to claim an enhanced deduction for donations of food inventory.
(Sec. 105) Reduces from two to one percent the excise tax on the net investment income of private foundations that are exempt from Federal income tax.
Increases the self-dealing excise tax on such foundations from five to 25 percent.
Modifies provisions concerning the excise tax for the failure of such foundations to distribute income.
(Sec. 106) Revises rules concerning unrelated business taxable income of charitable remainder trusts and charitable remainder unitrusts to impose an excise tax equal to the amount of any unrelated business taxable income.
(Sec. 107) Makes property assembled by the taxpayer, as well as property constructed by the taxpayer, eligible for the scientific property deduction and the computer technology and equipment for educational purposes deduction.
(Sec. 108) Provides that the amount of a shareholder's basis reduction in the stock of an S corporation by reason of a charitable contribution made by the corporation equals the shareholder's pro rata share of the adjusted basis of the contributed property.
(Sec. 109) Permits an organization to be treated as a tax-exempt organization if it makes collegiate housing and infrastructure grants to tax-exempt clubs organized for pleasure and recreation, if, at the time of the grant, substantially all of the active members of the recipient club are full-time students at the college or university with which such recipient organization is associated.
(Sec. 110) Expands the exemption from tax applicable to the income of a charitable organization from bingo games to include other qualified games of chance, so long as the net proceeds are used to promote social welfare.
(Sec. 111) Exempts qualified blood collection organizations from the special fuels tax, the manufacturers excise tax, the communications excise tax, and other specified taxes.
(Sec. 112) Extends the replacement period for acquisitions of replacement property with respect to the nonrecognition of gain on sales of property by clubs organized for pleasure and recreation. (Maintains the current replacement period for voluntary employees' beneficiary associations, supplemental unemployment compensation benefit organizations, and group legal services plans.)
(Sec. 113) Exempts qualified bonds from federal guarantee prohibitions (thus, permits interest on such bonds to be tax-exempt) if the proceeds are used are used to finance one or more of the following facilities used primarily for the benefit of the elderly: (1) licensed nursing home facilities; (2) licensed or certified assisted living facilities; (3) licensed personal care facilities; or (4) continuing care retirement communities. Limits to $15 million or less the aggregate bond issuance per issuer per calendar year.
Title II: Tax Reform and Improvements Relating to Charitable Organizations and Programs - (Sec. 201) Suspends the tax-exempt status of an organization that is tax-exempt for any period during which the organization is designated or identified by U.S. Federal authorities as a terrorist organization or supporter of terrorism.
(Sec. 202) States that church tax inquiry procedures do not apply to information provided by the Secretary of the Treasury related to the standards for tax exemption and the requirements relating to unrelated business taxable income.
(Sec. 203) Extends the remedy of declaratory judgment to organizations applying for tax-exempt status.
(Sec. 204) Excludes from gross income landowner incentive programs to conserve threatened, endangered, or imperiled species or to protect or restore certain habitats.
(Sec. 205) Modifies rules concerning interest, rent, annuity, or royalty payments made by a controlled entity to a tax-exempt organization.
(Sec. 206) Eliminates the separate limitation for grassroots lobbying expenditures applicable to electing charities, thus providing one overall limit on lobbying expenditures.
(Sec. 207) Treats qualified forest conservation bonds as exempt facility bonds. Excludes from "gross income" income from certain timber harvesting activities conducted by a qualified organization on lands acquired with proceeds from qualified forest conservation bonds.
Title III: Other Provisions - (Sec. 301) Amends title IV of the Social Security Act to add a new part, Part F: Compassion Capital Fund.
Directs the Secretary of Health and Human Services to make grants to support any private entity that operates a promising social services program. Authorizes appropriations through FY 2008.
(Sec. 302) Amends the Assets for Independence Act to extend the Individual Development Account program through FY 2008 and to make other revisions to such program.
(Sec. 303) Expresses the sense of Congress that: (1) U.S. corporations are important partners with government in efforts to overcome difficult societal problems; and (2) no U.S. corporation should adopt policies that prohibit the corporation from contributing to an organization that is successfully advancing a philanthropic cause merely because such organization is faith based.
(Sec. 304) Amends the Runaway and Homeless Youth Act to make maternity group homes eligible for Transitional Living Project grants.
(Sec. 305) Amends part A (Block Grants to States for Temporary Assistance for Needy Families) of title IV of the Social Security Act to limit to 10 percent the amount of any grant under such part which may be used to carry out programs under title XX (Block Grants to States for Social Services) of such Act.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7 Introduced in House (IH)]
108th CONGRESS
1st Session
H. R. 7
To amend the Internal Revenue Code of 1986 to provide incentives for
charitable contributions by individuals and businesses, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 7, 2003
Mr. Blunt (for himself, Mr. Ford, Mr. Hulshof, Mr. Wynn, Mr. Hastert,
Mr. Gordon, Mr. DeLay, Ms. Norton, Ms. Pryce of Ohio, Mr. Meeks of New
York, Mr. Cantor, Mr. Crane, Mr. Ramstad, Mr. English, Mr. Foley, Mr.
Shays, Mr. Smith of Texas, Mr. Upton, Mr. Wolf, Mr. Gillmor, Mr.
Stearns, Mr. Camp, Mr. Kingston, Mr. McHugh, Mr. Bachus, Mr. Bartlett
of Maryland, Mr. Barton of Texas, Mrs. Myrick, Mr. Norwood, Mr. Souder,
Mr. Tiahrt, Mr. Wamp, Mr. Wicker, Mr. Doolittle, Mrs. Northup, Mr.
Peterson of Pennsylvania, Mr. Pickering, Mr. Pitts, Mr. Reynolds, Mr.
Sessions, Mr. Shimkus, Mr. Green of Wisconsin, Mr. Hayes, Mr. Isakson,
Mr. Terry, Mr. Akin, Mr. Boozman, Mr. Forbes, Mr. Graves, Ms. Hart, Mr.
Keller, Mr. Pence, Mr. Schrock, Mr. Simmons, Mr. Barrett of South
Carolina, Mrs. Blackburn, Ms. Ginny Brown-Waite of Florida, Mr.
Burgess, Mr. Chocola, Mr. Garrett of New Jersey, Ms. Harris, Mr.
Janklow, Mrs. Musgrave, Mr. Renzi, and Mr. Fossella) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Education and the Workforce, for a
period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide incentives for
charitable contributions by individuals and businesses, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Charitable Giving
Act of 2003''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--
Sec. 1. Short title; etc.
TITLE I--CHARITABLE GIVING INCENTIVES
Sec. 101. Deduction for portion of charitable contributions to be
allowed to individuals who do not itemize
deductions.
Sec. 102. Tax-free distributions from individual retirement plans for
charitable purposes.
Sec. 103. Increase in cap on corporate charitable contributions.
Sec. 104. Charitable deduction for contributions of food inventory.
Sec. 105. Reform of certain excise taxes related to private
foundations.
Sec. 106. Excise tax on unrelated business taxable income of charitable
remainder trusts.
Sec. 107. Expansion of charitable contribution allowed for scientific
property used for research and for computer
technology and equipment used for
educational purposes.
Sec. 108. Adjustment to basis of S corporation stock for certain
charitable contributions.
TITLE II--TAX REFORM AND IMPROVEMENTS RELATING TO CHARITABLE
ORGANIZATIONS AND PROGRAMS
Sec. 201. Suspension of tax-exempt status of terrorist organizations.
Sec. 202. Clarification of definition of church tax inquiry.
Sec. 203. Expansion of declaratory judgment remedy to tax-exempt
organizations.
Sec. 204. Landowner incentives programs.
Sec. 205. Modifications to section 512(b)(13).
Sec. 206. Simplification of lobbying expenditure limitation.
Sec. 207. Permitted holdings of private foundation where corporation is
publicly traded and publicly controlled.
TITLE III--OTHER PROVISIONS
Sec. 301. Compassion capital fund.
Sec. 302. Reauthorization of assets for independence demonstration.
Sec. 303. Sense of the Congress regarding corporate contributions to
faith-based organizations, etc.
Sec. 304. Maternity group homes.
TITLE I--CHARITABLE GIVING INCENTIVES
SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CONTRIBUTIONS TO BE
ALLOWED TO INDIVIDUALS WHO DO NOT ITEMIZE DEDUCTIONS.
(a) In General.--Section 170 (relating to charitable, etc.,
contributions and gifts) is amended by redesignating subsection (m) as
subsection (n) and by inserting after subsection (l) the following new
subsection:
``(m) Deduction for Individuals Not Itemizing Deductions.--
``(1) In general.--In the case of an individual who does
not itemize deductions for any taxable year, there shall be
taken into account as a direct charitable deduction under
section 63 an amount equal to the amount allowable under
subsection (a) for the taxable year for cash contributions
(determined without regard to any carryover), to the extent
that such contributions exceed $250 ($500 in the case of a
joint return) but do not exceed $500 ($1,000 in the case of a
joint return).
``(2) Termination.--This subsection shall not apply to any
taxable year beginning after December 31, 2005.''.
(b) Direct Charitable Deduction.--
(1) In general.--Subsection (b) of section 63 (defining
taxable income) is amended by striking ``and'' at the end of
paragraph (1), by striking the period at the end of paragraph
(2) and inserting ``, and'', and by adding at the end the
following new paragraph:
``(3) the direct charitable deduction.''.
(2) Definition.--Section 63 is amended by redesignating
subsection (g) as subsection (h) and by inserting after
subsection (f) the following new subsection:
``(g) Direct Charitable Deduction.--For purposes of this section,
the term `direct charitable deduction' means that portion of the amount
allowable under section 170(a) which is taken as a direct charitable
deduction for the taxable year under section 170(m).''.
(3) Conforming amendment.--Subsection (d) of section 63 is
amended by striking ``and'' at the end of paragraph (1), by
striking the period at the end of paragraph (2) and inserting
``, and'', and by adding at the end the following new
paragraph:
``(3) the direct charitable deduction.''.
(c) Study.--
(1) In general.--The Secretary of the Treasury shall study
the effect of the amendments made by this section on increased
charitable giving and taxpayer compliance, including a comparison of
taxpayer compliance between taxpayers who itemize their charitable
contributions and taxpayers who claim a direct charitable deduction.
(2) Report.--By not later than December 31, 2005, the
Secretary of the Treasury shall report on the study required
under paragraph (1) to the Committee on Finance of the Senate
and the Committee on Ways and Means of the House of
Representatives.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.
SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS FOR
CHARITABLE PURPOSES.
(a) In General.--Subsection (d) of section 408 (relating to
individual retirement accounts) is amended by adding at the end the
following new paragraph:
``(8) Distributions for charitable purposes.--
``(A) In general.--No amount shall be includible in
gross income by reason of a qualified charitable
distribution.
``(B) Qualified charitable distribution.--For
purposes of this paragraph, the term `qualified
charitable distribution' means any distribution from an
individual retirement plan--
``(i) which is made on or after the date
that the individual for whose benefit the plan
is maintained has attained age 70 \1/2\, and
``(ii) which is made directly by the
trustee--
``(I) to an organization described
in section 170(c), or
``(II) to a split-interest entity.
A distribution shall be treated as a qualified
charitable distribution only to the extent that the
distribution would be includible in gross income
without regard to subparagraph (A) and, in the case of
a distribution to a split-interest entity, only if no
person holds an income interest in the amounts in the
split-interest entity attributable to such distribution
other than one or more of the following: the individual
for whose benefit such plan is maintained, the spouse
of such individual, or any organization described in
section 170(c).
``(C) Contributions must be otherwise deductible.--
For purposes of this paragraph--
``(i) Direct contributions.--A distribution
to an organization described in section 170(c)
shall be treated as a qualified charitable
distribution only if a deduction for the entire
distribution would be allowable under section
170 (determined without regard to subsection
(b) thereof and this paragraph).
``(ii) Split-interest gifts.--A
distribution to a split-interest entity shall
be treated as a qualified charitable
distribution only if a deduction for the entire
value of the interest in the distribution for
the use of an organization described in section
170(c) would be allowable under section 170
(determined without regard to subsection (b)
thereof and this paragraph).
``(D) Application of section 72.--Notwithstanding
section 72, in determining the extent to which a
distribution is a qualified charitable distribution,
the entire amount of the distribution shall be treated
as includible in gross income without regard to
subparagraph (A) to the extent that such amount does
not exceed the aggregate amount which would have been
so includible if all amounts were distributed from all
individual retirement plans treated as 1 contract under
paragraph (2)(A) for purposes of determining the
inclusion on such distribution under section 72. Proper
adjustments shall be made in applying section 72 to
other distributions in such taxable year and subsequent
taxable years.
``(E) Special rules for split-interest entities.--
``(i) Charitable remainder trusts.--
Notwithstanding section 664(b), distributions
made from a trust described in subparagraph
(G)(i) shall be treated as ordinary income in
the hands of the beneficiary to whom is paid
the annuity described in section 664(d)(1)(A)
or the payment described in section
664(d)(2)(A).
``(ii) Pooled income funds.--No amount
shall be includible in the gross income of a
pooled income fund (as defined in subparagraph
(G)(ii)) by reason of a qualified charitable
distribution to such fund, and all
distributions from the fund which are
attributable to qualified charitable
distributions shall be treated as ordinary
income to the beneficiary.
``(iii) Charitable gift annuities.--
Qualified charitable distributions made for a
charitable gift annuity shall not be treated as
an investment in the contract.
``(F) Denial of deduction.--Qualified charitable
distributions shall not be taken into account in
determining the deduction under section 170.
``(G) Split-interest entity defined.--For purposes
of this paragraph, the term `split-interest entity'
means--
``(i) a charitable remainder annuity trust
or a charitable remainder unitrust (as such
terms are defined in section 664(d)) which must
be funded exclusively by qualified charitable
distributions,
``(ii) a pooled income fund (as defined in
section 642(c)(5)), but only if the fund
accounts separately for amounts attributable to
qualified charitable distributions, and
``(iii) a charitable gift annuity (as
defined in section 501(m)(5)).''.
(b) Modifications Relating to Information Returns by Certain
Trusts.--
(1) Returns.--Section 6034 (relating to returns by trusts
described in section 4947(a)(2) or claiming charitable
deductions under section 642(c)) is amended to read as follows:
``SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION 4947(A)(2) OR
CLAIMING CHARITABLE DEDUCTIONS UNDER SECTION 642(C).
``(a) Trusts Described in Section 4947(a)(2).--Every trust
described in section 4947(a)(2) shall furnish such information with
respect to the taxable year as the Secretary may by forms or
regulations require.
``(b) Trusts Claiming a Charitable Deduction Under Section
642(c).--
``(1) In general.--Every trust not required to file a
return under subsection (a) but claiming a deduction under
section 642(c) for the taxable year shall furnish such
information with respect to such taxable year as the Secretary
may by forms or regulations prescribe, including--
``(A) the amount of the deduction taken under
section 642(c) within such year,
``(B) the amount paid out within such year which
represents amounts for which deductions under section
642(c) have been taken in prior years,
``(C) the amount for which such deductions have
been taken in prior years but which has not been paid
out at the beginning of such year,
``(D) the amount paid out of principal in the
current and prior years for the purposes described in
section 642(c),
``(E) the total income of the trust within such
year and the expenses attributable thereto, and
``(F) a balance sheet showing the assets,
liabilities, and net worth of the trust as of the
beginning of such year.
``(2) Exceptions.--Paragraph (1) shall not apply to a trust
for any taxable year if--
``(A) all the net income for such year, determined
under the applicable principles of the law of trusts,
is required to be distributed currently to the
beneficiaries, or
``(B) the trust is described in section
4947(a)(1).''.
(2) Increase in penalty relating to filing of information
return by split-interest trusts.--Paragraph (2) of section
6652(c) (relating to returns by exempt organizations and by
certain trusts) is amended by adding at the end the following
new subparagraph:
``(C) Split-interest trusts.--In the case of a
trust which is required to file a return under section
6034(a), subparagraphs (A) and (B) of this paragraph
shall not apply and paragraph (1) shall apply in the
same manner as if such return were required under
section 6033, except that--
``(i) the 5 percent limitation in the
second sentence of paragraph (1)(A) shall not
apply,
``(ii) in the case of any trust with gross
income in excess of $250,000, the first
sentence of paragraph (1)(A) shall be applied
by substituting `$100' for `$20', and the
second sentence thereof shall be applied by
substituting `$50,000' for `$10,000', and
``(iii) the third sentence of paragraph
(1)(A) shall be disregarded.
In addition to any penalty imposed on the trust
pursuant to this subparagraph, if the person required
to file such return knowingly fails to file the return,
such penalty shall also be imposed on such person who
shall be personally liable for such penalty.''.
(3) Confidentiality of noncharitable beneficiaries.--
Subsection (b) of section 6104 (relating to inspection of
annual information returns) is amended by adding at the end the
following new sentence: ``In the case of a trust which is
required to file a return under section 6034(a), this
subsection shall not apply to information regarding
beneficiaries which are not organizations described in section
170(c).''.
(c) Effective Dates.--
(1) Subsection (a).--The amendment made by subsection (a)
shall apply to distributions made after December 31, 2003.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to returns for taxable years beginning after
December 31, 2003.
SEC. 103. INCREASE IN CAP ON CORPORATE CHARITABLE CONTRIBUTIONS.
(a) In General.--Paragraph (2) of section 170(b) (relating to
corporations) is amended by striking ``10 percent'' and inserting ``the
applicable percentage''.
(b) Applicable Percentage.--Subsection (b) of section 170 is
amended by adding at the end the following new paragraph:
``(3) Applicable percentage defined.--For purposes of
paragraph (2), the applicable percentage shall be determined in
accordance with the following table:
``For taxable years beginning
The applicable
in calendar year--
percentage is--
2004................................... 11
2005................................... 12
2006................................... 13
2007................................... 14
2008 through 2011...................... 15
2012 and thereafter.................... 20.''.
(c) Conforming Amendments.--
(1) Sections 512(b)(10) and 805(b)(2)(A) are each amended
by striking ``10 percent'' each place it occurs and inserting
``the applicable percentage (determined under section
170(b)(3))''.
(2) Sections 545(b)(2) and 556(b)(2) are each amended by
striking ``10-percent limitation'' and inserting ``applicable
percentage limitation''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.
SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD INVENTORY.
(a) In General.--Paragraph (3) of section 170(e) (relating to
special rule for certain contributions of inventory and other property)
is amended by redesignating subparagraph (C) as subparagraph (D) and by
inserting after subparagraph (B) the following new subparagraph:
``(C) Special rule for contributions of food
inventory.--
``(i) General rule.--In the case of a
charitable contribution of food, this paragraph
shall be applied--
``(I) without regard to whether the
contribution is made by a C
corporation, and
``(II) only for food that is
apparently wholesome food.
``(ii) Limitation.--In the case of taxpayer
other than a C corporation, clause (i) shall
not apply to any contribution of apparently
wholesome food from a trade or business of the
taxpayer to the extent that such contribution
exceeds the applicable percentage (within the
meaning of subsection (b)(3)) of the amount of
net income of the taxpayer from the trade or
business with respect to which such food is
inventory. For purposes of the preceding
sentence, the amount of net income of the
taxpayer from a trade or business is the excess
of--
``(I) the aggregate amount of gross
income from such trade or business
received or accrued by the taxpayer
during the taxable year, over
``(II) the aggregate amount of any
deductions allocable to such trade or
business allowed to the taxpayer under
this chapter for the taxable year.
``(iii) Determination of fair market
value.--In the case of a qualified contribution
of apparently wholesome food to which this
paragraph applies and which, solely by reason
of internal standards of the taxpayer or lack
of market, cannot or will not be sold, the fair
market value of such food shall be determined
by taking into account the price at which the
same or substantially the same food items (as
to both type and quality) are sold by the
taxpayer at the time of the contribution (or,
if not so sold at such time, in the recent
past).
``(iv) Apparently wholesome food.--For
purposes of this subparagraph, the term
`apparently wholesome food' shall have the
meaning given to such term by section 22(b)(2)
of the Bill Emerson Good Samaritan Food
Donation Act (42 U.S.C. 1791(b)(2)), as in
effect on the date of the enactment of this
subparagraph.''.
(b) Effective Date.--The amendment made by section shall apply to
taxable years beginning after December 31, 2003.
SEC. 105. REFORM OF CERTAIN EXCISE TAXES RELATED TO PRIVATE
FOUNDATIONS.
(a) Reduction of Tax on Net Investment Income.--Subsection (a) of
section 4940 (relating to excise tax based on investment income) is
amended by striking ``2 percent'' and inserting ``1 percent''.
(b) Repeal of Reduction In Tax Where Private Foundation Meets
Certain Distribution Requirements.--Section 4940 is amended by striking
subsection (e).
(c) Modification of Excise Tax on Failure to Distribute Income.--
(1) Administrative expenses not treated as distributions.--
Subparagraph (A) of section 4942(g)(1) is amended by striking
``including that portion of reasonable and necessary
administrative expenses'' and inserting ``excluding
administrative expenses''.
(2) Exclusion not to apply to certain private
foundations.--Paragraph (3) of section 4942(j) is amended--
(A) by striking ``(within the meaning of paragraph
(1) or (2) of subsection (g))'' each place it appears,
and
(B) by inserting at the end the following: ``For
purposes of this paragraph, the term `qualifying
distributions' means qualifying distributions within
the meaning of paragraph (1) or (2) of subsection (g),
except that `including that portion of reasonable and
necessary administrative expenses' shall be substituted
for `excluding administrative expenses' in subsection
(g)(1)(A).''.
(3) Conforming amendment.--Subsection (g) of section 4942
is amended by striking paragraph (4).
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.
SEC. 106. EXCISE TAX ON UNRELATED BUSINESS TAXABLE INCOME OF CHARITABLE
REMAINDER TRUSTS.
(a) In General.--Subsection (c) of section 664 (relating to
exemption from income taxes) is amended to read as follows:
``(c) Taxation of Trusts.--
``(1) Income tax.--A charitable remainder annuity trust and
a charitable remainder unitrust shall, for any taxable year,
not be subject to any tax imposed by this subtitle.
``(2) Excise tax.--
``(A) In general.--In the case of a charitable
remainder annuity trust or a charitable remainder
unitrust that has unrelated business taxable income
(within the meaning of section 512, determined as if
part III of subchapter F applied to such trust) for a
taxable year, there is hereby imposed on such trust or
unitrust an excise tax equal to the amount of such
unrelated business taxable income.
``(B) Certain rules to apply.--The tax imposed by
subparagraph (A) shall be treated as imposed by chapter
42 for purposes of this title other than subchapter E
of chapter 42.
``(C) Character of distributions and coordination
with distribution requirements.--The amounts taken into
account in determining unrelated business taxable
income (as defined in subparagraph (A)) shall not be
taken into account for purposes of--
``(i) subsection (b),
``(ii) determining the value of trust
assets under subsection (d)(2), and
``(iii) determining income under subsection
(d)(3).
``(D) Tax court proceedings.--For purposes of this
paragraph, the references in section 6212(c)(1) to
section 4940 shall be deemed to include references to
this paragraph.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2003.
SEC. 107. EXPANSION OF CHARITABLE CONTRIBUTION ALLOWED FOR SCIENTIFIC
PROPERTY USED FOR RESEARCH AND FOR COMPUTER TECHNOLOGY
AND EQUIPMENT USED FOR EDUCATIONAL PURPOSES.
(a) Scientific Property Used for Research.--
(1) In general.--Clause (ii) of section 170(e)(4)(B)
(defining qualified research contributions) is amended by
inserting ``or assembled'' after ``constructed''.
(2) Conforming amendment.--Clause (iii) of section
170(e)(4)(B) is amended by inserting ``or assembling'' after
``construction''.
(b) Computer Technology and Equipment for Educational Purposes.--
(1) In general.--Clause (ii) of section 170(e)(6)(B) is
amended by inserting ``or assembled'' after ``constructed'' and
``or assembling'' after ``construction''.
(2) Special rule extended.--Section 170(e)(6)(G) is amended
by striking ``2003'' and inserting ``2005''.
(3) Conforming amendments.--Subparagraph (D) of section
170(e)(6) is amended by inserting ``or assembled'' after
``constructed'' and ``or assembling'' after ``construction''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.
SEC. 108. ADJUSTMENT TO BASIS OF S CORPORATION STOCK FOR CERTAIN
CHARITABLE CONTRIBUTIONS.
(a) In General.--Paragraph (2) of section 1367(a) (relating to
adjustments to basis of stock of shareholders, etc.) is amended by
adding at the end the following new flush sentence:
``The decrease under subparagraph (B) by reason of a charitable
contribution (as defined in section 170(c)) of property shall
be the amount equal to the shareholder's pro rata share of the
adjusted basis of such property.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2003.
TITLE II--TAX REFORM AND IMPROVEMENTS RELATING TO CHARITABLE
ORGANIZATIONS AND PROGRAMS
SEC. 201. SUSPENSION OF TAX-EXEMPT STATUS OF TERRORIST ORGANIZATIONS.
(a) In General.--Section 501 (relating to exemption from tax on
corporations, certain trusts, etc.) is amended by redesignating
subsection (p) as subsection (q) and by inserting after subsection (o)
the following new subsection:
``(p) Suspension of Tax-Exempt Status of Terrorist Organizations.--
``(1) In general.--The exemption from tax under subsection
(a) with respect to any organization described in paragraph
(2), and the eligibility of any organization described in
paragraph (2) to apply for recognition of exemption under
subsection (a), shall be suspended during the period described
in paragraph (3).
``(2) Terrorist organizations.--An organization is
described in this paragraph if such organization is designated
or otherwise individually identified--
``(A) under section 212(a)(3)(B)(vi)(II) or 219 of
the Immigration and Nationality Act as a terrorist
organization or foreign terrorist organization,
``(B) in or pursuant to an Executive order which is
related to terrorism and issued under the authority of
the International Emergency Economic Powers Act or
section 5 of the United Nations Participation Act of
1945 for the purpose of imposing on such organization
an economic or other sanction, or
``(C) in or pursuant to an Executive order issued
under the authority of any Federal law if--
``(i) the organization is designated or
otherwise individually identified in or
pursuant to such Executive order as supporting
or engaging in terrorist activity (as defined
in section 212(a)(3)(B) of the Immigration and
Nationality Act) or supporting terrorism (as
defined in section 140(d)(2) of the Foreign
Relations Authorization Act, Fiscal Years 1988
and 1989); and
``(ii) such Executive order refers to this
subsection.
``(3) Period of suspension.--With respect to any
organization described in paragraph (2), the period of
suspension--
``(A) begins on the later of--
``(i) the date of the first publication of
a designation or identification described in
paragraph (2) with respect to such
organization, or
``(ii) the date of the enactment of this
subsection, and
``(B) ends on the first date that all designations
and identifications described in paragraph (2) with
respect to such organization are rescinded pursuant to
the law or Executive order under which such designation
or identification was made.
``(4) Denial of deduction.--No deduction shall be allowed
under section 170, 545(b)(2), 556(b)(2), 642(c), 2055,
2106(a)(2), or 2522 for any contribution to an organization
described in paragraph (2) during the period described in
paragraph (3).
``(5) Denial of administrative or judicial challenge of
suspension or denial of deduction.--Notwithstanding section
7428 or any other provision of law, no organization or other
person may challenge a suspension under paragraph (1), a
designation or identification described in paragraph (2), the
period of suspension described in paragraph (3), or a denial of
a deduction under paragraph (4) in any administrative or
judicial proceeding relating to the Federal tax liability of
such organization or other person.
``(6) Erroneous designation.--
``(A) In general.--If--
``(i) the tax exemption of any organization
described in paragraph (2) is suspended under
paragraph (1),
``(ii) each designation and identification
described in paragraph (2) which has been made
with respect to such organization is determined
to be erroneous pursuant to the law or
Executive order under which such designation or
identification was made, and
``(iii) the erroneous designations and
identifications result in an overpayment of
income tax for any taxable year by such
organization,
credit or refund (with interest) with respect to such
overpayment shall be made.
``(B) Waiver of limitations.--If the credit or
refund of any overpayment of tax described in
subparagraph (A)(iii) is prevented at any time by the
operation of any law or rule of law (including res
judicata), such credit or refund may nevertheless be
allowed or made if the claim therefor is filed before
the close of the 1-year period beginning on the date of
the last determination described in subparagraph
(A)(ii).
``(7) Notice of suspensions.--If the tax exemption of any
organization is suspended under this subsection, the Internal
Revenue Service shall update the listings of tax-exempt
organizations and shall publish appropriate notice to taxpayers
of such suspension and of the fact that contributions to such
organization are not deductible during the period of such
suspension.''.
(b) Effective Date.--The amendments made by this section shall
apply to designations made before, on, or after the date of the
enactment of this Act.
SEC. 202. CLARIFICATION OF DEFINITION OF CHURCH TAX INQUIRY.
Subsection (i) of section 7611 (relating to section not to apply to
criminal investigations, etc.) is amended by striking ``or'' at the end
of paragraph (4), by striking the period at the end of paragraph (5)
and inserting ``, or'', and by inserting after paragraph (5) the
following:
``(6) information provided by the Secretary related to the
standards for exemption from tax under this title and the
requirements under this title relating to unrelated business
taxable income.''.
SEC. 203. EXPANSION OF DECLARATORY JUDGMENT REMEDY TO TAX-EXEMPT
ORGANIZATIONS.
(a) In General.--Paragraph (1) of section 7428(a) (relating to
creation of remedy) is amended--
(1) in subparagraph (B) by inserting after ``509(a))'' the
following: ``or as a private operating foundation (as defined
in section 4942(j)(3))''; and
(2) by amending subparagraph (C) to read as follows:
``(C) with respect to the initial qualification or
continuing qualification of an organization as an
organization described in subsection (c) (other than
paragraph (3)) or (d) of section 501 which is exempt
from tax under section 501(a), or''.
(b) Court Jurisdiction.--Subsection (a) of section 7428 is amended
in the material following paragraph (2) by striking ``United States Tax
Court, the United States Claims Court, or the district court of the
United States for the District of Columbia'' and inserting the
following: ``United States Tax Court (in the case of any such
determination or failure) or the United States Claims Court or the
district court of the United States for the District of Columbia (in
the case of a determination or failure with respect to an issue
referred to in subparagraph (A) or (B) of paragraph (1)),''.
(c) Effective Date.--The amendments made by this section shall
apply to pleadings filed with respect to determinations (or requests
for determinations) made after the date of the enactment of this Act.
SEC. 204. LANDOWNER INCENTIVES PROGRAMS.
(a) In General.--Subsection (a) of section 126 is amended by
redesignating paragraph (10) as paragraph (11) and by inserting after
paragraph (9) the following new paragraph:
``(10) Landowner initiatives programs to conserve
threatened, endangered, or imperiled species, or protect or
restore habitat carried out under--
``(A) the Fish and Wildlife Coordination Act (16
U.S.C. 661 et seq.),
``(B) the Fish and Wildlife Act of 1956 (16 U.S.C.
742f), or
``(C) section 6 of the Endangered Species Act (16
U.S.C. 11531 et seq.).''.
(b) Excludable Portion.--Subparagraph (A) of section 126(b)(1) is
amended by inserting after ``Secretary of Agriculture'' the following:
``(the Secretary of the Interior, in the case of the landowner
incentives programs described in subsection (a)(10) and the programs
described in subsection (a)(11) that are implemented by the Department
of the Interior)''.
(c) Effective Date.--The amendments made by this section shall
apply to amounts received after the date of the enactment of this Act,
in taxable years ending after such date.
SEC. 205. MODIFICATIONS TO SECTION 512(B)(13).
(a) In General.--Paragraph (13) of section 512(b) (relating to
special rules for certain amounts received from controlled entities) is
amended by redesignating subparagraph (E) as subparagraph (F) and by
inserting after subparagraph (D) the following new subparagraph:
``(E) Paragraph to apply only to excess payments.--
``(i) In general.--Subparagraph (A) shall
apply only to the portion of a specified
payment received or accrued by the controlling
organization that exceeds the amount which
would have been paid or accrued if such payment
met the requirements prescribed under section
482.
``(ii) Addition to tax for valuation
misstatements.--The tax imposed by this chapter
on the controlling organization shall be
increased by an amount equal to 20 percent of
the larger of--
``(I) such excess determined
without regard to any amendment or
supplement to a return of tax, or
``(II) such excess determined with
regard to all such amendments and
supplements.''.
(b) Effective Date.--
(1) In general.--The amendment made by this section shall
apply to payments received or accrued after December 31, 2003.
(2) Payments subject to binding contract transition rule.--
If the amendments made by section 1041 of the Taxpayer Relief
Act of 1997 did not apply to any amount received or accrued in
the first 2 taxable years beginning on or after the date of the
enactment of the Taxpayer Relief Act of 1997 under any contract
described in subsection (b)(2) of such section, such amendments
also shall not apply to amounts received or accrued under such
contract before January 1, 2001.
SEC. 206. SIMPLIFICATION OF LOBBYING EXPENDITURE LIMITATION.
(a) Repeal of Grassroots Expenditure Limit.--Paragraph (1) of
section 501(h) (relating to expenditures by public charities to
influence legislation) is amended to read as follows:
``(1) General rule.--In the case of an organization to
which this subsection applies, exemption from taxation under
subsection (a) shall be denied because a substantial part of
the activities of such organization consists of carrying on
propaganda, or otherwise attempting, to influence legislation,
but only if such organization normally makes lobbying
expenditures in excess of the lobbying ceiling amount for such
organization for each taxable year.''.
(b) Excess Lobbying Expenditures.--Section 4911(b) is amended to
read as follows:
``(b) Excess Lobbying Expenditures.--For purposes of this section,
the term `excess lobbying expenditures' means, for a taxable year, the
amount by which the lobbying expenditures made by the organization
during the taxable year exceed the lobbying nontaxable amount for such
organization for such taxable year.''.
(c) Conforming Amendments.--
(1) Section 501(h)(2) is amended by striking subparagraphs
(C) and (D).
(2) Section 4911(c) is amended by striking paragraphs (3)
and (4).
(3) Paragraph (1)(A) of section 4911(f) is amended by
striking ``limits of section 501(h)(1) have'' and inserting
``limit of section 501(h)(1) has''.
(4) Paragraph (1)(C) of section 4911(f) is amended by
striking ``limits of section 501(h)(1) are'' and inserting
``limit of section 501(h)(1) is''.
(5) Paragraphs (4)(A) and (4)(B) of section 4911(f) are
each amended by striking ``limits of section 501(h)(1)'' and
inserting ``limit of section 501(h)(1)''.
(6) Paragraph (8) of section 6033(b) (relating to certain
organizations described in section 501(c)(3)) is amended by
inserting ``and'' at the end of subparagraph (A) and by
striking subparagraphs (C) and (D).
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.
SEC. 207. PERMITTED HOLDINGS OF PRIVATE FOUNDATION WHERE CORPORATION IS
PUBLICLY TRADED AND PUBLICLY CONTROLLED.
(a) In General.--Paragraph (2) of section 4943(c) (relating to the
permitted holdings in a corporation) is amended by adding at the end
the following new subparagraphs:
``(D) Permitted holdings where corporation is
publicly-traded and publicly controlled.--A private
foundation shall not be treated as having excess
business holdings in any corporation in any calendar
year in which it (together with all other private
foundations which are described in section
4946(a)(1)(H)) owns not more than 5 percent of the
voting stock and not more than 5 percent in value of
all outstanding shares of all classes of stock if--
``(i) the common stock of the corporation,
and any other class of stock of which shares
are held by the private foundation, are
regularly traded on an established securities
market (within the meaning of section
897(c)(3)),
``(ii) more than 50 percent of--
``(I) the total combined voting
power of all classes of stock of such
corporation entitled to vote, and
``(II) the total value of the stock
of such corporation,
is owned directly or indirectly by persons
other than the private foundation and persons
who are disqualified persons with respect to
the private foundation,
``(iii) the Board of Directors of such
corporation consists of a majority of persons
who are not disqualified persons with respect
to the private foundation, and
``(iv) any undistributed income (within the
meaning of section 4942(c)) of the private
foundation for such year (determined after
substituting `6 percent' for `5 percent' in
section 4942(e)(1)) shall have been distributed
within the required period under section
4942(a) so as to avoid application of the
initial tax on such undistributed income.
``(E) Exception to permitted holdings where
corporation is publicly-traded and publicly
controlled.--No stock of a corporation held by the
private foundation shall be considered permitted
holdings pursuant to subparagraph (D) to the extent
such stock was acquired by the private foundation by
purchase in a taxable transaction or was acquired from
a disqualified person who acquired such stock by
purchase in a taxable transaction within the 5 years
immediately preceding the transfer of such stock to the
private foundation. Solely for purposes of applying the
preceding sentence--
``(i) any such stock acquired by purchase
in a taxable transaction by such disqualified
person within such 5 year period shall be
treated as included in such transfer to the
extent of such transfer,
``(ii) all stock acquired by such
disqualified person by purchase in a taxable
transaction during the 24 month period
beginning on the date of the transfer to the
private foundation shall be treated as held by
such disqualified person on the date of such
transfer and included in such transfer, and
``(iii) the private foundation may
specifically designate any shares of stock not
considered permitted holdings for purposes of
allowing such private foundation to dispose of
such stock.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2003.
TITLE III--OTHER PROVISIONS
SEC. 301. COMPASSION CAPITAL FUND.
Title IV of the Social Security Act (42 U.S.C. 601-679b) is amended
by adding at the end the following:
``PART F--COMPASSION CAPITAL FUND
``SEC. 481. SECRETARY'S FUND TO SUPPORT AND REPLICATE PROMISING SOCIAL
SERVICE PROGRAMS.
``(a) Grant Authority.--
``(1) In general.--The Secretary may make grants to support
any private entity that operates a promising social services
program.
``(2) Applications.--An entity desiring to receive a grant
under paragraph (1) shall submit to the Secretary an
application for the grant, which shall contain such information
as the Secretary may require.
``(b) Contract Authority, Etc.--The Secretary may enter into a
grant, contract, or cooperative agreement with any entity under which
the entity would provide technical assistance to another entity to
operate a social service program that assists persons and families in
need, including by--
``(1) providing the other entity with--
``(A) technical assistance and information,
including legal assistance and other business
assistance;
``(B) information on capacity-building;
``(C) information and assistance in identifying and
using best practices for serving persons and families
in need; or
``(D) assistance in replicating programs with
demonstrated effectiveness in assisting persons and
families in need; or
``(2) supporting research on the best practices of social
service organizations.
``(c) Guidance and Technical Assistance.--The Secretary may use not
more than 25 percent of the amount appropriated under this section for
a fiscal year to provide guidance and technical assistance to States
and political subdivisions of States with respect to the implementation
of any social service program.
``(d) Social Services Program Defined.--In this section, the term
`social services program' means a program that provides benefits or
services of any kind to persons and families in need.
``(e) Limitations on Authorization of Appropriations.--To carry out
this section, there are authorized to be appropriated to the Secretary
$150,000,000 for fiscal year 2003, and such sums as may be necessary
for fiscal years 2004 through 2007.''.
SEC. 302. REAUTHORIZATION OF ASSETS FOR INDEPENDENCE DEMONSTRATION.
Section 416 of the Assets for Independence Act (title IV of Public
Law 105-285; 42 U.S.C. 604 note) is amended by striking ``and 2003''
and inserting ``2003, 2004, 2005, 2006, 2007, and 2008''.
SEC. 303. SENSE OF THE CONGRESS REGARDING CORPORATE CONTRIBUTIONS TO
FAITH-BASED ORGANIZATIONS, ETC.
(a) Findings.--The Congress finds as follows:
(1) America's community of faith has long played a leading
role in dealing with difficult societal problems that might
otherwise have gone unaddressed.
(2) President Bush has called upon Americans ``to revive
the spirit of citizenship . . . to marshal the compassion of
our people to meet the continuing needs of our Nation''.
(3) Although the work of faith-based organizations should
not be used by government as an excuse for backing away from
its historic and rightful commitment to help those who are
disadvantaged and in need, such organizations can and should be
seen as a valuable partner with government in meeting societal
challenges.
(4) Every day faith-based organizations in the United
States help people recover from drug and alcohol addiction,
provide food and shelter for the homeless, rehabilitate prison
inmates so that they can break free from the cycle of
recidivism, and teach people job skills that will allow them to
move from poverty to productivity.
(5) Faith-based organizations are often more successful in
dealing with difficult societal problems than government and
non-sectarian organizations.
(6) As President Bush has stated, ``It is not sufficient to
praise charities and community groups; we must support them.
And this is both a public obligation and a personal
responsibility.''.
(7) Corporate foundations contribute billions of dollars
each year to a variety of philanthropic causes.
(8) According to a study produced by the Capital Research
Center, the 10 largest corporate foundations in the United
States contributed $1,900,000,000 to such causes.
(9) According to the same study, faith-based organizations
only receive a small fraction of the contributions made by
corporations in the United States, and 6 of the 10 corporations
that give the most to philanthropic causes explicitly ban or
restrict contributions to faith-based organizations.
(b) Corporations Encouraged To Contribute to Faith-Based
Organizations.--The Congress calls on corporations in the United
States, in the words of the President, ``to give more and to give
better'' by making greater contributions to faith-based organizations
that are on the front lines battling some of the great societal
challenges of our day.
(c) Sense of the Congress.--It is the sense of Congress that--
(1) corporations in the United States are important
partners with government in efforts to overcome difficult
societal problems; and
(2) no corporation in the United States should adopt
policies that prohibit the corporation from contributing to an
organization that is successfully advancing a philanthropic
cause merely because such organization is faith based.
SEC. 304. MATERNITY GROUP HOMES.
(a) Permissible Use of Funds.--Section 322 of the Runaway and
Homeless Youth Act (42 U.S.C. 5714-2) is amended--
(1) in subsection (a)(1), by inserting ``(including
maternity group homes)'' after ``group homes''; and
(2) by adding at the end the following:
``(c) Maternity Group Home.--In this part, the term `maternity
group home' means a community-based, adult-supervised group home that
provides--
``(1) young mothers and their children with a supportive
and supervised living arrangement in which such mothers are
required to learn parenting skills, including child
development, family budgeting, health and nutrition, and other
skills to promote their long-term economic independence and the
well-being of their children; and
``(2) pregnant women with--
``(A) information regarding the option of placing
children for adoption through licensed adoption service
providers;
``(B) assistance with prenatal care and child
birthing; and
``(C) pre- and post-placement adoption
counseling.''.
(b) Contract for Evaluation.--Part B of the Runaway and Homeless
Youth Act (42 U.S.C. 5701 et seq.) is amended by adding at the end the
following:
``SEC. 323. CONTRACT FOR EVALUATION.
``(a) In General.--The Secretary shall enter into a contract with a
public or private entity for an evaluation of the maternity group homes
that are supported by grant funds under this Act.
``(b) Information.--The evaluation described in subsection (a)
shall include the collection of information about the relevant
characteristics of individuals who benefit from maternity group homes
such as those that are supported by grant funds under this Act and what
services provided by those maternity group homes are most beneficial to
such individuals.
``(c) Report.--Not later than 2 years after the date on which the
Secretary enters into a contract for an evaluation under subsection
(a), and biennially thereafter, the entity conducting the evaluation
under this section shall submit to Congress a report on the status,
activities, and accomplishments of maternity group homes that are
supported by grant funds under this Act.''.
(c) Authorization of Appropriations.--Section 388 of the Runaway
and Homeless Youth Act (42 U.S.C. 5751) is amended--
(1) in subsection (a)(1)--
(A) by striking ``There'' and inserting the
following:
``(A) In general.--There'';
(B) in subparagraph (A), as redesignated, by
inserting ``and the purpose described in subparagraph
(B)'' after ``other than part E''; and
(C) by adding at the end the following:
``(B) Maternity group homes.--There is authorized
to be appropriated, for maternity group homes eligible
for assistance under section 322(a)(1)--
``(i) $33,000,000 for fiscal year 2003; and
``(ii) such sums as may be necessary for
fiscal year 2004.''; and
(2) in subsection (a)(2)(A), by striking ``paragraph (1)''
and inserting ``paragraph (1)(A)''.
<all>
Ordered to be Reported (Amended) by Voice Vote.
Reported (Amended) by the Committee on Ways and Means. H. Rept. 108-270, Part I.
Reported (Amended) by the Committee on Ways and Means. H. Rept. 108-270, Part I.
House Committee on Education and the Workforce Granted an extension for further consideration ending not later than Sept. 16, 2003.
Committee on Education and the Workforce discharged.
Committee on Education and the Workforce discharged.
Placed on the Union Calendar, Calendar No. 157.
Rules Committee Resolution H. Res. 370 Reported to House. Rule provides for consideration of H.R. 7 with 1 hour of general debate. Previous question shall be considered as ordered without intervening motions except motion to recommit with or without instructions. The amendment in the nature of a substitute recommended by the Committee on Ways and Means now printed in the bill, modified by the amendment printed in part A of the report of the Committee on Rules accompanying this resolution, shall be considered as adopted. The amendment printed in part B of the report of the Committee on Rules shall be considered as read, and shall be separately debatable for one hour equally divided and controlled by the proponent and an opponent. Measure will be considered read. A specified amendment is in order.
Rule H. Res. 370 passed House.
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Considered under the provisions of rule H. Res. 370. (consideration: CR H8304-8356)
Rule provides for consideration of H.R. 7 with 1 hour of general debate. Previous question shall be considered as ordered without intervening motions except motion to recommit with or without instructions. The amendment in the nature of a substitute recommended by the Committee on Ways and Means now printed in the bill, modified by the amendment printed in part A of the report of the Committee on Rules accompanying this resolution, shall be considered as adopted. The amendment printed in part B of the report of the Committee on Rules shall be considered as read, and shall be separately debatable for one hour equally divided and controlled by the proponent and an opponent. Measure will be considered read. A specified amendment is in order.
DEBATE - The House proceeded with one hour of debate on H.R. 7, as amended.
DEBATE - Pursuant to the provisions of H. Res. 370, the House proceeded with one hour of debate on the Cardin amendment in the nature of a substitute.
Mr. Neal (MA) moved to recommit with instructions to Ways and Means. (consideration: CR H8345-8355; text: CR H8346-8354)
On motion to recommit with instructions Failed by recorded vote: 201 - 221 (Roll no. 507). (consideration: CR H8355)
Roll Call #507 (House)Passed/agreed to in House: On passage Passed by the Yeas and Nays: 408 - 13 (Roll no. 508).
Roll Call #508 (House)On passage Passed by the Yeas and Nays: 408 - 13 (Roll no. 508).
Roll Call #508 (House)Motion to reconsider laid on the table Agreed to without objection.
Received in the Senate.
Read twice and referred to the Committee on Finance.