I 

109TH CONGRESS 

1ST SESSION H. R. 2534 

To amend the Internal Revenue Code of 1986 to encourage private 

philanthropy. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 23, 2005 

Mr. DEAL of Georgia introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to encourage 

private philanthropy. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Personal Philanthropy 

5 Account Act of 2005’’. 

6 SEC. 2. PERSONAL PHILANTHROPY ACCOUNTS. 

7 (a) IN GENERAL.—Part VII of subchapter B of chap8 ter 1 of the Internal Revenue Code of 1986 (relating to 

9 additional itemized deductions for individuals) is amended 
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1 by redesignating section 224 as section 225 and by insert2 ing after section 223 the following new section: 

3 ‘‘SEC. 224. PERSONAL PHILANTHROPY ACCOUNTS. 

4 ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an 

5 individual, there shall be allowed as a deduction for the 

6 taxable year an amount equal to the aggregate amount 

7 paid in cash during such taxable year by or on behalf of 

8 such individual to a personal philanthropy account of such 

9 individual. 

10 ‘‘(b) PERSONAL PHILANTHROPY ACCOUNT.—For 

11 purposes of this section, the term ‘personal philanthropy 

12 account’ means a trust created or organized in the United 

13 States exclusively for the purpose of making distributions 

14 for the charitable purposes designated by an individual 

15 who is the account holder of the trust (and designated as 

16 an personal philanthropy account at the time created or 

17 organized), but only if the written governing instrument 

18 creating the trust meets the following requirements: 

19 ‘‘(1) No contribution will be accepted unless it 

20 is in cash. 

21 ‘‘(2) The trustee is a bank (as defined in sec22 tion 408(n)), community foundation, or another per23 son who demonstrates to the satisfaction of the Sec24 retary that the manner in which that person will ad25 minister the trust will be consistent with the require-
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1 ments of this section or who has so demonstrated 

2 with respect to any personal philanthropy account 

3 and who is not disqualified under subsection (f). 

4 ‘‘(3) No part of the trust assets will be invested 

5 in life insurance contracts. 

6 ‘‘(4) The assets of the trust shall not be com7 mingled with other property except in a common 

8 trust fund or common investment fund. 

9 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur10 poses of this section— 

11 ‘‘(1) DEFAULT DISTRIBUTION RULES.— 

12 ‘‘(A) IN GENERAL.—No account shall be 

13 treated as a personal philanthropy account un14 less at all times there are in effect qualified de15 fault charitable organization designations under 

16 subparagraphs (B) and (C). 

17 ‘‘(B) QUALIFIED DEFAULT CHARITABLE

18 ORGANIZATION DESIGNATION.—For purposes of 

19 subparagraph (A), a qualified default charitable 

20 organization designation in effect under this 

21 subparagraph is the designation by the account 

22 holder of an organization to which the remain23 der of such account may be made in the form 

24 of a qualified philanthropy payment upon the 

25 death of the account holder in any case in 
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1 which the account holder fails to provide by will 

2 or other suitable estate document for the dis3 tribution of the assets of such account. 

4 ‘‘(C) TRUSTEE DESIGNATION.—For pur5 poses of subparagraph (A), a qualified default 

6 charitable organization designation in effect 

7 under this subparagraph is the designation by 

8 the trustee of the personal philanthropy account 

9 of an organization to which a payment under 

10 subparagraph (B) will be made if the organiza11 tion designated under subparagraph (B) is not 

12 qualified to receive a qualified philanthropy 

13 payment at the time of such payment. 

14 ‘‘(2) MINIMUM DISTRIBUTION REQUIRE15 MENTS.— 

16 ‘‘(A) IN GENERAL.—No account shall be 

17 treated as a personal philanthropy account for 

18 a taxable year unless such account meets the 

19 minimum distribution requirements for such 

20 taxable year. 

21 ‘‘(B) MINIMUM DISTRIBUTION REQUIRE22 MENT.—An account meets the minimum dis23 tribution requirements for a taxable year if the 

24 aggregate distributions from the account for the 

25 taxable year are not less than 5 percent of the 
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1 balance of such account as of the last day of 

2 the preceding taxable year. 

3 ‘‘(C) EXCEPTION FOR ACCOUNTS WITH A

4 BALANCE OF LESS THAN $10,000.—Subpara5 graph (A) shall not apply to any account for a 

6 taxable year if the balance of such account as 

7 of the last day of the preceding taxable year is 

8 less than $10,000. 

9 ‘‘(3) DENIAL OF DEDUCTION TO DEPEND10 ENTS.—No deduction shall be allowed under this 

11 section to any individual with respect to whom a de12 duction under section 151 is allowable to another 

13 taxpayer for a taxable year beginning in the cal14 endar year in which such individual’s taxable year 

15 begins. 

16 ‘‘(4) COMMUNITY FOUNDATION.—For purposes 

17 of this section, the term ‘community foundation’ 

18 means a non-sectarian organization— 

19 ‘‘(A) whose long-term goal is to build per20 manent, named component funds established by 

21 many separate donors for the broad-based char22 itable benefit of the residents of a defined geo23 graphic area, and 

24 ‘‘(B) which— 
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1 ‘‘(i) is described in section 501(c)(3) 

2 and exempt from tax under section 501(a), 

3 ‘‘(ii) is not a private foundation, and 

4 ‘‘(iii) is not controlled directly or indi5 rectly by one or more disqualified persons 

6 (as defined in section 4946, determined 

7 without regard to subsection (a)(1)(B) 

8 thereof). 

9 ‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.— 

10 ‘‘(1) IN GENERAL.—Any distribution from a 

11 personal philanthropy account shall be includible in 

12 the gross income of the account holder in the man13 ner as provided in section 72. 

14 ‘‘(2) QUALIFIED PHILANTHROPY PAYMENTS.— 

15 ‘‘(A) IN GENERAL.—No amount shall be 

16 includible in gross income under paragraph (1) 

17 to the extent that such distribution is a quali18 fied philanthropy payment. 

19 ‘‘(B) QUALIFIED PHILANTHROPY PAYMENT

20 DEFINED.—For purposes of this section, the 

21 term ‘qualified philanthropy payment’ means a 

22 distribution from a personal philanthropy ac23 count— 

24 ‘‘(i) which is made, pursuant to a re25 quest by the account holder, by the trustee 
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1 of the account within 30 days after receipt 

2 by the trustee of a certification under sub3 paragraph (C), and 

4 ‘‘(ii) which is paid for a purpose speci5 fied in section 170(c). 

6 A trustee who fails to meet the 30-day require7 ment of clause (i) shall be subject to disquali8 fication as a trustee. 

9 ‘‘(C) ORGANIZATION CERTIFICATION.—For 

10 purposes of subparagraph (B)(i), a certification 

11 under this subparagraph is a certification by an 

12 organization pursuant to a written request by 

13 the trustee of a personal philanthropy account 

14 that the organization is an organization 

15 which— 

16 ‘‘(i) is described in section 501(c)(3) 

17 and exempt from tax under section 501(a), 

18 and 

19 ‘‘(ii) is not a personal philanthropy 

20 account. 

21 ‘‘(D) COORDINATION WITH CHARITABLE

22 CONTRIBUTIONS.— 

23 ‘‘(i) No deduction shall be allowed 

24 under sections 170, 642(c), 2055, 

25 2106(a)(2), or 2522 for any amount ex-
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1 cluded from gross income under subpara2 graph (A), 

3 ‘‘(ii) under regulations, the amount 

4 allowable as a deduction under sections 

5 170, 642(c), 2055, 2106(a)(2), or 2522 (as 

6 appropriate) for the taxable year (without 

7 regard to this clause) shall be reduced by 

8 the amount excluded from gross income for 

9 the taxable year under subparagraph (A), 

10 and 

11 ‘‘(iii) section 170(d) shall not apply to 

12 any amount excluded from gross income 

13 under subparagraph (A). 

14 ‘‘(3) ROLLOVER CONTRIBUTIONS.— 

15 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

16 not apply to any amount paid or distributed 

17 from a personal philanthropy account to the ex18 tent that the amount received is paid, not later 

19 than the 60th day after the date of such pay20 ment or distribution, into another personal phi21 lanthropy account of the same account holder. 

22 The preceding sentence shall not apply to any 

23 payment or distribution if it applied to any 

24 prior payment or distribution during the 12- 
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1 month period ending on the date of the pay2 ment or distribution. 

3 ‘‘(B) HEIR.—Paragraph (1) shall not 

4 apply to any amount paid or distributed from 

5 a personal philanthropy account of a decedent 

6 to the extent that the amount received is paid, 

7 not later than the 60th day after the date of 

8 such payment or distribution, into the personal 

9 philanthropy account of an heir of the decedent, 

10 as designated by the will of the decedent. 

11 ‘‘(e) TAX TREATMENT OF ACCOUNT.— 

12 ‘‘(1) IN GENERAL.—A personal philanthropy 

13 account shall be exempt from taxation under this 

14 subtitle. Notwithstanding the preceding sentence, 

15 the personal philanthropy account shall be subject to 

16 the taxes imposed by section 511 (relating to imposi17 tion of tax on unrelated business income of chari18 table organizations). 

19 ‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 

20 to the rules of paragraphs (2) and (4) of section 

21 408(e) shall apply to any personal philanthropy ac22 count. 

23 ‘‘(f) DISQUALIFICATION OF TRUSTEE.—The trustee 

24 of a personal philanthropy account shall not be qualified 

25 to be a trustee of such account after a final determination 
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1 by the Secretary that the trustee has disbursed more than 

2 10 percent of its payments from personal philanthropy ac3 counts to non-qualifying organizations in a calendar year. 

4 ‘‘(g) REPORTS.—The trustee of a personal philan5 thropy account shall make such reports regarding such ac6 count to the Secretary and to the holder the account with 

7 respect to contributions, distributions, and such other 

8 matters as the Secretary may require. The reports re9 quired by this subsection shall be filed at such time and 

10 in such manner and furnished to such individuals at such 

11 time and in such manner as may be required.’’. 

12 (b) DEDUCTION ALLOWED WHETHER OR NOT INDI13 VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 

14 of section 62 of such Code is amended by inserting before 

15 the flush sentence at the end the following new paragraph: 

16 ‘‘(21) PERSONAL PHILANTHROPY ACCOUNTS.— 

17 The deduction allowed under section 224.’’. 

18 (c) EXCLUSION FOR EMPLOYER CONTRIBUTIONS TO

19 PERSONAL PHILANTHROPY ACCOUNTS.— 

20 (1) IN GENERAL.—Part III of subchapter B of 

21 chapter 1 of such Code is amended by inserting 

22 after section 139A the following new section: 
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1 ‘‘SEC. 139B. CONTRIBUTIONS BY EMPLOYER TO PERSONAL 

2 PHILANTHROPY ACCOUNTS. 

3 ‘‘(a) IN GENERAL.—Gross income of an employee 

4 does not include contributions by the employer to the per5 sonal philanthropy account of the employee. 

6 ‘‘(b) PERSONAL PHILANTHROPY ACCOUNT.—For 

7 purposes of this section, the term ‘personal philanthropy 

8 account’ shall have the meaning given to such term by 

9 section 224. 

10 ‘‘(c) EXCLUSION NOT TO EXCEED COMPENSATION.— 

11 ‘‘(1) EMPLOYEES.—The amount excluded from 

12 gross income by subsection (a) with respect to an 

13 employee shall not exceed such employee’s wages, 

14 salaries, tips, and other employee compensation 

15 which are attributable to such employee’s employ16 ment by the employer referred to in such subsection. 

17 ‘‘(2) SELF-EMPLOYED INDIVIDUALS.—The 

18 amount excluded from gross income by subsection 

19 (a) for contributions with respect to an individual 

20 who is self employed shall not exceed such individ21 ual’s earned income (as defined in section 401(c)(2)) 

22 derived by the taxpayer from the trade or business 

23 with respect to which the individual is self-employed. 

24 ‘‘(3) COMMUNITY PROPERTY LAWS NOT TO

25 APPLY.—The limitations under this subsection shall 
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1 be determined without regard to community prop2 erty laws.’’. 

3 (2) CONFORMING AMENDMENTS.— 

4 (A) Section 3121(a) of such Code is 

5 amended by striking ‘‘or’’ at the end of para6 graph (21), by striking the period at the end of 

7 paragraph (22) and inserting ‘‘; or ’’, and by 

8 inserting after paragraph (22) the following 

9 new paragraph: 

10 ‘‘(23) any payment made to a personal philan11 thropy account (as defined in section 224) of an em12 ployee.’’. 

13 (B) Section 3231(e) of such Code is 

14 amended by adding at the end the following 

15 new paragraph: 

16 ‘‘(13) PERSONAL PHILANTHROPY ACCOUNT

17 CONTRIBUTIONS.—The term ‘compensation’ shall 

18 not include any payment made to a personal philan19 thropy account (as defined in section 224) of an em20 ployee.’’. 

21 (C) Section 3306(b) of such Code is 

22 amended by striking ‘‘or’’ at the end of para23 graph (18), by striking the period at the end of 

24 paragraph (19) and inserting ‘‘; or’’, and by in-
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1 serting after paragraph (19) the following new 

2 paragraph: 

3 ‘‘(20) any payment made to a personal philan4 thropy account (as defined in section 224) of an em5 ployee.’’. 

6 (D) Section 3401(a) of such Code is 

7 amended by striking ‘‘or’’ at the end of para8 graph (21), by striking the period at the end of 

9 paragraph (22) and inserting ‘‘; or’’, and by in10 serting after paragraph (22) the following new 

11 paragraph: 

12 ‘‘(23) any payment made to a personal philan13 thropy account (as defined in section 224) of an em14 ployee.’’. 

15 (E) Section 6051(a) of such Code is 

16 amended by striking ‘‘and’’ at the end of para17 graph (12), by striking the period at the end of 

18 paragraph (13) and inserting ‘‘, and’’, and by 

19 inserting after paragraph (13) the following 

20 new paragraph: 

21 ‘‘(14) the amount contributed to any personal 

22 philanthropy account (as defined in section 224) of 

23 such employee or such employee’s spouse.’’. 

24 (d) PROHIBITED TRANSACTIONS.— 
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1 (1) EXCEPTION FOR TAXABLE DISTRIBUTIONS

2 FROM PERSONAL PHILANTHROPY ACCOUNTS.—Sub3 section (c) of section 4975 of such Code (defining to 

4 prohibited transaction) is amended by adding at the 

5 end the following new paragraph: 

6 ‘‘(7) SPECIAL RULE FOR PERSONAL PHILAN7 THROPY ACCOUNTS.—An individual for whose ben8 efit a personal philanthropy account is established 

9 and any contributor to such account shall be exempt 

10 from the tax imposed by this section with respect to 

11 any transaction concerning such account (which 

12 would otherwise be taxable under this section) if sec13 tion 224(d) applies with respect to such trans14 action.’’. 

15 (2) PLAN DEFINED.—Paragraph (1) of section 

16 4975(e) of such Code is amended by striking ‘‘or’’ 

17 at the end of subparagraph (F), by striking the pe18 riod at the end of subparagraph (G) and inserting 

19 ‘‘, or’’, and by inserting after subparagraph (G) the 

20 following new subparagraph: 

21 ‘‘(H) a personal philanthropy account de22 scribed in section 224.’’. 

23 (e) PENALTY ON FAILURE TO REPORT.—Paragraph 

24 (2) of section 6693(a) of such Code (relating to provisions) 

25 is amended by striking ‘‘and’’ at the end of subparagraph 
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1 (D), by striking the period at the end of subparagraph 

2 (E) and inserting ‘‘, and’’, and by inserting after subpara3 graph (E) the following new subparagraph: 

4 ‘‘(F) section 224(f) (relating to personal 

5 philanthropy accounts).’’. 

6 (f) CONFORMING AMENDMENT.—Paragraph (2) of 

7 section 26(b) of such Code is amended by striking ‘‘and’’ 

8 at the end of subparagraph (R), by striking the period 

9 at the end of subparagraph (S) and inserting ‘‘, and’’, and 

10 by adding at the end the following new subparagraph: 

11 ‘‘(T) section 224(d)(3) relating to (relating 

12 to additional tax with respect to distributions 

13 not used for charitable contribution pur14 poses).’’. 

15 (g) CLERICAL AMENDMENTS.— 

16 (1) The table of sections for part VII of sub17 chapter B of chapter 1 of such Code is amended by 

18 redesignating the item relating to section 224 as an 

19 item relating to section 225 and by inserting after 

20 the item relating to section 223 the following new 

21 item: 

‘‘Sec. 224. Personal philanthropy accounts.’’. 

22 (2) The table of sections for part III of sub23 chapter B of chapter 1 of such Code is amended by 
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1 inserting after the item relating to section 139A the 

2 following new item: 

‘‘Sec. 139B. Contributions by employer to personal philanthropy accounts.’’. 

3 (h) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 December 31, 2004. 

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