I

104TH CONGRESS

1ST SESSION H. R. 1768

To amend the Internal Revenue Code of 1986 to provide a credit for

charitable contributions to fight poverty, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 7, 1995

Mr. KNOLLENBERG (for himself, Mr. KOLBE, Mr. BARTLETT of Maryland,

Mr. EWING, Ms. MOLINARI, and Mr. UPTON) 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 provide

a credit for charitable contributions to fight poverty,

and for other purposes.

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 ‘‘Choice in Welfare Tax

5 Credit Act of 1995’’.
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1 SEC. 2. CREDIT FOR CHARITABLE CONTRIBUTIONS TO CER2 TAIN PRIVATE CHARITIES PROVIDING AS3 SISTANCE TO THE POOR.

4 (a) IN GENERAL.—Subpart A of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of

6 1986 (relating to nonrefundable personal credits) is

7 amended by inserting after section 22 the following new

8 section:

9 ‘‘SEC. 23. CREDIT FOR CERTAIN CHARITABLE CONTRIBU10 TIONS.

11 ‘‘(a) IN GENERAL.—In the case of an individual,

12 there shall be allowed as a credit against the tax imposed

13 by this chapter for the taxable year an amount equal to

14 the qualified charitable contributions which are paid by

15 the taxpayer during the taxable year.

16 ‘‘(b) LIMITATION.—The credit allowed by subsection

17 (a) for the taxable year shall not exceed $100 ($200 in

18 the case of a joint return).

19 ‘‘(c) QUALIFIED CHARITABLE CONTRIBUTION.—For

20 purposes of this section, the term ‘qualified charitable con21 tribution’ means any charitable contribution (as defined

22 in section 170(c)) made in cash to a qualified charity but

23 only if the amount of each such contribution, and the re24 cipient thereof, are identified on the return for the taxable

25 year during which such contribution is made.

26 ‘‘(d) QUALIFIED CHARITY.—
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1 ‘‘(1) IN GENERAL.—For purposes of this sec2 tion, the term ‘qualified charity’ means, with respect

3 to the taxpayer, any organization described in sec4 tion 501(c)(3) and exempt from tax under section

5 501(a)—

6 ‘‘(A) which is certified by the Secretary as

7 meeting the requirements of paragraphs (2)

8 and (3),

9 ‘‘(B) which is organized under the laws of

10 the United States or of any State in which the

11 organization is qualified to operate, and

12 ‘‘(C) which is required, or elects to be

13 treated as being required, to file returns under

14 section 6033.

15 ‘‘(2) CHARITY MUST PRIMARILY ASSIST THE

16 POOR.—An organization meets the requirements of

17 this paragraph only if the predominant activity of

18 such organization is the provision of services to indi19 viduals whose annual incomes generally do not ex20 ceed 150 percent of the official poverty line (as de21 fined by the Office of Management and Budget).

22 ‘‘(3) MINIMUM EXPENDITURE REQUIREMENT.—

23 ‘‘(A) IN GENERAL.—An organization meets

24 the requirements of this paragraph only if the

25 Secretary reasonably expects that the annual
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1 exempt purpose expenditures of such organiza2 tion will not be less than 70 percent of the an3 nual aggregate expenditures of such organiza4 tion.

5 ‘‘(B) EXEMPT PURPOSE EXPENDITURE.—

6 For purposes of subparagraph (A)—

7 ‘‘(i) IN GENERAL.—The term ‘exempt

8 purpose expenditure’ means any expendi9 ture to carry out the activity referred to in

10 paragraph (2).

11 ‘‘(ii) EXCEPTIONS.—Such term shall

12 not include—

13 ‘‘(I) any administrative expense,

14 ‘‘(II) any expense for the purpose

15 of influencing legislation (as defined

16 in section 4911(d)),

17 ‘‘(III) any expense primarily for

18 the purpose of fundraising, and

19 ‘‘(IV) any expense for litigation

20 on behalf of any individual referred to

21 in paragraph (2).

22 ‘‘(e) TIME WHEN CONTRIBUTIONS DEEMED

23 MADE.—For purposes of this section, at the election of

24 the taxpayer, a contribution which is made not later than

25 the time prescribed by law for filing the return for the
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1 taxable year (not including extensions thereof) shall be

2 treated as made on the last day of such taxable year.

3 ‘‘(f) COORDINATION WITH DEDUCTION FOR CHARI4 TABLE CONTRIBUTIONS.—

5 ‘‘(1) CREDIT IN LIEU OF DEDUCTION.—The

6 credit provided by subsection (a) for any qualified

7 charitable contribution shall be in lieu of any deduc8 tion otherwise allowable under this chapter for such

9 contribution.

10 ‘‘(2) ELECTION TO HAVE SECTION NOT

11 APPLY.—A taxpayer may elect for any taxable year

12 to have this section not apply.’’

13 (b) QUALIFIED CHARITIES REQUIRED TO PROVIDE

14 COPIES OF ANNUAL RETURN.—Subsection (e) of section

15 6104 of such Code (relating to public inspection of certain

16 annual returns and applications for exemption) is amend17 ed by adding at the end the following new paragraph:

18 ‘‘(3) CHARITIES RECEIVING CREDITABLE CON19 TRIBUTIONS REQUIRED TO PROVIDE COPIES OF AN20 NUAL RETURN.—

21 ‘‘(A) IN GENERAL.—Every qualified char22 ity (as defined in section 23(d)) shall, upon re23 quest of an individual made at an office where

24 such organization’s annual return filed under

25 section 6033 is required under paragraph (1) to
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1 be available for inspection, provide a copy of

2 such return to such individual without charge

3 other than a reasonable fee for any reproduc4 tion and mailing costs. If the request is made

5 in person, such copies shall be provided imme6 diately and, if made other than in person, shall

7 be provided within 30 days.

8 ‘‘(B) PERIOD OF AVAILABILITY.—Subpara9 graph (A) shall apply only during the 3-year pe10 riod beginning on the filing date (as defined in

11 paragraph (1)(D) of the return requested).’’

12 (c) CLERICAL AMENDMENT.—The table of sections

13 for subpart A of part IV of subchapter A of chapter 1

14 of such Code is amended by inserting after the item relat15 ing to section 22 the following new item:

‘‘Sec. 23. Credit for certain charitable contributions.’’

16 (d) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to contributions made after the

18 90th day after the date of the enactment of this Act in

19 taxable years ending after such date.

20 SEC. 3. REPEAL OF CERTAIN CHANGES MADE IN THE

21 EARNED INCOME CREDIT.

22 (a) REPEAL OF CREDIT FOR INDIVIDUALS WITHOUT

23 CHILDREN.—Subparagraph (A) of section 32(c)(1) of the

24 Internal Revenue Code of 1986 (defining eligible individ25 ual) is amended to read as follows:
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1 ‘‘(A) IN GENERAL.—The term ‘eligible in2 dividual’ means any individual who has a quali3 fying child for the taxable year.’’

4 (b) REPEAL OF INCREASES IN AMOUNT OF CRED5 IT.—

6 (1) Subsection (b) of section 32 of such Code

7 is amended to read as follows:

8 ‘‘(b) PERCENTAGES.—

9 ‘‘(1) IN GENERAL.—The credit percentage and

10 the phaseout percentage shall be determined as

11 follows:

‘‘In the case of an eligible individual with:The credit percentage

is:

The phaseout percentage

is:

1 qualifying child .................... 34 ............................. 15.98

2 or more qualifying children .. 36 ............................. 20.22

12 ‘‘(2) AMOUNTS.—The earned income amount

13 and the phaseout amount shall be determined as

14 follows:

‘‘In the case of an eligible individual with:The earned income

amount is: The phaseout amount is:

1 qualifying child .................... $6,000 ...................... $11,000

2 or more qualifying children .. $8,425 ...................... $11,000.’’

15 (2) Paragraph (1) of section 32(i) of such Code

16 is amended by striking ‘‘subsection (b)(2)(A)’’ and

17 inserting ‘‘subsection (b)(2)’’.

18 (c) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to taxable years beginning after

20 December 31, 1995, except that adjustments shall be
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1 made under section 32(i) of the Internal Revenue Code

2 of 1986 to the section 32(b)(2) of such Code (as amended

3 by this section) for such taxable years.

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