89–008

107TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 107–144

PROVIDING FOR CONSIDERATION OF H.R. 7, THE

COMMUNITY SOLUTIONS ACT OF 2001

JULY 17, 2001.—Referred to the House Calendar and ordered to be printed

Ms. PRYCE of Ohio, from the Committee on Rules,

submitted the following

REPORT

[To accompany H. Res. 196]

The Committee on Rules, having had under consideration House

Resolution 196, by a nonrecord vote, report the same to the House

with the recommendation that the resolution be adopted.

SUMMARY OF PROVISIONS OF THE RESOLUTION

The resolution provides for the consideration in the House of

H.R. 7, the Community Solutions Act of 2001, under a modified

closed rule. The rule provides one hour of debate equally divided

and controlled by the chairman and ranking minority member of

the Committee on Ways and Means. The rule waives all points of

order against consideration of the bill.

The rule provides that, in lieu of the amendments recommended

by the Committee on Ways and Means and the Committee on the

Judiciary now printed in the bill, the amendment in the nature of

a substitute printed in the Congressional Record and numbered one

shall be considered as adopted.

The rule provides for consideration of the amendment in the nature of a substitute printed in this report, if offered by Representative Rangel or Representative Conyers or a designee, which shall

be considered as read and shall be separately debatable for one

hour equally divided and controlled by the proponent and an opponent. The rule waives all points of order against the amendment.

Finally, the rule provides one motion to recommit with or without

instructions.

COMMITTEE VOTES

Pursuant to clause 3(b) of House rule XIII the results of each

record vote on an amendment or motion to report, together with

the names of those voting for and against, are printed below:

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Rules Committee Record Vote No. 26

Date: July 17, 2001.

Measure: H.R. 7, the Community Solutions Act of 2001.

Motion By: Mr. Frost.

Summary of Motion: Make in order the Foley amendment to ensure that organizations receiving federal funds to subsidize the operation of a faith-based assistance program would not be permitted

to exempt themselves from State and local civil rights laws.

Results: Defeated 4 to 9.

Vote by Member: Goss—Nay; Linder—Nay; Pryce—Yea; DiazBalart—Nay; Hastings (WA)—Nay; Myrick—Nay; Sessions—Nay;

Reynolds—Nay; Frost—Yea; Hall—Nay; Slaughter—Yea; Hastings

(FL)—Yea; Dreier—Nay.

Rules Committee Record Vote No. 27

Date: July 17, 2001.

Measure: H.R. 7, the Community Solutions Act of 2001.

Motion By: Mr. Frost.

Summary of Motion: Make in order the Edwards amendment to

prohibit direct federal funding of pervasively sectarian organizations.

Results: Defeated 3 to 10.

Vote by Member: Goss—Nay; Linder—Nay; Pryce—Nay; DiazBalart—Nay; Hastings (WA)—Nay; Myrick—Nay; Sessions—Nay;

Reynolds—Nay; Frost—Yea; Hall—Nay; Slaughter—Yea; Hastings

(FL)—Yea; Dreier—Nay.

Rules Committee Record Vote No. 28

Date: July 17, 2001.

Measure: H.R. 7, the Community Solutions Act of 2001.

Motion By: Mr. Hastings (FL).

Summary of Motion: Make in order the Thurman amendment to

provide that the tax provisions in the bill would not apply if the

Director of OMB projects that there will be a federal deficit outside

the Social Security and Medicare Trust Funds.

Results: Defeated 3 to 10.

Vote by Member: Goss—Nay; Linder—Nay; Pryce—Nay; DiazBalart—Nay; Hastings (WA)—Nay; Myrick—Nay; Sessions—Nay;

Reynolds—Nay; Frost—Yea; Hall—Nay; Slaughter—Yea; Hastings

(FL)—Yea; Dreier—Nay.

SUMMARY OF AMENDMENT MADE IN ORDER TO H.R. 7—COMMUNITY

SOLUTIONS ACT OF 2001

Rangel/Conyers/Frank/Nadler/Edwards/Scott: Democratic Substitute. Retains all of the provisions of the bill as reported with the

following changes: revises section 1991(e) in section 201 to make

clear that religious organizations receiving taxpayer dollars for

charitable choice programs cannot discriminate in employment on

the basis of an employee’s religion, religious belief, or a refusal to

hold a religious belief, adds a new section (i) to section 1991 in section 201 to prohibit the charitable choice provisions in the bill from

preempting or superceding state or local civil rights laws; revises

sections 1991(j) of section 201 to make clear that religious programs cannot engage in sectarian instruction, worship, or prosVerDate 11-MAY-2000 05:57 Jul 18, 2001 Jkt 089008 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR144.XXX pfrm02 PsN: HR144
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elytization at the same time and place as the government funded

program; deletes the indirect assistance provision; deletes the tort

liability reform provisions; and includes a revenue offset that reduces the recent tax cut for the top income rate by 0.2 percentage

points to offset the cost of the tax benefits included in Title I.

Text of amendment made in order under the rule:

AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE RANGEL OF

NEW YORK, OR REPRESENTATIVE CONYERS OF MICHIGAN, OR A

DESIGNEE, DEBATABLE FOR 60 MINUTES

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Community Solutions Act of 2001’’.

(b) TABLE OF CONTENTS.—The table of contents is as follows:

Sec. 1. Short title; table of contents.

TITLE I—CHARITABLE GIVING INCENTIVES PACKAGE

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 accounts 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 excise tax on net investment income of 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.

Sec. 109. Revenue offset.

TITLE II—EXPANSION OF CHARITABLE CHOICE

Sec. 201. Provision of assistance under government programs by religious and community organizations.

TITLE III—INDIVIDUAL DEVELOPMENT ACCOUNTS

Sec. 301. Additional qualified entities eligible to conduct projects under the Assets

for Independence Act.

Sec. 302. Increase in limitation on net worth.

Sec. 303. Change in limitation on deposits for an individual.

Sec. 304. Elimination of limitation on deposits for a household.

Sec. 305. Extension of program.

Sec. 306. Conforming amendments.

Sec. 307. Applicability.

TITLE I—CHARITABLE GIVING

INCENTIVES PACKAGE

SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CONTRIBUTIONS TO BE ALLOWED TO INDIVIDUALS WHO DO NOT

ITEMIZE DEDUCTIONS.

(a) IN GENERAL.—Section 170 of the Internal Revenue Code of

1986 (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.—

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‘‘(1) IN GENERAL.—In the case of an individual who does not

itemize his deductions for the taxable year, there shall be

taken into account as a direct charitable deduction under section 63 an amount equal to the lesser of—

‘‘(A) the amount allowable under subsection (a) for the

taxable year for cash contributions, or

‘‘(B) the applicable amount.

‘‘(2) APPLICABLE AMOUNT.—For purposes of paragraph (1),

the applicable amount shall be determined as follows:

‘‘For taxable years The applicable

beginning in: amount is:

2002 and 2003 ............................................................................ $25

2004, 2005, 2006 ........................................................................ $50

2007, 2008, 2009 ........................................................................ $75

2010 and thereafter ................................................................... $100.

In the case of a joint return, the applicable amount is twice the

applicable amount determined under the preceding table.’’.

(b) DIRECT CHARITABLE DEDUCTION.—

(1) IN GENERAL.—Subsection (b) of section 63 of such Code 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 thereof the following new

paragraph:

‘‘(3) the direct charitable deduction.’’.

(2) DEFINITION.—Section 63 of such Code 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

of such Code 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 thereof the following new paragraph:

‘‘(3) the direct charitable deduction.’’.

(c) EFFECTIVE DATE.—The amendments made by this section

shall apply to taxable years beginning after December 31, 2001.

SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT

ACCOUNTS FOR CHARITABLE PURPOSES.

(a) IN GENERAL.—Subsection (d) of section 408 of the Internal

Revenue Code of 1986 (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 account—

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‘‘(i) which is made on or after the date that the individual for whose benefit the account is maintained has

attained age 701⁄2, 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 account 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 splitinterest 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 be so includible if all amounts were distributed from all individual retirement accounts otherwise

taken into account in 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.—Distributions

made from an individual retirement account to a trust

described in subparagraph (G)(ii)(I) shall be treated as

income described in section 664(b)(1) except to the extent that the beneficiary of the individual retirement

account notifies the trustee of the trust of the amount

which is not allocable to income under subparagraph

(D).

‘‘(ii) POOLED INCOME FUNDS.—No amount shall be

includible in the gross income of a pooled income fund

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(as defined in subparagraph (G)(ii)(II)) by reason of a

qualified charitable distribution to such fund.

‘‘(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)),

‘‘(ii) a pooled income fund (as defined in section

642(c)(5)), 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 of such Code (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 charitable, etc., 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 charitable, etc., deduction taken

under section 642(c) within such year,

‘‘(B) the amount paid out within such year which represents amounts for which charitable, etc., deductions

under section 642(c) have been taken in prior years,

‘‘(C) the amount for which charitable, etc., 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 charitable, etc., purposes,

‘‘(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 in the case

of a taxable year if 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. ParaVerDate 11-MAY-2000 05:57 Jul 18, 2001 Jkt 089008 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR144.XXX pfrm02 PsN: HR144
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graph (1) shall not apply in the case of a trust 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) of such Code (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.

If the person required to file such return knowingly fails

to file the return, such person shall be personally liable for

the penalty imposed pursuant to this subparagraph.’’.

(3) CONFIDENTIALITY OF NONCHARITABLE BENEFICIARIES.—

Subsection (b) of section 6104 of such Code (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 taxable years beginning after December 31,

2001.

(2) SUBSECTION (b).—The amendments made by subsection

(b) shall apply to returns for taxable years beginning after December 31, 2001.

SEC. 103. INCREASE IN CAP ON CORPORATE CHARITABLE CONTRIBUTIONS.

(a) IN GENERAL.—Paragraph (2) of section 170(b) of the Internal

Revenue Code of 1986 (relating to corporations) is amended by

striking ‘‘10 percent’’ and inserting ‘‘the applicable percentage’’.

(b) APPLICABLE PERCENTAGE.—Subsection (b) of section 170 of

such Code 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—

2002 through 2007 ..................................................................... 11

2008 ............................................................................................. 12

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2009 ............................................................................................. 13

2010 and thereafter ................................................................... 15.’’.

(c) CONFORMING AMENDMENTS.—

(1) Sections 512(b)(10) and 805(b)(2)(A) of such Code 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) of such Code 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, 2001.

SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD INVENTORY.

(a) IN GENERAL.—Paragraph (3) of section 170(e) of the Internal

Revenue Code of 1986 (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) 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 similar

food items are sold by the taxpayer at the time of the

contribution (or, if not so sold at such time, in the recent past).

‘‘(iii) 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 subsection (a)

shall apply to taxable years beginning after December 31, 2001.

SEC. 105. REFORM OF EXCISE TAX ON NET INVESTMENT INCOME OF

PRIVATE FOUNDATIONS.

(a) IN GENERAL.—Subsection (a) of section 4940 of the Internal

Revenue Code of 1986 (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 of

such Code is amended by striking subsection (e).

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(c) EFFECTIVE DATE.—The amendments made by this section

shall apply to taxable years beginning after December 31, 2001.

SEC. 106. EXCISE TAX ON UNRELATED BUSINESS TAXABLE INCOME OF

CHARITABLE REMAINDER TRUSTS.

(a) IN GENERAL.—Subsection (c) of section 664 of the Internal

Revenue Code of 1986 (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 subsection (a)

shall apply to taxable years beginning after December 31, 2001.

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.—Clause (ii) of

section 170(e)(4)(B) of the Internal Revenue Code of 1986 (defining

qualified research contributions) is amended by inserting ‘‘or assembled’’ after ‘‘constructed’’.

(b) COMPUTER TECHNOLOGY AND EQUIPMENT FOR EDUCATIONAL

PURPOSES.—Clause (ii) of section 170(e)(6)(B) of such Code is

amended by inserting ‘‘or assembled’’ after ‘‘constructed’’ and ‘‘or

assembling’’ after ‘‘construction’’.

(c) CONFORMING AMENDMENT.—Subparagraph (D) of section

170(e)(6) of such Code is amended by inserting ‘‘or assembled’’ after

‘‘constructed’’ and ‘‘or assembling’’ after ‘‘construction’’.

(d) EFFECTIVE DATE.—The amendments made by this section

shall apply to taxable years beginning after December 31, 2001.

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SEC. 108. ADJUSTMENT TO BASIS OF S CORPORATION STOCK FOR

CERTAIN CHARITABLE CONTRIBUTIONS.

(a) IN GENERAL.—Paragraph (1) of section 1367(a) of such Code

(relating to adjustments to basis of stock of shareholders, etc.) is

amended by striking ‘‘and’’ at the end of subparagraph (B), by

striking the period at the end of subparagraph (C) and inserting ‘‘, and’’, and by adding at the end the following new subparagraph: ‘‘(D) the excess of the amount of the shareholder’s deduction for any charitable contribution made by the S corporation over the shareholder’s proportionate share of the adjusted basis of the property contributed.’’. (b) EFFECTIVE DATE.—The amendment made by this section shall

apply to taxable years beginning after December 31, 2001.

SEC. 109. REVENUE OFFSET.

(a) IN GENERAL.—Paragraph (2) of section 1(i) of the Internal

Revenue Code of 1986 (relating to reductions in rates after June

30, 2001) is amended— (1) by striking ‘‘38.6’’ and inserting ‘‘38.8’’, (2) by striking ‘‘37.6’’ and inserting ‘‘37.8’’, and

(3) by striking ‘‘35’’ and inserting ‘‘35.5’’. (b) EFFECTIVE DATE.—The amendments made by subsection (a)

shall apply to taxable years beginning after December 31, 2001.

TITLE II—EXPANSION OF CHARITABLE

CHOICE

SEC. 201. PROVISION OF ASSISTANCE UNDER GOVERNMENT PROGRAMS BY RELIGIOUS AND COMMUNITY ORGANIZATIONS.

Title XXIV of the Revised Statutes of the United States is

amended by inserting after section 1990 (42 U.S.C. 1994) the following:

‘‘SEC. 1991. CHARITABLE CHOICE.

‘‘(a) SHORT TITLE.—This section may be cited as the ‘Charitable

Choice Act of 2001’. ‘‘(b) PURPOSES.—The purposes of this section are— ‘‘(1) to enable assistance to be provided to individuals and

families in need in the most effective and efficient manner; ‘‘(2) to supplement the Nation’s social service capacity by facilitating the entry of new, and the expansion of existing, efforts by religious and other community organizations in the administration and distribution of government assistance under

the government programs described in subsection (c)(4); ‘‘(3) to prohibit discrimination against religious organizations

on the basis of religion in the administration and distribution

of government assistance under such programs; ‘‘(4) to allow religious organizations to participate in the administration and distribution of such assistance without impairing the religious character and autonomy of such organizations; and

‘‘(5) to protect the religious freedom of individuals and families in need who are eligible for government assistance, including expanding the possibility of their being able to choose to receive services from a religious organization providing such assistance.

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‘‘(c) RELIGIOUS ORGANIZATIONS INCLUDED AS PROVIDERS; DIS- CLAIMERS.— ‘‘(1) IN GENERAL.— ‘‘(A) INCLUSION.—For any program described in paragraph (4) that is carried out by the Federal Government,

or by a State or local government with Federal funds, the

government shall consider, on the same basis as other nongovernmental organizations, religious organizations to provide the assistance under the program, and the program

shall be implemented in a manner that is consistent with

the establishment clause and the free exercise clause of

the first amendment to the Constitution. ‘‘(B) DISCRIMINATION PROHIBITED.—Neither the Federal

Government, nor a State or local government receiving

funds under a program described in paragraph (4), shall

discriminate against an organization that provides assistance under, or applies to provide assistance under, such

program on the basis that the organization is religious or

has a religious character. ‘‘(2) FUNDS NOT AID TO RELIGION.—Federal, State, or local

government funds or other assistance that is received by a religious organization for the provision of services under this section constitutes aid to individuals and families in need, the ultimate beneficiaries of such services, and not support for religion or the organization’s religious beliefs or practices. Notwithstanding the provisions in this paragraph, title VI of the

Civil Rights Act of 1964 (42 USC 2000d et seq.) shall apply to

organizations receiving assistance funded under any program

described in subsection (c)(4). ‘‘(3) FUNDS NOT ENDORSEMENT OF RELIGION.—The receipt by

a religious organization of Federal, State, or local government

funds or other assistance under this section is not an endorsement by the government of religion or of the organization’s religious beliefs or practices.

‘‘(4) PROGRAMS.—For purposes of this section, a program is

described in this paragraph— ‘‘(A) if it involves activities carried out using Federal

funds—

‘‘(i) related to the prevention and treatment of juvenile delinquency and the improvement of the juvenile

justice system, including programs funded under the

Juvenile Justice and Delinquency Prevention Act of

1974 (42 U.S.C. 5601 et seq.); ‘‘(ii) related to the prevention of crime and assistance to crime victims and offenders’ families, including

programs funded under title I of the Omnibus Crime

Control and Safe Streets Act of 1968 (42 U.S.C. 3701

et seq.); ‘‘(iii) related to the provision of assistance under

Federal housing statutes, including the Community

Development Block Grant Program established under

title I of the Housing and Community Development

Act of 1974 (42 U.S.C. 5301 et seq.);

‘‘(iv) under subtitle B or D of title I of the Workforce

Investment Act of 1998 (29 U.S.C. 2801 et seq.);

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‘‘(v) under the Older Americans Act of 1965 (42

U.S.C. 3001 et seq.); ‘‘(vi) related to the intervention in and prevention of

domestic violence, including programs under the Child

Abuse Prevention and Treatment Act (42 U.S.C. 5101

et seq.) or the Family Violence Prevention and Services Act (42 U.S.C. 10401 et seq.); ‘‘(vii) related to hunger relief activities; or

‘‘(viii) under the Job Access and Reverse Commute

grant program established under section 3037 of the

Federal Transit Act of 1998 (49 U.S.C. 5309 note); or ‘‘(B)(i) if it involves activities to assist students in obtaining the recognized equivalents of secondary school diplomas and activities relating to nonschool hours programs, including programs under— ‘‘(I) chapter 3 of subtitle A of title II of the Workforce Investment Act of 1998 (Public Law 105–220); or ‘‘(II) part I of title X of the Elementary and Secondary Education Act (20 U.S.C. 6602 et seq.); and ‘‘(ii) except as provided in subparagraph (A) and clause

(i), does not include activities carried out under Federal

programs providing education to children eligible to attend

elementary schools or secondary schools, as defined in section 14101 of the Elementary and Secondary Education

Act of 1965 (20 U.S.C. 8801). ‘‘(d) ORGANIZATIONAL CHARACTER AND AUTONOMY.— ‘‘(1) IN GENERAL.—A religious organization that provides assistance under a program described in subsection (c)(4) shall

have the right to retain its autonomy from Federal, State, and

local governments, including such organization’s control over

the definition, development, practice, and expression of its religious beliefs. ‘‘(2) ADDITIONAL SAFEGUARDS.—Neither the Federal Government, nor a State or local government with Federal funds,

shall require a religious organization, in order to be eligible to

provide assistance under a program described in subsection

(c)(4), to—

‘‘(A) alter its form of internal governance or provisions in

its charter documents; or

‘‘(B) remove religious art, icons, scripture, or other symbols, or to change its name, because such symbols or

names are of a religious character.

‘‘(e) EMPLOYMENT PRACTICES.—A religious organization’s exemption provided under section 702 of the Civil Rights Act of 1964 (42

U.S.C. 2000e–1) regarding employment practices shall not be affected by its participation in, or receipt of funds from, programs described in subsection (c)(4), and any provision in such programs

that is inconsistent with or would diminish the exercise of an organization’s autonomy recognized in section 702 or in this section

shall have no effect, except that no religious organization receiving

funds through a grant or cooperative agreement for programs described in subsection (c)(4) shall, in expending such funds allocated

under such program, discriminate in employment on the basis of an

employee’s religion, religious belief, or a refusal to hold a religious

belief. Nothing in this section alters the duty of a religious organiVerDate 11-MAY-2000 05:57 Jul 18, 2001 Jkt 089008 PO 00000 Frm 00012 Fmt 6659 Sfmt 6602 E:\HR\OC\HR144.XXX pfrm02 PsN: HR144
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zation to comply with the nondiscrimination provisions of title VII

of the Civil Rights Act of 1964 in the use of funds from programs

described in subsection (c)(4). ‘‘(f) EFFECT ON OTHER LAWS.—Nothing in this section shall alter

the duty of a religious organization receiving assistance or providing services under any program described in subsection (c)(4) to

comply with the nondiscrimination provisions in title VI of the

Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.) (prohibiting discrimination on the basis of race, color, and national origin), title IX

of the Education Amendments of 1972 (20 U.S.C. 1681–1688) (prohibiting discrimination in education programs or activities on the

basis of sex and visual impairment), section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) (prohibiting discrimination against

otherwise qualified disabled individuals), and the Age Discrimination Act of 1975 (42 U.S.C. 6101–6107) (prohibiting discrimination

on the basis of age). ‘‘(g) RIGHTS OF BENEFICIARIES OF ASSISTANCE.— ‘‘(1) IN GENERAL.—If an individual described in paragraph (3)

has an objection to the religious character of the organization

from which the individual receives, or would receive, assistance

funded under any program described in subsection (c)(4), the

appropriate Federal, State, or local governmental entity shall

provide to such individual (if otherwise eligible for such assistance) within a reasonable period of time after the date of such

objection, assistance that— ‘‘(A) is an alternative that is accessible to the individual

and unobjectionable to the individual on religious grounds;

and‘‘(B) has a value that is not less than the value of the

assistance that the individual would have received from

such organization. ‘‘(2) NOTICE.—The appropriate Federal, State, or local governmental entity shall guarantee that notice is provided to the

individuals described in paragraph (3) of the rights of such individuals under this section. ‘‘(3) INDIVIDUAL DESCRIBED.—An individual described in this

paragraph is an individual who receives or applies for assistance under a program described in subsection (c)(4). ‘‘(h) NONDISCRIMINATION AGAINST BENEFICIARIES.— ‘‘(1) GRANTS AND COOPERATIVE AGREEMENTS.—A religious organization providing assistance through a grant or cooperative

agreement under a program described in subsection (c)(4) shall

not discriminate in carrying out the program against an individual described in subsection (g)(3) on the basis of religion, a

religious belief, or a refusal to hold a religious belief.

‘‘(2) INDIRECT FORMS OF ASSISTANCE.—A religious organization providing assistance through a voucher, certificate, or

other form of indirect assistance under a program described in

subsection (c)(4) shall not deny an individual described in subsection (g)(3) admission into such program on the basis of religion, a religious belief, or a refusal to hold a religious belief. ‘‘(i) LOCAL CIVIL RIGHTS LAWS.—Nothwithstanding anything to

the contrary in this section, nothing in this section preempts or

supercedes State or local civil rights laws. ‘‘(j) ACCOUNTABILITY.—

14

‘‘(1) IN GENERAL.—Except as provided in paragraphs (2) and

(3), a religious organization providing assistance under any

program described in subsection (c)(4) shall be subject to the

same regulations as other nongovernmental organizations to

account in accord with generally accepted accounting principles

for the use of such funds and its performance of such programs. ‘‘(2) LIMITED AUDIT.— ‘‘(A) GRANTS AND COOPERATIVE AGREEMENTS.—A religious organization providing assistance through a grant or

cooperative agreement under a program described in subsection (c)(4) shall segregate government funds provided

under such program into a separate account or accounts.

Only the separate accounts consisting of funds from the

government shall be subject to audit by the government. ‘‘(B) INDIRECT FORMS OF ASSISTANCE.—A religious organization providing assistance through a voucher, certificate, or other form of indirect assistance under a program

described in subsection (c)(4) may segregate government

funds provided under such program into a separate account or accounts. If such funds are so segregated, then

only the separate accounts consisting of funds from the

government shall be subject to audit by the government. ‘‘(3) SELF AUDIT.—A religious organization providing services

under any program described in subsection (c)(4) shall conduct

annually a self audit for compliance with its duties under this

section and submit a copy of the self audit to the appropriate

Federal, State, or local government agency, along with a plan

to timely correct variances, if any, identified in the self audit. ‘‘(k) LIMITATIONS ON USE OF FUNDS; VOLUNTARINESS.—No funds

provided through a grant or cooperative agreement to a religious

organization to provide assistance under any program described in

subsection (c)(4) shall be expended for sectarian instruction, worship, or proselytization. If the religious organization offers such an

activity, it shall be voluntary for the individuals receiving services

and offered separate from the program funded under subsection

(c)(4). A certificate shall be separately signed by religious organizations, and filed with the government agency that disburses the

funds, certifying that the organization is aware of and will comply

with this subsection. No direct funds shall be provided under subsection (c)(4) to a religious organization that engages in sectarian

instruction, worship, or proselytization at the same time and place

as the government funded program.

‘‘(l) EFFECT ON STATE AND LOCAL FUNDS.—If a State or local government contributes State or local funds to carry out a program described in subsection (c)(4), the State or local government may segregate the State or local funds from the Federal funds provided to

carry out the program or may commingle the State or local funds

with the Federal funds. If the State or local government commingles the State or local funds, the provisions of this section shall

apply to the commingled funds in the same manner, and to the

same extent, as the provisions apply to the Federal funds. ‘‘(m) TREATMENT OF INTERMEDIATE GRANTORS.—If a nongovernmental organization (referred to in this subsection as an ‘intermediate grantor’), acting under a grant or other agreement with

15

the Federal Government, or a State or local government with Federal funds, is given the authority under the agreement to select

nongovernmental organizations to provide assistance under the

programs described in subsection (c)(4), the intermediate grantor

shall have the same duties under this section as the government

when selecting or otherwise dealing with subgrantors, but the intermediate grantor, if it is a religious organization, shall retain all

other rights of a religious organization under this section.

‘‘(n) COMPLIANCE.—A party alleging that the rights of the party

under this section have been violated by a State or local government may bring a civil action for injunctive relief pursuant to section 1979 against the State official or local government agency that

has allegedly committed such violation. A party alleging that the

rights of the party under this section have been violated by the

Federal Government may bring a civil action for injunctive relief

in Federal district court against the official or government agency

that has allegedly committed such violation.

‘‘(o) TRAINING AND TECHNICAL ASSISTANCE FOR SMALL NONGOVERNMENTAL ORGANIZATIONS.—

‘‘(1) IN GENERAL.—From amounts made available to carry out

the purposes of the Office of Justice Programs (including any

component or unit thereof, including the Office of Community

Oriented Policing Services), funds are authorized to provide

training and technical assistance, directly or through grants or

other arrangements, in procedures relating to potential application and participation in programs identified in subsection

(c)(4) to small nongovernmental organizations, as determined

by the Attorney General, including religious organizations, in

an amount not to exceed $50 million annually.

‘‘(2) TYPES OF ASSISTANCE.—Such assistance may include—

‘‘(A) assistance and information relative to creating an

organization described in section 501(c)(3) of the Internal

Revenue Code of 1986 to operate identified programs;

‘‘(B) granting writing assistance which may include

workshops and reasonable guidance;

‘‘(C) information and referrals to other nongovernmental

organizations that provide expertise in accounting, legal

issues, tax issues, program development, and a variety of

other organizational areas; and

‘‘(D) information and guidance on how to comply with

Federal nondiscrimination provisions including, but not

limited to, title VI of the Civil Rights Act of 1964 (42

U.S.C. 2000d et seq.), title VII of the Civil Rights Act of

1964 (42 U.S.C. 2000e et seq.), the Fair Housing Act, as

amended (42 U.S.C. 3601 et seq.), title IX of the Education

Amendments of 1972 (20 U.S.C. 1681–1688), section 504 of

the Rehabilitation Act of 1973 (29 U.S.C. 694), and the Age

Discrimination Act of 1975 (42 U.S.C. 6101–6107).

‘‘(3) RESERVATION OF FUNDS.—An amount of no less than

$5,000,000 shall be reserved under this section. Small nongovernmental organizations may apply for these funds to be

used for assistance in providing full and equal integrated access to individuals with disabilities in programs under this

title.

16

‘‘(4) PRIORITY.—In giving out the assistance described in this

subsection, priority shall be given to small nongovernmental

organizations serving urban and rural communities.’’.

TITLE III—INDIVIDUAL DEVELOPMENT

ACCOUNTS

SEC. 301. ADDITIONAL QUALIFIED ENTITIES ELIGIBLE TO CONDUCT

PROJECTS UNDER THE ASSETS FOR INDEPENDENCE ACT.

Section 404(7)(A)(iii)(I)(aa) of the Assets for Independence Act (42

U.S.C. 604 note) is amended to read as follows:

‘‘(aa) a federally insured credit union; or’’.

SEC. 302. INCREASE IN LIMITATION ON NET WORTH.

Section 408(a)(2)(A) of the Assets for Independence Act (42

U.S.C. 604 note) is amended by striking ‘‘$10,000’’ and inserting

‘‘$20,000’’.

SEC. 303. CHANGE IN LIMITATION ON DEPOSITS FOR AN INDIVIDUAL.

Section 410(b) of the Assets for Independence Act (42 U.S.C. 604

note) is amended to read as follows:

‘‘(b) LIMITATION ON DEPOSITS FOR AN INDIVIDUAL.—Not more

than $500 from a grant made under section 406(b) shall be provided per year to any one individual during the project.’’.

SEC. 304. ELIMINATION OF LIMITATION ON DEPOSITS FOR A HOUSEHOLD.

Section 410 of the Assets for Independence Act (42 U.S.C. 604

note) is amended by striking subsection (c) and redesignating subsections (d) and (e) as subsections (c) and (d), respectively.

SEC. 305. EXTENSION OF PROGRAM.

Section 416 of the Assets for Independence Act (42 U.S.C. 604

note) is amended by striking ‘‘2001, 2002, and 2003’’ and inserting

‘‘and 2001, and $50,000,000 for each of fiscal years 2002 through

2008’’.

SEC. 306. CONFORMING AMENDMENTS.

(a) AMENDMENTS TO TEXT.—The text of each of the following provisions of the Assets for Independence Act (42 U.S.C. 604 note) is

amended by striking ‘‘demonstration’’ each place it appears:

(1) Section 403.

(2) Section 404(2).

(3) Section 405(a).

(4) Section 405(b).

(5) Section 405(c).

(6) Section 405(d).

(7) Section 405(e).

(8) Section 405(g).

(9) Section 406(a).

(10) Section 406(b).

(11) Section 407(b)(1)(A).

(12) Section 407(c)(1)(A).

(13) Section 407(c)(1)(B).

(14) Section 407(c)(1)(C).

(15) Section 407(c)(1)(D).

(16) Section 407(d).

17

(17) Section 408(a).

(18) Section 408(b).

(19) Section 409.

(20) Section 410(e).

(21) Section 411.

(22) Section 412(a).

(23) Section 412(b)(2).

(24) Section 412(c).

(25) Section 413(a).

(26) Section 413(b).

(27) Section 414(a).

(28) Section 414(b).

(29) Section 414(c).

(30) Section 414(d)(1).

(31) Section 414(d)(2).

(b) AMENDMENTS TO SUBSECTION HEADINGS.—The heading of

each of the following provisions of the Assets for Independence Act

(42 U.S.C. 604 note) is amended by striking ‘‘DEMONSTRATION’’:

(1) Section 405(a).

(2) Section 406(a).

(3) Section 413(a).

(c) AMENDMENTS TO SECTION HEADINGS.—The headings of sections 406 and 411 of the Assets for Independence Act (42 U.S.C.

604 note) are amended by striking ‘‘DEMONSTRATION’’.

SEC. 307. APPLICABILITY.

(a) IN GENERAL.—The amendments made by this title shall apply

to funds provided before, on or after the date of the enactment of

this Act.

(b) PRIOR AMENDMENTS.—The amendments made by title VI of

the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2001 (as enacted

into law by Public Law 106–554) shall apply to funds provided before, on or after the date of the enactment of such Act.

Æ