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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1696 Placed on Calendar Senate (PCS)]

                                                       Calendar No. 212
109th CONGRESS
  1st Session
                                S. 1696

To provide tax relief for the victims of Hurricane Katrina, to provide 
       incentives for charitable giving, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           September 13, 2005

  Mr. Grassley (for himself, Mr. Baucus, Mr. Lott, Ms. Landrieu, Mr. 
    Vitter, Mr. Cochran, Mr. Shelby, and Mr. Craig) introduced the 
     following bill; which was referred to the Committee on Finance

                           September 15, 2005

 Committee discharged; amended and ordered to be placed on the calendar

_______________________________________________________________________

                                 A BILL

 
To provide tax relief for the victims of Hurricane Katrina, to provide 
       incentives for charitable giving, 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; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Hurricane Katrina 
Tax Relief Act of 2005''.
    (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.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.
Sec. 2. Hurricane Katrina disaster area.
   TITLE I--PENALTY FREE USE OF RETIREMENT FUNDS BY NATURAL DISASTER 
                                VICTIMS

Sec. 101. Penalty free withdrawals from retirement plans for victims of 
                            federally declared natural disasters.
Sec. 102. Income averaging for disaster-relief distributions related to 
                            Hurricane Katrina.
Sec. 103. Recontributions of withdrawals for home purchases cancelled 
                            due to Hurricane Katrina.
Sec. 104. Loans from qualified plans to victims of Hurricane Katrina.
Sec. 105. Provisions relating to plan amendments.
                      TITLE II--EMPLOYMENT RELIEF

Sec. 201. Work opportunity tax credit for Hurricane Katrina employee 
                            survivors.
Sec. 202. Employee retention credit for employers affected by Hurricane 
                            Katrina.
                TITLE III--CHARITABLE GIVING INCENTIVES

Sec. 301. Temporary increase in limitation on individual and corporate 
                            charitable cash contributions.
Sec. 302. Tax-free distributions from individual retirement accounts 
                            for charitable purposes.
Sec. 303. Charitable deduction for contributions of food inventories.
Sec. 304. Charitable deduction for contributions of book inventories.
Sec. 305. Additional personal exemption amount for Hurricane Katrina 
                            houseguest.
Sec. 306. Increase in standard mileage rate for charitable use of 
                            passenger automobile.
               TITLE IV--ADDITIONAL TAX RELIEF PROVISIONS

Sec. 401. Exclusions of certain cancellations of indebtedness for 
                            victims of Hurricane Katrina.
Sec. 402. Modification to casualty loss rules for victims of Hurricane 
                            Katrina.
Sec. 403. Required exercise of authority under section 7508A for tax 
                            relief for victims of Hurricane Katrina.
Sec. 404. Special mortgage financing rules for residences located in 
                            Hurricane Katrina disaster area.
Sec. 405. Extension of replacement period for nonrecognition of gain 
                            for property located in Hurricane Katrina 
                            disaster area.
Sec. 406. Special rule for determining earned income.
Sec. 407. Secretarial authority to make adjustments regarding taxpayer 
                            and dependency status.
                     TITLE V--ADDITIONAL PROVISIONS

Sec. 501. Disclosure to State officials of proposed actions related to 
                            exempt organizations.
Sec. 502. Dedication and use of certain fees.

SEC. 2. HURRICANE KATRINA DISASTER AREA.

    For purposes of this Act, the term ``Hurricane Katrina disaster 
area'' means an area--
            (1) with respect to which a major disaster has been 
        declared by the President before September 14, 2005, under 
        section 401 of the Robert T. Stafford Disaster Relief and 
        Emergency Assistance Act in connection with Hurricane Katrina, 
        and
            (2) which is determined by the President before such date 
        to warrant individual assistance, or individual and public 
        assistance, from the Federal Government under such Act.

   TITLE I--PENALTY FREE USE OF RETIREMENT FUNDS BY NATURAL DISASTER 
                                VICTIMS

SEC. 101. PENALTY FREE WITHDRAWALS FROM RETIREMENT PLANS FOR VICTIMS OF 
              FEDERALLY DECLARED NATURAL DISASTERS.

    (a) In General.--Paragraph (2) of section 72(t) (relating to 10-
percent additional tax on early distributions from qualified retirement 
plans) is amended by adding at the end the following new subparagraph:
                    ``(G) Distributions from retirement plans to 
                victims of federally declared natural disasters.--
                            ``(i) Distribution allowed.--Any qualified 
                        disaster-relief distribution.
                            ``(ii) Amount distributed may be repaid.--
                                    ``(I) In general.--Any individual 
                                who receives a qualified disaster-
                                relief distribution may, at any time 
                                during the 3-year period beginning on 
                                the day after the date on which such 
                                distribution was made, make one or more 
                                contributions in an aggregate amount 
                                not to exceed the amount of such 
                                distribution to an eligible retirement 
                                plan (as defined in section 
                                402(c)(8)(B)) of which such individual 
                                is a beneficiary and to which a 
                                rollover contribution of such 
                                distribution could be made under 
                                section 402(c), 403(a)(4), 403(b)(8), 
                                408(d)(3), or 457(e)(16), as the case 
                                may be.
                                    ``(II) Treatment of repayments for 
                                distributions from eligible retirement 
                                plans other than iras.--For purposes of 
                                this title, if a contribution is made 
                                pursuant to subclause (I) with respect 
                                to a qualified disaster-relief 
                                distribution from an eligible 
                                retirement plan (as so defined) other 
                                than an individual retirement plan, 
                                then the taxpayer shall, to the extent 
                                of the amount of the contribution, be 
                                treated as having received the 
                                qualified disaster-relief distribution 
                                in an eligible rollover distribution 
                                (as defined in section 402(c)(4)) and 
                                as having transferred the amount to the 
                                eligible retirement plan in a direct 
                                trustee to trustee transfer within 60 
                                days of the distribution.
                                    ``(III) Treatment of repayments for 
                                distributions from iras.--For purposes 
                                of this title, if a contribution is 
                                made pursuant to subclause (I) with 
                                respect to a qualified disaster-relief 
                                distribution from an individual 
                                retirement plan, then, to the extent of 
                                the amount of the contribution, the 
                                qualified disaster-relief distribution 
                                shall be treated as a distribution 
                                described in section 408(d)(3) and as 
                                having been transferred to the eligible 
                                retirement plan in a direct trustee to 
                                trustee transfer within 60 days of the 
                                distribution.
                                    ``(IV) Application to governmental 
                                section 457 plans.--In determining 
                                whether any distribution is a qualified 
                                disaster-relief distribution for 
                                purposes of this clause, an eligible 
                                deferred compensation plan (as defined 
                                in section 457(b)) maintained by an 
                                employer described in section 
                                457(e)(1)(A) shall be treated as a 
                                qualified retirement plan.
                            ``(iii) Qualified disaster-relief 
                        distribution.--Except as provided in clause 
                        (iv), for purposes of this subparagraph, the 
                        term `qualified disaster-relief distribution' 
                        means any distribution--
                                    ``(I) to an individual who has 
                                sustained a loss as a result of a major 
                                disaster declared under section 401 of 
                                the Robert T. Stafford Disaster Relief 
                                and Emergency Assistance Act and who 
                                has a principal place of abode 
                                immediately before the declaration in a 
                                qualified disaster area, and
                                    ``(II) which is made during the 1-
                                year period beginning on the date such 
                                declaration is made.
                            ``(iv) Dollar limitation.--
                                    ``(I) In general.--The term 
                                `qualified disaster-relief 
                                distribution' shall not include any 
                                distributions with respect to any major 
                                disaster described in clause (iii)(I) 
                                to the extent the aggregate amount of 
                                such distributions exceeds $100,000.
                                    ``(II) Treatment of plan 
                                distributions.--If a distribution to an 
                                individual with respect to any such 
                                major disaster would (without regard to 
                                subclause (I)) be a qualified disaster-
                                relief distribution, a plan shall not 
                                be treated as violating any requirement 
                                of this title merely because it treats 
                                such distribution as a qualified 
                                disaster-relief distribution, unless 
                                the aggregate amount of such 
                                distributions from all plans maintained 
                                by the employer (and any member of 
                                controlled group which includes the 
                                employer) to such individual with 
                                respect to such major disaster exceeds 
                                $100,000.
                            ``(v) Qualified disaster area.--For 
                        purposes of this subparagraph, the term 
                        `qualified disaster area' means an area--
                                    ``(I) with respect to which a major 
                                disaster has been declared by the 
                                President under section 401 of the 
                                Robert T. Stafford Disaster Relief and 
                                Emergency Assistance Act, and
                                    ``(II) which is determined by the 
                                President to warrant individual 
                                assistance, or individual and public 
                                assistance, from the Federal Government 
                                under such Act.''.
    (b) Exemption of Distributions From Trustee to Trustee Transfer and 
Withholding Rules.--Paragraph (4) of section 402(c) (relating to 
eligible rollover distribution) 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 inserting at the end 
the following new subparagraph:
                    ``(D) any qualified disaster-relief distribution 
                (within the meaning of section 72(t)(2)(G)).''.
    (c) Conforming Amendments.--
            (1) Section 401(k)(2)(B)(i) is amended by striking ``or'' 
        at the end of subclause (III), by striking ``and'' at the end 
        of subclause (IV) and inserting ``or'', and by inserting after 
        subclause (IV) the following new subclause:
                                    ``(V) the date on which a period 
                                referred to in section 
                                72(t)(2)(G)(iii)(II) begins (but only 
                                to the extent provided in section 
                                72(t)(2)(G)), and''.
            (2) Section 403(b)(7)(A)(ii) is amended by inserting 
        ``sustains a loss as a result of a major disaster declared 
        under section 401 of the Robert T. Stafford Disaster Relief and 
        Emergency Assistance Act (but only to the extent provided in 
        section 72(t)(2)(G)),'' before ``or''.
            (3) Section 403(b)(11) is amended by striking ``or'' at the 
        end of subparagraph (A), by striking the period at the end of 
        subparagraph (B) and inserting ``, or'', and by inserting after 
        subparagraph (B) the following new subparagraph:
                    ``(C) for distributions to which section 
                72(t)(2)(G) applies.''.
            (4) Section 457(d)(1)(A) is amended by striking ``or'' at 
        the end of clause (ii), by adding ``or'' at the end of clause 
        (iii), and by adding at the end the following new clause:
                            ``(iv) in the case of an eligible deferred 
                        compensation plan established and maintained by 
                        an employer described in subsection (e)(1)(A), 
                        when the participant sustains a loss as a 
                        result of a major disaster declared under 
                        section 401 of the Robert T. Stafford Disaster 
                        Relief and Emergency Assistance Act (but only 
                        to the extent provided in section 
                        72(t)(2)(G)),''.
    (d) Effective Date.--The amendments made by this section shall 
apply to distributions received after August 28, 2005.

SEC. 102. INCOME AVERAGING FOR DISASTER-RELIEF DISTRIBUTIONS RELATED TO 
              HURRICANE KATRINA.

    (a) In General.--In the case of any qualified disaster-relief 
distribution (within the meaning of section 72(t)(2)(G) of the Internal 
Revenue Code of 1986) from a qualified retirement plan (as defined in 
section 4974(c) of such Code) to a qualified individual, unless the 
taxpayer elects not to have this section apply for any taxable year, 
any amount required to be included in gross income for such taxable 
year shall be so included ratably over the 3-taxable year period 
beginning with such taxable year.
    (b) Special Rules.--
            (1) Application to governmental section 457 plans.--In 
        determining whether any distribution is a qualified disaster-
        relief distribution (as so defined) for purposes of this 
        section, an eligible deferred compensation plan (as defined in 
        section 457(b) of such Code) maintained by an employer 
        described in section 457(e)(1)(A) of such Code shall be treated 
        as a qualified retirement plan (as so defined).
            (2) Certain rules to apply.--Rules similar to the rules of 
        subparagraph (E) of section 408A(d)(3) of such Code shall apply 
        for purposes of this section.
    (c) Qualified Individual.--For purposes of this section, the term 
``qualified individual'' means an individual who has sustained a loss 
as a result of the major disaster declared under section 401 of the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 
U.S.C. 5170) in connection with Hurricane Katrina and who has a 
principal place of abode immediately before the declaration in a 
Hurricane Katrina disaster area.

SEC. 103. RECONTRIBUTIONS OF WITHDRAWALS FOR HOME PURCHASES CANCELLED 
              DUE TO HURRICANE KATRINA.

    (a) Recontributions.--
            (1) In general.--Any individual who received a qualified 
        distribution may, at any time during the 6-month period 
        beginning on the day after the disaster declaration date, make 
        one or more contributions in an aggregate amount not to exceed 
        the amount of such qualified distribution to an eligible 
        retirement plan (as defined in section 402(c)(8)(B) of the 
        Internal Revenue Code of 1986) of which such individual is a 
        beneficiary and to which a rollover contribution of such 
        distribution could be made under section 402(c), 403(a)(4), 
        403(b)(8), or 408(d)(3) of such Code, as the case may be.
            (2) Treatment of repayments.--
                    (A) Treatment of repayments for distributions from 
                eligible retirement plans other than iras.--For 
                purposes of the Internal Revenue Code of 1986, if a 
                contribution is made pursuant to paragraph (1) with 
                respect to a qualified distribution from an eligible 
                retirement plan (as so defined) other than an 
                individual retirement plan (as defined in section 
                7701(a)(37) of such Code), then the taxpayer shall, to 
                the extent of the amount of the contribution, be 
                treated as having received the qualified distribution 
                in an eligible rollover distribution (as defined in 
                section 402(c)(4) of such Code) and as having 
                transferred the amount to the eligible retirement plan 
                in a direct trustee to trustee transfer within 60 days 
                of the distribution.
                    (B) Treatment of repayments for distributions from 
                iras.--For purposes of the Internal Revenue Code of 
                1986, if a contribution is made pursuant to paragraph 
                (1) with respect to a qualified distribution from an 
                individual retirement plan (as so defined), then, to 
                the extent of the amount of the contribution, the 
                qualified distribution shall be treated as a 
                distribution described in section 408(d)(3) of such 
                Code and as having been transferred to the eligible 
                retirement plan (as so defined) in a direct trustee to 
                trustee transfer within 60 days of the distribution.
    (b) Definitions.--For purposes of this section--
            (1) Qualified distribution.--The term ``qualified 
        distribution'' means any distribution--
                    (A) described in section 401(k)(2)(B)(i)(IV), 
                403(b)(7)(A)(ii) (but only to the extent such 
                distribution relates to financial hardship), 
                403(b)(11)(B), or 72(t)(2)(F) of the Internal Revenue 
                Code of 1986,
                    (B) received after February 28, 2005, and before 
                August 29, 2005, and
                    (C) which was to be used to purchase or construct a 
                principal residence in a Hurricane Katrina disaster 
                area, but which was not so purchased or constructed.
            (2) Disaster declaration date.--The term ``disaster 
        declaration date'' means the date on which the President 
        designated the area as a Hurricane Katrina disaster area.

SEC. 104. LOANS FROM QUALIFIED PLANS TO VICTIMS OF HURRICANE KATRINA.

    (a) Increase in Limit on Loans Not Treated as Distributions.--In 
the case of any loan from a qualified employer plan (as defined under 
section 72(p)(4) of the Internal Revenue Code of 1986) to a qualified 
individual (as defined in section 102(c)) made after the date of 
enactment of this Act and before the date which is 1 year after the 
disaster declaration date (as defined in section 103(b)(2))--
            (1) clause (i) of section 72(p)(2)(A) of such Code shall be 
        applied by substituting ``$100,000'' for ``$50,000'', and
            (2) clause (ii) of such section shall be applied by 
        substituting ``the present value of the nonforfeitable accrued 
        benefit of the employee under the plan'' for ``one-half of the 
        present value of the nonforfeitable accrued benefit of the 
        employee under the plan''.
    (b) Delay of Repayment.--In the case of a qualified individual (as 
defined in section 102(c)) with an outstanding loan on or after August 
26, 2005, from a qualified employer plan (as defined in section 
72(p)(4) of the Internal Revenue Code of 1986)--
            (1) if the due date pursuant to subparagraph (B) or (C) of 
        section 72(p)(2) of such Code for any repayment with respect to 
        such loan occurs during the period beginning after August 29, 
        2005, and ending before August 30, 2006, such due date shall be 
        delayed for 1 year,
            (2) any subsequent repayments with respect to any such loan 
        shall be appropriately adjusted to reflect the delay in the due 
        date under paragraph (1) and any interest accruing during such 
        delay, and
            (3) in determining the 5-year period and the term of a loan 
        under subparagraph (B) or (C) of section 72(p)(2) of such Code, 
        such period shall be disregarded.

SEC. 105. PROVISIONS RELATING TO PLAN AMENDMENTS.

    (a) In General.--If this section applies to any plan or contract 
amendment such plan or contract shall be treated as being operated in 
accordance with the terms of the plan during the period described in 
subsection (b)(2)(A).
    (b) Amendments to Which Section Applies.--
            (1) In general.--This section shall apply to any amendment 
        to any plan or annuity contract which is made--
                    (A) pursuant to any amendment made by this title, 
                or pursuant to any regulation issued by the Secretary 
                of the Treasury or the Secretary of Labor under this 
                title, and
                    (B) on or before the last day of the first plan 
                year beginning on or after January 1, 2007, or such 
                later date as the Secretary of the Treasury may 
                prescribe.
        In the case of a governmental plan (as defined in section 
        414(d) of the Internal Revenue Code of 1986), subparagraph (B) 
        shall be applied by substituting the date which is 2 years 
        after the date otherwise applied under subparagraph (B).
            (2) Conditions.--This section shall not apply to any 
        amendment unless--
                    (A) during the period--
                            (i) beginning on the date the legislative 
                        or regulatory amendment described in paragraph 
                        (1)(A) takes effect (or in the case of a plan 
                        or contract amendment not required by such 
                        legislative or regulatory amendment, the 
                        effective date specified by the plan), and
                            (ii) ending on the date described in 
                        paragraph (1)(B) (or, if earlier, the date the 
                        plan or contract amendment is adopted),
                the plan or contract is operated as if such plan or 
                contract amendment were in effect; and
                    (B) such plan or contract amendment applies 
                retroactively for such period.

                      TITLE II--EMPLOYMENT RELIEF

SEC. 201. WORK OPPORTUNITY TAX CREDIT FOR HURRICANE KATRINA EMPLOYEE 
              SURVIVORS.

    (a) In General.--For purposes of section 51 of the Internal Revenue 
Code of 1986, a Hurricane Katrina employee survivor shall be treated as 
a member of a targeted group.
    (b) Hurricane Katrina Employee Survivor.--For purposes of this 
section, the term ``Hurricane Katrina employee survivor'' means any 
individual who is certified as an individual who--
            (1) on August 28, 2005, had a principal place of abode in a 
        Hurricane Katrina disaster area, and
            (2) became unemployed as a result of Hurricane Katrina.
    (c) Special Rules for Determining Credit.--For purposes of applying 
subpart F of part IV of subchapter A of chapter 1 of such Code to wages 
paid or incurred to any Hurricane Katrina employee survivor--
            (1) section 51(c)(4) of such Code shall not apply,
            (2) notwithstanding section 51(d)(12) of such Code, the 
        certification under subsection (b) shall be made in such manner 
        and at such time as determined by the Secretary of the 
        Treasury, except that the certification shall be made by a 
        person other than such employee survivor or the employer 
        (within the meaning of section 51 of such Code), and
            (3) section 51(i)(2) of such Code shall not apply with 
        respect to the first hire of such employee survivor, unless 
        such employee survivor was an employee of the employer on 
        August 28, 2005.
    (d) Application of Section.--This section shall apply to wages 
(within the meaning of section 51(c) of such Code) paid or incurred to 
any individual who begins work--
            (1) for an employer during the 1-year period beginning on 
        August 29, 2005, or
            (2) in the case of an individual who is being hired for a 
        position the principal place of employment of which is located 
        in a Hurricane Katrina disaster area, for any employer during 
        the 3-year period beginning on such date.

SEC. 202. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED BY HURRICANE 
              KATRINA.

    (a) In General.--In the case of an eligible employer, there shall 
be allowed as a credit against the tax imposed by chapter 1 of the 
Internal Revenue Code of 1986 for the taxable year an amount equal to 
40 percent of the qualified wages with respect to each eligible 
employee of such employer for such taxable year. For purposes of the 
preceding sentence, the amount of qualified wages which may be taken 
into account with respect to any individual shall not exceed $6,000.
    (b) Definitions.--For purposes of this section--
            (1) Eligible employer.--The term ``eligible employer'' 
        means any employer--
                    (A) which conducted an active trade or business on 
                August 28, 2005, in a Hurricane Katrina disaster area, 
                and
                    (B) with respect to whom the trade or business 
                described in subparagraph (A) is inoperable on any day 
                after August 28, 2005, and before January 1, 2006, as a 
                result of damage sustained in connection with Hurricane 
                Katrina.
            (2) Eligible employee.--The term ``eligible employee'' 
        means with respect to an eligible employer--
                    (A) an employee whose principal place of employment 
                on August 28, 2005, with such eligible employer was in 
                a Hurricane Katrina disaster area, or
                    (B) a Ready Reserve-National Guard employee of such 
                eligible employer who is performing qualified active 
                duty and whose principal place of employment 
                immediately before the date on which such employee 
                began performing such qualified active duty was in a 
                Hurricane Katrina disaster area.
            (3) Qualified wages.--The term ``qualified wages'' means 
        wages (as defined in section 51(c)(1) of the Internal Revenue 
        Code of 1986, but without regard to section 3306(b)(2)(B) of 
        such Code) paid or incurred by an eligible employer with 
        respect to an eligible employee on any day after August 28, 
        2005, and before January 1, 2006, which occurs during the 
        period--
                    (A) beginning on the date on which the trade or 
                business described in paragraph (1) first became 
                inoperable at the principal place of employment of the 
                employee immediately before Hurricane Katrina, and
                    (B) ending on the date on which such trade or 
                business has resumed significant operations at such 
                principal place of employment.
        Such term shall include wages paid without regard to whether 
        the employee performs no services, performs services at a 
        different place of employment than such principal place of 
        employment, or performs services at such principal place of 
        employment before significant operations have resumed.
            (4) Ready reserve-national guard employee.--The term 
        ``Ready Reserve-National Guard employee'' means an employee who 
        is a member of the Ready Reserve of a reserve component of an 
        Armed Force of the United States as described in section 10142 
        and 10101 of title 10, United States Code and who is performing 
        qualified active duty.
            (5) Qualified active duty.--The term ``qualified active 
        duty'' means--
                    (A) active duty, other than the training duty 
                specified in section 10147 of title 10, United States 
                Code (relating to training requirements for Ready 
                Reserve), or section 502(a) of title 32, United States 
                Code (relating to required drills and field exercises 
                for the National Guard), in connection with which an 
                employee is entitled to reemployment rights and other 
                benefits or to a leave of absence from employment under 
                chapter 43 of title 38, United States Code, and
                    (B) hospitalization incident to such duty.
    (c) Certain Rules to Apply.--For purposes of this section, rules 
similar to the rules of sections 51(i)(1), 52, and 280C(a) of the 
Internal Revenue Code of 1986 shall apply.
    (d) Credit to Be Part of General Business Credit.--The credit 
allowed under this section shall be added to the current year business 
credit under section 38(b) of the Internal Revenue Code of 1986 and 
shall be treated as a credit allowed under subpart D of part IV of 
subchapter A of chapter 1 of such Code.

                TITLE III--CHARITABLE GIVING INCENTIVES

SEC. 301. TEMPORARY INCREASE IN LIMITATION ON INDIVIDUAL AND CORPORATE 
              CHARITABLE CASH CONTRIBUTIONS.

    (a) In General.--In the case of qualified contributions made during 
the period beginning on August 29, 2005, and ending on December 31, 
2005, in the case of any taxable year which includes any portion of 
such period--
            (1) subsection (b)(1)(A) of section 170 of the Internal 
        Revenue Code of 1986 shall be applied separately--
                    (A) first without regard to such contributions, and
                    (B) next with regard to such contributions by 
                substituting ``60 percent of the taxpayer's 
                contribution base less the other contributions 
                allowable under this paragraph for the taxable year'' 
                for ``50 percent of the taxpayer's contribution base 
                for the taxable year'', and
            (2) subsection (b)(2) of section 170 of such Code shall be 
        applied separately--
                    (A) first without regard to such contributions, and
                    (B) next with regard to such contributions by 
                substituting ``15 percent of the taxpayer's taxable 
                income less the other charitable contributions 
                allowable for the taxable year'' for ``10 percent of 
                the taxpayer's taxable income''.
    (b) Qualified Contributions.--For purposes of this section, the 
term ``qualified contributions'' means any charitable contributions (as 
defined in section 170(c) of such Code) made in cash to an organization 
described in section 170(b)(1)(A) of such Code.
    (c) Application of Carryover Rules.--For purposes of section 170 of 
such Code--
            (1) qualified contributions shall not be taken into account 
        under section 170(d)(1)(A)(i) of such Code in determining the 
        amount of the deduction allowable under such section with 
        respect to such contributions, and
            (2) to the extent qualified contributions increase the 
        amount allowable under section 170 of such Code by reason of 
        subsection (a), such contributions shall not be taken into 
        account under section 170(d) of such Code.
    (d) Fiscal Year Taxpayers.--In the case of a taxpayer whose taxable 
year ends after August 28, 2005, and before December 31, 2005, 
subsection (a) shall apply to only the one taxable year that the 
taxpayer elects.

SEC. 302. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS 
              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 made 
                after August 28, 2005, and before January 1, 2006, from 
                an individual retirement account--
                            ``(i) which is made directly by the 
                        trustee--
                                    ``(I) to an organization described 
                                in section 170(c), or
                                    ``(II) to a split-interest entity, 
                                and
                            ``(ii) which is made on or after--
                                    ``(I) in the case of any 
                                distribution described in clause 
                                (i)(I), the date that the individual 
                                for whose benefit the account is 
                                maintained has attained age 70\1/2\, 
                                and
                                    ``(II) in the case of any 
                                distribution described in clause 
                                (i)(II), the date that such individual 
                                has attained age 59\1/2\.
                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 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 accounts 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 August 28, 2005.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to returns for taxable years beginning after 
        December 31, 2004.

SEC. 303. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD INVENTORIES.

    (a) In General.--Subsection (e) of section 170 (relating to certain 
contributions of ordinary income and capital gain property) is amended 
by adding at the end the following new paragraph:
            ``(7) Application of paragraph (3) to certain contributions 
        of food inventory.--For purposes of this section--
                    ``(A) Extension to individuals.--In the case of a 
                charitable contribution of apparently wholesome food--
                            ``(i) paragraph (3)(A) shall be applied 
                        without regard to whether the contribution is 
                        made by a C corporation, and
                            ``(ii) in the case of a taxpayer other than 
                        a C corporation, the aggregate amount of such 
                        contributions for any taxable year which may be 
                        taken into account under this section shall not 
                        exceed 10 percent of the taxpayer's net income 
                        for such taxable year from all trades or 
                        businesses from which such contributions were 
                        made for such taxable year, computed without 
                        regard to this section.
                    ``(B) Limitation on reduction.--In the case of a 
                charitable contribution of apparently wholesome food, 
                notwithstanding paragraph (3)(B), the amount of the 
                reduction determined under paragraph (1)(A) shall not 
                exceed the amount by which the fair market value of 
                such property exceeds twice the basis of such property.
                    ``(C) Determination of basis.--If a taxpayer--
                            ``(i) does not account for inventories 
                        under section 471, and
                            ``(ii) is not required to capitalize 
                        indirect costs under section 263A,
                the taxpayer may elect, solely for purposes of 
                paragraph (3)(B), to treat the basis of any apparently 
                wholesome food as being equal to 25 percent of the fair 
                market value of such food.
                    ``(D) Determination of fair market value.--In the 
                case of a charitable contribution of apparently 
                wholesome food which is a qualified contribution 
                (within the meaning of paragraph (3), as modified by 
                subparagraph (A) of this paragraph) 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 contribution shall be determined--
                            ``(i) without regard to such internal 
                        standards or such lack of market and
                            ``(ii) 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).
                    ``(E) Apparently wholesome food.--For purposes of 
                this paragraph, the term `apparently wholesome food' 
                has the meaning given 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 paragraph.
                    ``(F) Application.--This paragraph shall apply to 
                contributions made after August 28, 2005, and before 
                January 1, 2006.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after August 28, 2005.

SEC. 304. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF BOOK INVENTORIES.

    (a) In General.--Section 170(e)(3) (relating to certain 
contributions of ordinary income and capital gain 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 book 
                inventory for educational purposes.--
                            ``(i) Contributions of book inventory.--In 
                        determining whether a qualified book 
                        contribution is a qualified contribution, 
                        subparagraph (A) shall be applied without 
                        regard to whether--
                                    ``(I) the donee is an organization 
                                described in the matter preceding 
                                clause (i) of subparagraph (A), and
                                    ``(II) the property is to be used 
                                by the donee solely for the care of the 
                                ill, the needy, or infants.
                            ``(ii) Amount of reduction.--
                        Notwithstanding subparagraph (B), the amount of 
                        the reduction determined under paragraph (1)(A) 
                        shall not exceed the amount by which the fair 
                        market value of the contributed property (as 
                        determined by the taxpayer using a bona fide 
                        published market price for such book) exceeds 
                        twice the basis of such property.
                            ``(iii) Qualified book contribution.--For 
                        purposes of this paragraph, the term `qualified 
                        book contribution' means a charitable 
                        contribution of books, but only if the 
                        requirements of clauses (iv) and (v) are met.
                            ``(iv) Identity of donee.--The requirement 
                        of this clause is met if the contribution is to 
                        an organization--
                                    ``(I) described in subclause (I) or 
                                (III) of paragraph (6)(B)(i), or
                                    ``(II) described in section 
                                501(c)(3) and exempt from tax under 
                                section 501(a) (other than a private 
                                foundation, as defined in section 
                                509(a), which is not an operating 
                                foundation, as defined in section 
                                4942(j)(3)), which is organized 
                                primarily to make books available to 
                                the general public at no cost or to 
                                operate a literacy program.
                            ``(v) Certification by donee.--The 
                        requirement of this clause is met if, in 
                        addition to the certifications required by 
                        subparagraph (A) (as modified by this 
                        subparagraph), the donee certifies in writing 
                        that--
                                    ``(I) the books are suitable, in 
                                terms of currency, content, and 
                                quantity, for use in the donee's 
                                educational programs, and
                                    ``(II) the donee will use the books 
                                in its educational programs.
                            ``(vi) Bona fide published market price.--
                        For purposes of this subparagraph, the term 
                        `bona fide published market price' means, with 
                        respect to any book, a price--
                                    ``(I) determined using the same 
                                printing and edition,
                                    ``(II) determined in the usual 
                                market in which such a book has been 
                                customarily sold by the taxpayer, and
                                    ``(III) for which the taxpayer can 
                                demonstrate to the satisfaction of the 
                                Secretary that the taxpayer customarily 
                                sold such books in arm's length 
                                transactions within 7 years preceding 
                                the contribution of such a book.
                            ``(vii) Application.--This subparagraph 
                        shall apply to contributions made after August 
                        28, 2005, and before January 1, 2006.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to contributions made after August 28, 2005.

SEC. 305. ADDITIONAL PERSONAL EXEMPTION AMOUNT FOR HURRICANE KATRINA 
              HOUSEGUEST.

    (a) In General.--In the case of the taxpayer's taxable year 
beginning in 2005, the amount allowed as a deduction in computing 
taxable income of the taxpayer under section 151 of the Internal 
Revenue Code of 1986 shall be increased by the lesser of--
            (1) the product of--
                    (A) $500, and
                    (B) the number of Hurricane Katrina houseguests of 
                the taxpayer, or
            (2) $2,000.
    (b) Hurricane Katrina Houseguest.--For purposes of this section, 
the term ``Hurricane Katrina houseguest'' means any individual--
            (1) who would not otherwise qualify for an exemption amount 
        with respect to the taxpayer for the taxable year,
            (2) whose principal place of abode in a Hurricane Katrina 
        disaster area was rendered uninhabitable after August 28, 2005, 
        and
            (3) is provided shelter without remuneration for not less 
        than 60 days after August 28, 2005, and before January 1, 2006, 
        by the taxpayer in the taxpayer's principal place of abode.
    (c) Limitation.--No deduction shall be allowed under this section 
if the taxpayer receives any rent or other amount (from any source) in 
connection with the providing of such shelter.

SEC. 306. INCREASE IN STANDARD MILEAGE RATE FOR CHARITABLE USE OF 
              PASSENGER AUTOMOBILE.

    Notwithstanding section 170(i) of the Internal Revenue Code of 
1986, for purposes of computing the deduction under section 170 of such 
Code for use of a passenger automobile for the period beginning on 
August 29, 2005, and ending before January 1, 2006, the standard 
mileage rate shall be 50 percent of the standard mileage rate in effect 
under section 162(a) of such Code at the time of such use. Any increase 
under this section shall be rounded to the next highest cent.

               TITLE IV--ADDITIONAL TAX RELIEF PROVISIONS

SEC. 401. EXCLUSIONS OF CERTAIN CANCELLATIONS OF INDEBTEDNESS FOR 
              VICTIMS OF HURRICANE KATRINA.

    (a) In General.--For purposes of the Internal Revenue Code of 1986, 
gross income shall not include any amount which (but for this section) 
would be includible in gross income by reason of the discharge (in 
whole or in part) of indebtedness of a natural person by an applicable 
entity (as defined in section 6050P(c)(1)) if the discharge is by 
reason of the damage sustained by the taxpayer in connection with 
Hurricane Katrina.
    (b) Exception.--Subsection (a) shall not apply to any indebtedness 
incurred in connection with a trade or business.
    (c) Denial of Double Benefit.--The amount excluded from gross 
income under subsection (a) shall be applied to reduce the tax 
attributes of the taxpayer as provided in section 108(b) of such Code.
    (d) Effective Date.--This section shall apply to discharges made on 
or after August 29, 2005, and before January 1, 2007.

SEC. 402. MODIFICATION TO CASUALTY LOSS RULES FOR VICTIMS OF HURRICANE 
              KATRINA.

    In the case of an individual with a personal casualty loss which 
arises in connection with Hurricane Katrina--
            (1) section 165(h)(2)(A) of the Internal Revenue Code of 
        1986 shall not apply, and
            (2) in applying such section to other personal casualty 
        losses during the taxable year, losses to which this section 
        applies shall be disregarded.

SEC. 403. REQUIRED EXERCISE OF AUTHORITY UNDER SECTION 7508A FOR TAX 
              RELIEF FOR VICTIMS OF HURRICANE KATRINA.

    (a) Authority Includes Suspension of Payment of Employment and 
Excise Taxes.--Subparagraphs (A) and (B) of section 7508(a)(1) are 
amended to read as follows:
                    ``(A) Filing any return of income, estate, gift, 
                employment, or excise tax;
                    ``(B) Payment of any income, estate, gift, 
                employment, or excise tax or any installment thereof or 
                of any other liability to the United States in respect 
                thereof;''.
    (b) Application to Victims of Hurricane Katrina.--In the case of 
any taxpayer determined by the Secretary of the Treasury to be affected 
by the Presidentially declared disaster relating to Hurricane Katrina, 
any relief provided by the Secretary of the Treasury under section 
7508A of the Internal Revenue Code of 1986 shall be for a period ending 
not earlier than February 28, 2006, and shall be treated as applying to 
the filing of returns relating to, and the payment of, employment and 
excise taxes.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply for any period for performing an act which has not expired before 
August 29, 2005.

SEC. 404. SPECIAL MORTGAGE FINANCING RULES FOR RESIDENCES LOCATED IN 
              HURRICANE KATRINA DISASTER AREA.

    In the case of a residence located in a Hurricane Katrina disaster 
area, section 143 of the Internal Revenue Code of 1986 shall be applied 
with the following modifications to financing provided with respect to 
such residence within 3 years after the date of the disaster 
declaration:
            (1) Subsections (d), (e) and (f) of such section 143 shall 
        be applied as if such residence were a targeted area residence.
            (2) Subsection (f)(3) of such section 143 shall be applied 
        without regard to subparagraph (A) thereof.
            (3) The limitation under subsection (k)(4) of such section 
        143 shall be increased (but not above $150,000) to the extent 
        the qualified home-improvement loan is for the repair of damage 
        caused by Hurricane Katrina.
This section shall apply only with respect to bonds issued after August 
28, 2005, and before August 29, 2008.

SEC. 405. EXTENSION OF REPLACEMENT PERIOD FOR NONRECOGNITION OF GAIN 
              FOR PROPERTY LOCATED IN HURRICANE KATRINA DISASTER AREA.

    Notwithstanding subsections (g) and (h) of section 1033 of the 
Internal Revenue Code of 1986, clause (i) of section 1033(a)(2)(B) of 
such Code shall be applied by substituting ``5 years'' for ``2 years'' 
with respect to property which is compulsorily or involuntarily 
converted as a result of Hurricane Katrina in a Hurricane Katrina 
disaster area, but only if substantially all of the use of the 
replacement property is in such area.

SEC. 406. SPECIAL RULE FOR DETERMINING EARNED INCOME.

    (a) In General.--In the case of a qualified individual, if the 
earned income of the taxpayer for the taxable year of such taxpayer 
which includes August 28, 2005, is less than the earned income which 
attributable to the taxpayer for the preceding taxable year, the 
credits allowed under sections 24(d) and 32 of the Internal Revenue 
Code of 1986 may, at the election of the taxpayer, be determined by 
substituting--
            (1) such earned income for the preceding taxable year, for
            (2) such earned income for the taxable year which includes 
        August 28, 2005.
    (b) Qualified Individual.--For purposes of this section, the term 
``qualified individual'' means any individual who was (as of August 28, 
2005) a resident of any area which is determined by the President to 
warrant individual or individual and public assistance from the Federal 
Government under the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act by reason of Hurricane Katrina.
    (c) Earned Income.--For purposes of this section, the term ``earned 
income'' has the meaning given such term under section 32(c) of such 
Code.
    (d) Special Rules.--
            (1) Application to joint returns.--For purpose of 
        subsection (a), in the case of a joint return for a taxable 
        year which includes August 28, 2005--
                    (A) such subsection shall apply if either spouse is 
                a qualified individual,
                    (B) the earned income which is attributable to the 
                taxpayer for the preceding taxable year shall be the 
                sum of the earned income which is attibutable to each 
                spouse for such preceding taxable year, and
                    (C) the substitution described in such subsection 
                shall apply only with respect to earned income which is 
                attributable to a spouse who is a qualified individual.
            (2) Uniform application of election.--Any election made 
        under subsection (a) shall apply with respect to both section 
        24(d) and section 32 of such Code.
            (3) Errors treated as mathematical error.--For purposes of 
        section 6213 of such Code, an incorrect use on a return of 
        earned income pursuant to subsection (a) shall be treated as a 
        mathematical or clerical error.
            (4) No effect on determination of gross income.--For 
        purposes of the Internal Revenue Code of 1986, gross income 
        shall be determined without regard to any substitution under 
        subsection (a).

SEC. 407. SECRETARIAL AUTHORITY TO MAKE ADJUSTMENTS REGARDING TAXPAYER 
              AND DEPENDENCY STATUS.

    With respect to taxable years beginning in 2005 or 2006, the 
Secretary of the Treasury or the Secretary's delegate may make such 
adjustments in the application of the internal revenue laws as may be 
necessary to ensure that taxpayers do not lose any deduction or credit 
or experience a change of filing status by reason of temporary 
relocations after Hurricane Katrina or by reason of the receipt of 
hurricane relief. Any adjustments made under the preceding sentence 
shall ensure that an individual is not taken into account by more than 
one taxpayer with respect to the same tax benefit.

                     TITLE V--ADDITIONAL PROVISIONS

SEC. 501. DISCLOSURE TO STATE OFFICIALS OF PROPOSED ACTIONS RELATED TO 
              EXEMPT ORGANIZATIONS.

    (a) In General.--Subsection (c) of section 6104 is amended by 
striking paragraph (2) and inserting the following new paragraphs:
            ``(2) Disclosure of proposed actions related to charitable 
        organizations.--
                    ``(A) Specific notifications.--In the case of an 
                organization to which paragraph (1) applies, the 
                Secretary may disclose to the appropriate State 
                officer--
                            ``(i) a notice of proposed refusal to 
                        recognize such organization as an organization 
                        described in section 501(c)(3) or a notice of 
                        proposed revocation of such organization's 
                        recognition as an organization exempt from 
                        taxation,
                            ``(ii) the issuance of a letter of proposed 
                        deficiency of tax imposed under section 507 or 
                        chapter 41 or 42, and
                            ``(iii) the names, addresses, and taxpayer 
                        identification numbers of organizations which 
                        have applied for recognition as organizations 
                        described in section 501(c)(3).
                    ``(B) Additional disclosures.--Returns and return 
                information of organizations with respect to which 
                information is disclosed under subparagraph (A) may be 
                made available for inspection by or disclosed to an 
                appropriate State officer.
                    ``(C) Procedures for disclosure.--Information may 
                be inspected or disclosed under subparagraph (A) or (B) 
                only--
                            ``(i) upon written request by an 
                        appropriate State officer, and
                            ``(ii) for the purpose of, and only to the 
                        extent necessary in, the administration of 
                        State laws regulating such organizations.
                Such information may only be inspected by or disclosed 
                to a person other than the appropriate State officer if 
                such person is an officer or employee of the State and 
                is designated by the appropriate State officer to 
                receive the returns or return information under this 
                paragraph on behalf of the appropriate State officer.
                    ``(D) Disclosures other than by request.--The 
                Secretary may make available for inspection or disclose 
                returns and return information of an organization to 
                which paragraph (1) applies to an appropriate State 
                officer of any State if the Secretary determines that 
                such inspection or disclosure may facilitate the 
                resolution of Federal or State issues relating to the 
                tax-exempt status of such organization.
            ``(3) Disclosure with respect to certain other exempt 
        organizations.--Upon written request by an appropriate State 
        officer, the Secretary may make available for inspection or 
        disclosure returns and return information of an organization 
        described in paragraph (2), (4), (6), (7), (8), (10), or (13) 
        of section 501(c) for the purpose of, and to the extent 
        necessary in, the administration of State laws regulating the 
        solicitation or administration of the charitable funds or 
        charitable assets of such organizations. Such information may 
        only be inspected by or disclosed to a person other than the 
        appropriate State officer if such person is an officer or 
        employee of the State and is designated by the appropriate 
        State officer to receive the returns or return information 
        under this paragraph on behalf of the appropriate State 
        officer.
            ``(4) Use in civil judicial and administrative 
        proceedings.--Returns and return information disclosed pursuant 
        to this subsection may be disclosed in civil administrative and 
        civil judicial proceedings pertaining to the enforcement of 
        State laws regulating such organizations in a manner prescribed 
        by the Secretary similar to that for tax administration 
        proceedings under section 6103(h)(4).
            ``(5) No disclosure if impairment.--Returns and return 
        information shall not be disclosed under this subsection, or in 
        any proceeding described in paragraph (4), to the extent that 
        the Secretary determines that such disclosure would seriously 
        impair Federal tax administration.
            ``(6) Definitions.--For purposes of this subsection--
                    ``(A) Return and return information.--The terms 
                `return' and `return information' have the respective 
                meanings given to such terms by section 6103(b).
                    ``(B) Appropriate state officer.--The term 
                `appropriate State officer' means--
                            ``(i) the State attorney general,
                            ``(ii) the State tax officer,
                            ``(iii) in the case of an organization to 
                        which paragraph (1) applies, any other State 
                        official charged with overseeing organizations 
                        of the type described in section 501(c)(3), and
                            ``(iv) in the case of an organization to 
                        which paragraph (3) applies, the head of an 
                        agency designated by the State attorney general 
                        as having primary responsibility for overseeing 
                        the solicitation of funds for charitable 
                        purposes.''.
    (b) Conforming Amendments.--
            (1) Subparagraph (A) of section 6103(p)(3) is amended by 
        inserting ``and section 6104(c)'' after ``section'' in the 
        first sentence.
            (2) Paragraph (4) of section 6103(p) is amended--
                    (A) in the matter preceding subparagraph (A), by 
                inserting ``, or any appropriate State officer (as 
                defined in section 6104(c)),'' before ``or any other 
                person'',
                    (B) in subparagraph (F)(i), by inserting ``or any 
                appropriate State officer (as defined in section 
                6104(c)),'' before ``or any other person'', and
                    (C) in the matter following subparagraph (F), by 
                inserting ``, an appropriate State officer (as defined 
                in section 6104(c)),'' after ``including an agency'' 
                each place it appears.
            (3) The heading for paragraph (1) of section 6104(c) is 
        amended by inserting ``for charitable organizations'' after 
        ``rule''.
            (4) Paragraph (2) of section 7213(a) is amended by 
        inserting ``or under section 6104(c)'' after ``6103''.
            (5) Paragraph (2) of section 7213A(a) is amended by 
        inserting ``or 6104(c)'' after ``6103''.
            (6) Paragraph (2) of section 7431(a) is amended by 
        inserting ``(including any disclosure in violation of section 
        6104(c))'' after ``6103''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act but shall not apply to 
requests made before such date.

SEC. 502. DEDICATION AND USE OF CERTAIN FEES.

    Notwithstanding section 202(c) of Public Law 108-89, the Secretary 
of the Treasury may retain and use fees from employee plan and exempt 
organization letter rulings and determination letters charged under 
section 7528 of the Internal Revenue Code of 1986--
            (1) in fiscal years 2005 and 2006--
                    (A) for the administration of the provisions of, 
                and amendments made by, this Act,
                    (B) to provide taxpayer assistance to any taxpayer 
                determined by the Secretary of the Treasury to be 
                affected by the Presidentially declared disaster 
                relating to Hurricane Katrina, and
                    (C) to aid the Internal Revenue Service in 
                repairing, rebuilding, and recovering from the damage 
                to Internal Revenue Service offices, equipment, and 
                support caused by Hurricane Katrina, and
            (2) in any fiscal year after 2006--
                    (A) on oversight, enforcement, and administration 
                by the Tax-Exempt and Government Entities Division of 
                the Internal Revenue Service, and
                    (B) on oversight, enforcement, and administration 
                of section 170 of such Code.
                                                       Calendar No. 212

109th CONGRESS

  1st Session

                                S. 1696

_______________________________________________________________________

                                 A BILL

To provide tax relief for the victims of Hurricane Katrina, to provide 
       incentives for charitable giving, and for other purposes.

_______________________________________________________________________

                           September 15, 2005

 Committee discharged; amended and ordered to be placed on the calendar
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