II 

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, and Mr. SHELBY) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To provide tax relief for the victims of Hurricane Katrina, 

to provide incentives for charitable giving, and for other 

purposes. 

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

3 SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; 

4 TABLE OF CONTENTS. 

5 (a) SHORT TITLE.—This Act may be cited as the 

6 ‘‘Hurricane Katrina Tax Relief Act of 2005’’. 

7 (b) AMENDMENT OF 1986 CODE.—Except as other8 wise expressly provided, whenever in this Act an amend9 ment or repeal is expressed in terms of an amendment 
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1 to, or repeal of, a section or other provision, the reference 

2 shall be considered to be made to a section or other provi3 sion of the Internal Revenue Code of 1986. 

4 (c) TABLE OF CONTENTS.—The table of contents for 

5 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. Payroll maintenance tax 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. Renewal of 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. 
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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. 

1 SEC. 2. HURRICANE KATRINA DISASTER AREA. 

2 For purposes of this Act, the term ‘‘Hurricane 

3 Katrina disaster area’’ means an area— 

4 (1) with respect to which a major disaster has 

5 been declared by the President before September 14, 

6 2005, under section 401 of the Robert T. Stafford 

7 Disaster Relief and Emergency Assistance Act in 

8 connection with Hurricane Katrina, and 

9 (2) which is determined by the President before 

10 such date to warrant individual assistance, or indi11 vidual and public assistance, from the Federal Gov12 ernment under such Act. 

13 TITLE I—PENALTY FREE USE OF 

14 RETIREMENT FUNDS BY NAT15 URAL DISASTER VICTIMS 

16 SEC. 101. PENALTY FREE WITHDRAWALS FROM RETIRE17 MENT PLANS FOR VICTIMS OF FEDERALLY 

18 DECLARED NATURAL DISASTERS. 

19 (a) IN GENERAL.—Paragraph (2) of section 72(t) 

20 (relating to 10-percent additional tax on early distribu21 tions from qualified retirement plans) is amended by add22 ing at the end the following new subparagraph: 
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1 ‘‘(G) DISTRIBUTIONS FROM RETIREMENT

2 PLANS TO VICTIMS OF FEDERALLY DECLARED

3 NATURAL DISASTERS.— 

4 ‘‘(i) IN GENERAL.—Any qualified dis5 aster-relief distribution. 

6 ‘‘(ii) AMOUNT DISTRIBUTED MAY BE

7 REPAID.— 

8 ‘‘(I) IN GENERAL.—Any indi9 vidual who receives a qualified dis10 aster-relief distribution may, at any 

11 time during the 3-year period begin12 ning on the day after the date on 

13 which such distribution was made, 

14 make one or more contributions in an 

15 aggregate amount not to exceed the 

16 amount of such distribution to an eli17 gible retirement plan (as defined in 

18 section 402(c)(8)(B)) of which such 

19 individual is a beneficiary and to 

20 which a rollover contribution of such 

21 distribution could be made under sec22 tion 402(c), 403(a)(4), 403(b)(8), or 

23 408(d)(3), as the case may be. 

24 ‘‘(II) TREATMENT OF REPAY25 MENTS FOR DISTRIBUTIONS FROM EL-
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•S 1696 IS

1 IGIBLE RETIREMENT PLANS OTHER

2 THAN IRAS.—For purposes of this 

3 title, if a contribution is made pursu4 ant to subclause (I) with respect to a 

5 qualified disaster-relief distribution 

6 from an eligible retirement plan (as so 

7 defined) other than an individual re8 tirement plan, then the taxpayer shall, 

9 to the extent of the amount of the 

10 contribution, be treated as having re11 ceived the qualified disaster-relief dis12 tribution in an eligible rollover dis13 tribution (as defined in section 

14 402(c)(4)) and as having transferred 

15 the amount to the eligible retirement 

16 plan in a direct trustee to trustee 

17 transfer within 60 days of the dis18 tribution. 

19 ‘‘(III) TREATMENT OF REPAY20 MENTS FOR DISTRIBUTIONS FROM

21 IRAS.—For purposes of this title, if a 

22 contribution is made pursuant to sub23 clause (I) with respect to a qualified 

24 disaster-relief distribution from an in25 dividual retirement plan, then, to the 
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1 extent of the amount of the contribu2 tion, the qualified disaster-relief dis3 tribution shall be treated as a dis4 tribution described in section 

5 408(d)(3) and as having been trans6 ferred to the eligible retirement plan 

7 in a direct trustee to trustee transfer 

8 within 60 days of the distribution. 

9 ‘‘(IV) APPLICATION TO GOVERN10 MENTAL SECTION 457 PLANS.—In de11 termining whether any distribution is 

12 a qualified disaster-relief distribution 

13 for purposes of this clause, an eligible 

14 deferred compensation plan (as de15 fined in section 457(b)) maintained by 

16 an employer described in section 

17 457(e)(1)(A) shall be treated as a 

18 qualified retirement plan. 

19 ‘‘(iii) QUALIFIED DISASTER-RELIEF

20 DISTRIBUTION.—For purposes of this sub21 paragraph, the term ‘qualified disaster-re22 lief distribution’ means any distribution— 

23 ‘‘(I) to an individual who has 

24 sustained a loss as a result of a major 

25 disaster declared under section 401 of 
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1 the Robert T. Stafford Disaster Relief 

2 and Emergency Assistance Act and 

3 who has a principal place of abode im4 mediately before the declaration in a 

5 qualified disaster area, and 

6 ‘‘(II) which is made during the 1- 

7 year period beginning on the date 

8 such declaration is made. 

9 ‘‘(iv) QUALIFIED DISASTER AREA.— 

10 For purposes of this subparagraph, the 

11 term ‘qualified disaster area’ means an 

12 area— 

13 ‘‘(I) with respect to which a 

14 major disaster has been declared by 

15 the President under section 401 of the 

16 Robert T. Stafford Disaster Relief 

17 and Emergency Assistance Act, and 

18 ‘‘(II) which is determined by the 

19 President to warrant individual assist20 ance, or individual and public assist21 ance, from the Federal Government 

22 under such Act.’’. 

23 (b) EXEMPTION OF DISTRIBUTIONS FROM TRUSTEE

24 TO TRUSTEE TRANSFER AND WITHHOLDING RULES.— 

25 Paragraph (4) of section 402(c) (relating to eligible roll-
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1 over distribution) is amended by striking ‘‘and’’ at the end 

2 of subparagraph (B), by striking the period at the end 

3 of subparagraph (C) and inserting ‘‘, and’’, and by insert4 ing at the end the following new subparagraph: 

5 ‘‘(D) any qualified disaster-relief distribu6 tion (within the meaning of section 

7 72(t)(2)(G)).’’. 

8 (c) CONFORMING AMENDMENTS.— 

9 (1) Section 401(k)(2)(B)(i) is amended by 

10 striking ‘‘or’’ at the end of subclause (III), by strik11 ing ‘‘and’’ at the end of subclause (IV) and inserting 

12 ‘‘or’’, and by inserting after subclause (IV) the fol13 lowing new subclause: 

14 ‘‘(V) the date on which a period 

15 referred to in section 

16 72(t)(2)(G)(iii)(II) begins (but only to 

17 the extent provided in section 

18 72(t)(2)(G)), and’’. 

19 (2) Section 403(b)(7)(A)(ii) is amended by in20 serting ‘‘sustains a loss as a result of a major dis21 aster declared under section 401 of the Robert T. 

22 Stafford Disaster Relief and Emergency Assistance 

23 Act (but only to the extent provided in section 

24 72(t)(2)(G)),’’ before ‘‘or’’. 
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1 (3) Section 403(b)(11) is amended by striking 

2 ‘‘or’’ at the end of subparagraph (A), by striking the 

3 period at the end of subparagraph (B) and inserting 

4 ‘‘, or’’, and by inserting after subparagraph (B) the 

5 following new subparagraph: 

6 ‘‘(C) for distributions to which section 

7 72(t)(2)(G) applies.’’. 

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

9 this section shall apply to distributions received after Au10 gust 28, 2005. 

11 SEC. 102. INCOME AVERAGING FOR DISASTER-RELIEF DIS12 TRIBUTIONS RELATED TO HURRICANE 

13 KATRINA. 

14 (a) IN GENERAL.—In the case of any qualified dis15 aster-relief distribution (within the meaning of section 

16 72(t)(2)(G) of the Internal Revenue Code of 1986) from 

17 a qualified retirement plan (as defined in section 4974(c) 

18 of such Code) to a qualified individual, unless the taxpayer 

19 elects not to have this section apply for any taxable year, 

20 any amount required to be included in gross income for 

21 such taxable year shall be so included ratably over the 3- 

22 taxable year period beginning with such taxable year. 

23 (b) SPECIAL RULES.— 

24 (1) APPLICATION TO GOVERNMENTAL SECTION

25 457 PLANS.—In determining whether any distribu-
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1 tion is a qualified disaster-relief distribution (as so 

2 defined) for purposes of this section, an eligible de3 ferred compensation plan (as defined in section 

4 457(b) of such Code) maintained by an employer de5 scribed in section 457(e)(1)(A) of such Code shall be 

6 treated as a qualified retirement plan (as so de7 fined). 

8 (2) CERTAIN RULES TO APPLY.—Rules similar 

9 to the rules of subparagraph (E) of section 

10 408A(d)(3) of such Code shall apply for purposes of 

11 this section. 

12 (c) QUALIFIED INDIVIDUAL.—For purposes of this 

13 section, the term ‘‘qualified individual’’ means an indi14 vidual who has sustained a loss as a result of the major 

15 disaster declared under section 401 of the Robert T. Staf16 ford Disaster Relief and Emergency Assistance Act (42 

17 U.S.C. 5170) in connection with Hurricane Katrina and 

18 who has a principal place of abode immediately before the 

19 declaration in a Hurricane Katrina disaster area. 

20 SEC. 103. RECONTRIBUTIONS OF WITHDRAWALS FOR HOME 

21 PURCHASES CANCELLED DUE TO HURRI22 CANE KATRINA. 

23 (a) RECONTRIBUTIONS.— 

24 (1) IN GENERAL.—Any individual who received 

25 a qualified distribution may, at any time during the 
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1 6-month period beginning on the day after the dis2 aster declaration date, make one or more contribu3 tions in an aggregate amount not to exceed the 

4 amount of such qualified distribution to an eligible 

5 retirement plan (as defined in section 402(c)(8)(B) 

6 of the Internal Revenue Code of 1986) of which such 

7 individual is a beneficiary and to which a rollover 

8 contribution of such distribution could be made 

9 under section 402(c), 403(a)(4), 403(b)(8), 

10 408(d)(3), or 457(e)(16) of such Code, as the case 

11 may be. 

12 (2) TREATMENT OF REPAYMENTS.— 

13 (A) TREATMENT OF REPAYMENTS FOR

14 DISTRIBUTIONS FROM ELIGIBLE RETIREMENT

15 PLANS OTHER THAN IRAS.—For purposes of 

16 the Internal Revenue Code of 1986, if a con17 tribution is made pursuant to paragraph (1) 

18 with respect to a qualified distribution from an 

19 eligible retirement plan (as so defined) other 

20 than an individual retirement plan (as defined 

21 in section 7701(a)(37) of such Code), then the 

22 taxpayer shall, to the extent of the amount of 

23 the contribution, be treated as having received 

24 the qualified distribution in an eligible rollover 

25 distribution (as defined in section 402(c)(4) of 
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1 such Code) and as having transferred the 

2 amount to the eligible retirement plan in a di3 rect trustee to trustee transfer within 60 days 

4 of the distribution. 

5 (B) TREATMENT OF REPAYMENTS FOR

6 DISTRIBUTIONS FROM IRAS.—For purposes of 

7 the Internal Revenue Code of 1986, if a con8 tribution is made pursuant to paragraph (1) 

9 with respect to a qualified distribution from an 

10 individual retirement plan (as so defined), then, 

11 to the extent of the amount of the contribution, 

12 the qualified distribution shall be treated as a 

13 distribution described in section 408(d)(3) of 

14 such Code and as having been transferred to 

15 the eligible retirement plan (as so defined) in a 

16 direct trustee to trustee transfer within 60 days 

17 of the distribution. 

18 (b) DEFINITIONS.—For purposes of this section— 

19 (1) QUALIFIED DISTRIBUTION.—The term 

20 ‘‘qualified distribution’’ means any distribution— 

21 (A) described in section 

22 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii), 

23 403(b)(11)(B), 457(d)(1)(A)(iii), or 72(t)(2)(F) 

24 of the Internal Revenue Code of 1986, 
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1 (B) received after February 28, 2005, and 

2 before August 29, 2005, and 

3 (C) which was to be used to purchase or 

4 construct a principal residence in a Hurricane 

5 Katrina disaster area, but which was not so 

6 purchased or constructed. 

7 (2) DISASTER DECLARATION DATE.—The term 

8 ‘‘disaster declaration date’’ means the date on which 

9 the President designated the area as a Hurricane 

10 Katrina disaster area. 

11 SEC. 104. LOANS FROM QUALIFIED PLANS TO VICTIMS OF 

12 HURRICANE KATRINA. 

13 (a) INCREASE IN LIMIT ON LOANS NOT TREATED AS

14 DISTRIBUTIONS.—In the case of any loan from a qualified 

15 employer plan (as defined under section 72(p)(4) of the 

16 Internal Revenue Code of 1986) to a qualified individual 

17 (as defined in section 102(c)) made after the date of en18 actment of this Act and before the date which is 1 year 

19 after the disaster declaration date (as defined in section 

20 103(b)(2))— 

21 (1) clause (i) of section 72(p)(2)(A) of such 

22 Code shall be applied by substituting ‘‘$100,000’’ 

23 for ‘‘$50,000’’, and 

24 (2) clause (ii) of such section shall be applied 

25 by substituting ‘‘the present value of the nonforfeit-
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1 able accrued benefit of the employee under the plan’’ 

2 for ‘‘one-half of the present value of the nonforfeit3 able accrued benefit of the employee under the 

4 plan’’. 

5 (b) DELAY OF REPAYMENT.—In the case of a quali6 fied individual (as defined in section 102(c)) with an out7 standing loan on or after August 26, 2005, from a quali8 fied employer plan (as defined in section 72(p)(4) of the 

9 Internal Revenue Code of 1986)— 

10 (1) if the due date pursuant to subparagraph 

11 (B) or (C) of section 72(p)(2) of such Code for any 

12 repayment with respect to such loan occurs during 

13 the period beginning after August 29, 2005, and 

14 ending before August 30, 2006, such due date shall 

15 be delayed for 1 year, 

16 (2) any subsequent repayments with respect to 

17 any such loan shall be appropriately adjusted to re18 flect the delay in the due date under paragraph (1) 

19 and any interest accruing during such delay, and 

20 (3) in determining the 5-year period and the 

21 term of a loan under subparagraph (B) or (C) of 

22 section 72(p)(2) of such Code, such period shall be 

23 disregarded. 
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1 SEC. 105. PROVISIONS RELATING TO PLAN AMENDMENTS. 

2 (a) IN GENERAL.—If this section applies to any plan 

3 or contract amendment— 

4 (1) such plan or contract shall be treated as 

5 being operated in accordance with the terms of the 

6 plan during the period described in subsection 

7 (b)(2)(A), and 

8 (2) except as provided by the Secretary of the 

9 Treasury, such plan shall not fail to meet the re10 quirements of section 411(d)(6) of the Internal Rev11 enue Code of 1986 and section 204(g) of the Em12 ployee Retirement Income Security Act of 1974 by 

13 reason of such amendment. 

14 (b) AMENDMENTS TO WHICH SECTION APPLIES.— 

15 (1) IN GENERAL.—This section shall apply to 

16 any amendment to any plan or annuity contract 

17 which is made— 

18 (A) pursuant to any amendment made by 

19 this title, or pursuant to any regulation issued 

20 by the Secretary of the Treasury or the Sec21 retary of Labor under this title, and 

22 (B) on or before the last day of the first 

23 plan year beginning on or after January 1, 

24 2007, or such later date as the Secretary of the 

25 Treasury may prescribe. 
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1 In the case of a governmental plan (as defined in 

2 section 414(d) of the Internal Revenue Code of 

3 1986), subparagraph (B) shall be applied by sub4 stituting the date which is 2 years after the date 

5 otherwise applied under subparagraph (B). 

6 (2) CONDITIONS.—This section shall not apply 

7 to any amendment unless— 

8 (A) during the period— 

9 (i) beginning on the date the legisla10 tive or regulatory amendment described in 

11 paragraph (1)(A) takes effect (or in the 

12 case of a plan or contract amendment not 

13 required by such legislative or regulatory 

14 amendment, the effective date specified by 

15 the plan), and 

16 (ii) ending on the date described in 

17 paragraph (1)(B) (or, if earlier, the date 

18 the plan or contract amendment is adopt19 ed), 

20 the plan or contract is operated as if such plan 

21 or contract amendment were in effect; and 

22 (B) such plan or contract amendment ap23 plies retroactively for such period. 
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1 TITLE II—EMPLOYMENT RELIEF 

2 SEC. 201. WORK OPPORTUNITY TAX CREDIT FOR HURRI3 CANE KATRINA EMPLOYEE SURVIVORS. 

4 (a) IN GENERAL.—For purposes of section 51 of the 

5 Internal Revenue Code of 1986, a Hurricane Katrina em6 ployee survivor shall be treated as a member of a targeted 

7 group. 

8 (b) HURRICANE KATRINA EMPLOYEE SURVIVOR.— 

9 For purposes of this section, the term ‘‘Hurricane Katrina 

10 employee survivor’’ means any individual who is certified 

11 by the designated local agency (as defined in section 

12 51(d)(11) of such Code) as an individual who— 

13 (1) on August 28, 2005, had a principal place 

14 of abode in a Hurricane Katrina disaster area, and 

15 (2) became unemployed as a result of Hurri16 cane Katrina. 

17 (c) SPECIAL RULES FOR DETERMINING CREDIT.— 

18 For purposes of applying subpart F of part IV of sub19 chapter A of chapter 1 of such Code to wages paid or in20 curred to any Hurricane Katrina employee survivor— 

21 (1) section 51(c)(4) of such Code shall not 

22 apply, and 

23 (2) except in the case of an employee of the em24 ployer (within the meaning of section 51 of such 
18 

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1 Code) on August 28, 2005, section 51(i)(2) of such 

2 Code shall not apply. 

3 (d) APPLICATION OF SECTION.—This section shall 

4 apply to wages (within the meaning on section 51(c) of 

5 such Code) paid or incurred to any individual who begins 

6 work— 

7 (1) for an employer during the 1-year period 

8 beginning on August 29, 2005, or 

9 (2) in the case of an individual who is being 

10 hired for a position the principal place of employ11 ment of which is located in a Hurricane Katrina dis12 aster area, for any employer during the 3-year pe13 riod beginning on such date. 

14 SEC. 202. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS 

15 AFFECTED BY HURRICANE KATRINA. 

16 (a) IN GENERAL.—In the case of an eligible em17 ployer, there shall be allowed as a credit against the tax 

18 imposed by chapter 1 of the Internal Revenue Code of 

19 1986 for the taxable year an amount equal to 40 percent 

20 of the qualified wages with respect to each eligible em21 ployee for such taxable year. For purposes of the pre22 ceding sentence, the amount of qualified wages which may 

23 be taken into account with respect to any individual shall 

24 not exceed $6,000. 

25 (b) DEFINITIONS.—For purposes of this section— 
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1 (1) ELIGIBLE EMPLOYER.—The term ‘‘eligible 

2 employer’’ means any employer— 

3 (A) which conducted an active trade or 

4 business on August 28, 2005, in a Hurricane 

5 Katrina disaster area, and 

6 (B) with respect to whom the trade or 

7 business described in subparagraph (A) is inop8 erable on any day after August 28, 2005, and 

9 before January 1, 2006, as a result of damage 

10 sustained in connection with Hurricane 

11 Katrina. 

12 (2) ELIGIBLE EMPLOYEE.—The term ‘‘eligible 

13 employee’’ means— 

14 (A) an employee of an eligible employer 

15 whose principal place of employment on August 

16 28, 2005, was in a Hurricane Katrina disaster 

17 area, or 

18 (B) a Ready Reserve-National Guard em19 ployee of an eligible employer who is performing 

20 qualified active duty and whose principal place 

21 of employment immediately before the date on 

22 which such employee began performing such 

23 qualified active duty was in a Hurricane 

24 Katrina disaster area. 
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1 (3) QUALIFIED WAGES.—The term ‘‘qualified 

2 wages’’ means wages (as defined in section 51(c)(1) 

3 of the Internal Revenue Code of 1986, but without 

4 regard to section 3306(b)(2)(B) of such Code) paid 

5 or incurred by an eligible employer with respect to 

6 an eligible employee on any day after August 28, 

7 2005, and before January 1, 2006, which occurs 

8 during the period— 

9 (A) beginning on the date on which the 

10 trade or business described in paragraph (1) 

11 first became inoperable at the principal place of 

12 employment of the employee immediately before 

13 Hurricane Katrina, and 

14 (B) ending on the date on which such 

15 trade or business has resumed significant oper16 ations at such principal place of employment. 

17 Such term shall include wages paid without regard 

18 to whether the employee performs no services, per19 forms services at a different place of employment 

20 than such principal place of employment, or per21 forms services at such principal place of employment 

22 before significant operations have resumed. 

23 (4) READY RESERVE-NATIONAL GUARD EM24 PLOYEE.—The term ‘‘Ready Reserve-National 

25 Guard employee’’ means an employee who is a mem-
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1 ber of the Ready Reserve of a reserve component of 

2 an Armed Force of the United States as described 

3 in section 10142 and 10101 of title 10, United 

4 States Code and who is performing qualified active 

5 duty. 

6 (5) QUALIFIED ACTIVE DUTY.—The term 

7 ‘‘qualified active duty’’ means— 

8 (A) active duty, other than the training 

9 duty specified in section 10147 of title 10, 

10 United States Code (relating to training re11 quirements for Ready Reserve), or section 

12 502(a) of title 32, United States Code (relating 

13 to required drills and field exercises for the Na14 tional Guard), in connection with which an em15 ployee is entitled to reemployment rights and 

16 other benefits or to a leave of absence from em17 ployment under chapter 43 of title 38, United 

18 States Code, and 

19 (B) hospitalization incident to such duty. 

20 (c) CERTAIN RULES TO APPLY.—For purposes of 

21 this section, rules similar to the rules of sections 51(i)(1), 

22 52, and 280C(a) of the Internal Revenue Code of 1986 

23 of the shall apply. 

24 (d) NO DOUBLE BENEFIT.—No credit shall be al25 lowed under this section with respect to wages for which 
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1 a credit is determined under section 51 of the Internal 

2 Revenue Code of 1986 (after application of section 201). 

3 (e) CREDIT TO BE PART OF GENERAL BUSINESS

4 CREDIT.—The credit allowed under this section shall be 

5 added to the current year business credit under section 

6 38(b) of the Internal Revenue Code of 1986 and shall be 

7 treated as a credit allowed under subpart D of part IV 

8 of subchapter A of chapter 1 of such Code. 

9 TITLE III—CHARITABLE GIVING 

10 INCENTIVES 

11 SEC. 301. TEMPORARY INCREASE IN LIMITATION ON INDI12 VIDUAL AND CORPORATE CHARITABLE CASH 

13 CONTRIBUTIONS. 

14 (a) IN GENERAL.—In the case of qualified contribu15 tions made during the period beginning on August 29, 

16 2005, and ending on December 31, 2005, in the case of 

17 any taxable year which includes any portion of such pe18 riod— 

19 (1) subsection (b)(1)(A) of section 170 of the 

20 Internal Revenue Code of 1986 shall be applied sep21 arately— 

22 (A) first without regard to such contribu23 tions, and 

24 (B) next with regard to such contributions 

25 by substituting ‘‘60 percent of the taxpayer’s 
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1 contribution base less the other contributions 

2 allowable under this paragraph for the taxable 

3 year’’ for ‘‘50 percent of the taxpayer’s con4 tribution base for the taxable year’’, and 

5 (2) subsection (b)(2) of section 170 of such 

6 Code shall be applied separately— 

7 (A) first without regard to such contribu8 tions, and 

9 (B) next with regard to such contributions 

10 by substituting ‘‘15 percent of the taxpayer’s 

11 taxable income less the other charitable con12 tributions allowable for the taxable year’’ for 

13 ‘‘10 percent of the taxpayer’s taxable income’’. 

14 (b) QUALIFIED CONTRIBUTIONS.—For purposes of 

15 this section, the term ‘‘qualified contributions’’ means any 

16 charitable contributions (as defined in section 170(c) of 

17 such Code) made in cash to an organization described in 

18 section 170(b)(1)(A) of such Code. 

19 (c) APPLICATION OF CARRYOVER RULES.—To the 

20 extent qualified contributions increase the amount allow21 able under section 170 of such Code by reason of sub22 section (a), such contributions shall not be taken into ac23 count under section 170(d) of such Code. 

24 (d) FISCAL YEAR TAXPAYERS.—In the case of a tax25 payer whose taxable year ends after August 28, 2005, and 
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1 before December 31, 2005, subsection (a) shall apply to 

2 only the one taxable year that the taxpayer elects. 

3 SEC. 302. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE4 TIREMENT ACCOUNTS FOR CHARITABLE 

5 PURPOSES. 

6 (a) IN GENERAL.—Subsection (d) of section 408 (re7 lating to individual retirement accounts) is amended by 

8 adding at the end the following new paragraph: 

9 ‘‘(8) DISTRIBUTIONS FOR CHARITABLE PUR10 POSES.— 

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

12 includible in gross income by reason of a quali13 fied charitable distribution. 

14 ‘‘(B) QUALIFIED CHARITABLE DISTRIBU15 TION.—For purposes of this paragraph, the 

16 term ‘qualified charitable distribution’ means 

17 any distribution from an individual retirement 

18 account— 

19 ‘‘(i) which is made directly by the 

20 trustee— 

21 ‘‘(I) to an organization described 

22 in section 170(c), or 

23 ‘‘(II) to a split-interest entity, 

24 and 

25 ‘‘(ii) which is made on or after— 
25 

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1 ‘‘(I) in the case of any distribu2 tion described in clause (i)(I), the 

3 date that the individual for whose 

4 benefit the account is maintained has 

attained age 701 5 ⁄2, and 

6 ‘‘(II) in the case of any distribu7 tion described in clause (i)(II), the 

8 date that such individual has attained 

age 591 9 ⁄2. 

10 A distribution shall be treated as a qualified 

11 charitable distribution only to the extent that 

12 the distribution would be includible in gross in13 come without regard to subparagraph (A) and, 

14 in the case of a distribution to a split-interest 

15 entity, only if no person holds an income inter16 est in the amounts in the split-interest entity 

17 attributable to such distribution other than one 

18 or more of the following: the individual for 

19 whose benefit such account is maintained, the 

20 spouse of such individual, or any organization 

21 described in section 170(c). 

22 ‘‘(C) CONTRIBUTIONS MUST BE OTHER23 WISE DEDUCTIBLE.—For purposes of this para24 graph— 
26 

•S 1696 IS

1 ‘‘(i) DIRECT CONTRIBUTIONS.—A dis2 tribution to an organization described in 

3 section 170(c) shall be treated as a quali4 fied charitable distribution only if a deduc5 tion for the entire distribution would be al6 lowable under section 170 (determined 

7 without regard to subsection (b) thereof 

8 and this paragraph). 

9 ‘‘(ii) SPLIT-INTEREST GIFTS.—A dis10 tribution to a split-interest entity shall be 

11 treated as a qualified charitable distribu12 tion only if a deduction for the entire value 

13 of the interest in the distribution for the 

14 use of an organization described in section 

15 170(c) would be allowable under section 

16 170 (determined without regard to sub17 section (b) thereof and this paragraph). 

18 ‘‘(D) APPLICATION OF SECTION 72.—Not19 withstanding section 72, in determining the ex20 tent to which a distribution is a qualified chari21 table distribution, the entire amount of the dis22 tribution shall be treated as includible in gross 

23 income without regard to subparagraph (A) to 

24 the extent that such amount does not exceed 

25 the aggregate amount which would have been so 
27 

•S 1696 IS

1 includible if all amounts were distributed from 

2 all individual retirement accounts treated as 1 

3 contract under paragraph (2)(A) for purposes 

4 of determining the inclusion on such distribu5 tion under section 72. Proper adjustments shall 

6 be made in applying section 72 to other dis7 tributions in such taxable year and subsequent 

8 taxable years. 

9 ‘‘(E) SPECIAL RULES FOR SPLIT-INTEREST

10 ENTITIES.— 

11 ‘‘(i) CHARITABLE REMAINDER

12 TRUSTS.—Notwithstanding section 664(b), 

13 distributions made from a trust described 

14 in subparagraph (G)(i) shall be treated as 

15 ordinary income in the hands of the bene16 ficiary to whom is paid the annuity de17 scribed in section 664(d)(1)(A) or the pay18 ment described in section 664(d)(2)(A). 

19 ‘‘(ii) POOLED INCOME FUNDS.—No 

20 amount shall be includible in the gross in21 come of a pooled income fund (as defined 

22 in subparagraph (G)(ii)) by reason of a 

23 qualified charitable distribution to such 

24 fund, and all distributions from the fund 

25 which are attributable to qualified chari-
28 

•S 1696 IS

1 table distributions shall be treated as ordi2 nary income to the beneficiary. 

3 ‘‘(iii) CHARITABLE GIFT ANNU4 ITIES.—Qualified charitable distributions 

5 made for a charitable gift annuity shall not 

6 be treated as an investment in the con7 tract. 

8 ‘‘(F) DENIAL OF DEDUCTION.—Qualified 

9 charitable distributions shall not be taken into 

10 account in determining the deduction under sec11 tion 170. 

12 ‘‘(G) SPLIT-INTEREST ENTITY DEFINED.— 

13 For purposes of this paragraph, the term ‘split14 interest entity’ means— 

15 ‘‘(i) a charitable remainder annuity 

16 trust or a charitable remainder unitrust 

17 (as such terms are defined in section 

18 664(d)) which must be funded exclusively 

19 by qualified charitable distributions, 

20 ‘‘(ii) a pooled income fund (as defined 

21 in section 642(c)(5)), but only if the fund 

22 accounts separately for amounts attrib23 utable to qualified charitable distributions, 

24 and 
29 

•S 1696 IS

1 ‘‘(iii) a charitable gift annuity (as de2 fined in section 501(m)(5)). 

3 ‘‘(H) APPLICATION.—This paragraph shall 

4 apply to distributions made after August 28, 

5 2005, and before January 1, 2006.’’. 

6 (b) MODIFICATIONS RELATING TO INFORMATION RE7 TURNS BY CERTAIN TRUSTS.— 

8 (1) RETURNS.—Section 6034 (relating to re9 turns by trusts described in section 4947(a)(2) or 

10 claiming charitable deductions under section 642(c)) 

11 is amended to read as follows: 

12 ‘‘SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION 

13 4947(a)(2) OR CLAIMING CHARITABLE DEDUC14 TIONS UNDER SECTION 642(c). 

15 ‘‘(a) TRUSTS DESCRIBED IN SECTION 4947(a)(2).— 

16 Every trust described in section 4947(a)(2) shall furnish 

17 such information with respect to the taxable year as the 

18 Secretary may by forms or regulations require. 

19 ‘‘(b) TRUSTS CLAIMING A CHARITABLE DEDUCTION

20 UNDER SECTION 642(c).— 

21 ‘‘(1) IN GENERAL.—Every trust not required to 

22 file a return under subsection (a) but claiming a de23 duction under section 642(c) for the taxable year 

24 shall furnish such information with respect to such 
30 

•S 1696 IS

1 taxable year as the Secretary may by forms or regu2 lations prescribe, including— 

3 ‘‘(A) the amount of the deduction taken 

4 under section 642(c) within such year, 

5 ‘‘(B) the amount paid out within such year 

6 which represents amounts for which deductions 

7 under section 642(c) have been taken in prior 

8 years, 

9 ‘‘(C) the amount for which such deductions 

10 have been taken in prior years but which has 

11 not been paid out at the beginning of such year, 

12 ‘‘(D) the amount paid out of principal in 

13 the current and prior years for the purposes de14 scribed in section 642(c), 

15 ‘‘(E) the total income of the trust within 

16 such year and the expenses attributable thereto, 

17 and 

18 ‘‘(F) a balance sheet showing the assets, li19 abilities, and net worth of the trust as of the 

20 beginning of such year. 

21 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 

22 apply to a trust for any taxable year if— 

23 ‘‘(A) all the net income for such year, de24 termined under the applicable principles of the 
31 

•S 1696 IS

1 law of trusts, is required to be distributed cur2 rently to the beneficiaries, or 

3 ‘‘(B) the trust is described in section 

4 4947(a)(1).’’. 

5 (2) INCREASE IN PENALTY RELATING TO FIL6 ING OF INFORMATION RETURN BY SPLIT-INTEREST

7 TRUSTS.—Paragraph (2) of section 6652(c) (relating 

8 to returns by exempt organizations and by certain 

9 trusts) is amended by adding at the end the fol10 lowing new subparagraph: 

11 ‘‘(C) SPLIT-INTEREST TRUSTS.—In the 

12 case of a trust which is required to file a return 

13 under section 6034(a), subparagraphs (A) and 

14 (B) of this paragraph shall not apply and para15 graph (1) shall apply in the same manner as if 

16 such return were required under section 6033, 

17 except that— 

18 ‘‘(i) the 5 percent limitation in the 

19 second sentence of paragraph (1)(A) shall 

20 not apply, 

21 ‘‘(ii) in the case of any trust with 

22 gross income in excess of $250,000, the 

23 first sentence of paragraph (1)(A) shall be 

24 applied by substituting ‘$100’ for ‘$20’, 

25 and the second sentence thereof shall be 
32 

•S 1696 IS

1 applied by substituting ‘$50,000’ for 

2 ‘$10,000’, and 

3 ‘‘(iii) the third sentence of paragraph 

4 (1)(A) shall be disregarded. 

5 In addition to any penalty imposed on the trust 

6 pursuant to this subparagraph, if the person re7 quired to file such return knowingly fails to file 

8 the return, such penalty shall also be imposed 

9 on such person who shall be personally liable 

10 for such penalty.’’. 

11 (3) CONFIDENTIALITY OF NONCHARITABLE

12 BENEFICIARIES.—Subsection (b) of section 6104 

13 (relating to inspection of annual information re14 turns) is amended by adding at the end the fol15 lowing new sentence: ‘‘In the case of a trust which 

16 is required to file a return under section 6034(a), 

17 this subsection shall not apply to information re18 garding beneficiaries which are not organizations de19 scribed in section 170(c).’’. 

20 (c) EFFECTIVE DATES.— 

21 (1) SUBSECTION (a).—The amendment made 

22 by subsection (a) shall apply to distributions made 

23 after August 28, 2005. 
33 

•S 1696 IS

1 (2) SUBSECTION (b).—The amendments made 

2 by subsection (b) shall apply to returns for taxable 

3 years beginning after December 31, 2004. 

4 SEC. 303. CHARITABLE DEDUCTION FOR CONTRIBUTIONS 

5 OF FOOD INVENTORIES. 

6 (a) IN GENERAL.—Subsection (e) of section 170 (re7 lating to certain contributions of ordinary income and cap8 ital gain property) is amended by adding at the end the 

9 following new paragraph: 

10 ‘‘(7) APPLICATION OF PARAGRAPH (3) TO CER11 TAIN CONTRIBUTIONS OF FOOD INVENTORY.—For 

12 purposes of this section— 

13 ‘‘(A) EXTENSION TO INDIVIDUALS.—In the 

14 case of a charitable contribution of apparently 

15 wholesome food— 

16 ‘‘(i) paragraph (3)(A) shall be applied 

17 without regard to whether the contribution 

18 is made by a C corporation, and 

19 ‘‘(ii) in the case of a taxpayer other 

20 than a C corporation, the aggregate 

21 amount of such contributions for any tax22 able year which may be taken into account 

23 under this section shall not exceed 10 per24 cent of the taxpayer’s net income for such 

25 taxable year from all trades or businesses 
34 

•S 1696 IS

1 from which such contributions were made 

2 for such taxable year, computed without 

3 regard to this section. 

4 ‘‘(B) LIMITATION ON REDUCTION.—In the 

5 case of a charitable contribution of apparently 

6 wholesome food, notwithstanding paragraph 

7 (3)(B), the amount of the reduction determined 

8 under paragraph (1)(A) shall not exceed the 

9 amount by which the fair market value of such 

10 property exceeds twice the basis of such prop11 erty. 

12 ‘‘(C) DETERMINATION OF BASIS.—If a 

13 taxpayer— 

14 ‘‘(i) does not account for inventories 

15 under section 471, and 

16 ‘‘(ii) is not required to capitalize indi17 rect costs under section 263A, 

18 the taxpayer may elect, solely for purposes of 

19 paragraph (3)(B), to treat the basis of any ap20 parently wholesome food as being equal to 25 

21 percent of the fair market value of such food. 

22 ‘‘(D) DETERMINATION OF FAIR MARKET

23 VALUE.—In the case of a charitable contribu24 tion of apparently wholesome food which is a 

25 qualified contribution (within the meaning of 
35 

•S 1696 IS

1 paragraph (3), as modified by subparagraph 

2 (A) of this paragraph) and which, solely by rea3 son of internal standards of the taxpayer or 

4 lack of market, cannot or will not be sold, the 

5 fair market value of such contribution shall be 

6 determined— 

7 ‘‘(i) without regard to such internal 

8 standards or such lack of market and 

9 ‘‘(ii) by taking into account the price 

10 at which the same or substantially the 

11 same food items (as to both type and qual12 ity) are sold by the taxpayer at the time of 

13 the contribution (or, if not so sold at such 

14 time, in the recent past). 

15 ‘‘(E) APPARENTLY WHOLESOME FOOD.— 

16 For purposes of this paragraph, the term ‘ap17 parently wholesome food’ has the meaning given 

18 such term by section 22(b)(2) of the Bill Emer19 son Good Samaritan Food Donation Act (42 

20 U.S.C. 1791(b)(2)), as in effect on the date of 

21 the enactment of this paragraph. 

22 ‘‘(F) APPLICATION.—This paragraph shall 

23 apply to contributions made after August 28, 

24 2005, and before January 1, 2006.’’. 
36 

•S 1696 IS

1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to contributions made after August 

3 28, 2005. 

4 SEC. 304. CHARITABLE DEDUCTION FOR CONTRIBUTIONS 

5 OF BOOK INVENTORIES. 

6 (a) IN GENERAL.—Section 170(e)(3) (relating to cer7 tain contributions of ordinary income and capital gain 

8 property) is amended by redesignating subparagraph (C) 

9 as subparagraph (D) and by inserting after subparagraph 

10 (B) the following new subparagraph: 

11 ‘‘(C) SPECIAL RULE FOR CONTRIBUTIONS

12 OF BOOK INVENTORY FOR EDUCATIONAL PUR13 POSES.— 

14 ‘‘(i) CONTRIBUTIONS OF BOOK INVEN15 TORY.—In determining whether a qualified 

16 book contribution is a qualified contribu17 tion, subparagraph (A) shall be applied 

18 without regard to whether— 

19 ‘‘(I) the donee is an organization 

20 described in the matter preceding 

21 clause (i) of subparagraph (A), and 

22 ‘‘(II) the property is to be used 

23 by the donee solely for the care of the 

24 ill, the needy, or infants. 
37 

•S 1696 IS

1 ‘‘(ii) AMOUNT OF REDUCTION.—Not2 withstanding subparagraph (B), the 

3 amount of the reduction determined under 

4 paragraph (1)(A) shall not exceed the 

5 amount by which the fair market value of 

6 the contributed property (as determined by 

7 the taxpayer using a bona fide published 

8 market price for such book) exceeds twice 

9 the basis of such property. 

10 ‘‘(iii) QUALIFIED BOOK CONTRIBU11 TION.—For purposes of this paragraph, 

12 the term ‘qualified book contribution’ 

13 means a charitable contribution of books, 

14 but only if the requirements of clauses (iv) 

15 and (v) are met. 

16 ‘‘(iv) IDENTITY OF DONEE.—The re17 quirement of this clause is met if the con18 tribution is to an organization— 

19 ‘‘(I) described in subclause (I) or 

20 (III) of paragraph (6)(B)(i), or 

21 ‘‘(II) described in section 

22 501(c)(3) and exempt from tax under 

23 section 501(a) (other than a private 

24 foundation, as defined in section 

25 509(a), which is not an operating 
38 

•S 1696 IS

1 foundation, as defined in section 

2 4942(j)(3)), which is organized pri3 marily to make books available to the 

4 general public at no cost or to operate 

5 a literacy program. 

6 ‘‘(v) CERTIFICATION BY DONEE.—The 

7 requirement of this clause is met if, in ad8 dition to the certifications required by sub9 paragraph (A) (as modified by this sub10 paragraph), the donee certifies in writing 

11 that— 

12 ‘‘(I) the books are suitable, in 

13 terms of currency, content, and quan14 tity, for use in the donee’s educational 

15 programs, and 

16 ‘‘(II) the donee will use the books 

17 in its educational programs. 

18 ‘‘(vi) BONA FIDE PUBLISHED MARKET

19 PRICE.—For purposes of this subpara20 graph, the term ‘bona fide published mar21 ket price’ means, with respect to any book, 

22 a price— 

23 ‘‘(I) determined using the same 

24 printing and edition, 
39 

•S 1696 IS

1 ‘‘(II) determined in the usual 

2 market in which such a book has been 

3 customarily sold by the taxpayer, and 

4 ‘‘(III) for which the taxpayer can 

5 demonstrate to the satisfaction of the 

6 Secretary that the taxpayer custom7 arily sold such books in arm’s length 

8 transactions within 7 years preceding 

9 the contribution of such a book. 

10 ‘‘(vii) APPLICATION.—This subpara11 graph shall apply to contributions made 

12 after August 28, 2005, and before January 

13 1, 2006.’’. 

14 (b) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to contributions made after August 

16 28, 2005. 

17 SEC. 305. ADDITIONAL PERSONAL EXEMPTION AMOUNT 

18 FOR HURRICANE KATRINA HOUSEGUEST. 

19 (a) IN GENERAL.—In the case of the a taxpayer’s 

20 taxable year beginning in 2005, the amount allowed as a 

21 deduction in computing taxable income of the taxpayer 

22 under section 151 of the Internal Revenue Code of 1986 

23 shall be increased by the lesser of— 

24 (1) the product of— 

25 (A) $500, and 
40 

•S 1696 IS

1 (B) the number of Hurricane Katrina 

2 houseguests of the taxpayer, or 

3 (2) $2,000. 

4 (b) HURRICANE KATRINA HOUSEGUEST.—For pur5 poses of this section, the term ‘‘Hurricane Katrina house6 guest’’ means any individual— 

7 (1) who would not otherwise qualify for an ex8 emption amount with respect to the taxpayer for the 

9 taxable year, 

10 (2) whose principal place of abode in a Hurri11 cane Katrina disaster area was rendered uninhabit12 able after August 28, 2005, and 

13 (3) is provided shelter without remuneration for 

14 not less than 60 days after August 28, 2005, and 

15 before January 1, 2006, by the taxpayer in the tax16 payer’s principal place of abode. 

17 SEC. 306. INCREASE IN STANDARD MILEAGE RATE FOR 

18 CHARITABLE USE OF PASSENGER AUTO19 MOBILE. 

20 Notwithstanding section 170(i) of the Internal Rev21 enue Code of 1986, for purposes of computing the deduc22 tion under section 170 of such Code for use of a passenger 

23 automobile for the period beginning on August 29, 2005, 

24 and ending before January 1, 2006, the standard mileage 

25 rate shall be 50 percent of the standard mileage rate in 
41 

•S 1696 IS

1 effect under section 162(a) of such Code at the time of 

2 such use. Any increase under this section shall be rounded 

3 to the next highest cent. 

4 TITLE IV—ADDITIONAL TAX 

5 RELIEF PROVISIONS 

6 SEC. 401. EXCLUSIONS OF CERTAIN CANCELLATIONS OF IN7 DEBTEDNESS FOR VICTIMS OF HURRICANE 

8 KATRINA. 

9 (a) IN GENERAL.—For purposes of the Internal Rev10 enue Code of 1986 gross income shall not include any 

11 amount which (but for this section) would be includible 

12 in gross income by reason of the discharge (in whole or 

13 in part) of indebtedness of a taxpayer by a person regu14 larly engaged in the trade or business of commercial lend15 ing if the discharge is by reason of the damage sustained 

16 by the taxpayer in connection with Hurricane Katrina. 

17 (b) EFFECTIVE DATE.—This section shall apply to 

18 discharges made on or after August 29, 2005, and before 

19 January 1, 2007. 

20 SEC. 402. MODIFICATION TO CASUALTY LOSS RULES FOR 

21 VICTIMS OF HURRICANE KATRINA. 

22 In the case of an individual with a personal casualty 

23 loss which arises in connection with Hurricane Katrina— 

24 (1) section 165(h)(2)(A) of the Internal Rev25 enue Code of 1986 shall not apply, and 
42 

•S 1696 IS

1 (2) in applying such section to other personal 

2 casualty losses during the taxable year, losses to 

3 which this section applies shall be disregarded. 

4 SEC. 403. REQUIRED EXERCISE OF AUTHORITY UNDER SEC5 TION 7508A FOR TAX RELIEF FOR VICTIMS OF 

6 HURRICANE KATRINA. 

7 (a) AUTHORITY INCLUDES SUSPENSION OF PAY8 MENT OF EMPLOYMENT AND EXCISE TAXES.—Subpara9 graphs (A) and (B) of section 7508(a)(1) are amended 

10 to read as follows: 

11 ‘‘(A) Filing any return of income, estate, 

12 gift, employment, or excise tax; 

13 ‘‘(B) Payment of any income, estate, gift, 

14 employment, or excise tax or any installment 

15 thereof or of any other liability to the United 

16 States in respect thereof;’’. 

17 (b) APPLICATION TO VICTIMS OF HURRICANE

18 KATRINA.—In the case of any taxpayer determined by the 

19 Secretary of the Treasury to be affected by the Presi20 dentially declared disaster relating to Hurricane Katrina, 

21 any relief provided by the Secretary of the Treasury under 

22 section 7508A of the Internal Revenue Code of 1986 shall 

23 be for a period ending not earlier than February 28, 2006, 

24 and shall be treated as applying to the filing of returns 
43 

•S 1696 IS

1 relating to, and the payment of, employment and excise 

2 taxes. 

3 (c) EFFECTIVE DATE.—The amendment made by 

4 subsection (a) shall apply for any period for performing 

5 an act which has not expired before August 29, 2005. 

6 SEC. 404. SPECIAL MORTGAGE FINANCING RULES FOR 

7 RESIDENCES LOCATED IN HURRICANE 

8 KATRINA DISASTER AREA. 

9 In the case of a residence located in a Hurricane 

10 Katrina disaster area, section 143 of the Internal Revenue 

11 Code of 1986 shall be applied with the following modifica12 tions to financing provided with respect to such residence 

13 within 3 years after the date of the disaster declaration: 

14 (1) Subsections (d), (e) and (f) of such section 

15 143 shall be applied as if such residence were a tar16 geted area residence. 

17 (2) Subsection (f)(3) of such section 143 shall 

18 be applied without regard to subparagraph (A) 

19 thereof. 

20 (3) The limitation under subsection (k)(4) of 

21 such section 143 shall be increased (but not above 

22 $150,000) to the extent the qualified home-improve23 ment loan is for the repair of damage caused by 

24 Hurricane Katrina. 
44 

•S 1696 IS

1 This section shall apply only with respect to bonds issued 

2 after August 28, 2005, and before August 29, 2008. 

3 SEC. 405. EXTENSION OF REPLACEMENT PERIOD FOR NON4 RECOGNITION OF GAIN FOR PROPERTY LO5 CATED IN HURRICANE KATRINA DISASTER 

6 AREA. 

7 Notwithstanding subsections (g) and (h) of section 

8 1033 of the Internal Revenue Code of 1986, clause (i) of 

9 section 1033(a)(2)(B) of such Code shall be applied by 

10 substituting ‘‘5 years’’ for ‘‘2 years’’ with respect to prop11 erty which is compulsorily or involuntarily converted as 

12 a result of Hurricane Katrina in a Hurricane Katrina dis13 aster area, but only if substantially all of the use of the 

14 replacement property is in such area. 

15 TITLE V—ADDITIONAL 

16 PROVISIONS 

17 SEC. 501. DISCLOSURE TO STATE OFFICIALS OF PROPOSED 

18 ACTIONS RELATED TO EXEMPT ORGANIZA19 TIONS. 

20 (a) IN GENERAL.—Subsection (c) of section 6104 is 

21 amended by striking paragraph (2) and inserting the fol22 lowing new paragraphs: 

23 ‘‘(2) DISCLOSURE OF PROPOSED ACTIONS RE24 LATED TO CHARITABLE ORGANIZATIONS.— 
45 

•S 1696 IS

1 ‘‘(A) SPECIFIC NOTIFICATIONS.—In the 

2 case of an organization to which paragraph (1) 

3 applies, the Secretary may disclose to the ap4 propriate State officer— 

5 ‘‘(i) a notice of proposed refusal to 

6 recognize such organization as an organi7 zation described in section 501(c)(3) or a 

8 notice of proposed revocation of such orga9 nization’s recognition as an organization 

10 exempt from taxation, 

11 ‘‘(ii) the issuance of a letter of pro12 posed deficiency of tax imposed under sec13 tion 507 or chapter 41 or 42, and 

14 ‘‘(iii) the names, addresses, and tax15 payer identification numbers of organiza16 tions which have applied for recognition as 

17 organizations described in section 

18 501(c)(3). 

19 ‘‘(B) ADDITIONAL DISCLOSURES.—Returns 

20 and return information of organizations with 

21 respect to which information is disclosed under 

22 subparagraph (A) may be made available for in23 spection by or disclosed to an appropriate State 

24 officer. 
46 

•S 1696 IS

1 ‘‘(C) PROCEDURES FOR DISCLOSURE.—In2 formation may be inspected or disclosed under 

3 subparagraph (A) or (B) only— 

4 ‘‘(i) upon written request by an ap5 propriate State officer, and 

6 ‘‘(ii) for the purpose of, and only to 

7 the extent necessary in, the administration 

8 of State laws regulating such organiza9 tions. 

10 Such information may only be inspected by or 

11 disclosed to representatives of the appropriate 

12 State officer designated as the individuals who 

13 are to inspect or to receive the returns or re14 turn information under this paragraph on be15 half of such officer. Such representatives shall 

16 not include any contractor or agent. 

17 ‘‘(D) DISCLOSURES OTHER THAN BY RE18 QUEST.—The Secretary may make available for 

19 inspection or disclose returns and return infor20 mation of an organization to which paragraph 

21 (1) applies to an appropriate State officer of 

22 any State if the Secretary determines that such 

23 inspection or disclosure may facilitate the reso24 lution of Federal or State issues relating to the 

25 tax-exempt status of such organization. 
47 

•S 1696 IS

1 ‘‘(3) DISCLOSURE WITH RESPECT TO CERTAIN

2 OTHER EXEMPT ORGANIZATIONS.—Upon written re3 quest by an appropriate State officer, the Secretary 

4 may make available for inspection or disclosure re5 turns and return information of an organization de6 scribed in paragraph (2), (4), (6), (7), (8), (10), or 

7 (13) of section 501(c) for the purpose of, and to the 

8 extent necessary in, the administration of State laws 

9 regulating the solicitation or administration of the 

10 charitable funds or charitable assets of such organi11 zations. Such information may be inspected only by 

12 or disclosed only to representatives of the appro13 priate State officer designated as the individuals who 

14 are to inspect or to receive the returns or return in15 formation under this paragraph on behalf of such of16 ficer. Such representatives shall not include any con17 tractor or agent. 

18 ‘‘(4) USE IN CIVIL JUDICIAL AND ADMINISTRA19 TIVE PROCEEDINGS.—Returns and return informa20 tion disclosed pursuant to this subsection may be 

21 disclosed in civil administrative and civil judicial pro22 ceedings pertaining to the enforcement of State laws 

23 regulating such organizations in a manner pre24 scribed by the Secretary similar to that for tax ad25 ministration proceedings under section 6103(h)(4). 
48 

•S 1696 IS

1 ‘‘(5) NO DISCLOSURE IF IMPAIRMENT.—Re2 turns and return information shall not be disclosed 

3 under this subsection, or in any proceeding described 

4 in paragraph (4), to the extent that the Secretary 

5 determines that such disclosure would seriously im6 pair Federal tax administration. 

7 ‘‘(6) DEFINITIONS.—For purposes of this sub8 section— 

9 ‘‘(A) RETURN AND RETURN INFORMA10 TION.—The terms ‘return’ and ‘return informa11 tion’ have the respective meanings given to such 

12 terms by section 6103(b). 

13 ‘‘(B) APPROPRIATE STATE OFFICER.—The 

14 term ‘appropriate State officer’ means— 

15 ‘‘(i) the State attorney general, 

16 ‘‘(ii) in the case of an organization to 

17 which paragraph (1) applies, any other 

18 State official charged with overseeing orga19 nizations of the type described in section 

20 501(c)(3), and 

21 ‘‘(iii) in the case of an organization to 

22 which paragraph (3) applies, the head of 

23 an agency designated by the State attorney 

24 general as having primary responsibility 
49 

•S 1696 IS

1 for overseeing the solicitation of funds for 

2 charitable purposes.’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) Subsection (a) of section 6103 is amend5 ed— 

6 (A) by inserting ‘‘or any appropriate State 

7 officer who has or had access to returns or re8 turn information under section 6104(c)’’ after 

9 ‘‘this section’’ in paragraph (2), and 

10 (B) by striking ‘‘or subsection (n)’’ in 

11 paragraph (3) and inserting ‘‘subsection (n), or 

12 section 6104(c)’’. 

13 (2) Subparagraph (A) of section 6103(p)(3) is 

14 amended by inserting ‘‘and section 6104(c)’’ after 

15 ‘‘section’’ in the first sentence. 

16 (3) The heading for paragraph (1) of section 

17 6104(c) is amended by inserting ‘‘FOR CHARITABLE

18 ORGANIZATIONS’’ after ‘‘RULE’’. 

19 (4) Paragraph (2) of section 7213(a) is amend20 ed by inserting ‘‘or under section 6104(c)’’ after 

21 ‘‘6103’’. 

22 (5) Paragraph (2) of section 7213A(a) is 

23 amended by inserting ‘‘or 6104(c)’’ after ‘‘6103’’. 
50 

•S 1696 IS

1 (6) Paragraph (2) of section 7431(a) is amend2 ed by inserting ‘‘(including any disclosure in viola3 tion of section 6104(c))’’ after ‘‘6103’’. 

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

5 this section shall take effect on the date of the enactment 

6 of this Act but shall not apply to requests made before 

7 such date. 

8 SEC. 502. DEDICATION AND USE OF CERTAIN FEES. 

9 Notwithstanding section 202(c) of Public Law 108– 

10 89, the Secretary of the Treasury may retain and use fees 

11 from employee plan and exempt organization letter rulings 

12 and determination letters charged under section 7528 of 

13 the Internal Revenue Code of 1986— 

14 (1) in fiscal years 2005 and 2006— 

15 (A) for the administration of the provisions 

16 of, and amendments made by, this Act, 

17 (B) to provide taxpayer assistance to vic18 tims of Hurricane Katrina, and 

19 (C) to aid the Internal Revenue Service in 

20 repairing, rebuilding, and recovering from the 

21 damage to Internal Revenue Service offices, 

22 equipment, and support caused by Hurricane 

23 Katrina, and 

24 (2) in any fiscal year after 2006— 
51 

•S 1696 IS

1 (A) on oversight, enforcement, and admin2 istration by the Tax-Exempt and Government 

3 Entities Division of the Internal Revenue Serv4 ice, and 

5 (B) on oversight, enforcement, and admin6 istration of section 170 of such Code. 

Æ