II

106TH CONGRESS

1ST SESSION S. 997

To assist States in providing individuals a credit against State income taxes

or a comparable benefit for contributions to charitable organizations

working to prevent or reduce poverty and protect and encourage donations to charitable organizations, to prohibit discrimination against nongovernmental organizations and certain individuals on the basis of religion in the distribution of government funds to provide government

assistance and the distribution of such assistance, to allow such organizations to accept such funds to provide such assistance without impairing

the religious character of such organizations, to provide for tax-free

distributions from individual retirement accounts for charitable purposes,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 11, 1999

Mr. SANTORUM (for himself, Mr. ABRAHAM, Mr. ASHCROFT, Mr.

BROWNBACK, Mr. COVERDELL, Mr. DEWINE, Mrs. HUTCHISON, and Mr.

MCCAIN) introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To assist States in providing individuals a credit against

State income taxes or a comparable benefit for contributions to charitable organizations working to prevent or

reduce poverty and protect and encourage donations to

charitable organizations, to prohibit discrimination

against nongovernmental organizations and certain individuals on the basis of religion in the distribution of

government funds to provide government assistance and

the distribution of such assistance, to allow such organi-
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zations to accept such funds to provide such assistance

without impairing the religious character of such organizations, to provide for tax-free distributions from individual retirement accounts for charitable purposes, 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; TABLE OF CONTENTS.

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

5 ‘‘Charity Empowerment Act of 1999’’.

6 (b) TABLE OF CONTENTS.—The table of contents for

7 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—ASSISTANCE TO STATES IN PROVIDING CHARITY TAX

CREDITS

Sec. 101. Authority to use certain Federal grant funds for State charity tax

credit.

Sec. 102. Definitions.

Sec. 103. Study and report.

Sec. 104. Effective date.

TITLE II—BUDGET OFFSET

Sec. 201. Reduction of earned income credit for individuals without children.

TITLE III—TORT REFORMS RELATING TO CHARITABLE

CONTRIBUTIONS

Sec. 301. Definitions.

Sec. 302. Liability.

Sec. 303. Exceptions.

Sec. 304. Superseding provision.

Sec. 305. Election of State regarding nonapplicability.

Sec. 306. Effective date.

TITLE IV—CHARITABLE CHOICE EXPANSION ACT

Sec. 401. Provision of assistance under government programs by religious organizations.

TITLE V—TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL

RETIREMENT ACCOUNTS FOR CHARITABLE PURPOSES
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Sec. 501. Tax-free distributions from individual retirement accounts for charitable purposes.

1 TITLE I—ASSISTANCE TO

2 STATES IN PROVIDING CHAR3 ITY TAX CREDITS

4 SEC. 101. AUTHORITY TO USE CERTAIN FEDERAL GRANT

5 FUNDS FOR STATE CHARITY TAX CREDIT.

6 (a) IN GENERAL.—Notwithstanding any other provi7 sion of law, if there is in effect under State law a charity

8 tax credit, then the State may use for any purpose not

9 more than 50 percent of each total amount paid to the

10 State during the fiscal year under each of the provisions

11 of law specified in subsection (d).

12 (b) LIMITATION.—The aggregate amount a State

13 may use under subsection (a) during a fiscal year shall

14 not exceed an amount equal to 100 percent of the revenue

15 loss of the State during the fiscal year that is attributable

16 to the charity tax credit, as determined by the Secretary

17 of the Treasury without regard to any such revenue loss

18 occurring before January 1, 2000.

19 (c) CERTAIN CREDIT AMOUNTS TREATED AS STATE

20 PAYMENT FOR TEMPORARY ASSISTANCE FOR NEEDY

21 FAMILIES.—For purposes of title IV of the Social Security

22 Act, an amount equal to the excess (if any) of—

23 (1) the amount of the revenue loss of a State

24 (not to exceed 100 percent) during a fiscal year that
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1 is attributable to the charity tax credit, as deter2 mined under subsection (b); over

3 (2) the aggregate amount used by the State

4 under subsection (a) during the fiscal year,

5 shall be treated as an amount used during the fiscal year

6 by the State to carry out a State program funded under

7 part A of such title.

8 (d) PROVISIONS OF LAW.—The provisions of law

9 specified in this subsection are the following:

10 (1) Paragraphs (1) through (4) of section

11 403(a) of the Social Security Act (42 U.S.C.

12 603(a)).

13 (2) The Child Care and Development Block

14 Grant Act of 1990 (42 U.S.C. 9858–9858q) and

15 section 418 of the Social Security Act (42 U.S.C.

16 618).

17 (3) Sections 2002 and 2007 of the Social Secu18 rity Act (42 U.S.C. 1397a and 1397f).

19 (4) The Community Services Block Grant Act

20 (42 U.S.C. 9901–9912).

21 (5) The Low-Income Home Energy Assistance

22 Act of 1981 (42 U.S.C. 8621 et seq.).

23 (6) The Job Training Partnership Act (29

24 U.S.C. 1501 et seq.).
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1 (7) Title I of the Housing and Community De2 velopment Act of 1974 (42 U.S.C. 5301 et seq.).

3 SEC. 102. DEFINITIONS.

4 (a) CHARITY TAX CREDIT.—For purposes of this

5 title, the term ‘‘charity tax credit’’ means a nonrefundable

6 credit against State income tax (or, in the case of a State

7 which does not impose an income tax, a comparable ben8 efit)—

9 (1) which is allowable only to an individual for

10 a cash contribution to a qualified charity; and

11 (2) of which the maximum amount allowable to

12 an individual for any taxable year does not exceed

13 $50 ($100 in the case of a joint or combined return

14 of individuals who are married to each other) in the

15 first year the credit is available and such amount is

16 increased by not more than $50 ($100 in the case

17 of a joint or combined return of individuals who are

18 married to each other) for each subsequent year (but

19 not to exceed $250 ($500, if applicable)).

20 (b) QUALIFIED CHARITY.—For purposes of this

21 title—

22 (1) IN GENERAL.—The term ‘‘qualified charity’’

23 means any organization—

24 (A) which is described in section 501(c)(3)

25 of the Internal Revenue Code of 1986 and ex-
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1 empt from tax under section 501(a) of such

2 Code;

3 (B) which is certified by the appropriate

4 State authority as meeting the requirements of

5 paragraphs (3) and (4); and

6 (C) which annually reports the information

7 required to be furnished under paragraph (5)

8 and if such organization is otherwise required

9 to file a return under section 6033 of such

10 Code, which elects to treat the information re11 quired to be furnished under paragraph (5) as

12 the information specified in section 6033(b) of

13 such Code.

14 (2) CERTAIN CONTRIBUTIONS TO COLLECTION

15 ORGANIZATIONS TREATED AS CONTRIBUTIONS TO

16 QUALIFIED CHARITY.—

17 (A) IN GENERAL.—A contribution to a col18 lection organization shall be treated as a con19 tribution to a qualified charity if the donor des20 ignates in writing that the contribution is for

21 the qualified charity.

22 (B) COLLECTION ORGANIZATION.—The

23 term ‘‘collection organization’’ means an organi24 zation described in section 501(c)(3) of the In-
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1 ternal Revenue Code of 1986 and exempt from

2 tax under section 501(a) of such Code—

3 (i) which solicits and collects gifts and

4 grants which, by agreement, are distrib5 uted to qualified charities described in

6 paragraph (1);

7 (ii) which distributes to qualified

8 charities described in paragraph (1) at

9 least 90 percent of the gifts and grants re10 ceived that are designated for such quali11 fied charities; and

12 (iii) which meets the requirements of

13 paragraph (6).

14 (3) CHARITY MUST PRIMARILY ASSIST POOR IN15 DIVIDUALS.—

16 (A) IN GENERAL.—An organization meets

17 the requirements of this paragraph only if the

18 appropriate State authority reasonably expects

19 that the predominant activity of such organiza20 tion will be the provision of direct services with21 in the United States to individuals and families

22 whose annual incomes generally do not exceed

23 185 percent of the official poverty line (as de24 fined by the Office of Management and Budget)
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1 in order to prevent or alleviate poverty among

2 such individuals and families.

3 (B) NO RECORDKEEPING IN CERTAIN

4 CASES.—An organization shall not be required

5 to establish or maintain records with respect to

6 the incomes of individuals and families for pur7 poses of subparagraph (A) if such individuals or

8 families are members of groups which are gen9 erally recognized as including substantially only

10 individuals and families described in subpara11 graph (A).

12 (C) FOOD AID AND HOMELESS SHEL13 TERS.—Except as otherwise provided by the ap14 propriate State authority, for purposes of sub15 paragraph (A), services to individuals in the

16 form of—

17 (i) donations of food or meals; or

18 (ii) temporary shelter to homeless in19 dividuals,

20 shall be treated as provided to individuals de21 scribed in subparagraph (A) if the location and

22 operation of such services are such that the

23 service provider may reasonably conclude that

24 the beneficiaries of such services are predomi-
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1 nantly individuals described in subparagraph

2 (A).

3 (4) MINIMUM EXPENSE REQUIREMENT.—

4 (A) IN GENERAL.—An organization meets

5 the requirements of this paragraph only if the

6 appropriate State authority reasonably expects

7 that the annual poverty program expense of

8 such organization will not be less than 75 per9 cent of the annual aggregate expenses of such

10 organization.

11 (B) POVERTY PROGRAM EXPENSE.—For

12 purposes of subparagraph (A)—

13 (i) IN GENERAL.—The term ‘‘poverty

14 program expense’’ means any expense paid

15 or incurred in providing program services

16 described in paragraph (3).

17 (ii) EXCEPTIONS.—Such term shall

18 not include—

19 (I) any management or general

20 expense;

21 (II) any expense for the purpose

22 of influencing legislation (as defined

23 in section 4911(d) of the Internal

24 Revenue Code of 1986);
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1 (III) any expense for the purpose

2 of fundraising;

3 (IV) any expense for a legal serv4 ice provided on behalf of any indi5 vidual described in paragraph (3); and

6 (V) any expense which consists of

7 a payment to an affiliate of the orga8 nization.

9 (5) REPORTING REQUIREMENT.—The informa10 tion required to be furnished under this paragraph

11 is—

12 (A) each category of services (including

13 food, shelter, education, substance abuse, job

14 training, or otherwise) which constitutes the

15 predominant activities of the organization; and

16 (B) the percentages determined by dividing

17 the categories of the organization’s expenses for

18 the year by the total expenses of the organiza19 tion for the year, including—

20 (i) program services;

21 (ii) management expenses;

22 (iii) general expenses;

23 (iv) fundraising expenses; and

24 (v) payments to affiliates.
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1 (6) ADDITIONAL REQUIREMENTS FOR SOLICITA2 TION ORGANIZATIONS.—The requirements of this

3 paragraph are met if the organization—

4 (A) maintains separate accounting for rev5 enues and expenses; and

6 (B) makes available to the public adminis7 trative and fundraising costs and information

8 regarding any organization receiving funds from

9 the organization and the amount of such funds.

10 (7) RECOMMENDATIONS.—It is recommended,

11 but not required, that—

12 (A) the definition of ‘‘qualified charity’’ be

13 further limited under State law to an

14 organization—

15 (i) which has been operating for at

16 least 1 year or is controlled by, or operated

17 under the auspices of, an organization

18 which has been operating for at least 1

19 year; and

20 (ii) with expenses for the purpose of

21 influencing legislation, litigation on behalf

22 of any individual described in paragraph

23 (3), voter registration, political organizing,

24 public policy advocacy, or public policy re25 search in an amount not in excess of 5
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1 percent of the total expenses of the organi2 zation;

3 (B) except as provided in subsection

4 (a)(2), the amount of the charity tax credit be

5 equal to at least 50 percent and not more than

6 90 percent of the amount of the individual’s

7 cash contribution to a qualified charity; and

8 (C) contributions made not later than the

9 time prescribed by law for filing the return of

10 the State income tax for a taxable year (not in11 cluding extensions thereof) be treated as made

12 (at the taxpayer’s election) on the last day of

13 such year.

14 (8) SPECIAL RULE FOR STATES REQUIRING TAX

15 UNIFORMITY.—In the case of a State—

16 (A) which has a constitutional requirement

17 of tax uniformity; and

18 (B) which, as of December 31, 1997, im19 posed a tax on personal income with—

20 (i) a single flat rate applicable to all

21 earned and unearned income (except inso22 far as any amount is not taxed pursuant to

23 tax forgiveness provisions); and

24 (ii) no generally available exemptions

25 or deductions to individuals,
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1 the requirement of subsection (a)(2) shall be treated

2 as met if the amount of the credit is limited to a

3 uniform percentage (but not greater than 25 per4 cent) of State personal income tax liability (deter5 mined without regard to credits).

6 (9) COORDINATION WITH FEDERAL CHARI7 TABLE CONTRIBUTION DEDUCTION.—The amount of

8 the deduction allowed under the Internal Revenue

9 Code of 1986 for contributions which are taken into

10 account in determining any charity tax credit shall

11 be reduced by the amount of such credit which is al12 lowed.

13 (c) STATE.—For purposes of this title, the term

14 ‘‘State’’ means each of the several States, the District of

15 Columbia, the Commonwealth of Puerto Rico, the Virgin

16 Islands, Guam, American Samoa, the Northern Mariana

17 Islands, any other territory or possession of the United

18 States.

19 SEC. 103. STUDY AND REPORT.

20 (a) STUDY.—The Comptroller General of the United

21 States shall conduct a study of the effects of the charity

22 tax credit under this title, including—

23 (1) the types of organizations which receive

24 contributions during the first year to which the cred25 it applies; and
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1 (2) the types of services provided to the poor by

2 such organizations.

3 (b) REPORT.—The Comptroller General shall report

4 to Congress the results of such study, including—

5 (1) the geographical distribution of funding

6 from charity tax credit contributions, and an anal7 ysis of the information provided on the annual re8 turns required under section 6033 of the Internal

9 Revenue Code of 1986 with respect to qualified

10 charities to determine if the broad categories of serv11 ices provided to the poor (including food, shelter,

12 education, substance abuse, job training, or other13 wise) match the services that would otherwise be

14 provided by Federal welfare program funds without

15 the enactment of the reductions in the programs

16 permitted by this legislation; and

17 (2) any recommendations for legislative

18 changes.

19 SEC. 104. EFFECTIVE DATE.

20 This title shall take effect on January 1, 2000.

21 TITLE II—BUDGET OFFSET

22 SEC. 201. REDUCTION OF EARNED INCOME CREDIT FOR IN23 DIVIDUALS WITHOUT CHILDREN.

24 (a) IN GENERAL.—The table in subparagraph (A) of

25 section 32(b)(1) of the Internal Revenue Code of 1986 (re-
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1 lating to percentages) is amended by striking the item re2 lating to no qualifying children and inserting the following:

‘‘No qualifying children ........................................................ 3.825 7.65.’’

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

4 subsection (a) shall apply to taxable years beginning after

5 December 31, 2001.

6 TITLE III—TORT REFORMS RE7 LATING TO CHARITABLE CON8 TRIBUTIONS

9 SEC. 301. DEFINITIONS.

10 In this title:

11 (1) AIRCRAFT.—The term ‘‘aircraft’’ has the

12 meaning provided that term in section 40102(6) of

13 title 49, United States Code.

14 (2) BUSINESS ENTITY.—The term ‘‘business

15 entity’’ means a firm, corporation, association, part16 nership, consortium, joint venture, or other form of

17 enterprise.

18 (3) EQUIPMENT.—The term ‘‘equipment’’ in19 cludes mechanical equipment, electronic equipment,

20 and office equipment.

21 (4) FACILITY.—The term ‘‘facility’’ means any

22 real property, including any building, improvement,

23 or appurtenance.
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1 (5) GROSS NEGLIGENCE.—The term ‘‘gross

2 negligence’’ means voluntary and conscious conduct

3 by a person with knowledge (at the time of the con4 duct) that the conduct is likely to be harmful to the

5 health or well-being of another person.

6 (6) INTENTIONAL MISCONDUCT.—The term

7 ‘‘intentional misconduct’’ means conduct by a person

8 with knowledge (at the time of the conduct) that the

9 conduct is harmful to the health or well-being of an10 other person.

11 (7) MOTOR VEHICLE.—The term ‘‘motor vehi12 cle’’ has the meaning provided that term in section

13 30102(6) of title 49, United States Code.

14 (8) NONPROFIT ORGANIZATION.—The term

15 ‘‘nonprofit organization’’ means—

16 (A) any organization described in section

17 501(c)(3) of the Internal Revenue Code of 1986

18 and exempt from tax under section 501(a) of

19 such Code; or

20 (B) any not-for-profit organization orga21 nized and conducted for public benefit and op22 erated primarily for charitable, civic, edu23 cational, religious, welfare, or health purposes.

24 (9) STATE.—The term ‘‘State’’ means each of

25 the several States, the District of Columbia, the
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1 Commonwealth of Puerto Rico, the Virgin Islands,

2 Guam, American Samoa, the Northern Mariana Is3 lands, any other territory or possession of the

4 United States, or any political subdivision of any

5 such State, territory, or possession.

6 SEC. 302. LIABILITY.

7 (a) LIABILITY OF BUSINESS ENTITIES THAT DO8 NATE EQUIPMENT TO NONPROFIT ORGANIZATIONS.—

9 (1) IN GENERAL.—Subject to section 303, a

10 business entity shall not be subject to civil liability

11 relating to any injury or death that results from the

12 use of equipment donated by a business entity to a

13 nonprofit organization.

14 (2) APPLICATION.—This subsection shall apply

15 with respect to civil liability under Federal and State

16 law.

17 (b) LIABILITY OF BUSINESS ENTITIES PROVIDING

18 USE OF FACILITIES TO NONPROFIT ORGANIZATIONS.—

19 (1) IN GENERAL.—Subject to section 303, a

20 business entity shall not be subject to civil liability

21 relating to any injury or death occurring at a facility

22 of the business entity in connection with a use of

23 such facility by a nonprofit organization, if—

24 (A) the use occurs outside of the scope of

25 business of the business entity;
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1 (B) such injury or death occurs during a

2 period that such facility is used by the non3 profit organization; and

4 (C) the business entity authorized the use

5 of such facility by the nonprofit organization.

6 (2) APPLICATION.—This subsection shall

7 apply—

8 (A) with respect to civil liability under

9 Federal and State law; and

10 (B) regardless of whether a nonprofit orga11 nization pays for the use of a facility.

12 (c) LIABILITY OF BUSINESS ENTITIES PROVIDING

13 USE OF A MOTOR VEHICLE OR AIRCRAFT.—

14 (1) IN GENERAL.—Subject to section 303, a

15 business entity shall not be subject to civil liability

16 relating to any injury or death occurring as a result

17 of the operation of aircraft or a motor vehicle of a

18 business entity loaned to a nonprofit organization

19 for use outside of the scope of business of the busi20 ness entity, if—

21 (A) such injury or death occurs during a

22 period that such motor vehicle or aircraft is

23 used by a nonprofit organization; and
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1 (B) the business entity authorized the use

2 by the nonprofit organization of motor vehicle

3 or aircraft that resulted in the injury or death.

4 (2) APPLICATION.—This subsection shall

5 apply—

6 (A) with respect to civil liability under

7 Federal and State law; and

8 (B) regardless of whether a nonprofit orga9 nization pays for the use of the aircraft or

10 motor vehicle.

11 (d) LIABILITY OF BUSINESS ENTITIES PROVIDING

12 TOURS OF FACILITIES.—

13 (1) IN GENERAL.—Subject to section 303, a

14 business entity shall not be subject to civil liability

15 relating to any injury to, or death of an individual

16 occurring at a facility of the business entity, if—

17 (A) such injury or death occurs during a

18 tour of the facility in an area of the facility that

19 is not otherwise accessible to the general public;

20 and

21 (B) the business entity authorized the

22 tour.

23 (2) APPLICATION.—This subsection shall

24 apply—
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1 (A) with respect to civil liability under

2 Federal and State law; and

3 (B) regardless of whether an individual

4 pays for the tour.

5 SEC. 303. EXCEPTIONS.

6 Section 302 shall not apply to an injury or death that

7 results from an act or omission of a business entity that

8 constitutes gross negligence or intentional misconduct, in9 cluding any misconduct that—

10 (1) constitutes a crime of violence (as that term

11 is defined in section 16 of title 18, United States

12 Code) or act of international terrorism (as that term

13 is defined in section 2331 of title 18, United States

14 Code) for which the defendant has been convicted in

15 any court;

16 (2) constitutes a hate crime (as that term is

17 used in the Hate Crime Statistics Act (28 U.S.C.

18 534 note));

19 (3) involves a sexual offense, as defined by ap20 plicable State law, for which the defendant has been

21 convicted in any court; or

22 (4) involves misconduct for which the defendant

23 has been found to have violated a Federal or State

24 civil rights law.
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1 SEC. 304. SUPERSEDING PROVISION.

2 (a) IN GENERAL.—Subject to subsection (b) and sec3 tion 305, this title preempts the laws of any State to the

4 extent that such laws are inconsistent with this title, ex5 cept that this title shall not preempt any State law that

6 provides additional protection for a business entity for an

7 injury or death described in a subsection of section 302

8 with respect to which the conditions specified in such sub9 section apply.

10 (b) LIMITATION.—Nothing in this title shall be con11 strued to supersede any Federal or State health or safety

12 law.

13 SEC. 305. ELECTION OF STATE REGARDING NONAPPLICA14 BILITY.

15 (a) ELECTION OF STATE REGARDING NONAPPLICA16 BILITY.—A provision of this title shall not apply to any

17 civil action in a State court against a business entity in

18 which all parties are citizens of the State if such State

19 enacts a statute—

20 (1) citing the authority of this section;

21 (2) declaring the election of such State that

22 such provision shall not apply to such civil action in

23 the State; and

24 (3) containing no other provisions.
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1 SEC. 306. EFFECTIVE DATE.

2 This title shall apply to injuries (and deaths resulting

3 therefrom) occurring on or after the date of the enactment

4 of this Act.

5 TITLE IV—CHARITABLE CHOICE

6 EXPANSION ACT

7 SEC. 401. PROVISION OF ASSISTANCE UNDER GOVERN8 MENT PROGRAMS BY RELIGIOUS ORGANIZA9 TIONS.

10 Title XXIV of the Revised Statutes is amended by

11 inserting after section 1990 (42 U.S.C. 1994) the fol12 lowing:

13 ‘‘SEC. 1994A. CHARITABLE CHOICE.

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

15 ‘Charitable Choice Expansion Act of 1999’.

16 ‘‘(b) PURPOSE.—The purposes of this section are—

17 ‘‘(1) to prohibit discrimination against non18 governmental organizations and certain individuals

19 on the basis of religion in the distribution of govern20 ment funds to provide government assistance and

21 distribution of such assistance, under government

22 programs described in subsection (c); and

23 ‘‘(2) to allow such organizations to accept such

24 funds to provide such assistance to such individuals

25 without impairing the religious character of such or-
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1 ganizations or the religious freedom of such individ2 uals.

3 ‘‘(c) RELIGIOUS ORGANIZATIONS INCLUDED AS NON4 GOVERNMENTAL PROVIDERS.—For any program carried

5 out by the Federal Government, or by a State or local

6 government with Federal funds, in which the Federal,

7 State, or local government is authorized to use nongovern8 mental organizations, through contracts, grants, certifi9 cates, vouchers, or other forms of disbursement, to provide

10 assistance to beneficiaries under the program, the govern11 ment shall consider, on the same basis as other nongovern12 mental organizations, religious organizations to provide

13 the assistance under the program, so long as the program

14 is implemented in a manner consistent with the Establish15 ment Clause of the first amendment to the Constitution.

16 Neither the Federal Government nor a State or local gov17 ernment receiving funds under such program shall dis18 criminate against an organization that provides assistance

19 under, or applies to provide assistance under, such pro20 gram, on the basis that the organization has a religious

21 character.

22 ‘‘(d) EXCLUSIONS.—As used in subsection (c), the

23 term ‘program’ does not include activities carried out

24 under—
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1 ‘‘(1) Federal programs providing education to

2 children eligible to attend elementary schools or sec3 ondary schools, as defined in section 14101 of the

4 Elementary and Secondary Education Act of 1965

5 (20 U.S.C. 8801) (except for activities to assist stu6 dents in obtaining the recognized equivalents of sec7 ondary school diplomas);

8 ‘‘(2) the Higher Education Act of 1965 (20

9 U.S.C. 1001 et seq.);

10 ‘‘(3) the Head Start Act (42 U.S.C. 9831 et

11 seq.); or

12 ‘‘(4) the Child Care and Development Block

13 Grant Act of 1990 (42 U.S.C. 9858 et seq.).

14 ‘‘(e) RELIGIOUS CHARACTER AND INDEPENDENCE.—

15 ‘‘(1) IN GENERAL.—A religious organization

16 that provides assistance under a program described

17 in subsection (c) shall retain its independence from

18 Federal, State, and local governments, including

19 such organization’s control over the definition, devel20 opment, practice, and expression of its religious be21 liefs.

22 ‘‘(2) ADDITIONAL SAFEGUARDS.—Neither the

23 Federal Government nor a State or local government

24 shall require a religious organization—
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1 ‘‘(A) to alter its form of internal govern2 ance; or

3 ‘‘(B) to remove religious art, icons, scrip4 ture, or other symbols;

5 in order to be eligible to provide assistance under a

6 program described in subsection (c).

7 ‘‘(f) EMPLOYMENT PRACTICES.—

8 ‘‘(1) TENETS AND TEACHINGS.—A religious or9 ganization that provides assistance under a program

10 described in subsection (c) may require that its em11 ployees providing assistance under such program ad12 here to the religious tenets and teachings of such or13 ganization, and such organization may require that

14 those employees adhere to rules forbidding the use

15 of drugs or alcohol.

16 ‘‘(2) TITLE VII EXEMPTION.—The exemption of

17 a religious organization provided under section 702

18 or 703(e)(2) of the Civil Rights Act of 1964 (42

19 U.S.C. 2000e–1, 2000e–2(e)(2)) regarding employ20 ment practices shall not be affected by the religious

21 organization’s provision of assistance under, or re22 ceipt of funds from, a program described in sub23 section (c).

24 ‘‘(g) RIGHTS OF BENEFICIARIES OF ASSISTANCE.—
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1 ‘‘(1) IN GENERAL.—If an individual described

2 in paragraph (3) has an objection to the religious

3 character of the organization from which the indi4 vidual receives, or would receive, assistance funded

5 under any program described in subsection (c), the

6 appropriate Federal, State, or local governmental

7 entity shall provide to such individual (if otherwise

8 eligible for such assistance) within a reasonable pe9 riod of time after the date of such objection, assist10 ance that—

11 ‘‘(A) is from an alternative organization

12 that is accessible to the individual; and

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

14 value of the assistance that the individual would

15 have received from such organization.

16 ‘‘(2) NOTICE.—The appropriate Federal, State,

17 or local governmental entity shall ensure that notice

18 is provided to individuals described in paragraph (3)

19 of the rights of such individuals under this section.

20 ‘‘(3) INDIVIDUAL DESCRIBED.—An individual

21 described in this paragraph is an individual who re22 ceives or applies for assistance under a program de23 scribed in subsection (c).

24 ‘‘(h) NONDISCRIMINATION AGAINST BENE25 FICIARIES.—
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1 ‘‘(1) GRANTS AND CONTRACTS.—A religious or2 ganization providing assistance through a grant or

3 contract under a program described in subsection (c)

4 shall not discriminate, in carrying out the program,

5 against an individual described in subsection (g)(3)

6 on the basis of religion, a religious belief, a refusal

7 to hold a religious belief, or a refusal to actively par8 ticipate in a religious practice.

9 ‘‘(2) INDIRECT FORMS OF DISBURSEMENT.—A

10 religious organization providing assistance through a

11 voucher, certificate, or other form of indirect dis12 bursement under a program described in subsection

13 (c) shall not deny an individual described in sub14 section (g)(3) admission into such program on the

15 basis of religion, a religious belief, or a refusal to

16 hold a religious belief.

17 ‘‘(i) FISCAL ACCOUNTABILITY.—

18 ‘‘(1) IN GENERAL.—Except as provided in para19 graph (2), any religious organization providing as20 sistance under any program described in subsection

21 (c) shall be subject to the same regulations as other

22 nongovernmental organizations to account in accord

23 with generally accepted accounting principles for the

24 use of such funds provided under such program.
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1 ‘‘(2) LIMITED AUDIT.—Such organization shall

2 segregate government funds provided under such

3 program into a separate account. Only the govern4 ment funds shall be subject to audit by the govern5 ment.

6 ‘‘(j) COMPLIANCE.—A party alleging that the rights

7 of the party under this section have been violated by a

8 State or local government may bring a civil action pursu9 ant to section 1979 against the official or government

10 agency that has allegedly committed such violation. A

11 party alleging that the rights of the party under this sec12 tion have been violated by the Federal Government may

13 bring a civil action for appropriate relief in an appropriate

14 Federal district court against the official or government

15 agency that has allegedly committed such violation.

16 ‘‘(k) LIMITATIONS ON USE OF FUNDS FOR CERTAIN

17 PURPOSES.—No funds provided through a grant or con18 tract to a religious organization to provide assistance

19 under any program described in subsection (c) shall be

20 expended for sectarian worship, instruction, or proselytiza21 tion.

22 ‘‘(l) EFFECT ON STATE AND LOCAL FUNDS.—If a

23 State or local government contributes State or local funds

24 to carry out a program described in subsection (c), the

25 State or local government may segregate the State or local
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•S 997 IS

1 funds from the Federal funds provided to carry out the

2 program or may commingle the State or local funds with

3 the Federal funds. If the State or local government com4 mingles the State or local funds, the provisions of this sec5 tion shall apply to the commingled funds in the same man6 ner, and to the same extent, as the provisions apply to

7 the Federal funds.

8 ‘‘(m) TREATMENT OF INTERMEDIATE CONTRAC9 TORS.—If a nongovernmental organization (referred to in

10 this subsection as an ‘intermediate organization’), acting

11 under a contract or other agreement with the Federal Gov12 ernment or a State or local government, is given the au13 thority under the contract or agreement to select non14 governmental organizations to provide assistance under

15 the programs described in subsection (c), the intermediate

16 organization shall have the same duties under this section

17 as the government but shall retain all other rights of a

18 nongovernmental organization under this section.’’.
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1 TITLE V—TAX-FREE DISTRIBU2 TIONS FROM INDIVIDUAL RE3 TIREMENT ACCOUNTS FOR

4 CHARITABLE PURPOSES

5 SEC. 501. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE6 TIREMENT ACCOUNTS FOR CHARITABLE

7 PURPOSES.

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

9 the Internal Revenue Code of 1986 (relating to individual

10 retirement accounts) is amended by adding at the end the

11 following new paragraph:

12 ‘‘(8) DISTRIBUTIONS FOR CHARITABLE PUR13 POSES.—

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

15 includible in gross income by reason of a quali16 fied charitable distribution from an individual

17 retirement plan—

18 ‘‘(i) to an organization described in

19 section 170(c), or

20 ‘‘(ii) to a trust or fund, or for the

21 issuance of an annuity, described in sub22 paragraph (B).

23 ‘‘(B) SPECIAL RULES RELATING TO CHARI24 TABLE REMAINDER TRUSTS, POOLED INCOME

25 FUNDS, AND CHARITABLE GIFT ANNUITIES.—
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1 ‘‘(i) IN GENERAL.—A trust, fund, or

2 annuity is described in this subparagraph

3 if such trust, fund, or annuity is—

4 ‘‘(I) a charitable remainder annu5 ity trust or a charitable remainder

6 unitrust (as such terms are defined in

7 section 664(d)),

8 ‘‘(II) a pooled income fund (as

9 defined in section 642(c)(5)), or

10 ‘‘(III) a charitable gift annuity

11 (as defined in section 501(m)(5)).

12 The preceding sentence shall apply only if

13 no person holds an income interest in the

14 amounts in the trust, fund, or annuity at15 tributable to a qualified charitable distribu16 tion other than one or more of the fol17 lowing: the individual for whose benefit

18 such account or annuity is maintained, the

19 spouse of such individual, or any organiza20 tion described in section 170(c).

21 ‘‘(ii) DETERMINATION OF INCLUSION

22 OF AMOUNTS DISTRIBUTED.—In deter23 mining the amount includible in the gross

24 income of any person by reason of a pay25 ment or distribution from a trust referred
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1 to in clause (i)(I) or a charitable gift annu2 ity (as so defined), the portion of any

3 qualified charitable distribution to such

4 trust or for such annuity which would (but

5 for this subparagraph) have been includible

6 in gross income—

7 ‘‘(I) shall be treated as income

8 described in section 664(b)(1), and

9 ‘‘(II) shall not be treated as an

10 investment in the contract.

11 ‘‘(iii) NO INCLUSION FOR DISTRIBU12 TION TO POOLED INCOME FUND.—No

13 amount shall be includible in the gross in14 come of a pooled income fund (as so de15 fined) by reason of a qualified charitable

16 distribution to such fund.

17 ‘‘(C) QUALIFIED CHARITABLE DISTRIBU18 TION.—For purposes of this paragraph, the

19 term ‘qualified charitable distribution’ means

20 any distribution from an individual retirement

21 plan—

22 ‘‘(i) which is made on or after the

23 date that the individual for whose benefit

24 the account or annuity is maintained has

attained age 591 25 ⁄2, and
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1 ‘‘(ii) which is made directly from the

2 account or annuity to—

3 ‘‘(I) an organization described in

4 section 170(c); or

5 ‘‘(II) a trust, fund, or annuity

6 described in subparagraph (B).

7 ‘‘(D) DENIAL OF DEDUCTION.—The

8 amount allowable as a deduction under section

9 170 to the taxpayer for the taxable year shall

10 be reduced (but not below zero) by the sum of

11 the amounts of the qualified charitable distribu12 tions during such year which would be includ13 ible in the gross income of the taxpayer for

14 such year but for this paragraph.’’

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

16 subsection (a) shall apply to taxable years beginning after

17 the date of the enactment of this Act.

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