Calendar No. 314

105TH CONGRESS

2D SESSION S. 1244

A BILL

To amend title 11, United States Code, to protect

purposes.certain charitable contributions, and for other

FEBRUARY 26, 1998

Reported with an amendment
II

Calendar No. 314

105TH CONGRESS

2D SESSION S. 1244

To amend title 11, United States Code, to protect certain charitable

contributions, and for other purposes.

IN THE SENATE OF THE UNITED STATES

OCTOBER 1, 1997

Mr. GRASSLEY (for himself, Mr. SESSIONS, Mr. GRAMS, Mr. ALLARD, and Mr.

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

to the Committee on the Judiciary

FEBRUARY 26, 1998

Reported by Mr. HATCH, with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]

A BILL

To amend title 11, United States Code, to protect certain

charitable contributions, and for other purposes.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Religious Liberty and

5 Charitable Donation Protection Act of 1997’’.
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1 SEC. 2. DEFINITIONS.

2 Section 548(d) of title 11, United States Code, is

3 amended by adding at the end the following:

4 ‘‘(3) In this section, the term ‘charitable contribution’

5 means a charitable contribution, as that term is defined

6 in section 170(c) of the Internal Revenue Code of 1986,

7 if that contribution—

8 ‘‘(A) is made by a natural person; and

9 ‘‘(B) consists of—

10 ‘‘(i) a financial instrument (as that term is

11 defined in section 731(c)(2)(C) of the Internal

12 Revenue Code of 1986); or

13 ‘‘(ii) cash.

14 ‘‘(4) In this section, the term ‘qualified religious or

15 charitable entity or organization’ means—

16 ‘‘(A) an entity described in section 170(c)(1) of

17 the Internal Revenue Code of 1986; or

18 ‘‘(B) an entity or organization described in sec19 tion 170(c)(2) of the Internal Revenue Code of

20 1986.’’.

21 SEC. 3. TREATMENT OF PRE-PETITION QUALIFIED CHARI22 TABLE CONTRIBUTIONS.

23 (a) IN GENERAL.—Section 548(a) of title 11, United

24 States Code, is amended—

25 (1) by inserting ‘‘(1)’’ after ‘‘(a)’’;
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1 (2) by striking ‘‘(1) made’’ and inserting ‘‘(A)

2 made’’;

3 (3) by striking ‘‘(2)(A)’’ and inserting ‘‘(B)(i);

4 (4) by striking ‘‘(B)(i)’’ and inserting ‘‘(ii)(I)’’;

5 (5) by striking ‘‘(ii) was’’ and inserting ‘‘(II)

6 was’’;

7 (6) by striking ‘‘(iii)’’ and inserting ‘‘(III)’’;

8 and

9 (7) by adding at the end the following:

10 ‘‘(2) A transfer of a charitable contribution to a

11 qualified religious or charitable entity or organization shall

12 not be considered to be a transfer covered under para13 graph (1)(B) in any case in which—

14 ‘‘(A) the amount of that contribution does not

15 exceed 15 percent of the gross annual income of the

16 debtor for the year in which the transfer of the con17 tribution is made; or

18 ‘‘(B) the contribution made by a debtor exceed19 ed the percentage amount of gross annual income

20 specified in subparagraph (A), if the transfer was

21 consistent with the practices of the debtor in making

22 charitable contributions.’’.

23 (b) TRUSTEE AS LIEN CREDITOR AND AS SUCCESSOR

24 TO CERTAIN CREDITORS AND PURCHASERS.—Section

25 544(b) of title 11, United States Code, is amended—
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1 (1) by striking ‘‘(b) The trustee’’ and inserting

2 ‘‘(b)(1) Except as provided in paragraph (2), the

3 trustee’’; and

4 (2) by adding at the end the following:

5 ‘‘(2) Paragraph (1) shall not apply to a transfer of

6 a charitable contribution (as that term is defined in sec7 tion 548(d)(3)) that is not covered under section

8 548(a)(1)(B), by reason of section 548(a)(2).’’.

9 (c) CONFORMING AMENDMENTS.—Section 546 of

10 title 11, United States Code, is amended—

11 (1) in subsection (e)—

12 (A) by striking ‘‘548(a)(2)’’ and inserting

13 ‘‘548(a)(1)(B)’’; and

14 (B) by striking ‘‘548(a)(1)’’ and inserting

15 ‘‘548(a)(1)(A)’’;

16 (2) in subsection (f)—

17 (A) by striking ‘‘548(a)(2)’’ and inserting

18 ‘‘548(a)(1)(B)’’; and

19 (B) by striking ‘‘548(a)(1)’’ and inserting

20 ‘‘548(a)(1)(A)’’; and

21 (3) in subsection (g)—

22 (A) by striking ‘‘section 548(a)(1)’’ each

23 place it appears and inserting ‘‘section

24 548(a)(1)(A)’’; and
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1 (B) by striking ‘‘548(a)(2)’’ and inserting

2 ‘‘548(a)(1)(B)’’.

3 SEC. 4. TREATMENT OF POST-PETITION CHARITABLE CON4 TRIBUTIONS.

5 (a) CONFIRMATION OF PLAN.—Section

6 1325(b)(2)(A) of title 11, United States Code, is amended

7 by inserting before the semicolon the following: ‘‘, includ8 ing charitable contributions (that meet the definition of

9 ‘charitable contribution’ under section 548(d)(3)) to a

10 qualified religious or charitable entity or organization (as

11 that term is defined in section 548(d)(4)) in an amount

12 not to exceed 15 percent of the gross income of the debtor

13 for the year in which the contributions are made’’.

14 (b) DISMISSAL.—Section 707(b) of title 11, United

15 States Code, is amended by adding at the end the follow16 ing: ‘‘In making a determination whether to dismiss a case

17 under this section, the court may not take into consider18 ation whether a debtor has made, or continues to make,

19 charitable contributions (that meet the definition of ‘chari20 table contribution’ under section 548(d)(3)) to any quali21 fied religious or charitable entity or organization (as that

22 term is defined in section 548(d)(4)).’’.

23 SEC. 5. APPLICABILITY.

24 This Act and the amendments made by this Act shall

25 apply to any case brought under an applicable provision
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1 of title 11, United States Code, that is pending or com2 menced on or after the date of enactment of this Act.

3 SEC. 6. RULE OF CONSTRUCTION.

4 Nothing in the amendments made by this Act is in5 tended to limit the applicability of the Religious Freedom

6 Restoration Act of 1993 (42 U.S.C. 2002bb et seq.).

7 SECTION 1. SHORT TITLE.

8 This Act may be cited as the ‘‘Religious Liberty and

9 Charitable Donation Protection Act of 1998’’.

10 SEC. 2. DEFINITIONS.

11 Section 548(d) of title 11, United States Code, is

12 amended by adding at the end the following:

13 ‘‘(3) In this section, the term ‘charitable contribution’

14 means a charitable contribution, as that term is defined in

15 section 170(c) of the Internal Revenue Code of 1986, if that

16 contribution—

17 ‘‘(A) is made by a natural person; and

18 ‘‘(B) consists of—

19 ‘‘(i) a financial instrument (as that term is

20 defined in section 731(c)(2)(C) of the Internal

21 Revenue Code of 1986); or

22 ‘‘(ii) cash.

23 ‘‘(4) In this section, the term ‘qualified religious or

24 charitable entity or organization’ means—
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1 ‘‘(A) an entity described in section 170(c)(1) of

2 the Internal Revenue Code of 1986; or

3 ‘‘(B) an entity or organization described in sec4 tion 170(c)(2) of the Internal Revenue Code of 1986.’’.

5 SEC. 3. TREATMENT OF PRE-PETITION QUALIFIED CHARI6 TABLE CONTRIBUTIONS.

7 (a) IN GENERAL.—Section 548(a) of title 11, United

8 States Code, is amended—

9 (1) by inserting ‘‘(1)’’ after ‘‘(a)’’;

10 (2) by striking ‘‘(1) made’’ and inserting ‘‘(A)

11 made’’;

12 (3) by striking ‘‘(2)(A)’’ and inserting ‘‘(B)(i);

13 (4) by striking ‘‘(B)(i)’’ and inserting ‘‘(ii)(I)’’;

14 (5) by striking ‘‘(ii) was’’ and inserting ‘‘(II)

15 was’’;

16 (6) by striking ‘‘(iii)’’ and inserting ‘‘(III)’’; and

17 (7) by adding at the end the following:

18 ‘‘(2) A transfer of a charitable contribution to a quali19 fied religious or charitable entity or organization shall not

20 be considered to be a transfer covered under paragraph

21 (1)(B) in any case in which—

22 ‘‘(A) the amount of that contribution does not ex23 ceed 15 percent of the gross annual income of the

24 debtor for the year in which the transfer of the con25 tribution is made; or
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1 ‘‘(B) the contribution made by a debtor exceeded

2 the percentage amount of gross annual income speci3 fied in subparagraph (A), if the transfer was consist4 ent with the practices of the debtor in making chari5 table contributions.’’.

6 (b) TRUSTEE AS LIEN CREDITOR AND AS SUCCESSOR

7 TO CERTAIN CREDITORS AND PURCHASERS.—Section

8 544(b) of title 11, United States Code, is amended—

9 (1) by striking ‘‘(b) The trustee’’ and inserting

10 ‘‘(b)(1) Except as provided in paragraph (2), the

11 trustee’’; and

12 (2) by adding at the end the following:

13 ‘‘(2) Paragraph (1) shall not apply to a transfer of

14 a charitable contribution (as that term is defined in section

15 548(d)(3)) that is not covered under section 548(a)(1)(B),

16 by reason of section 548(a)(2). Any claim by any person

17 to recover a transferred contribution described in the pre18 ceding sentence under Federal or State law in a Federal

19 or State court shall be preempted by the commencement of

20 the case.’’.

21 (c) CONFORMING AMENDMENTS.—Section 546 of title

22 11, United States Code, is amended—

23 (1) in subsection (e)—

24 (A) by striking ‘‘548(a)(2)’’ and inserting

25 ‘‘548(a)(1)(B)’’; and
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1 (B) by striking ‘‘548(a)(1)’’ and inserting

2 ‘‘548(a)(1)(A)’’;

3 (2) in subsection (f)—

4 (A) by striking ‘‘548(a)(2)’’ and inserting

5 ‘‘548(a)(1)(B)’’; and

6 (B) by striking ‘‘548(a)(1)’’ and inserting

7 ‘‘548(a)(1)(A)’’; and

8 (3) in subsection (g)—

9 (A) by striking ‘‘section 548(a)(1)’’ each

10 place it appears and inserting ‘‘section

11 548(a)(1)(A)’’; and

12 (B) by striking ‘‘548(a)(2)’’ and inserting

13 ‘‘548(a)(1)(B)’’.

14 SEC. 4. TREATMENT OF POST-PETITION CHARITABLE CON15 TRIBUTIONS.

16 (a) CONFIRMATION OF PLAN.—Section 1325(b)(2)(A)

17 of title 11, United States Code, is amended by inserting

18 before the semicolon the following: ‘‘, including charitable

19 contributions (that meet the definition of ‘charitable con20 tribution’ under section 548(d)(3)) to a qualified religious

21 or charitable entity or organization (as that term is defined

22 in section 548(d)(4)) in an amount not to exceed 15 percent

23 of the gross income of the debtor for the year in which the

24 contributions are made’’.
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1 (b) DISMISSAL.—Section 707(b) of title 11, United

2 States Code, is amended by adding at the end the following:

3 ‘‘In making a determination whether to dismiss a case

4 under this section, the court may not take into consider5 ation whether a debtor has made, or continues to make,

6 charitable contributions (that meet the definition of ‘chari7 table contribution’ under section 548(d)(3)) to any qualified

8 religious or charitable entity or organization (as that term

9 is defined in section 548(d)(4)).’’.

10 SEC. 5. APPLICABILITY.

11 This Act and the amendments made by this Act shall

12 apply to any case brought under an applicable provision

13 of title 11, United States Code, that is pending or com14 menced on or after the date of enactment of this Act.

15 SEC. 6. RULE OF CONSTRUCTION.

16 Nothing in the amendments made by this Act is in17 tended to limit the applicability of the Religious Freedom

18 Restoration Act of 1993 (42 U.S.C. 2002bb et seq.).