S. 1244

One Hundred Fifth Congress

of the

United States of America

AT THE SECOND SESSION

Begun and held at the City of Washington on Tuesday,

the twenty-seventh day of January, one thousand nine hundred and ninety-eight

An Act

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

and for other purposes.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

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

Donation Protection Act of 1998’’.

SEC. 2. DEFINITIONS.

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

by adding at the end the following:

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

a charitable contribution, as that term is defined in section 170(c)

of the Internal Revenue Code of 1986, if that contribution—

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

‘‘(B) consists of—

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

in section 731(c)(2)(C) of the Internal Revenue Code of

1986); or

‘‘(ii) cash.

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

entity or organization’ means—

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

Revenue Code of 1986; or

‘‘(B) an entity or organization described in section 170(c)(2)

of the Internal Revenue Code of 1986.’’.

SEC. 3. TREATMENT OF PRE-PETITION QUALIFIED CHARITABLE CONTRIBUTIONS.

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

is amended—

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

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

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

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

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

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

(7) by adding at the end the following:

‘‘(2) A transfer of a charitable contribution to a qualified religious or charitable entity or organization shall not be considered

to be a transfer covered under paragraph (1)(B) in any case in

which—
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‘‘(A) the amount of that contribution does not exceed 15

percent of the gross annual income of the debtor for the year

in which the transfer of the contribution is made; or

‘‘(B) the contribution made by a debtor exceeded the

percentage amount of gross annual income specified in subparagraph (A), if the transfer was consistent with the practices

of the debtor in making charitable contributions.’’.

(b) TRUSTEE AS LIEN CREDITOR AND AS SUCCESSOR TO CERTAIN

CREDITORS AND PURCHASERS.—Section 544(b) of title 11, United

States Code, is amended—

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

as provided in paragraph (2), the trustee’’; and

(2) by adding at the end the following:

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

contribution (as that term is defined in section 548(d)(3)) that

is not covered under section 548(a)(1)(B), by reason of section

548(a)(2). Any claim by any person to recover a transferred contribution described in the preceding sentence under Federal or State

law in a Federal or State court shall be preempted by the commencement of the case.’’.

(c) CONFORMING AMENDMENTS.—Section 546 of title 11, United

States Code, is amended—

(1) in subsection (e)—

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

and

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

(2) in subsection (f)—

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

and

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

and

(3) in subsection (g)—

(A) by striking ‘‘section 548(a)(1)’’ each place it appears

and inserting ‘‘section 548(a)(1)(A)’’; and

(B) by striking ‘‘548(a)(2)’’ and inserting ‘‘548(a)(1)(B)’’.

SEC. 4. TREATMENT OF POST-PETITION CHARITABLE CONTRIBUTIONS.

(a) CONFIRMATION OF PLAN.—Section 1325(b)(2)(A) of title 11,

United States Code, is amended by inserting before the semicolon

the following: ‘‘, including charitable contributions (that meet the

definition of ‘charitable contribution’ under section 548(d)(3)) to

a qualified religious or charitable entity or organization (as that

term is defined in section 548(d)(4)) in an amount not to exceed

15 percent of the gross income of the debtor for the year in which

the contributions are made’’.

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

is amended by adding at the end the following: ‘‘In making a

determination whether to dismiss a case under this section, the

court may not take into consideration whether a debtor has made,

or continues to make, charitable contributions (that meet the definition of ‘charitable contribution’ under section 548(d)(3)) to any qualified religious or charitable entity or organization (as that term

is defined in section 548(d)(4)).’’.

SEC. 5. APPLICABILITY.

This Act and the amendments made by this Act shall apply

to any case brought under an applicable provision of title 11,
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United States Code, that is pending or commenced on or after

the date of enactment of this Act.

SEC. 6. RULE OF CONSTRUCTION.

Nothing in the amendments made by this Act is intended

to limit the applicability of the Religious Freedom Restoration Act

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

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.