I

106TH CONGRESS

1ST SESSION H. R. 1607

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 HOUSE OF REPRESENTATIVES

APRIL 28, 1999

Mr. KASICH (for himself, Mr. SOUDER, Mr. PITTS, Ms. GRANGER, Mr. WAMP,

Mr. MCINTOSH, Mr. TIAHRT, Mr. DEMINT, Mr. PICKERING, Mr. ROGAN,

and Mr. WATTS of Oklahoma) introduced the following bill; which was

referred to the Committee on Ways and Means, and in addition to the

Committee on the Judiciary, for a period to be subsequently determined

by the Speaker, in each case for consideration of such provisions as fall

within the jurisdiction of the committee concerned

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
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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.

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.
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TITLE V—TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL

RETIREMENT ACCOUNTS FOR CHARITABLE PURPOSES

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—

9 (1) not more than 50 percent of the total

10 amount paid to the State during the fiscal year

11 under the provisions of law specified in subsection

12 (d)(1);

13 (2) not more than 50 percent of the total

14 amount paid to the State during the fiscal year

15 under the provisions of law specified in subsection

16 (d)(2);

17 (3) not more than 50 percent of the total

18 amount paid to the State during the fiscal year

19 under the provisions of law specified in subsection

20 (d)(3);

21 (4) not more than 50 percent of the total

22 amount paid to the State during the fiscal year

23 under the law specified in subsection (d)(4);
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1 (5) not more than 50 percent of the total

2 amount paid to the State during the fiscal year

3 under the law specified in subsection (d)(5);

4 (6) not more than 50 percent of the total

5 amount paid to the State during the fiscal year

6 under the law specified in subsection (d)(6); and

7 (7) not more than 50 percent of the total

8 amount paid to the State during the fiscal year

9 under the law specified in subsection (d)(7).

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

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

12 not exceed 100 percent of the revenue loss of the State

13 during the fiscal year that is attributable to the charity

14 tax credit, as determined by the Secretary of the Treasury

15 without regard to any such revenue loss occurring before

16 January 1, 2000.

17 (c) CERTAIN CREDIT AMOUNTS TREATED AS STATE

18 PAYMENT FOR TEMPORARY ASSISTANCE FOR NEEDY

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

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

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

22 (not to exceed 100 percent) during a fiscal year that

23 is attributable to the charity tax credit, as deter24 mined under subsection (b), over
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1 (2) the aggregate amount used by the State

2 under subsection (a) during the fiscal year,

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

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

5 part A of such title.

6 (d) PROVISIONS OF LAW.—The provisions of law re7 ferred to in this subsection are the following:

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

9 403(a) of the Social Security Act (42 U.S.C.

10 603(a)).

11 (2) The Child Care and Development Block

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

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

14 618).

15 (3) Sections 2002 and 2007 of the Social Secu16 rity Act (42 U.S.C. 1397a and 1397f).

17 (4) The Community Services Block Grant Act

18 (42 U.S.C. 9901–9912).

19 (5) The Low-Income Home Energy Assistance

20 Act of 1981.

21 (6) The Job Training Partnership Act (29

22 U.S.C. 1501 et seq.).

23 (7) Title I of the Housing and Community De24 velopment Act of 1974 (42 U.S.C. 5301 et seq.).
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1 SEC. 102. DEFINITIONS.

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

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

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

5 which does not impose an income tax, a comparable ben6 efit)—

7 (1) which is allowable only to individuals for

8 cash contributions to qualified charities,

9 (2) the maximum amount of which for each

10 taxable year does not exceed $250 ($500 in the case

11 of a joint or combined return of individuals who are

12 married to each other), and

13 (3) under which the annual amount of the cred14 it allowed per taxpayer is not more than $50 ($100

15 in the case of a joint or combined return of individ16 uals who are married to each other) in the first year

17 and increased by not more than $50 ($100 in the

18 case of a joint or combined return of individuals who

19 are married to each other) for each subsequent year.

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) if such organization is otherwise re7 quired to file a return under section 6033 of

8 such Code, which elects to treat the information

9 required to be furnished by paragraph (5) as

10 being specified in section 6033(b) of such Code.

11 (2) CERTAIN CONTRIBUTIONS TO COLLECTION

12 ORGANIZATIONS TREATED AS CONTRIBUTIONS TO

13 QUALIFIED CHARITY.—

14 (A) IN GENERAL.—A contribution to a col15 lection organization shall be treated as a con16 tribution to a qualified charity if the donor des17 ignates in writing that the contribution is for

18 the qualified charity.

19 (B) COLLECTION ORGANIZATION.—The

20 term ‘‘collection organization’’ means an organi21 zation described in section 501(c)(3) of such

22 Code and exempt from tax under section 501(a)

23 of such Code—

24 (i) which solicits and collects gifts and

25 grants which, by agreement, are distrib-
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1 uted to qualified charities described in

2 paragraph (1),

3 (ii) which distributes to qualified

4 charities described in paragraph (1) at

5 least 90 percent of the gifts and grants it

6 receives that are designated for such quali7 fied charities, and

8 (iii) which meets the requirements of

9 paragraph (6).

10 (3) CHARITY MUST PRIMARILY ASSIST POOR IN11 DIVIDUALS.—

12 (A) IN GENERAL.—An organization meets

13 the requirements of this paragraph only if the

14 appropriate State authority reasonably expects

15 that the predominant activity of such organiza16 tion will be the provision of direct services with17 in the United States to individuals and families

18 whose annual incomes generally do not exceed

19 185 percent of the official poverty line (as de20 fined by the Office of Management and Budget)

21 in order to prevent or alleviate poverty among

22 such individuals and families.

23 (B) NO RECORDKEEPING IN CERTAIN

24 CASES.—An organization shall not be required

25 to establish or maintain records with respect to
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1 the incomes of individuals and families for pur2 poses of subparagraph (A) if such individuals or

3 families are members of groups which are gen4 erally recognized as including substantially only

5 individuals and families described in subpara6 graph (A).

7 (C) FOOD AID AND HOMELESS SHEL8 TERS.—Except as otherwise provided by the ap9 propriate State authority, for purposes of sub10 paragraph (A), services to individuals in the

11 form of—

12 (i) donations of food or meals, or

13 (ii) temporary shelter to homeless in14 dividuals,

15 shall be treated as provided to individuals de16 scribed in subparagraph (A) if the location and

17 operation of such services are such that the

18 service provider may reasonably conclude that

19 the beneficiaries of such services are predomi20 nantly individuals described in subparagraph

21 (A).

22 (4) MINIMUM EXPENSE REQUIREMENT.—

23 (A) IN GENERAL.—An organization meets

24 the requirements of this paragraph only if the

25 appropriate State authority reasonably expects
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1 that the annual poverty program expenses of

2 such organization will not be less than 75 per3 cent of the annual aggregate expenses of such

4 organization.

5 (B) POVERTY PROGRAM EXPENSE.—For

6 purposes of subparagraph (A)—

7 (i) IN GENERAL.—The term ‘‘poverty

8 program expense’’ means any expense in

9 providing program services referred to in

10 paragraph (3).

11 (ii) EXCEPTIONS.—Such term shall

12 not include—

13 (I) any management or general

14 expense,

15 (II) any expense for the purpose

16 of influencing legislation (as defined

17 in section 4911(d) of the Internal

18 Revenue Code of 1986),

19 (III) any expense for the purpose

20 of fundraising,

21 (IV) any expense for a legal serv22 ice provided on behalf of any indi23 vidual referred to in paragraph (3),

24 and
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1 (V) any expense which consists of

2 a payment to an affiliate of the orga3 nization.

4 (5) REPORTING REQUIREMENT.—The informa5 tion required to be furnished under this paragraph

6 is—

7 (A) the percentages determined by dividing

8 the following categories of the organization’s ex9 penses for the year by its total expenses for the

10 year: program services, management expenses,

11 general expenses, fundraising expenses, and

12 payments to affiliates, and

13 (B) the category or categories (including

14 food, shelter, education, substance abuse, job

15 training, or otherwise) of services which con16 stitute its predominant activities.

17 (6) ADDITIONAL REQUIREMENTS FOR SOLICITA18 TION ORGANIZATIONS.—The requirements of this

19 paragraph are met if the organization—

20 (A) maintains separate accounting for rev21 enues and expenses, and

22 (B) makes available to the public its ad23 ministrative and fundraising costs and informa24 tion as to the organizations receiving funds

25 from it and the amount of such funds.
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1 (7) RECOMMENDATIONS.—It is recommended,

2 but not required, that—

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

4 further limited under State law to

5 organizations—

6 (i) which have been operating for at

7 least 1 year or are controlled by, or oper8 ated under the auspices of, organizations

9 which have been operating for at least one

10 year, and

11 (ii) with expenses of less than 5 per12 cent of total expenses for the purpose of

13 influencing legislation, litigation on behalf

14 of any individual referred to in paragraph

15 (3), voter registration, political organizing,

16 public policy advocacy, or public policy re17 search,

18 (B) subject to subsection (a)(2), the

19 amount of the credit be at least 50 percent and

20 not more than 90 percent of the amount of the

21 cash contributions to qualified charities, and

22 (C) contributions made not later than the

23 time prescribed by law for filing the return of

24 the State income tax for a taxable year (not in25 cluding extensions thereof) be treated as made
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1 (at the taxpayer’s election) on the last day of

2 such year.

3 (8) SPECIAL RULE FOR STATES REQUIRING TAX

4 UNIFORMITY.—In the case of a State—

5 (A) which has a constitutional requirement

6 of tax uniformity, and

7 (B) which, as of December 31, 1997, im8 posed a tax on personal income with—

9 (i) a single flat rate applicable to all

10 earned and unearned income (except inso11 far as any amount is not taxed pursuant to

12 tax forgiveness provisions), and

13 (ii) no generally available exemptions

14 or deductions to individuals,

15 the requirement of subsection (a)(2) shall be treated

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

17 uniform percentage (but not greater than 25 per18 cent) of State personal income tax liability (deter19 mined without regard to credits).

20 (9) COORDINATION WITH FEDERAL CHARI21 TABLE CONTRIBUTION DEDUCTION.—The amount of

22 the deduction allowed under the Internal Revenue

23 Code of 1986 for contributions which are taken into

24 account in determining any charity tax credit shall
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1 be reduced by the amount of such credit which is al2 lowed.

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

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

5 Columbia, the Commonwealth of Puerto Rico, the Virgin

6 Islands, Guam, American Samoa, the Northern Mariana

7 Islands, any other territory or possession of the United

8 States.

9 SEC. 103. STUDY AND REPORT.

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

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

12 tax credit under this title, including—

13 (1) the types of organizations which receive

14 contributions during the first year to which the cred15 it applies, and

16 (2) the types of services provided to the poor by

17 such organizations.

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

19 to the Congress the results of such study, including—

20 (1) the geographical distribution of funding

21 from charity tax credit contributions, and an anal22 ysis of Internal Revenue Service Form 990’s of

23 qualified charities to determine if the broad cat24 egories of services provided to the poor (including

25 food, shelter, education, substance abuse, job train-
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1 ing, or otherwise) match the services that would oth2 erwise be provided by Federal welfare program

3 funds without the enactment of the reductions in the

4 programs permitted by this legislation, and

5 (2) any recommendations for legislative

6 changes.

7 SEC. 104. EFFECTIVE DATE.

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

9 TITLE II—BUDGET OFFSET

10 SEC. 201. REDUCTION OF EARNED INCOME CREDIT FOR IN11 DIVIDUALS WITHOUT CHILDREN.

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

13 section 32(b)(1) of the Internal Revenue Code of 1986 is

14 amended by striking the item relating to no qualifying

15 children and inserting the following:

‘‘No qualifying children ........................................................ 3.825 7.651.’’.

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

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

18 December 31, 2001.

19 TITLE III—TORT REFORMS RE20 LATING TO CHARITABLE CON21 TRIBUTIONS

22 SEC. 301. DEFINITIONS.

23 In this title:
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1 (1) AIRCRAFT.—The term ‘‘aircraft’’ has the

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

3 title 49, United States Code.

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

5 entity’’ means a firm, corporation, association, part6 nership, consortium, joint venture, or other form of

7 enterprise.

8 (3) EQUIPMENT.—The term ‘‘equipment’’ in9 cludes mechanical equipment, electronic equipment,

10 and office equipment.

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

12 real property, including any building, improvement,

13 or appurtenance.

14 (5) GROSS NEGLIGENCE.—The term ‘‘gross

15 negligence’’ means voluntary and conscious conduct

16 by a person with knowledge (at the time of the con17 duct) that the conduct is likely to be harmful to the

18 health or well-being of another person.

19 (6) INTENTIONAL MISCONDUCT.—The term

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

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

22 conduct is harmful to the health or well-being of an23 other person.
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1 (7) MOTOR VEHICLE.—The term ‘‘motor vehi2 cle’’ has the meaning provided that term in section

3 30102(6) of title 49, United States Code.

4 (8) NONPROFIT ORGANIZATION.—The term

5 ‘‘nonprofit organization’’ means—

6 (A) any organization described in section

7 501(c)(3) of the Internal Revenue Code of 1986

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

9 such Code; or

10 (B) any not-for-profit organization orga11 nized and conducted for public benefit and op12 erated primarily for charitable, civic, edu13 cational, religious, welfare, or health purposes.

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

15 the several States, the District of Columbia, the

16 Commonwealth of Puerto Rico, the Virgin Islands,

17 Guam, American Samoa, the Northern Mariana Is18 lands, any other territory or possession of the

19 United States, or any political subdivision of any

20 such State, territory, or possession.

21 SEC. 302. LIABILITY.

22 (a) LIABILITY OF BUSINESS ENTITIES THAT DO23 NATE EQUIPMENT TO NONPROFIT ORGANIZATIONS.—

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

25 business entity shall not be subject to civil liability
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1 relating to any injury or death that results from the

2 use of equipment donated by a business entity to a

3 nonprofit organization.

4 (2) APPLICATION.—This subsection shall apply

5 with respect to civil liability under Federal and State

6 law.

7 (b) LIABILITY OF BUSINESS ENTITIES PROVIDING

8 USE OF FACILITIES 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 occurring at a facility

12 of the business entity in connection with a use of

13 such facility by a nonprofit organization if—

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

15 business of the business entity;

16 (B) such injury or death occurs during a

17 period that such facility is used by the non18 profit organization; and

19 (C) the business entity authorized the use

20 of such facility by the nonprofit organization.

21 (2) APPLICATION.—This subsection shall

22 apply—

23 (A) with respect to civil liability under

24 Federal and State law; and
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1 (B) regardless of whether a nonprofit orga2 nization pays for the use of a facility.

3 (c) LIABILITY OF BUSINESS ENTITIES PROVIDING

4 USE OF A MOTOR VEHICLE OR AIRCRAFT.—

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

6 business entity shall not be subject to civil liability

7 relating to any injury or death occurring as a result

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

9 business entity loaned to a nonprofit organization

10 for use outside of the scope of business of the busi11 ness entity if—

12 (A) such injury or death occurs during a

13 period that such motor vehicle or aircraft is

14 used by a nonprofit organization; and

15 (B) the business entity authorized the use

16 by the nonprofit organization of motor vehicle

17 or aircraft that resulted in the injury or death.

18 (2) APPLICATION.—This subsection shall

19 apply—

20 (A) with respect to civil liability under

21 Federal and State law; and

22 (B) regardless of whether a nonprofit orga23 nization pays for the use of the aircraft or

24 motor vehicle.
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1 (d) LIABILITY OF BUSINESS ENTITIES PROVIDING

2 TOURS OF FACILITIES.—

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

4 business entity shall not be subject to civil liability

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

6 occurring at a facility of the business entity if—

7 (A) such injury or death occurs during a

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

9 is not otherwise accessible to the general public;

10 and

11 (B) the business entity authorized the

12 tour.

13 (2) APPLICATION.—This subsection shall

14 apply—

15 (A) with respect to civil liability under

16 Federal and State law; and

17 (B) regardless of whether an individual

18 pays for the tour.

19 SEC. 303. EXCEPTIONS.

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

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

22 constitutes gross negligence or intentional misconduct, in23 cluding any misconduct that—

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

25 is defined in section 16 of title 18, United States
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1 Code) or act of international terrorism (as that term

2 is defined in section 2331 of title 18) for which the

3 defendant has been convicted in any court;

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

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

6 534 note));

7 (3) involves a sexual offense, as defined by ap8 plicable State law, for which the defendant has been

9 convicted in any court; or

10 (4) involves misconduct for which the defendant

11 has been found to have violated a Federal or State

12 civil rights law.

13 SEC. 304. SUPERSEDING PROVISION.

14 (a) IN GENERAL.—Subject to subsection (b) and sec15 tion 305, this title preempts the laws of any State to the

16 extent that such laws are inconsistent with this title, ex17 cept that this title shall not preempt any State law that

18 provides additional protection for a business entity for an

19 injury or death described in a subsection of section 302

20 with respect to which the conditions specified in such sub21 section apply.

22 (b) LIMITATION.—Nothing in this title shall be con23 strued to supersede any Federal or State health or safety

24 law.
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1 SEC. 305. ELECTION OF STATE REGARDING NONAPPLICA2 BILITY.

3 (a) ELECTION OF STATE REGARDING NONAPPLICA4 BILITY.—A provision of this title shall not apply to any

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

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

7 enacts a statute—

8 (1) citing the authority of this section;

9 (2) declaring the election of such State that

10 such provision shall not apply to such civil action in

11 the State; and

12 (3) containing no other provisions.

13 SEC. 306. EFFECTIVE DATE.

14 This title shall apply to injuries (and deaths resulting

15 therefrom) occurring after the date of the enactment of

16 this Act.

17 TITLE IV—CHARITABLE CHOICE

18 EXPANSION ACT

19 SEC. 401. PROVISION OF ASSISTANCE UNDER GOVERN20 MENT PROGRAMS BY RELIGIOUS ORGANIZA21 TIONS.

22 Title XXIV of the Revised Statutes is amended by

23 inserting after section 1990 (42 U.S.C. 1994) the fol24 lowing:
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1 ‘‘SEC. 1994A. CHARITABLE CHOICE.

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

3 ‘Charitable Choice Expansion Act of 1999’.

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

5 ‘‘(1) to prohibit discrimination against non6 governmental organizations and certain individuals

7 on the basis of religion in the distribution of govern8 ment funds to provide government assistance and

9 distribution of such assistance, under government

10 programs described in subsection (c); and

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

12 funds to provide such assistance without impairing

13 the religious character of such organizations or the

14 religious freedom of the individuals.

15 ‘‘(c) RELIGIOUS ORGANIZATIONS INCLUDED AS NON16 GOVERNMENTAL PROVIDERS.—For any program carried

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

18 government with Federal funds, in which the Federal,

19 State, or local government is authorized to use nongovern20 mental organizations, through contracts, grants, certifi21 cates, vouchers, or other forms of disbursement, to provide

22 assistance to beneficiaries under the program, the govern23 ment shall consider, on the same basis as other nongovern24 mental organizations, religious organizations to provide

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

26 is implemented in a manner consistent with the Establish-
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1 ment Clause of the first amendment to the Constitution.

2 Neither the Federal Government nor a State or local gov3 ernment receiving funds under such program shall dis4 criminate against an organization that provides assistance

5 under, or applies to provide assistance under, such pro6 gram, on the basis that the organization has a religious

7 character.

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

9 term ‘program’ does not include activities carried out

10 under—

11 ‘‘(1) Federal programs providing education to

12 children eligible to attend elementary schools or sec13 ondary schools, as defined in section 14101 of the

14 Elementary and Secondary Education Act of 1965

15 (20 U.S.C. 8801) (except for activities to assist stu16 dents in obtaining the recognized equivalents of sec17 ondary school diplomas);

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

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

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

21 seq.); or

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

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

24 ‘‘(e) RELIGIOUS CHARACTER AND INDEPENDENCE.—
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1 ‘‘(1) IN GENERAL.—A religious organization

2 that provides assistance under a program described

3 in subsection (c) shall retain its independence from

4 Federal, State, and local governments, including

5 such organization’s control over the definition, devel6 opment, practice, and expression of its religious be7 liefs.

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

9 Federal Government nor a State or local government

10 shall require a religious organization—

11 ‘‘(A) to alter its form of internal govern12 ance; or

13 ‘‘(B) to remove religious art, icons, scrip14 ture, or other symbols;

15 in order to be eligible to provide assistance under a

16 program described in subsection (c).

17 ‘‘(f) EMPLOYMENT PRACTICES.—

18 ‘‘(1) TENETS AND TEACHINGS.—A religious or19 ganization that provides assistance under a program

20 described in subsection (c) may require that its em21 ployees providing assistance under such program ad22 here to the religious tenets and teachings of such or23 ganization, and such organization may require that

24 those employees adhere to rules forbidding the use

25 of drugs or alcohol.
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1 ‘‘(2) TITLE VII EXEMPTION.—The exemption of

2 a religious organization provided under section 702

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

4 U.S.C. 2000e–1, 2000e–2(e)(2)) regarding employ5 ment practices shall not be affected by the religious

6 organization’s provision of assistance under, or re7 ceipt of funds from, a program described in sub8 section (c).

9 ‘‘(g) RIGHTS OF BENEFICIARIES OF ASSISTANCE.—

10 ‘‘(1) IN GENERAL.—If an individual described

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

12 character of the organization from which the indi13 vidual receives, or would receive, assistance funded

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

15 appropriate Federal, State, or local governmental

16 entity shall provide to such individual (if otherwise

17 eligible for such assistance) within a reasonable pe18 riod of time after the date of such objection, assist19 ance that—

20 ‘‘(A) is from an alternative organization

21 that is accessible to the individual; and

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

23 value of the assistance that the individual would

24 have received from such organization.
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1 ‘‘(2) NOTICE.—The appropriate Federal, State,

2 or local governmental entity shall ensure that notice

3 is provided to individuals described in paragraph (3)

4 of the rights of such individuals under this section.

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

6 described in this paragraph is an individual who re7 ceives or applies for assistance under a program de8 scribed in subsection (c).

9 ‘‘(h) NONDISCRIMINATION AGAINST BENE10 FICIARIES.—

11 ‘‘(1) GRANTS AND CONTRACTS.—A religious or12 ganization providing assistance through a grant or

13 contract under a program described in subsection (c)

14 shall not discriminate, in carrying out the program,

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

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

17 to hold a religious belief, or a refusal to actively par18 ticipate in a religious practice.

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

20 religious organization providing assistance through a

21 voucher, certificate, or other form of indirect dis22 bursement under a program described in subsection

23 (c) shall not deny an individual described in sub24 section (g)(3) admission into such program on the
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1 basis of religion, a religious belief, or a refusal to

2 hold a religious belief.

3 ‘‘(i) FISCAL ACCOUNTABILITY.—

4 ‘‘(1) IN GENERAL.—Except as provided in para5 graph (2), any religious organization providing as6 sistance under any program described in subsection

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

8 nongovernmental organizations to account in accord

9 with generally accepted accounting principles for the

10 use of such funds provided under such program.

11 ‘‘(2) LIMITED AUDIT.—Such organization shall

12 segregate government funds provided under such

13 program into a separate account. Only the govern14 ment funds shall be subject to audit by the govern15 ment.

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

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

18 State or local government may bring a civil action pursu19 ant to section 1979 against the official or government

20 agency that has allegedly committed such violation. A

21 party alleging that the rights of the party under this sec22 tion have been violated by the Federal Government may

23 bring a civil action for appropriate relief in an appropriate

24 Federal district court against the official or government

25 agency that has allegedly committed such violation.
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1 ‘‘(k) LIMITATIONS ON USE OF FUNDS FOR CERTAIN

2 PURPOSES.—No funds provided through a grant or con3 tract to a religious organization to provide assistance

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

5 expended for sectarian worship, instruction, or proselytiza6 tion.

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

8 State or local government contributes State or local funds

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

10 State or local government may segregate the State or local

11 funds from the Federal funds provided to carry out the

12 program or may commingle the State or local funds with

13 the Federal funds. If the State or local government com14 mingles the State or local funds, the provisions of this sec15 tion shall apply to the commingled funds in the same man16 ner, and to the same extent, as the provisions apply to

17 the Federal funds.

18 ‘‘(m) TREATMENT OF INTERMEDIATE CONTRAC19 TORS.—If a nongovernmental organization (referred to in

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

21 under a contract or other agreement with the Federal Gov22 ernment or a State or local government, is given the au23 thority under the contract or agreement to select non24 governmental organizations to provide assistance under

25 the programs described in subsection (c), the intermediate
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1 organization shall have the same duties under this section

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

3 nongovernmental organization under this section.’’.

4 TITLE V—TAX-FREE DISTRIBU5 TIONS FROM INDIVIDUAL RE6 TIREMENT ACCOUNTS FOR

7 CHARITABLE PURPOSES

8 SEC. 501. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE9 TIREMENT ACCOUNTS FOR CHARITABLE

10 PURPOSES.

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

12 the Internal Revenue Code of 1986 (relating to individual

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

14 following new paragraph:

15 ‘‘(8) DISTRIBUTIONS FOR CHARITABLE PUR16 POSES.—

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

18 includible in gross income by reason of a quali19 fied charitable distribution from an individual

20 retirement account to an organization described

21 in section 170(c).

22 ‘‘(B) SPECIAL RULES RELATING TO CHARI23 TABLE REMAINDER TRUSTS, POOLED INCOME

24 FUNDS, AND CHARITABLE GIFT ANNUITIES.—
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1 ‘‘(i) IN GENERAL.—No amount shall

2 be includible in gross income by reason of

3 a qualified charitable distribution from an

4 individual retirement account—

5 ‘‘(I) to a charitable remainder

6 annuity trust or a charitable remain7 der unitrust (as such terms are de8 fined in section 664(d)),

9 ‘‘(II) to a pooled income fund (as

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

11 ‘‘(III) for the issuance of a chari12 table gift annuity (as defined in sec13 tion 501(m)(5)).

14 The preceding sentence shall apply only if

15 no person holds an income interest in the

16 amounts in the trust, fund, or annuity at17 tributable to such distribution other than

18 one or more of the following: the individual

19 for whose benefit such account is main20 tained, the spouse of such individual, or

21 any organization described in section

22 170(c).

23 ‘‘(ii) DETERMINATION OF INCLUSION

24 OF AMOUNTS DISTRIBUTED.—In deter25 mining the amount includible in the gross
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1 income of any person by reason of a pay2 ment or distribution from a trust referred

3 to in clause (i)(I) or a charitable gift annu4 ity (as so defined), the portion of any

5 qualified charitable distribution to such

6 trust or for such annuity which would (but

7 for this subparagraph) have been includible

8 in gross income—

9 ‘‘(I) shall be treated as income

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

11 ‘‘(II) shall not be treated as an

12 investment in the contract.

13 ‘‘(iii) NO INCLUSION FOR DISTRIBU14 TION TO POOLED INCOME FUND.—No

15 amount shall be includible in the gross in16 come of a pooled income fund (as so de17 fined) by reason of a qualified charitable

18 distribution to such fund.

19 ‘‘(C) QUALIFIED CHARITABLE DISTRIBU20 TION.—For purposes of this paragraph, the

21 term ‘qualified charitable distribution’ means

22 any distribution from an individual retirement

23 account—

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

25 date that the individual for whose benefit
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1 the account is maintained has attained age

591 2 ⁄2, and

3 ‘‘(ii) which is made directly from the

4 account to—

5 ‘‘(I) an organization described in

6 section 170(c), or

7 ‘‘(II) a trust, fund, or annuity re8 ferred to in subparagraph (B).

9 ‘‘(D) DENIAL OF DEDUCTION.—The

10 amount allowable as a deduction under section

11 170 to the taxpayer for the taxable year shall

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

13 the amounts of the qualified charitable distribu14 tions during such year which would be includ15 ible in the gross income of the taxpayer for

16 such year but for this paragraph.’’

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

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

19 the date of the enactment of this Act.

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