II 

108TH CONGRESS 

1ST SESSION S. 272

To provide incentives for charitable contributions by individuals and businesses, to improve the public disclosure of activities of exempt organizations, and to enhance the ability of low-income Americans to gain financial security by building assets, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 30, 2003

Mr. SANTORUM (for himself, Mr. LIEBERMAN, Mr. GRASSLEY, Mr. BAYH, Mr. 

HATCH, Ms. LANDRIEU, Mr. SMITH, Mr. NELSON of Florida, Mr. TALENT, Mr. LUGAR, Mr. FRIST, and Mr. MILLER) introduced the following 

bill; which was read twice and referred to the Committee on Finance 

A BILL

To provide incentives for charitable contributions by individuals and businesses, to improve the public disclosure 

of activities of exempt organizations, and to enhance 

the ability of low-income Americans to gain financial 

security by building assets, 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; ETC. 

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

5 ‘‘Charity Aid, Recovery, and Empowerment Act of 2003’’ 

6 or the ‘‘CARE Act of 2003’’. 
2

•S 272 IS 

1 (b) AMENDMENT OF 1986 CODE.—Except as other2 wise expressly provided, whenever in this Act an amend3 ment or repeal is expressed in terms of an amendment 

4 to, or repeal of, a section or other provision, the reference 

5 shall be considered to be made to a section or other provi6 sion of the Internal Revenue Code of 1986. 

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

8 this Act is as follows:

Sec. 1. Short title; etc. 

TITLE I—CHARITABLE GIVING INCENTIVES 

Sec. 101. Deduction for portion of charitable contributions to be allowed to individuals who do not itemize deductions. 

Sec. 102. Tax-free distributions from individual retirement accounts for charitable purposes. 

Sec. 103. Charitable deduction for contributions of food inventories. 

Sec. 104. Charitable deduction for contributions of book inventories. 

Sec. 105. Expansion of charitable contribution allowed for scientific property 

used for research and for computer technology and equipment 

used for educational purposes. 

Sec. 106. Modifications to encourage contributions of capital gain real property 

made for conservation purposes. 

Sec. 107. Exclusion of 25 percent of gain on sales or exchanges of land or 

water interests to eligible entities for conservation purposes. 

Sec. 108. Tax exclusion for cost-sharing payments under Partners for Fish and 

Wildlife Program. 

Sec. 109. Adjustment to basis of S corporation stock for certain charitable contributions. 

Sec. 110. Enhanced deduction for charitable contribution of literary, musical, 

artistic, and scholarly compositions. 

Sec. 111. Mileage reimbursements to charitable volunteers excluded from gross 

income. 

TITLE II—IMPROVE OVERSIGHT OF TAX-EXEMPT 

ORGANIZATIONS 

Sec. 201. Disclosure of written determinations. 

Sec. 202. Disclosure of Internet web site and name under which organization 

does business. 

Sec. 203. Modification to reporting capital transactions. 

Sec. 204. Disclosure that Form 990 is publicly available. 

Sec. 205. Disclosure to State officials of proposed actions related to section 

501(c) organizations. 

Sec. 206. Expansion of penalties to preparers of Form 990. 

Sec. 207. Notification requirement for entities not currently required to file. 

Sec. 208. Suspension of tax-exempt status of terrorist organizations. 
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•S 272 IS 

TITLE III—OTHER CHARITABLE AND EXEMPT ORGANIZATION 

PROVISIONS 

Sec. 301. Modification of excise tax on unrelated business taxable income of 

charitable remainder trusts. 

Sec. 302. Modifications to section 512(b)(13). 

Sec. 303. Simplification of lobbying expenditure limitation. 

Sec. 304. Expedited review process for certain tax-exemption applications. 

Sec. 305. Clarification of definition of church tax inquiry. 

Sec. 306. Expansion of declaratory judgment remedy to tax-exempt organizations. 

Sec. 307. Definition of convention or association of churches. 

Sec. 308. Payments by charitable organizations to victims of war on terrorism. 

Sec. 309. Modification of scholarship foundation rules. 

Sec. 310. Treatment of certain hospital support organizations as qualified organizations for purposes of determining acquisition indebtedness. 

TITLE IV—SOCIAL SERVICES BLOCK GRANT 

Sec. 401. Restoration of funds for the Social Services Block Grant. 

Sec. 402. Restoration of authority to transfer up to 10 percent of TANF funds 

to the Social Services Block Grant. 

Sec. 403. Requirement to submit annual report on State activities. 

TITLE V—INDIVIDUAL DEVELOPMENT ACCOUNTS 

Sec. 501. Short title. 

Sec. 502. Purposes. 

Sec. 503. Definitions. 

Sec. 504. Structure and administration of qualified individual development account programs. 

Sec. 505. Procedures for opening and maintaining an individual development 

account and qualifying for matching funds. 

Sec. 506. Deposits by qualified individual development account programs. 

Sec. 507. Withdrawal procedures. 

Sec. 508. Certification and termination of qualified individual development account programs. 

Sec. 509. Reporting, monitoring, and evaluation. 

Sec. 510. Authorization of appropriations. 

Sec. 511. Matching funds for individual development accounts provided through 

a tax credit for qualified financial institutions. 

Sec. 512. Account funds disregarded for purposes of certain means-tested Federal programs. 

TITLE VI—MANAGEMENT OF EXEMPT ORGANIZATIONS 

Sec. 601. Authorization of appropriations. 

TITLE VII—COMPASSION CAPITAL FUND 

Sec. 701. Support for nonprofit community-based organizations; Department of 

Health and Human Services. 

Sec. 702. Support for nonprofit community-based organizations; Corporation 

for National and Community Service. 

Sec. 703. Support for nonprofit community-based organizations; Department of 

Justice. 
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•S 272 IS 

Sec. 704. Support for nonprofit community-based organizations; Department of 

Housing and Urban Development. 

Sec. 705. Coordination. 

TITLE VIII—EQUAL TREATMENT FOR NONGOVERNMENTAL 

PROVIDERS 

Sec. 801. Nongovernmental organizations. 

TITLE IX—MATERNITY GROUP HOMES 

Sec. 901. Maternity group homes.

1 TITLE I—CHARITABLE GIVING 

2 INCENTIVES 

3 SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CON4 TRIBUTIONS TO BE ALLOWED TO INDIVID5 UALS WHO DO NOT ITEMIZE DEDUCTIONS. 

6 (a) IN GENERAL.—Section 170 (relating to chari7 table, etc., contributions and gifts) is amended by redesig8 nating subsection (m) as subsection (n) and by inserting 

9 after subsection (l) the following new subsection: 

10 ‘‘(m) DEDUCTION FOR INDIVIDUALS NOT ITEMIZING

11 DEDUCTIONS.—In the case of an individual who does not 

12 itemize deductions for any taxable year, there shall be 

13 taken into account as a direct charitable deduction under 

14 section 63 an amount equal to the amount allowable under 

15 subsection (a) for the taxable year for cash contributions, 

16 but only with respect to such contributions which exceed 

17 $250 ($500 in the case of a joint return), but do not ex18 ceed $500 ($1,000 in the case of a joint return).’’. 

19 (b) DIRECT CHARITABLE DEDUCTION.—
5

•S 272 IS 

1 (1) IN GENERAL.—Subsection (b) of section 63 

2 (defining taxable income) is amended by striking 

3 ‘‘and’’ at the end of paragraph (1), by striking the 

4 period at the end of paragraph (2) and inserting ‘‘, 

5 and’’, and by adding at the end the following new 

6 paragraph: 

7 ‘‘(3) the direct charitable deduction.’’. 

8 (2) DEFINITION.—Section 63 is amended by re9 designating subsection (g) as subsection (h) and by 

10 inserting after subsection (f) the following new sub11 section: 

12 ‘‘(g) DIRECT CHARITABLE DEDUCTION.—For pur13 poses of this section, the term ‘direct charitable deduction’ 

14 means that portion of the amount allowable under section 

15 170(a) which is taken as a direct charitable deduction for 

16 the taxable year under section 170(m).’’. 

17 (3) CONFORMING AMENDMENT.—Subsection (d) 

18 of section 63 is amended by striking ‘‘and’’ at the 

19 end of paragraph (1), by striking the period at the 

20 end of paragraph (2) and inserting ‘‘, and’’, and by 

21 adding at the end the following new paragraph: 

22 ‘‘(3) the direct charitable deduction.’’. 

23 (c) STUDY.—

24 (1) IN GENERAL.—The Secretary of the Treas25 ury shall study the effect of the amendments made
6

•S 272 IS 

1 by this section on increased charitable giving and 

2 taxpayer compliance, including a comparison of tax3 payer compliance by those who itemize their chari4 table contributions with those who claim a direct 

5 charitable deduction. 

6 (2) REPORT.—By not later than December 31, 

7 2004, the Secretary of the Treasury shall report on 

8 the study required under paragraph (1) to the Com9 mittee on Finance of the Senate and the Committee 

10 on Ways and Means of the House of Representa11 tives. 

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

13 this section shall apply to taxable years beginning after 

14 December 31, 2002, and before January 1, 2005. 

15 SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE16 TIREMENT ACCOUNTS FOR CHARITABLE 

17 PURPOSES. 

18 (a) IN GENERAL.—Subsection (d) of section 408 (re19 lating to individual retirement accounts) is amended by 

20 adding at the end the following new paragraph: 

21 ‘‘(8) DISTRIBUTIONS FOR CHARITABLE PUR22 POSES.—

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

24 includible in gross income by reason of a quali25 fied charitable distribution. 
7

•S 272 IS 

1 ‘‘(B) QUALIFIED CHARITABLE DISTRIBU2 TION.—For purposes of this paragraph, the 

3 term ‘qualified charitable distribution’ means 

4 any distribution from an individual retirement 

5 account—

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

7 trustee—

8 ‘‘(I) to an organization described 

9 in section 170(c), or

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

11 and 

12 ‘‘(ii) which is made on or after the 

13 date that the individual for whose benefit 

14 the account is maintained has attained—

15 ‘‘(I) in the case of any distribu16 tion described in clause (i)(I), age 

701 17 ⁄2, and 

18 ‘‘(II) in the case of any distribu19 tion described in clause (i)(II), age 

591 20 ⁄2. 

21 A distribution shall be treated as a qualified 

22 charitable distribution only to the extent that 

23 the distribution would be includible in gross in24 come without regard to subparagraph (A) and, 

25 in the case of a distribution to a split-interest 
8

•S 272 IS 

1 entity, only if no person holds an income inter2 est in the amounts in the split-interest entity 

3 attributable to such distribution other than one 

4 or more of the following: the individual for 

5 whose benefit such account is maintained, the 

6 spouse of such individual, or any organization 

7 described in section 170(c). 

8 ‘‘(C) CONTRIBUTIONS MUST BE OTHER9 WISE DEDUCTIBLE.—For purposes of this para10 graph—

11 ‘‘(i) DIRECT CONTRIBUTIONS.—A dis12 tribution to an organization described in 

13 section 170(c) shall be treated as a quali14 fied charitable distribution only if a deduc15 tion for the entire distribution would be al16 lowable under section 170 (determined 

17 without regard to subsection (b) thereof 

18 and this paragraph). 

19 ‘‘(ii) SPLIT-INTEREST GIFTS.—A dis20 tribution to a split-interest entity shall be 

21 treated as a qualified charitable distribu22 tion only if a deduction for the entire value 

23 of the interest in the distribution for the 

24 use of an organization described in section 

25 170(c) would be allowable under section 
9

•S 272 IS 

1 170 (determined without regard to sub2 section (b) thereof and this paragraph). 

3 ‘‘(D) APPLICATION OF SECTION 72.—Not4 withstanding section 72, in determining the ex5 tent to which a distribution is a qualified chari6 table distribution, the entire amount of the dis7 tribution shall be treated as includible in gross 

8 income without regard to subparagraph (A) to 

9 the extent that such amount does not exceed 

10 the aggregate amount which would be so includ11 ible if all amounts were distributed from all in12 dividual retirement accounts otherwise taken 

13 into account in determining the inclusion on 

14 such distribution under section 72. Proper ad15 justments shall be made in applying section 72 

16 to other distributions in such taxable year and 

17 subsequent taxable years. 

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

19 ENTITIES.—

20 ‘‘(i) CHARITABLE REMAINDER

21 TRUSTS.—Notwithstanding section 664(b), 

22 distributions made from a trust described 

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

24 ordinary income in the hands of the bene25 ficiary to whom is paid the annuity de-
10

•S 272 IS 

1 scribed in section 664(d)(1)(A) or the pay2 ment described in section 664(d)(2)(A). 

3 ‘‘(ii) POOLED INCOME FUNDS.—No 

4 amount shall be includible in the gross in5 come of a pooled income fund (as defined 

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

7 qualified charitable distribution to such 

8 fund, and all distributions from the fund 

9 which are attributable to qualified chari10 table distributions shall be treated as ordi11 nary income to the beneficiary. 

12 ‘‘(iii) CHARITABLE GIFT ANNU13 ITIES.—Qualified charitable distributions 

14 made for a charitable gift annuity shall not 

15 be treated as an investment in the con16 tract. 

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

18 charitable distributions shall not be taken into 

19 account in determining the deduction under sec20 tion 170. 

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

22 For purposes of this paragraph, the term ‘split23 interest entity’ means—

24 ‘‘(i) a charitable remainder annuity 

25 trust or a charitable remainder unitrust
11

•S 272 IS 

1 (as such terms are defined in section 

2 664(d)) which must be funded exclusively 

3 by qualified charitable distributions, 

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

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

6 accounts separately for amounts attrib7 utable to qualified charitable distributions, 

8 and 

9 ‘‘(iii) a charitable gift annuity (as de10 fined in section 501(m)(5)).’’. 

11 (b) MODIFICATIONS RELATING TO INFORMATION RE12 TURNS BY CERTAIN TRUSTS.—

13 (1) RETURNS.—Section 6034 (relating to re14 turns by trusts described in section 4947(a)(2) or 

15 claiming charitable deductions under section 642(c)) 

16 is amended to read as follows: 

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

18 4947(a)(2) OR CLAIMING CHARITABLE DEDUC19 TIONS UNDER SECTION 642(c). 

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

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

22 such information with respect to the taxable year as the 

23 Secretary may by forms or regulations require. 

24 ‘‘(b) TRUSTS CLAIMING A CHARITABLE DEDUCTION

25 UNDER SECTION 642(c).—
12

•S 272 IS 

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

2 file a return under subsection (a) but claiming a 

3 charitable, etc., deduction under section 642(c) for 

4 the taxable year shall furnish such information with 

5 respect to such taxable year as the Secretary may by 

6 forms or regulations prescribe, including: 

7 ‘‘(A) the amount of the charitable, etc., de8 duction taken under section 642(c) within such 

9 year, 

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

11 which represents amounts for which charitable, 

12 etc., deductions under section 642(c) have been 

13 taken in prior years,

14 ‘‘(C) the amount for which charitable, etc., 

15 deductions have been taken in prior years but 

16 which has not been paid out at the beginning 

17 of such year, 

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

19 the current and prior years for charitable, etc., 

20 purposes, 

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

22 such year and the expenses attributable thereto, 

23 and 
13

•S 272 IS 

1 ‘‘(F) a balance sheet showing the assets, li2 abilities, and net worth of the trust as of the 

3 beginning of such year. 

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

5 apply in the case of a taxable year if all the net in6 come for such year, determined under the applicable 

7 principles of the law of trusts, is required to be dis8 tributed currently to the beneficiaries. Paragraph (1) 

9 shall not apply in the case of a trust described in 

10 section 4947(a)(1).’’. 

11 (2) INCREASE IN PENALTY RELATING TO FIL12 ING OF INFORMATION RETURN BY SPLIT-INTEREST

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

14 to returns by exempt organizations and by certain 

15 trusts) is amended by adding at the end the fol16 lowing new subparagraph: 

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

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

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

20 (B) of this paragraph shall not apply and para21 graph (1) shall apply in the same manner as if 

22 such return were required under section 6033, 

23 except that—
14

•S 272 IS 

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

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

3 not apply, 

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

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

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

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

8 and the second sentence thereof shall be 

9 applied by substituting ‘$50,000’ for 

10 ‘$10,000’, and 

11 ‘‘(iii) the third sentence of paragraph 

12 (1)(A) shall be disregarded. 

13 In addition to any penalty imposed on the trust 

14 pursuant to this subparagraph, if the person re15 quired to file such return knowingly fails to file 

16 the return, such penalty shall also be imposed 

17 on such person who shall be personally liable 

18 for such penalty.’’. 

19 (3) CONFIDENTIALITY OF NONCHARITABLE

20 BENEFICIARIES.—Subsection (b) of section 6104 

21 (relating to inspection of annual information re22 turns) is amended by adding at the end the fol23 lowing new sentence: ‘‘In the case of a trust which 

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

25 this subsection shall not apply to information re-
15

•S 272 IS 

1 garding beneficiaries which are not organizations de2 scribed in section 170(c).’’. 

3 (c) EFFECTIVE DATES.—

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

5 by subsection (a) shall apply to distributions made 

6 after the date of the enactment. 

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

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

9 years beginning after December 31, 2003. 

10 SEC. 103. CHARITABLE DEDUCTION FOR CONTRIBUTIONS 

11 OF FOOD INVENTORIES. 

12 (a) IN GENERAL.—Subsection (e) of section 170 (re13 lating to certain contributions of ordinary income and cap14 ital gain property) is amended by adding at the end the 

15 following new paragraph: 

16 ‘‘(7) APPLICATION OF PARAGRAPH (3) TO CER17 TAIN CONTRIBUTIONS OF FOOD INVENTORY.—For 

18 purposes of this section—

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

20 case of a charitable contribution of apparently 

21 wholesome food—

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

23 without regard to whether the contribution 

24 is made by a C corporation, and
16

•S 272 IS 

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

2 than a C corporation, the aggregate 

3 amount of such contributions from any 

4 trade or business (or interest therein) of 

5 the taxpayer for any taxable year which 

6 may be taken into account under this sec7 tion shall not exceed 10 percent of the tax8 payer’s net income from any such trade or 

9 business, computed without regard to this 

10 section, for such taxable year. 

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

12 case of a charitable contribution of apparently 

13 wholesome food, notwithstanding paragraph 

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

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

16 amount by which the fair market value of such 

17 property exceeds twice the basis of such prop18 erty. 

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

20 taxpayer—

21 ‘‘(i) does not account for inventories 

22 under section 471, and 

23 ‘‘(ii) is not required to capitalize indi24 rect costs under section 263A, 
17

•S 272 IS 

1 the taxpayer may elect, solely for purposes of 

2 paragraph (3)(B), to treat the basis of any ap3 parently wholesome food as being equal to 25 

4 percent of the fair market value of such food. 

5 ‘‘(D) DETERMINATION OF FAIR MARKET

6 VALUE.—In the case of a charitable contribu7 tion of apparently wholesome food which is a 

8 qualified contribution (within the meaning of 

9 paragraph (3), as modified by subparagraph 

10 (A) of this paragraph) and which, solely by rea11 son of internal standards of the taxpayer or 

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

13 fair market value of such contribution shall be 

14 determined—

15 ‘‘(i) without regard to such internal 

16 standards or such lack of market and 

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

18 at which the same or substantially the 

19 same food items (as to both type and qual20 ity) are sold by the taxpayer at the time of 

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

22 time, in the recent past). 

23 ‘‘(E) APPARENTLY WHOLESOME FOOD.—

24 For purposes of this paragraph, the term ‘ap25 parently wholesome food’ has the meaning given 
18

•S 272 IS 

1 such term by section 22(b)(2) of the Bill Emer2 son Good Samaritan Food Donation Act (42 

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

4 the enactment of this paragraph.’’. 

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

6 this section shall apply to contributions made after the 

7 date of the enactment of this Act. 

8 SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS 

9 OF BOOK INVENTORIES. 

10 (a) IN GENERAL.—Section 170(e)(3) (relating to cer11 tain contributions of ordinary income and capital gain 

12 property) is amended by redesignating subparagraph (C) 

13 as subparagraph (D) and by inserting after subparagraph 

14 (B) the following new subparagraph: 

15 ‘‘(C) SPECIAL RULE FOR CONTRIBUTIONS

16 OF BOOK INVENTORY FOR EDUCATIONAL PUR17 POSES.—

18 ‘‘(i) CONTRIBUTIONS OF BOOK INVEN19 TORY.—In determining whether a qualified 

20 book contribution is a qualified contribu21 tion, subparagraph (A) shall be applied 

22 without regard to whether—

23 ‘‘(I) the donee is an organization 

24 described in the matter preceding 

25 clause (i) of subparagraph (A), and 
19

•S 272 IS 

1 ‘‘(II) the property is to be used 

2 by the donee solely for the care of the 

3 ill, the needy, or infants. 

4 ‘‘(ii) AMOUNT OF REDUCTION.—Not5 withstanding subparagraph (B), the 

6 amount of the reduction determined under 

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

8 amount by which the fair market value of 

9 the contributed property (as determined by 

10 the taxpayer using a bona fide published 

11 market price for such book) exceeds twice 

12 the basis of such property. 

13 ‘‘(iii) QUALIFIED BOOK CONTRIBU14 TION.—For purposes of this paragraph, 

15 the term ‘qualified book contribution’ 

16 means a charitable contribution of books, 

17 but only if the requirements of clauses (iv) 

18 and (v) are met. 

19 ‘‘(iv) IDENTITY OF DONEE.—The re20 quirement of this clause is met if the con21 tribution is to an organization—

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

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

24 ‘‘(II) described in section 

25 501(c)(3) and exempt from tax under 
20

•S 272 IS 

1 section 501(a) (other than a private 

2 foundation, as defined in section 

3 509(a), which is not an operating 

4 foundation, as defined in section 

5 4942(j)(3)), which is organized pri6 marily to make books available to the 

7 general public at no cost or to operate 

8 a literacy program. 

9 ‘‘(v) CERTIFICATION BY DONEE.—The 

10 requirement of this clause is met if, in ad11 dition to the certifications required by sub12 paragraph (A) (as modified by this sub13 paragraph), the donee certifies in writing 

14 that—

15 ‘‘(I) the books are suitable, in 

16 terms of currency, content, and quan17 tity, for use in the donee’s educational 

18 programs, and 

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

20 in its educational programs. 

21 ‘‘(vi) BONA FIDE PUBLISHED MARKET

22 PRICE.—For purposes of this subpara23 graph, the term ‘bona fide published mar24 ket price’ means, with respect to any book, 

25 a price—
21

•S 272 IS 

1 ‘‘(I) determined using the same 

2 printing and edition, 

3 ‘‘(II) published within 7 years 

4 preceding the contribution of such 

5 book, 

6 ‘‘(III) determined as a result of 

7 an arm’s length transaction, and 

8 ‘‘(IV) for which such a book has 

9 been customarily sold.’’. 

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

11 this section shall apply to contributions made after the 

12 date of the enactment of this Act 

13 SEC. 105. EXPANSION OF CHARITABLE CONTRIBUTION AL14 LOWED FOR SCIENTIFIC PROPERTY USED 

15 FOR RESEARCH AND FOR COMPUTER TECH16 NOLOGY AND EQUIPMENT USED FOR EDU17 CATIONAL PURPOSES. 

18 (a) SCIENTIFIC PROPERTY USED FOR RESEARCH.—

19 (1) IN GENERAL.—Clause (ii) of section 

20 170(e)(4)(B) (defining qualified research contribu21 tions) is amended by inserting ‘‘or assembled’’ after 

22 ‘‘constructed’’. 

23 (2) CONFORMING AMENDMENT.—Clause (iii) of 

24 section 170(e)(4)(B) is amended by inserting ‘‘or as25 sembling’’ after ‘‘construction’’. 
22

•S 272 IS 

1 (b) COMPUTER TECHNOLOGY AND EQUIPMENT FOR

2 EDUCATIONAL PURPOSES.—

3 (1) IN GENERAL.—Clause (ii) of section 

4 170(e)(6)(B) is amended by inserting ‘‘or assem5 bled’’ after ‘‘constructed’’ and ‘‘or assembling’’ after 

6 ‘‘construction’’. 

7 (2) SPECIAL RULE MADE PERMANENT.—Sec8 tion 170(e)(6) is amended by striking subparagraph 

9 (G). 

10 (3) CONFORMING AMENDMENTS.—Subpara11 graph (D) of section 170(e)(6) is amended by insert12 ing ‘‘or assembled’’ after ‘‘constructed’’ and ‘‘or as13 sembling’’ after ‘‘construction’’. 

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

15 this section shall apply to taxable years beginning after 

16 December 31, 2002. 

17 SEC. 106. MODIFICATIONS TO ENCOURAGE CONTRIBU18 TIONS OF CAPITAL GAIN REAL PROPERTY 

19 MADE FOR CONSERVATION PURPOSES. 

20 (a) IN GENERAL.—Section 170(h) (relating to quali21 fied conservation contribution) is amended by adding at 

22 the end the following new paragraph: 

23 ‘‘(7) ADDITIONAL INCENTIVES FOR QUALIFIED

24 CONSERVATION CONTRIBUTIONS.—
23

•S 272 IS 

1 ‘‘(A) IN GENERAL.—In the case of any 

2 qualified conservation contribution (as defined 

3 in paragraph (1)) made by an individual—

4 ‘‘(i) subparagraph (C) of subsection 

5 (b)(1) shall not apply, 

6 ‘‘(ii) except as provided in subpara7 graph (B)(i), subsections (b)(1)(A) and 

8 (d)(1) shall be applied separately with re9 spect to such contributions by treating ref10 erences to 50 percent of the taxpayer’s 

11 contribution base as references to the 

12 amount of such percentage of such base re13 duced by the amount of other contributions 

14 allowable under subsection (b)(1)(A), and 

15 ‘‘(iii) subparagraph (A) of subsection 

16 (d)(1) shall be applied—

17 ‘‘(I) by substituting ‘15 suc18 ceeding taxable years’ for ‘5 suc19 ceeding taxable years’, and 

20 ‘‘(II) by applying clause (ii) to 

21 each of the 15 succeeding taxable 

22 years. 

23 ‘‘(B) SPECIAL RULES FOR ELIGIBLE FARM24 ERS AND RANCHERS.—
24

•S 272 IS 

1 ‘‘(i) IN GENERAL.—In the case of any 

2 such contributions made by an eligible 

3 farmer or rancher—

4 ‘‘(I) if the taxpayer is an indi5 vidual, subsections (b)(1)(A) and 

6 (d)(1) shall be applied separately with 

7 respect to such contributions by sub8 stituting ‘the taxpayer’s contribution 

9 base reduced by the amount of other 

10 contributions allowable under sub11 section (b)(1)(A)’ for ‘50 percent of 

12 the taxpayer’s contribution base’ each 

13 place it appears, and 

14 ‘‘(II) if the taxpayer is a corpora15 tion, subsections (b)(2) and (d)(2) 

16 shall be applied separately with re17 spect to such contributions, subsection 

18 (b)(2) shall be applied with respect to 

19 such contributions as if such sub20 section did not contain the words ‘10 

21 percent of’ and as if subparagraph 

22 (A) thereof read ‘the deduction under 

23 this section for qualified conservation 

24 contributions’, and rules similar to the 

25 rules of subparagraph (A)(iii) shall 
25

•S 272 IS 

1 apply for purposes of subsection 

2 (d)(2). 

3 ‘‘(ii) DEFINITION.—For purposes of 

4 clause (i), the term ‘eligible farmer or 

5 rancher’ means a taxpayer whose gross in6 come from the trade or business of farm7 ing (within the meaning of section 

8 2032A(e)(5)) is at least 51 percent of the 

9 taxpayer’s gross income for the taxable 

10 year, and, in the case of a C corporation, 

11 the stock of which is not publicly traded on 

12 a recognized exchange.’’. 

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

14 this section shall apply to contributions made after the 

15 date of the enactment of this Act. 

16 SEC. 107. EXCLUSION OF 25 PERCENT OF GAIN ON SALES 

17 OR EXCHANGES OF LAND OR WATER INTER18 ESTS TO ELIGIBLE ENTITIES FOR CONSERVA19 TION PURPOSES. 

20 (a) IN GENERAL.—Part III of subchapter B of chap21 ter 1 (relating to items specifically excluded from gross 

22 income) is amended by inserting after section 121 the fol23 lowing new section:
26

•S 272 IS 

1 ‘‘SEC. 121A. 25-PERCENT EXCLUSION OF GAIN ON SALES OR 

2 EXCHANGES OF LAND OR WATER INTERESTS 

3 TO ELIGIBLE ENTITIES FOR CONSERVATION 

4 PURPOSES. 

5 ‘‘(a) EXCLUSION.—Gross income shall not include 25 

6 percent of the qualifying gain from a conservation sale of 

7 a long-held qualifying land or water interest. 

8 ‘‘(b) QUALIFYING GAIN.—For purposes of this sec9 tion—

10 ‘‘(1) IN GENERAL.—The term ‘qualifying gain’ 

11 means any gain which would be recognized as long12 term capital gain, reduced by the amount of any 

13 long-term capital gain attributable to disqualified 

14 improvements. 

15 ‘‘(2) DISQUALIFIED IMPROVEMENT.—For pur16 poses of paragraph (1), the term ‘disqualified im17 provement’ means any building, structure, or other 

18 improvement, other than—

19 ‘‘(A) any improvement which is described 

20 in section 175(c)(1), determined—

21 ‘‘(i) without regard to the require22 ments that the taxpayer be engaged in 

23 farming, and 

24 ‘‘(ii) without taking into account sub25 paragraphs (A) and (B) thereof, or 
27

•S 272 IS 

1 ‘‘(B) any improvement which the Secretary 

2 determines directly furthers conservation pur3 poses. 

4 ‘‘(3) SPECIAL RULE FOR SALES OF STOCK.—If 

5 the long-held qualifying land or water interest is 1 

6 or more shares of stock in a qualifying land or water 

7 corporation, the qualifying gain is equal to the lesser 

8 of—

9 ‘‘(A) the qualifying gain determined under 

10 paragraph (1), or 

11 ‘‘(B) the product of—

12 ‘‘(i) the percentage of such corpora13 tion’s stock which is transferred by the 

14 taxpayer, times 

15 ‘‘(ii) the amount which would have 

16 been the qualifying gain (determined under 

17 paragraph (1)) if there had been a con18 servation sale by such corporation of all of 

19 its interests in the land and water for a 

20 price equal to the product of the fair mar21 ket value of such interests times the ratio 

22 of—

23 ‘‘(I) the proceeds of the conserva24 tion sale of the stock, to 
28

•S 272 IS 

1 ‘‘(II) the fair market value of the 

2 stock which was the subject of the 

3 conservation sale. 

4 ‘‘(c) CONSERVATION SALE.—For purposes of this 

5 section, the term ‘conservation sale’ means a sale or ex6 change which meets the following requirements: 

7 ‘‘(1) TRANSFEREE IS AN ELIGIBLE ENTITY.—

8 The transferee of the long-held qualifying land or 

9 water interest is an eligible entity. 

10 ‘‘(2) QUALIFYING LETTER OF INTENT RE11 QUIRED.—At the time of the sale or exchange, such 

12 transferee provides the taxpayer with a qualifying 

13 letter of intent. 

14 ‘‘(3) NONAPPLICATION TO CERTAIN SALES.—

15 The sale or exchange is not made pursuant to an 

16 order of condemnation or eminent domain. 

17 ‘‘(4) CONTROLLING INTEREST IN STOCK SALE

18 REQUIRED.—In the case of the sale or exchange of 

19 stock in a qualifying land or water corporation, at 

20 the end of the taxpayer’s taxable year in which such 

21 sale or exchange occurs, the transferee’s ownership 

22 of stock in such corporation meets the requirements 

23 of section 1504(a)(2) (determined by substituting 

24 ‘90 percent’ for ‘80 percent’ each place it appears). 
29

•S 272 IS 

1 ‘‘(d) LONG-HELD QUALIFYING LAND OR WATER IN2 TEREST.—For purposes of this section—

3 ‘‘(1) IN GENERAL.—The term ‘long-held quali4 fying land or water interest’ means any qualifying 

5 land or water interest owned by the taxpayer or a 

6 member of the taxpayer’s family (as defined in sec7 tion 2032A(e)(2)) at all times during the 5-year pe8 riod ending on the date of the sale. 

9 ‘‘(2) QUALIFYING LAND OR WATER INTER10 EST.—

11 ‘‘(A) IN GENERAL.—The term ‘qualifying 

12 land or water interest’ means a real property 

13 interest which constitutes—

14 ‘‘(i) a taxpayer’s entire interest in 

15 land, 

16 ‘‘(ii) a taxpayer’s entire interest in 

17 water rights, 

18 ‘‘(iii) a qualified real property interest 

19 (as defined in section 170(h)(2)), or 

20 ‘‘(iv) stock in a qualifying land or 

21 water corporation. 

22 ‘‘(B) ENTIRE INTEREST.—For purposes of 

23 clause (i) or (ii) of subparagraph (A)—

24 ‘‘(i) a partial interest in land or water 

25 is not a taxpayer’s entire interest if an in-
30

•S 272 IS 

1 terest in land or water was divided in order 

2 to create such partial interest in order to 

3 avoid the requirements of such clause or 

4 section 170(f)(3)(A), and 

5 ‘‘(ii) a taxpayer’s entire interest in 

6 certain land does not fail to satisfy sub7 paragraph (A)(i) solely because the tax8 payer has retained an interest in other 

9 land, even if the other land is contiguous 

10 with such certain land and was acquired by 

11 the taxpayer along with such certain land 

12 in a single conveyance. 

13 ‘‘(e) OTHER DEFINITIONS.—For purposes of this 

14 section—

15 ‘‘(1) ELIGIBLE ENTITY.—The term ‘eligible en16 tity’ means—

17 ‘‘(A) a governmental unit referred to in 

18 section 170(c)(1), or an agency or department 

19 thereof operated primarily for 1 or more of the 

20 conservation purposes specified in clause (i), 

21 (ii), or (iii) of section 170(h)(4)(A), or 

22 ‘‘(B) an entity which is—

23 ‘‘(i) described in section 

24 170(b)(1)(A)(vi) or section 170(h)(3)(B), 

25 and
31

•S 272 IS 

1 ‘‘(ii) organized and at all times oper2 ated primarily for 1 or more of the con3 servation purposes specified in clause (i), 

4 (ii), or (iii) of section 170(h)(4)(A). 

5 ‘‘(2) QUALIFYING LETTER OF INTENT.—The 

6 term ‘qualifying letter of intent’ means a written let7 ter of intent which includes the following statement: 

8 ‘The transferee’s intent is that this acquisition will 

9 serve 1 or more of the conservation purposes speci10 fied in clause (i), (ii), or (iii) of section 170(h)(4)(A) 

11 of the Internal Revenue Code of 1986, that the 

12 transferee’s use of the property so acquired will be 

13 consistent with section 170(h)(5) of such Code, and 

14 that the use of the property will continue to be con15 sistent with such section, even if ownership or pos16 session of such property is subsequently transferred 

17 to another person.’

18 ‘‘(3) QUALIFYING LAND OR WATER CORPORA19 TION.—The term ‘qualifying land or water corpora20 tion’ means a C corporation (as defined in section 

21 1361(a)(2)) if, as of the date of the conservation 

22 sale—

23 ‘‘(A) the fair market value of the corpora24 tion’s interests in land or water held by the cor25 poration at all times during the preceding 5 
32

•S 272 IS 

1 years equals or exceeds 90 percent of the fair 

2 market value of all of such corporation’s assets, 

3 and 

4 ‘‘(B) not more than 50 percent of the total 

5 fair market value of such corporation’s assets 

6 consists of water rights or infrastructure re7 lated to the delivery of water, or both. 

8 ‘‘(f) TAX ON SUBSEQUENT TRANSFERS OR REMOV9 ALS OF CONSERVATION RESTRICTIONS.—

10 ‘‘(1) IN GENERAL.—A tax is hereby imposed on 

11 any subsequent—

12 ‘‘(A) transfer by an eligible entity of own13 ership or possession, whether by sale, exchange, 

14 or lease, of property acquired directly or indi15 rectly in—

16 ‘‘(i) a conservation sale described in 

17 subsection (a), or 

18 ‘‘(ii) a transfer described in clause (i), 

19 (ii), or (iii) of paragraph (4)(A), or 

20 ‘‘(B) removal of a conservation restriction 

21 contained in an instrument of conveyance of 

22 such property. 

23 ‘‘(2) AMOUNT OF TAX.—The amount of tax im24 posed by paragraph (1) on any transfer or removal 

25 shall be equal to the sum of—
33

•S 272 IS 

1 ‘‘(A) either—

2 ‘‘(i) 20 percent of the fair market 

3 value (determined at the time of the trans4 fer) of the property the ownership or pos5 session of which is transferred, or 

6 ‘‘(ii) 20 percent of the fair market 

7 value (determined at the time immediately 

8 after the removal) of the property upon 

9 which the conservation restriction was re10 moved, plus 

11 ‘‘(B) the product of—

12 ‘‘(i) the highest rate of tax specified 

13 in section 11, times 

14 ‘‘(ii) any gain or income realized by 

15 the transferor or person removing such re16 striction as a result of the transfer or re17 moval. 

18 ‘‘(3) LIABILITY.—The tax imposed by para19 graph (1) shall be paid—

20 ‘‘(A) on any transfer, by the transferor, 

21 and 

22 ‘‘(B) on any removal of a conservation re23 striction contained in an instrument of convey24 ance, by the person removing such restriction. 
34

•S 272 IS 

1 ‘‘(4) RELIEF FROM LIABILITY.—The person 

2 (otherwise liable for any tax imposed by paragraph 

3 (1)) shall be relieved of liability for the tax imposed 

4 by paragraph (1)—

5 ‘‘(A) with respect to any transfer if—

6 ‘‘(i) the transferee is an eligible entity 

7 which provides such person, at the time of 

8 transfer, a qualifying letter of intent, 

9 ‘‘(ii) the transferee is not an eligible 

10 entity, it is established to the satisfaction 

11 of the Secretary, that the transfer of own12 ership or possession, as the case may be, 

13 will be consistent with section 170(h)(5), 

14 and the transferee provides such person, at 

15 the time of transfer, a qualifying letter of 

16 intent, or 

17 ‘‘(iii) tax has previously been paid 

18 under this subsection as a result of a prior 

19 transfer of ownership or possession of the 

20 same property, or 

21 ‘‘(B) with respect to any removal of a con22 servation restriction contained in an instrument 

23 of conveyance, if it is established to the satis24 faction of the Secretary that the retention of 

25 the restriction was impracticable or impossible 
35

•S 272 IS 

1 and the proceeds continue to be used in a man2 ner consistent with 1 or more of the conserva3 tion purposes specified in clause (i), (ii), or (iii) 

4 of section 170(h)(4)(A). 

5 ‘‘(5) ADMINISTRATIVE PROVISIONS.—For pur6 poses of subtitle F, the taxes imposed by this sub7 section shall be treated as excise taxes with respect 

8 to which the deficiency procedures of such subtitle 

9 apply. 

10 ‘‘(6) REPORTING.—The Secretary may require 

11 such reporting as may be necessary or appropriate 

12 to further the purpose under this section that any 

13 conservation use be in perpetuity.’’. 

14 (b) CLERICAL AMENDMENT.—The table of sections 

15 for part III of subchapter B of chapter 1 is amended by 

16 inserting after the item relating to section 121 the fol17 lowing new item:

‘‘Sec. 121A. 25-percent exclusion of gain on sales or exchanges 

of land or water interests to eligible entities for 

conservation purposes.’’.

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

19 this section shall apply to sales or exchanges occurring 

20 after December 31, 2003.
36

•S 272 IS 

1 SEC. 108. TAX EXCLUSION FOR COST-SHARING PAYMENTS 

2 UNDER PARTNERS FOR FISH AND WILDLIFE 

3 PROGRAM. 

4 (a) IN GENERAL.—Section 126(a) (relating to cer5 tain cost-sharing payments) is amended by redesignating 

6 paragraph (10) as paragraph (11) and by inserting after 

7 paragraph (9) the following: 

8 ‘‘(10) The Partners for Fish and Wildlife Pro9 gram authorized by the Fish and Wildlife Act of 

10 1956 (16 U.S.C. 742a et seq.).’’

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

12 this section shall apply to payments received after the date 

13 of the enactment of this Act. 

14 SEC. 109. ADJUSTMENT TO BASIS OF S CORPORATION 

15 STOCK FOR CERTAIN CHARITABLE CON16 TRIBUTIONS. 

17 (a) IN GENERAL.—Paragraph (2) of section 1367(a) 

18 (relating to adjustments to basis of stock of shareholders, 

19 etc.) is amended by adding at the end the following new 

20 flush sentence: 

21 ‘‘The decrease under subparagraph (B) by reason of 

22 a charitable contribution (as defined in section 

23 170(c)) of property shall be the amount equal to the 

24 shareholder’s pro rata share of the adjusted basis of 

25 such property.’’. 
37

•S 272 IS 

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

2 this section shall apply to contributions made after the 

3 date of the enactment of this Act. 

4 SEC. 110. ENHANCED DEDUCTION FOR CHARITABLE CON5 TRIBUTION OF LITERARY, MUSICAL, ARTIS6 TIC, AND SCHOLARLY COMPOSITIONS. 

7 (a) IN GENERAL.—Subsection (e) of section 170 (re8 lating to certain contributions of ordinary income and cap9 ital gain property), as amended by this Act, is amended 

10 by adding at the end the following new paragraph: 

11 ‘‘(8) SPECIAL RULE FOR CERTAIN CONTRIBU12 TIONS OF LITERARY, MUSICAL, ARTISTIC, OR SCHOL13 ARLY COMPOSITIONS.—

14 ‘‘(A) IN GENERAL.—In the case of a quali15 fied artistic charitable contribution—

16 ‘‘(i) the amount of such contribution 

17 taken into account under this section shall 

18 be the fair market value of the property 

19 contributed (determined at the time of 

20 such contribution), and 

21 ‘‘(ii) no reduction in the amount of 

22 such contribution shall be made under 

23 paragraph (1). 

24 ‘‘(B) QUALIFIED ARTISTIC CHARITABLE

25 CONTRIBUTION.—For purposes of this para-
38

•S 272 IS 

1 graph, the term ‘qualified artistic charitable 

2 contribution’ means a charitable contribution of 

3 any literary, musical, artistic, or scholarly com4 position, or similar property, or the copyright 

5 thereon (or both), but only if—

6 ‘‘(i) such property was created by the 

7 personal efforts of the taxpayer making 

8 such contribution no less than 18 months 

9 prior to such contribution, 

10 ‘‘(ii) the taxpayer—

11 ‘‘(I) has received a qualified ap12 praisal of the fair market value of 

13 such property in accordance with the 

14 regulations under this section, and 

15 ‘‘(II) attaches to the taxpayer’s 

16 income tax return for the taxable year 

17 in which such contribution was made 

18 a copy of such appraisal, 

19 ‘‘(iii) the donee is an organization de20 scribed in subsection (b)(1)(A), 

21 ‘‘(iv) the use of such property by the 

22 donee is related to the purpose or function 

23 constituting the basis for the donee’s ex24 emption under section 501 (or, in the case 
39

•S 272 IS 

1 of a governmental unit, to any purpose or 

2 function described under section 501(c)), 

3 ‘‘(v) the taxpayer receives from the 

4 donee a written statement representing 

5 that the donee’s use of the property will be 

6 in accordance with the provisions of clause 

7 (iv), and 

8 ‘‘(vi) the written appraisal referred to 

9 in clause (ii) includes evidence of the ex10 tent (if any) to which property created by 

11 the personal efforts of the taxpayer and of 

12 the same type as the donated property is 

13 or has been—

14 ‘‘(I) owned, maintained, and dis15 played by organizations described in 

16 subsection (b)(1)(A), and 

17 ‘‘(II) sold to or exchanged by 

18 persons other than the taxpayer, 

19 donee, or any related person (as de20 fined in section 465(b)(3)(C)). 

21 ‘‘(C) MAXIMUM DOLLAR LIMITATION; NO

22 CARRYOVER OF INCREASED DEDUCTION.—The 

23 increase in the deduction under this section by 

24 reason of this paragraph for any taxable year—
40

•S 272 IS 

1 ‘‘(i) shall not exceed the artistic ad2 justed gross income of the taxpayer for 

3 such taxable year, and 

4 ‘‘(ii) shall not be taken into account in 

5 determining the amount which may be car6 ried from such taxable year under sub7 section (d). 

8 ‘‘(D) ARTISTIC ADJUSTED GROSS IN9 COME.—For purposes of this paragraph, the 

10 term ‘artistic adjusted gross income’ means 

11 that portion of the adjusted gross income of the 

12 taxpayer for the taxable year attributable to—

13 ‘‘(i) income from the sale or use of 

14 property created by the personal efforts of 

15 the taxpayer which is of the same type as 

16 the donated property, and 

17 ‘‘(ii) income from teaching, lecturing, 

18 performing, or similar activity with respect 

19 to property described in clause (i). 

20 ‘‘(E) PARAGRAPH NOT TO APPLY TO CER21 TAIN CONTRIBUTIONS.—Subparagraph (A) shall 

22 not apply to any charitable contribution of any 

23 letter, memorandum, or similar property which 

24 was written, prepared, or produced by or for an 

25 individual while the individual is an officer or
41

•S 272 IS 

1 employee of any person (including any govern2 ment agency or instrumentality) unless such 

3 letter, memorandum, or similar property is en4 tirely personal. 

5 ‘‘(F) COPYRIGHT TREATED AS SEPARATE

6 PROPERTY FOR PARTIAL INTEREST RULE.—In 

7 the case of a qualified artistic charitable con8 tribution, the tangible literary, musical, artistic, 

9 or scholarly composition, or similar property 

10 and the copyright on such work shall be treated 

11 as separate properties for purposes of this para12 graph and subsection (f)(3).’’. 

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

14 this section shall apply to contributions made after the 

15 date of the enactment of this Act. 

16 SEC. 111. MILEAGE REIMBURSEMENTS TO CHARITABLE 

17 VOLUNTEERS EXCLUDED FROM GROSS IN18 COME. 

19 (a) IN GENERAL.—Part III of subchapter B of chap20 ter 1 is amended by inserting after section 139 the fol21 lowing new section: 

22 ‘‘SEC. 139A. MILEAGE REIMBURSEMENTS TO CHARITABLE 

23 VOLUNTEERS. 

24 ‘‘(a) IN GENERAL.—Gross income of an individual 

25 does not include amounts received, from an organization 
42

•S 272 IS 

1 described in section 170(c), as reimbursement of operating 

2 expenses with respect to use of a passenger automobile 

3 for the benefit of such organization. The preceding sen4 tence shall apply only to the extent that such reimburse5 ment would be deductible under this chapter if section 

6 274(d) were applied—

7 ‘‘(1) by using the standard business mileage 

8 rate established under such section, and 

9 ‘‘(2) as if the individual were an employee of an 

10 organization not described in section 170(c). 

11 ‘‘(b) APPLICATION TO VOLUNTEER SERVICES

12 ONLY.—Subsection (a) shall not apply with respect to any 

13 expenses relating to the performance of services for com14 pensation. 

15 ‘‘(c) NO DOUBLE BENEFIT.—A taxpayer may not 

16 claim a deduction or credit under any other provision of 

17 this title with respect to the expenses under subsection (a). 

18 ‘‘(d) EXEMPTION FROM REPORTING REQUIRE19 MENTS.—Section 6041 shall not apply with respect to re20 imbursements excluded from income under subsection 

21 (a).’’

22 (b) CLERICAL AMENDMENT.—The table of sections 

23 for part III of subchapter B of chapter 1 is amended by 

24 inserting after the item relating to section 139 and insert25 ing the following new item:

‘‘Sec. 139A. Mileage reimbursements to charitable volunteers.’’.
43

•S 272 IS 

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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 TITLE II—IMPROVE OVERSIGHT 

5 OF TAX-EXEMPT ORGANIZA6 TIONS 

7 SEC. 201. DISCLOSURE OF WRITTEN DETERMINATIONS. 

8 (a) IN GENERAL.—Section 6110(l) (relating to sec9 tion not to apply) is amended by striking all matter before 

10 subparagraph (A) of paragraph (2) and inserting the fol11 lowing: 

12 ‘‘(l) SECTION NOT TO APPLY.—

13 ‘‘(1) IN GENERAL.—This section shall not apply 

14 to any matter to which section 6104 or 6105 ap15 plies, except that this section shall apply to any writ16 ten determination and related background file docu17 ment relating to an organization described under 

18 subsection (c) or (d) of section 501 (including any 

19 written determination denying an organization tax20 exempt status under such subsection) or a political 

21 organization described in section 527 which is not 

22 required to be disclosed by section 6104(a)(1)(A). 

23 ‘‘(2) ADDITIONAL MATTERS.—This section shall 

24 not apply to any—’’. 
44

•S 272 IS 

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

2 this section shall apply to written determinations issued 

3 after the date of the enactment of this Act. 

4 SEC. 202. DISCLOSURE OF INTERNET WEB SITE AND NAME 

5 UNDER WHICH ORGANIZATION DOES BUSI6 NESS. 

7 (a) IN GENERAL.—Section 6033 (relating to returns 

8 by exempt organizations) is amended by redesignating 

9 subsection (h) as subsection (i) and by inserting after sub10 section (g) the following new subsection: 

11 ‘‘(h) DISCLOSURE OF NAME UNDER WHICH ORGANI12 ZATION DOES BUSINESS AND ITS INTERNET WEB

13 SITE.—Any organization which is subject to the require14 ments of subsection (a) shall include on the return re15 quired under subsection (a)—

16 ‘‘(1) any name under which such organization 

17 operates or does business, and 

18 ‘‘(2) the Internet web site address (if any) of 

19 such organization.’’. 

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

21 this section shall apply to returns filed after December 31, 

22 2003. 
45

•S 272 IS 

1 SEC. 203. MODIFICATION TO REPORTING CAPITAL TRANS2 ACTIONS. 

3 (a) REQUIREMENT OF SUMMARY REPORT.—Section 

4 6033(c) (relating to additional provisions relating to pri5 vate foundations) is amended by adding at the end the 

6 following new sentence: ‘‘Any information included in an 

7 annual return regarding the gain or loss from the sale or 

8 other disposition of property which is required to be fur9 nished in order to calculate the tax on net investment in10 come shall also be reported in summary form with a notice 

11 that detailed information is available upon request by the 

12 public.’’. 

13 (b) DISCLOSURE REQUIREMENT.—Section 6104(b) 

14 (relating to inspection of annual information returns), as 

15 amended by this Act, is amended by adding at the end 

16 the following new sentences: ‘‘With respect to any private 

17 foundation (as defined in section 509(a)), any information 

18 regarding the gain or loss from the sale or other disposi19 tion of property which is required to be furnished in order 

20 to calculate the tax on net investment income but which 

21 is not in summary form is not required to be made avail22 able to the public under this subsection except upon the 

23 explicit request by a member of the public to the Sec24 retary.’’. 

25 (c) PUBLIC INSPECTION REQUIREMENT.—Section 

26 6104(d) (relating to public inspection of certain annual
46

•S 272 IS 

1 returns, applications for exemptions, and notices of sta2 tus) is amended by adding at the end the following new 

3 paragraph: 

4 ‘‘(9) APPLICATION TO PRIVATE FOUNDATION

5 CAPITAL TRANSACTION INFORMATION.—With re6 spect to any private foundation (as defined in sec7 tion 509(a)), any information regarding the gain or 

8 loss from the sale or other disposition of property 

9 which is required to be furnished in order to cal10 culate the tax on net investment income but which 

11 is not in summary form is not required to be made 

12 available to the public under this subsection except 

13 upon the explicit request by a member of the public 

14 to the private foundation in the form and manner of 

15 a request described in paragraph (1)(B).’’. 

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

17 this section shall apply to returns filed after December 31, 

18 2003. 

19 SEC. 204. DISCLOSURE THAT FORM 990 IS PUBLICLY AVAIL20 ABLE. 

21 (a) IN GENERAL.—The Commissioner of the Internal 

22 Revenue shall notify the public in appropriate publications 

23 or other materials of the extent to which an exempt orga24 nization’s Form 990, Form 990–EZ, or Form 990–PF is 

25 publicly available. 
47

•S 272 IS 

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

2 this section shall apply to publications or other materials 

3 issued or revised after the date of the enactment of this 

4 Act. 

5 SEC. 205. DISCLOSURE TO STATE OFFICIALS OF PROPOSED 

6 ACTIONS RELATED TO SECTION 501(c) ORGA7 NIZATIONS. 

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

9 amended by striking paragraph (2) and inserting the fol10 lowing new paragraphs: 

11 ‘‘(2) DISCLOSURE OF PROPOSED ACTIONS RE12 LATED TO CHARITABLE ORGANIZATIONS.—

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

14 case of an organization to which paragraph (1) 

15 applies, the Secretary may disclose to the ap16 propriate State officer—

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

18 recognize such organization as an organi19 zation described in section 501(c)(3) or a 

20 notice of proposed revocation of such orga21 nization’s recognition as an organization 

22 exempt from taxation, 

23 ‘‘(ii) the issuance of a letter of pro24 posed deficiency of tax imposed under sec25 tion 507 or chapter 41 or 42, and 
48

•S 272 IS 

1 ‘‘(iii) the names, addresses, and tax2 payer identification numbers of organiza3 tions which have applied for recognition as 

4 organizations described in section 

5 501(c)(3). 

6 ‘‘(B) ADDITIONAL DISCLOSURES.—Returns 

7 and return information of organizations with 

8 respect to which information is disclosed under 

9 subparagraph (A) may be made available for in10 spection by or disclosed to an appropriate State 

11 officer. 

12 ‘‘(C) PROCEDURES FOR DISCLOSURE.—In13 formation may be inspected or disclosed under 

14 subparagraph (A) or (B) only—

15 ‘‘(i) upon written request by an ap16 propriate State officer, and 

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

18 the extent necessary in, the administration 

19 of State laws regulating such organiza20 tions. 

21 Such information may only be inspected by or 

22 disclosed to representatives of the appropriate 

23 State officer designated as the individuals who 

24 are to inspect or to receive the returns or re25 turn information under this paragraph on be-
49

•S 272 IS 

1 half of such officer. Such representatives shall 

2 not include any contractor or agent. 

3 ‘‘(D) DISCLOSURES OTHER THAN BY RE4 QUEST.—The Secretary may make available for 

5 inspection or disclose returns and return infor6 mation of an organization to which paragraph 

7 (1) applies to an appropriate State officer of 

8 any State if the Secretary determines that such 

9 inspection or disclosure may facilitate the reso10 lution of Federal or State issues relating to the 

11 tax-exempt status of such organization. 

12 ‘‘(3) DISCLOSURE WITH RESPECT TO CERTAIN

13 OTHER EXEMPT ORGANIZATIONS.—Upon written re14 quest by an appropriate State officer, the Secretary 

15 may make available for inspection or disclosure re16 turns and return information of an organization de17 scribed in paragraph (2), (4), (6), (7), (8), (10), or 

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

19 extent necessary in, the administration of State laws 

20 regulating the solicitation or administration of the 

21 charitable funds or charitable assets of such organi22 zations. Such information may be inspected only by 

23 or disclosed only to representatives of the appro24 priate State officer designated as the individuals who 

25 are to inspect or to receive the returns or return in-
50

•S 272 IS 

1 formation under this paragraph on behalf of such of2 ficer. Such representatives shall not include any con3 tractor or agent. 

4 ‘‘(4) USE IN CIVIL JUDICIAL AND ADMINISTRA5 TIVE PROCEEDINGS.—Returns and return informa6 tion disclosed pursuant to this subsection may be 

7 disclosed in civil administrative and civil judicial pro8 ceedings pertaining to the enforcement of State laws 

9 regulating such organizations in a manner pre10 scribed by the Secretary similar to that for tax ad11 ministration proceedings under section 6103(h)(4). 

12 ‘‘(5) NO DISCLOSURE IF IMPAIRMENT.—Re13 turns and return information shall not be disclosed 

14 under this subsection, or in any proceeding described 

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

16 determines that such disclosure would seriously im17 pair Federal tax administration. 

18 ‘‘(6) DEFINITIONS.—For purposes of this sub19 section—

20 ‘‘(A) RETURN AND RETURN INFORMA21 TION.—The terms ‘return’ and ‘return informa22 tion’ have the respective meanings given to such 

23 terms by section 6103(b). 

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

25 term ‘appropriate State officer’ means—
51

•S 272 IS 

1 ‘‘(i) the State attorney general, 

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

3 which paragraph (1) applies, any other 

4 State official charged with overseeing orga5 nizations of the type described in section 

6 501(c)(3), and 

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

8 which paragraph (3) applies, the head of 

9 an agency designated by the State attorney 

10 general as having primary responsibility 

11 for overseeing the solicitation of funds for 

12 charitable purposes.’’. 

13 (b) CONFORMING AMENDMENTS.—

14 (1) Subsection (a) of section 6103 is amend15 ed—

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

17 officer who has or had access to returns or re18 turn information under section 6104(c)’’ after 

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

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

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

22 section 6104(c)’’. 

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

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

25 ‘‘section’’ in the first sentence. 
52

•S 272 IS 

1 (3) Paragraph (4) of section 6103(p) is amend2 ed—

3 (A) in the matter preceding subparagraph 

4 (A), by striking ‘‘(16) or any other person de5 scribed in subsection (l)(16)’’ and inserting 

6 ‘‘(16), any other person described in subsection 

7 (l)(16), or any appropriate State officer (as de8 fined in section 6104(c))’’, and 

9 (B) in subparagraph (F), by striking ‘‘or 

10 any other person described in subsection 

11 (l)(16)’’ and inserting ‘‘any other person de12 scribed in subsection (l)(16), or any appropriate 

13 State officer (as defined in section 6104(c))’’. 

14 (4) The heading for paragraph (1) of section 

15 6104(c) is amended by inserting ‘‘FOR CHARITABLE

16 ORGANIZATIONS’’. 

17 (5) Paragraph (2) of section 7213(a) is amend18 ed by inserting ‘‘or under section 6104(c)’’ after 

19 ‘‘6103’’. 

20 (6) Paragraph (2) of section 7213A(a) is 

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

22 (7) Paragraph (2) of section 7431(a) is amend23 ed by inserting ‘‘(including any disclosure in viola24 tion of section 6104(c))’’ after ‘‘6103’’. 
53

•S 272 IS 

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

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

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

4 such date.

5 SEC. 206. EXPANSION OF PENALTIES TO PREPARERS OF 

6 FORM 990. 

7 (a) IN GENERAL.—Section 6695 (relating to other 

8 assessable penalties with respect to the preparation of in9 come tax returns for other persons) is amended by adding 

10 at the end the following new subsections: 

11 ‘‘(h) CERTAIN OMISSIONS AND MISREPRESENTA12 TIONS.—

13 ‘‘(1) IN GENERAL.—Any person who prepares 

14 for compensation any return under section 6033 who 

15 omits or misrepresents any information with respect 

16 to such return which was known or should have been 

17 known by such person shall pay a penalty of $250 

18 with respect to such return. 

19 ‘‘(2) EXCEPTION FOR MINOR, INADVERTENT

20 OMISSIONS.—Paragraph (1) shall not apply to 

21 minor, inadvertent omissions. 

22 ‘‘(3) RULES FOR DETERMINING RETURN PRE23 PARER.—For purposes of this subsection and sub24 section (i), any reference to a person who prepares 

25 for compensation a return under section 6033—
54

•S 272 IS 

1 ‘‘(A) shall include any person who employs 

2 1 or more persons to prepare for compensation 

3 a return under section 6033, and 

4 ‘‘(B) shall not include any person who 

5 would be described in clause (i), (ii), (iii), or 

6 (iv) of section 7701(a)(36)(B) if such section 

7 referred to a return under section 6033. 

8 ‘‘(i) WILLFUL OR RECKLESS CONDUCT.—

9 ‘‘(1) IN GENERAL.—Any person who prepares 

10 for compensation any return under section 6033 who 

11 recklessly or intentionally misrepresents any infor12 mation or recklessly or intentionally disregards any 

13 rule or regulation with respect to such return shall 

14 pay a penalty of $1,000 with respect to such return. 

15 ‘‘(2) COORDINATION WITH OTHER PEN16 ALTIES.—With respect to any return, the amount of 

17 the penalty payable by any person by reason of para18 graph (1) shall be reduced by the amount of the 

19 penalty paid by such person by reason of subsection 

20 (h) or section 6694.’’. 

21 (b) CONFORMING AMENDMENTS.—

22 (1) The heading for section 6695 is amended by 

23 inserting ‘‘AND OTHER’’ after ‘‘INCOME TAX’’. 

24 (2) The item relating to section 6695 in the 

25 table of sections for part I of subchapter B of chap-
55

•S 272 IS 

1 ter 68 is amended by inserting ‘‘and other’’ after 

2 ‘‘income tax’’. 

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

4 this section shall apply with respect to documents pre5 pared after the date of the enactment of this Act. 

6 SEC. 207. NOTIFICATION REQUIREMENT FOR ENTITIES NOT 

7 CURRENTLY REQUIRED TO FILE. 

8 (a) IN GENERAL.—Section 6033 (relating to returns 

9 by exempt organizations), as amended by section 202(a), 

10 is amended by redesignating subsection (i) as subsection 

11 (j) and by inserting after subsection (h) the following new 

12 subsection: 

13 ‘‘(i) ADDITIONAL NOTIFICATION REQUIREMENTS.—

14 ‘‘(1) IN GENERAL.—Any organization the gross 

15 receipts of which in any taxable year result in such 

16 organization being referred to in subsection 

17 (a)(2)(A)(ii) or (a)(2)(B)—

18 ‘‘(A) shall furnish annually information, at 

19 such time and in such manner as the Secretary 

20 may by forms or regulations prescribe, setting 

21 forth—

22 ‘‘(i) the legal name of the organiza23 tion, 

24 ‘‘(ii) any name under which such or25 ganization operates or does business,
56

•S 272 IS 

1 ‘‘(iii) the organization’s mailing ad2 dress and Internet web site address (if 

3 any), 

4 ‘‘(iv) the organization’s taxpayer iden5 tification number, 

6 ‘‘(v) the name and address of a prin7 cipal officer, and 

8 ‘‘(vi) evidence of the continuing basis 

9 for the organization’s exemption from the 

10 filing requirements under subsection 

11 (a)(1), and 

12 ‘‘(B) upon the termination of the existence 

13 of the organization, shall furnish notice of such 

14 termination. 

15 ‘‘(2) PENALTY FOR FAILURE TO NOTIFY.—

16 ‘‘(A) IN GENERAL.—If an organization de17 scribed in paragraph (1) fails to file 3 consecu18 tive annual notices required under such para19 graph, such organization’s status as an organi20 zation exempt from tax under section 501(a) 

21 shall be considered revoked on and after the 

22 date set by the Secretary for the filing of the 

23 third annual notice. The Secretary shall publish 

24 and maintain a list of organizations the status 

25 of which is so revoked. 
57

•S 272 IS 

1 ‘‘(B) RETROACTIVE REINSTATEMENT IF

2 REASONABLE CAUSE SHOWN FOR FAILURE.—If 

3 upon reapplication for status as an organization 

4 exempt from tax under section 501(a), an orga5 nization described in subparagraph (A) can 

6 show to the satisfaction of the Secretary evi7 dence of reasonable cause for the failure de8 scribed in such subparagraph, the organiza9 tion’s status shall be effective from the date of 

10 the revocation under such subparagraph.’’. 

11 (b) NO DECLARATORY JUDGMENT RELIEF.—Section 

12 7428(b) (relating to limitations) is amended by adding at 

13 the end the following new paragraph: 

14 ‘‘(4) NONAPPLICATION FOR CERTAIN REVOCA15 TIONS.—No action may be brought under this sec16 tion with respect to any revocation of status de17 scribed in section 6033(i)(2)(A).’’. 

18 (c) NO INSPECTION REQUIREMENT.—Section 

19 6104(b) (relating to inspection of annual information re20 turns) is amended by inserting ‘‘(other than subsection (i) 

21 thereof)’’ after ‘‘6033’’. 

22 (d) NO DISCLOSURE REQUIREMENT.—Section 

23 6104(d)(3) (relating to exceptions from disclosure require24 ments) is amended by redesignating subparagraph (B) as 
58

•S 272 IS 

1 subparagraph (C) and by inserting after subparagraph (A) 

2 the following new subparagraph: 

3 ‘‘(B) NONDISCLOSURE OF ANNUAL NO4 TICES.—Paragraph (1) shall not require the 

5 disclosure of any notice required under section 

6 6033(i)(1).’’. 

7 (e) NO MONETARY PENALTY FOR FAILURE TO NO8 TIFY.—Section 6652(c)(1) (relating to annual returns 

9 under section 6033 or 6012(a)(6)) is amended by adding 

10 at the end the following new subparagraph: 

11 ‘‘(E) NO PENALTY FOR CERTAIN ANNUAL

12 NOTICES.—This paragraph shall not apply with 

13 respect to any notice required under section 

14 6033(i)(1).’’. 

15 (f) NOTICE OF REQUIREMENT BY SECRETARY.—The 

16 Secretary of the Treasury shall notify in a timely manner 

17 every organization described in section 6033(i)(1) of the 

18 Internal Revenue Code of 1986 (as added by this section) 

19 of the requirement under such section 6033(i)(1)—

20 (1) by mail, in the case of any organization the 

21 identity and address of which is included in the list 

22 of exempt organizations maintained by the Sec23 retary, and 

24 (2) by Internet or other means of outreach, in 

25 the case of any other organization. 
59

•S 272 IS 

1 (g) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to notices with respect to annual 

3 periods beginning after 2003. 

4 SEC. 208. SUSPENSION OF TAX-EXEMPT STATUS OF TER5 RORIST ORGANIZATIONS. 

6 (a) IN GENERAL.—Section 501 of the Internal Rev7 enue Code of 1986 (relating to exemption from tax on cor8 porations, certain trusts, etc.) is amended by redesig9 nating subsection (p) as subsection (q) and by inserting 

10 after subsection (o) the following new subsection: 

11 ‘‘(p) SUSPENSION OF TAX-EXEMPT STATUS OF TER12 RORIST ORGANIZATIONS.—

13 ‘‘(1) IN GENERAL.—The exemption from tax 

14 under subsection (a) with respect to any organiza15 tion described in paragraph (2), and the eligibility of 

16 any organization described in paragraph (2) to apply 

17 for recognition of exemption under subsection (a), 

18 shall be suspended during the period described in 

19 paragraph (3). 

20 ‘‘(2) TERRORIST ORGANIZATIONS.—An organi21 zation is described in this paragraph if such organi22 zation is designated or otherwise individually identi23 fied— 

24 ‘‘(A) under section 212(a)(3)(B)(vi)(II) or 

25 219 of the Immigration and Nationality Act as 
60

•S 272 IS 

1 a terrorist organization or foreign terrorist or2 ganization, 

3 ‘‘(B) in or pursuant to an Executive order 

4 which is related to terrorism and issued under 

5 the authority of the International Emergency 

6 Economic Powers Act or section 5 of the 

7 United Nations Participation Act of 1945 for 

8 the purpose of imposing on such organization 

9 an economic or other sanction, or 

10 ‘‘(C) in or pursuant to an Executive order 

11 issued under the authority of any Federal law 

12 if—

13 ‘‘(i) the organization is designated or 

14 otherwise individually identified in or pur15 suant to such Executive order as sup16 porting or engaging in terrorist activity (as 

17 defined in section 212(a)(3)(B) of the Im18 migration and Nationality Act) or sup19 porting terrorism (as defined in section 

20 140(d)(2) of the Foreign Relations Author21 ization Act, Fiscal Years 1988 and 1989); 

22 and 

23 ‘‘(ii) such Executive order refers to 

24 this subsection.
61

•S 272 IS 

1 ‘‘(3) PERIOD OF SUSPENSION.—With respect to 

2 any organization described in paragraph (2), the pe3 riod of suspension—

4 ‘‘(A) begins on the date of the first publi5 cation of a designation or identification de6 scribed in paragraph (2) with respect to such 

7 organization, and 

8 ‘‘(B) ends on the first date that all des9 ignations and identifications described in para10 graph (2) with respect to such organization are 

11 rescinded pursuant to the law or Executive 

12 order under which such designation or identi13 fication was made. 

14 ‘‘(4) DENIAL OF DEDUCTION.—No deduction 

15 shall be allowed under section 170, 545(b)(2), 

16 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 for 

17 any contribution to an organization described in 

18 paragraph (2) during the period described in para19 graph (3). 

20 ‘‘(5) DENIAL OF ADMINISTRATIVE OR JUDICIAL

21 CHALLENGE OF SUSPENSION OR DENIAL OF DEDUC22 TION.—Notwithstanding section 7428 or any other 

23 provision of law, no organization or other person 

24 may challenge a suspension under paragraph (1), a 

25 designation or identification described in paragraph 
62

•S 272 IS 

1 (2), the period of suspension described in paragraph 

2 (3), or a denial of a deduction under paragraph (4) 

3 in any administrative or judicial proceeding relating 

4 to the Federal tax liability of such organization or 

5 other person. 

6 ‘‘(6) ERRONEOUS DESIGNATION.—

7 ‘‘(A) IN GENERAL.—If—

8 ‘‘(i) the tax exemption of any organi9 zation described in paragraph (2) is sus10 pended under paragraph (1), 

11 ‘‘(ii) each designation and identifica12 tion described in paragraph (2) which has 

13 been made with respect to such organiza14 tion is determined to be erroneous pursu15 ant to the law or Executive order under 

16 which such designation or identification 

17 was made, and 

18 ‘‘(iii) the erroneous designations and 

19 identifications result in an overpayment of 

20 income tax for any taxable year by such 

21 organization, 

22 credit or refund (with interest) with respect to 

23 such overpayment shall be made. 

24 ‘‘(B) WAIVER OF LIMITATIONS.—If the 

25 credit or refund of any overpayment of tax de-
63

•S 272 IS 

1 scribed in subparagraph (A)(iii) is prevented at 

2 any time by the operation of any law or rule of 

3 law (including res judicata), such credit or re4 fund may nevertheless be allowed or made if the 

5 claim therefor is filed before the close of the 1-

6 year period beginning on the date of the last 

7 determination described in subparagraph 

8 (A)(ii). 

9 ‘‘(7) NOTICE OF SUSPENSIONS.—If the tax ex10 emption of any organization is suspended under this 

11 subsection, the Internal Revenue Service shall up12 date the listings of tax-exempt organizations and 

13 shall publish appropriate notice to taxpayers of such 

14 suspension and of the fact that contributions to such 

15 organization are not deductible during the period of 

16 such suspension.’’. 

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

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

19 of this Act. 
64

•S 272 IS 

1 TITLE III—OTHER CHARITABLE 

2 AND EXEMPT ORGANIZATION 

3 PROVISIONS 

4 SEC. 301. MODIFICATION OF EXCISE TAX ON UNRELATED 

5 BUSINESS TAXABLE INCOME OF CHARITABLE 

6 REMAINDER TRUSTS. 

7 (a) IN GENERAL.—Subsection (c) of section 664 (re8 lating to exemption from income taxes) is amended to read 

9 as follows: 

10 ‘‘(c) TAXATION OF TRUSTS.—

11 ‘‘(1) INCOME TAX.—A charitable remainder an12 nuity trust and a charitable remainder unitrust 

13 shall, for any taxable year, not be subject to any tax 

14 imposed by this subtitle. 

15 ‘‘(2) EXCISE TAX.—

16 ‘‘(A) IN GENERAL.—In the case of a chari17 table remainder annuity trust or a charitable 

18 remainder unitrust which has unrelated busi19 ness taxable income (within the meaning of sec20 tion 512, determined as if part III of sub21 chapter F applied to such trust) for a taxable 

22 year, there is hereby imposed on such trust or 

23 unitrust an excise tax equal to the amount of 

24 such unrelated business taxable income.
65

•S 272 IS 

1 ‘‘(B) CERTAIN RULES TO APPLY.—The tax 

2 imposed by subparagraph (A) shall be treated 

3 as imposed by chapter 42 for purposes of this 

4 title other than subchapter E of chapter 42. 

5 ‘‘(C) TAX COURT PROCEEDINGS.—For pur6 poses of this paragraph, the references in sec7 tion 6212(c)(1) to section 4940 shall be deemed 

8 to include references to this paragraph.’’. 

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

10 this section shall apply to taxable years beginning after 

11 December 31, 2002. 

12 SEC. 302. MODIFICATIONS TO SECTION 512(b)(13). 

13 (a) IN GENERAL.—Paragraph (13) of section 512(b) 

14 (relating to special rules for certain amounts received from 

15 controlled entities) is amended by redesignating subpara16 graph (E) as subparagraph (F) and by inserting after sub17 paragraph (D) the following new subparagraph: 

18 ‘‘(E) PARAGRAPH TO APPLY ONLY TO EX19 CESS PAYMENTS.—

20 ‘‘(i) IN GENERAL.—Subparagraph (A) 

21 shall apply only to the portion of a speci22 fied payment received or accrued by the 

23 controlling organization that exceeds the 

24 amount which would have been paid or ac-
66

•S 272 IS 

1 crued if such payment met the require2 ments prescribed under section 482. 

3 ‘‘(ii) ADDITION TO TAX FOR VALU4 ATION MISSTATEMENTS.—The tax imposed 

5 by this chapter on the controlling organiza6 tion shall be increased by an amount equal 

7 to 20 percent of the larger of—

8 ‘‘(I) such excess determined with9 out regard to any amendment or sup10 plement to a return of tax, or 

11 ‘‘(II) such excess determined 

12 with regard to all such amendments 

13 and supplements.’’. 

14 (b) EFFECTIVE DATE.—

15 (1) IN GENERAL.—The amendment made by 

16 this section shall apply to payments received or ac17 crued after December 31, 2000. 

18 (2) PAYMENTS SUBJECT TO BINDING CONTRACT

19 TRANSITION RULE.—If the amendments made by 

20 section 1041 of the Taxpayer Relief Act of 1997 did 

21 not apply to any amount received or accrued in the 

22 first 2 taxable years beginning on or after the date 

23 of the enactment of the Taxpayer Relief Act of 1997 

24 under any contract described in subsection (b)(2) of 

25 such section, such amendments also shall not apply 
67

•S 272 IS 

1 to amounts received or accrued under such contract 

2 before January 1, 2001. 

3 SEC. 303. SIMPLIFICATION OF LOBBYING EXPENDITURE 

4 LIMITATION. 

5 (a) REPEAL OF GRASSROOTS EXPENDITURE

6 LIMIT.—Paragraph (1) of section 501(h) (relating to ex7 penditures by public charities to influence legislation) is 

8 amended to read as follows: 

9 ‘‘(1) GENERAL RULE.—In the case of an orga10 nization to which this subsection applies, exemption 

11 from taxation under subsection (a) shall be denied 

12 because a substantial part of the activities of such 

13 organization consists of carrying on propaganda, or 

14 otherwise attempting, to influence legislation, but 

15 only if such organization normally makes lobbying 

16 expenditures in excess of the lobbying ceiling amount 

17 for such organization for each taxable year.’’. 

18 (b) EXCESS LOBBYING EXPENDITURES.—Section 

19 4911(b) is amended to read as follows: 

20 ‘‘(b) EXCESS LOBBYING EXPENDITURES.—For pur21 poses of this section, the term ‘excess lobbying expendi22 tures’ means, for a taxable year, the amount by which the 

23 lobbying expenditures made by the organization during the 

24 taxable year exceed the lobbying nontaxable amount for 

25 such organization for such taxable year.’’. 
68

•S 272 IS 

1 (c) CONFORMING AMENDMENTS.—

2 (1) Section 501(h)(2) is amended by striking 

3 subparagraphs (C) and (D). 

4 (2) Section 4911(c) is amended by striking 

5 paragraphs (3) and (4). 

6 (3) Paragraph (1)(A) of section 4911(f) is 

7 amended by striking ‘‘limits of section 501(h)(1) 

8 have’’ and inserting ‘‘limit of section 501(h)(1) 

9 has’’. 

10 (4) Paragraph (1)(C) of section 4911(f) is 

11 amended by striking ‘‘limits of section 501(h)(1) 

12 are’’ and inserting ‘‘limit of section 501(h)(1) is’’. 

13 (5) Paragraphs (4)(A) and (4)(B) of section 

14 4911(f) are each amended by striking ‘‘limits of sec15 tion 501(h)(1)’’ and inserting ‘‘limit of section 

16 501(h)(1)’’. 

17 (6) Paragraph (8) of section 6033(b) (relating 

18 to certain organizations described in section 

19 501(c)(3)) is amended by inserting ‘‘and’’ at the end 

20 of subparagraph (A) and by striking subparagraphs 

21 (C) and (D). 

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

23 this section shall apply to taxable years beginning after 

24 December 31, 2002. 
69

•S 272 IS 

1 SEC. 304. EXPEDITED REVIEW PROCESS FOR CERTAIN TAX2 EXEMPTION APPLICATIONS. 

3 (a) IN GENERAL.—The Secretary of the Treasury or 

4 the Secretary’s delegate (in this section, referred to as the 

5 ‘‘Secretary’’) shall adopt procedures to expedite the con6 sideration of applications for exempt status under section 

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

8 December 31, 2003, by any organization that—

9 (1) is organized and operated for the primary 

10 purpose of providing social services; 

11 (2) is seeking a contract or grant under a Fed12 eral, State, or local program that provides funding 

13 for social services programs; 

14 (3) establishes that, under the terms and condi15 tions of the contract or grant program, an organiza16 tion is required to obtain such exempt status before 

17 the organization is eligible to apply for a contract or 

18 grant; 

19 (4) includes with its exemption application a 

20 copy of its completed Federal, State, or local con21 tract or grant application; and 

22 (5) meets such other criteria as the Secretary 

23 deems appropriate for expedited consideration.

24 The Secretary may prescribe other similar circumstances 

25 in which such organizations may be entitled to expedited 

26 consideration. 
70

•S 272 IS 

1 (b) WAIVER OF APPLICATION FEE FOR EXEMPT

2 STATUS.—Any organization that meets the conditions de3 scribed in subsection (a) (without regard to paragraph (3) 

4 of that subsection) is entitled to a waiver of any fee for 

5 an application for exempt status under section 501(c)(3) 

6 of the Internal Revenue Code of 1986 if the organization 

7 certifies that the organization has had (or expects to have) 

8 average annual gross receipts of not more than $50,000 

9 during the preceding 4 years (or, in the case of an organi10 zation not in existence throughout the preceding 4 years, 

11 during such organization’s first 4 years). 

12 (c) SOCIAL SERVICES DEFINED.—For purposes of 

13 this section—

14 (1) IN GENERAL.—The term ‘‘social services’’ 

15 means services directed at helping people in need, 

16 reducing poverty, improving outcomes of low-income 

17 children, revitalizing low-income communities, and 

18 empowering low-income families and low-income in19 dividuals to become self-sufficient, including—

20 (A) child care services, protective services 

21 for children and adults, services for children 

22 and adults in foster care, adoption services, 

23 services related to the management and mainte24 nance of the home, day care services for adults, 

25 and services to meet the special needs of chil-
71

•S 272 IS 

1 dren, older individuals, and individuals with dis2 abilities (including physical, mental, or emo3 tional disabilities); 

4 (B) transportation services; 

5 (C) job training and related services, and 

6 employment services; 

7 (D) information, referral, and counseling 

8 services; 

9 (E) the preparation and delivery of meals, 

10 and services related to soup kitchens or food 

11 banks; 

12 (F) health support services; 

13 (G) literacy and mentoring programs; 

14 (H) services for the prevention and treat15 ment of juvenile delinquency and substance 

16 abuse, services for the prevention of crime and 

17 the provision of assistance to the victims and 

18 the families of criminal offenders, and services 

19 related to the intervention in, and prevention of, 

20 domestic violence; and 

21 (I) services related to the provision of as22 sistance for housing under Federal law. 

23 (2) EXCLUSIONS.—The term does not include a 

24 program having the purpose of delivering edu25 cational assistance under the Elementary and Sec-
72

•S 272 IS 

1 ondary Education Act of 1965 (20 U.S.C. 6301 et 

2 seq.) or under the Higher Education Act of 1965 

3 (20 U.S.C. 1001 et seq.). 

4 SEC. 305. CLARIFICATION OF DEFINITION OF CHURCH TAX 

5 INQUIRY. 

6 Subsection (i) of section 7611 (relating to section not 

7 to apply to criminal investigations, etc.) is amended by 

8 striking ‘‘or’’ at the end of paragraph (4), by striking the 

9 period at the end of paragraph (5) and inserting ‘‘, or’’, 

10 and by inserting after paragraph (5) the following: 

11 ‘‘(6) information provided by the Secretary re12 lated to the standards for exemption from tax under 

13 this title and the requirements under this title relat14 ing to unrelated business taxable income.’’. 

15 SEC. 306. EXPANSION OF DECLARATORY JUDGMENT REM16 EDY TO TAX-EXEMPT ORGANIZATIONS. 

17 (a) IN GENERAL.—Paragraph (1) of section 7428(a) 

18 (relating to creation of remedy) is amended—

19 (1) in subparagraph (B) by inserting after 

20 ‘‘509(a))’’ the following: ‘‘or as a private operating 

21 foundation (as defined in section 4942(j)(3))’’; and 

22 (2) by amending subparagraph (C) to read as 

23 follows: 

24 ‘‘(C) with respect to the initial qualifica25 tion or continuing qualification of an organiza-
73

•S 272 IS 

1 tion as an organization described in section 

2 501(c) (other than paragraph (3)) or 501(d) 

3 which is exempt from tax under section 501(a), 

4 or’’. 

5 (b) COURT JURISDICTION.—Subsection (a) of section 

6 7428 is amended in the material following paragraph (2) 

7 by striking ‘‘United States Tax Court, the United States 

8 Claims Court, or the district court of the United States 

9 for the District of Columbia’’ and inserting the following: 

10 ‘‘United States Tax Court (in the case of any such deter11 mination or failure) or the United States Claims Court 

12 or the district court of the United States for the District 

13 of Columbia (in the case of a determination or failure with 

14 respect to an issue referred to in subparagraph (A) or (B) 

15 of paragraph (1)),’’. 

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

17 this section shall apply to pleadings filed with respect to 

18 determinations (or requests for determinations) made 

19 after December 31, 2002. 

20 SEC. 307. DEFINITION OF CONVENTION OR ASSOCIATION 

21 OF CHURCHES. 

22 Section 7701 (relating to definitions) is amended by 

23 redesignating subsection (n) as subsection (o) and by in24 serting after subsection (m) the following new subsection: 
74

•S 272 IS 

1 ‘‘(n) CONVENTION OR ASSOCIATION OF CHURCH2 ES.—For purposes of this title, any organization which is 

3 otherwise a convention or association of churches shall not 

4 fail to so qualify merely because the membership of such 

5 organization includes individuals as well as churches or be6 cause individuals have voting rights in such organiza7 tion.’’. 

8 SEC. 308. PAYMENTS BY CHARITABLE ORGANIZATIONS TO 

9 VICTIMS OF WAR ON TERRORISM. 

10 (a) IN GENERAL.—For purposes of the Internal Rev11 enue Code of 1986—

12 (1) payments made by an organization de13 scribed in section 501(c)(3) of such Code to a mem14 ber of the Armed Forces of the United States, or to 

15 an individual of such member’s immediate family by 

16 reason of the death, injury, wounding, or illness of 

17 such member incurred as the result of the military 

18 response of the United States to the terrorist at19 tacks against the United States on September 11, 

20 2001, shall be treated as related to the purpose or 

21 function constituting the basis for such organiza22 tion’s exemption under section 501 of such Code if 

23 such payments are made using an objective formula 

24 which is consistently applied, and
75

•S 272 IS 

1 (2) in the case of a private foundation (as de2 fined in section 509 of such Code), any payment de3 scribed in paragraph (1) shall not be treated as 

4 made to a disqualified person for purposes of section 

5 4941 of such Code. 

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

7 payments made after the date of the enactment of this 

8 Act and before September 11, 2004. 

9 SEC. 309. MODIFICATION OF SCHOLARSHIP FOUNDATION 

10 RULES. 

11 In applying the limitations on the percentage of 

12 scholarship grants which may be awarded after the date 

13 of the enactment of this Act, to children of current or 

14 former employees under Revenue Procedure 76–47, such 

15 percentage shall be increased to 35 percent of the eligible 

16 applicants to be considered by the selection committee and 

17 to 20 percent of individuals eligible for the grants, but 

18 only if the foundation awarding the grants demonstrates 

19 that, in addition to meeting the other requirements of Rev20 enue Procedure 76–47, it provides a comparable number 

21 and aggregate amount of grants during the same program 

22 year to individuals who are not such employees, children 

23 or dependents of such employees, or affiliated with the em24 ployer of such employees. 
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•S 272 IS 

1 SEC. 310. TREATMENT OF CERTAIN HOSPITAL SUPPORT 

2 ORGANIZATIONS AS QUALIFIED ORGANIZA3 TIONS FOR PURPOSES OF DETERMINING AC4 QUISITION INDEBTEDNESS. 

5 (a) IN GENERAL.—Subparagraph (C) of section 

6 514(c)(9) (relating to real property acquired by a qualified 

7 organization) is amended by striking ‘‘or’’ at the end of 

8 clause (ii), by striking the period at the end of clause (iii) 

9 and inserting ‘‘; or’’, and by adding at the end the fol10 lowing new clause: 

11 ‘‘(iv) a qualified hospital support 

12 organization (as defined in subpara13 graph (I)).’’. 

14 (b) QUALIFIED HOSPITAL SUPPORT ORGANIZA15 TIONS.—Paragraph (9) of section 514(c) is amended by 

16 adding at the end the following new subparagraph: 

17 ‘‘(I) QUALIFIED HOSPITAL SUPPORT ORGA18 NIZATIONS.—For purposes of subparagraph 

19 (C)(iv), the term ‘qualified hospital support or20 ganization’ means, with respect to any eligible 

21 indebtedness (including any qualified refi22 nancing of such eligible indebtedness), a sup23 port organization (as defined in section 

24 509(a)(3)) which supports a hospital described 

25 in section 119(d)(4)(B) and with respect to 

26 which—
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•S 272 IS 

1 ‘‘(i) more than half of the organi2 zation’s assets (by value) at any time 

3 since its organization—

4 ‘‘(I) were acquired, directly 

5 or indirectly, by testamentary gift 

6 or devise, and 

7 ‘‘(II) consisted of real prop8 erty, and 

9 ‘‘(ii) the fair market value of the 

10 organization’s real estate acquired, di11 rectly or indirectly, by gift or devise, 

12 exceeded 25 percent of the fair mar13 ket value of all investment assets held 

14 by the organization immediately prior 

15 to the time that the eligible indebted16 ness was incurred. 

17 For purposes of this subparagraph, the term 

18 ‘eligible indebtedness’ means indebtedness se19 cured by real property acquired by the organi20 zation, directly or indirectly, by gift or devise, 

21 the proceeds of which are used exclusively to ac22 quire any leasehold interest in such real prop23 erty or for improvements on, or repairs to, such 

24 real property. A determination under clauses (i) 

25 and (ii) of this subparagraph shall be made 
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•S 272 IS 

1 each time such an eligible indebtedness (or the 

2 qualified refinancing of such an eligible indebt3 edness) is incurred. For purposes of this sub4 paragraph, a refinancing of such an eligible in5 debtedness shall be considered qualified if such 

6 refinancing does not exceed the amount of the 

7 refinanced eligible indebtedness immediately be8 fore the refinancing.’’. 

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

10 this section shall apply to indebtedness incurred after De11 cember 31, 2003. 

12 TITLE IV—SOCIAL SERVICES 

13 BLOCK GRANT 

14 SEC. 401. RESTORATION OF FUNDS FOR THE SOCIAL SERV15 ICES BLOCK GRANT. 

16 (a) FINDINGS.—Congress makes the following find17 ings: 

18 (1) On August 22, 1996, the Personal Respon19 sibility and Work Opportunity Reconciliation Act of 

20 1996 (Public Law 104–193; 110 Stat. 2105) was 

21 signed into law. 

22 (2) In enacting that law, Congress authorized 

23 $2,800,000,000 for fiscal year 2003 and each fiscal 

24 year thereafter to carry out the Social Services 
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•S 272 IS 

1 Block Grant program established under title XX of 

2 the Social Security Act (42 U.S.C. 1397 et seq.). 

3 (b) RESTORATION OF FUNDS.—Section 2003(c)(11) 

4 of the Social Security Act (42 U.S.C. 1397b(c)(11)) is 

5 amended by inserting ‘‘, except that, with respect to fiscal 

6 year 2003, the amount shall be $1,975,000,000, and with 

7 respect to fiscal year 2004, the amount shall be 

8 $2,800,000,000’’ after ‘‘thereafter.’’. 

9 SEC. 402. RESTORATION OF AUTHORITY TO TRANSFER UP 

10 TO 10 PERCENT OF TANF FUNDS TO THE SO11 CIAL SERVICES BLOCK GRANT. 

12 (a) IN GENERAL.—Section 404(d)(2) of the Social 

13 Security Act (42 U.S.C. 604(d)(2)) is amended to read 

14 as follows: 

15 ‘‘(2) LIMITATION ON AMOUNT TRANSFERABLE

16 TO TITLE XX PROGRAMS.—A State may use not 

17 more than 10 percent of the amount of any grant 

18 made to the State under section 403(a) for a fiscal 

19 year to carry out State programs pursuant to title 

20 XX.’’. 

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

22 subsection (a) applies to amounts made available for fiscal 

23 year 2003 and each fiscal year thereafter.
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•S 272 IS 

1 SEC. 403. REQUIREMENT TO SUBMIT ANNUAL REPORT ON 

2 STATE ACTIVITIES. 

3 (a) IN GENERAL.—Section 2006(c) of the Social Se4 curity Act (42 U.S.C. 1397e(c)) is amended by adding at 

5 the end the following: ‘‘The Secretary shall compile the 

6 information submitted by the States and submit that in7 formation to Congress on an annual basis.’’. 

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

9 subsection (a) applies to information submitted by States 

10 under section 2006 of the Social Security Act (42 U.S.C. 

11 1397e) with respect to fiscal year 2002 and each fiscal 

12 year thereafter.

13 TITLE V—INDIVIDUAL 

14 DEVELOPMENT ACCOUNTS 

15 SEC. 501. SHORT TITLE. 

16 This title may be cited as the ‘‘Savings for Working 

17 Families Act of 2003’’.

18 SEC. 502. PURPOSES. 

19 The purposes of this title are to provide for the estab20 lishment of individual development account programs that 

21 will—

22 (1) provide individuals and families with limited 

23 means an opportunity to accumulate assets and to 

24 enter the financial mainstream, 

25 (2) promote education, homeownership, and the 

26 development of small businesses, 
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•S 272 IS 

1 (3) stabilize families and build communities, 

2 and 

3 (4) support continued United States economic 

4 expansion. 

5 SEC. 503. DEFINITIONS. 

6 As used in this title: 

7 (1) ELIGIBLE INDIVIDUAL.—

8 (A) IN GENERAL.—The term ‘‘eligible indi9 vidual’’ means, with respect to any taxable year, 

10 an individual who—

11 (i) has attained the age of 18 but not 

12 the age of 61 as of the last day of such 

13 taxable year, 

14 (ii) is a citizen or lawful permanent 

15 resident (within the meaning of section 

16 7701(b)(6) of the Internal Revenue Code 

17 of 1986) of the United States as of the 

18 last day of such taxable year,

19 (iii) was not a student (as defined in 

20 section 151(c)(4) of such Code) for the im21 mediately preceding taxable year, 

22 (iv) is not an individual with respect 

23 to whom a deduction under section 151 of 

24 such Code is allowable to another taxpayer 

25 for a taxable year of the other taxpayer 
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•S 272 IS 

1 ending during the immediately preceding 

2 taxable year of the individual, 

3 (v) is not a taxpayer described in sub4 section (c), (d), or (e) of section 6402 of 

5 such Code for the immediately preceding 

6 taxable year, 

7 (vi) is not a taxpayer described in sec8 tion 1(d) of such Code for the immediately 

9 preceding taxable year, and 

10 (vii) is a taxpayer the modified ad11 justed gross income of whom for the imme12 diately preceding taxable year does not ex13 ceed—

14 (I) $18,000, in the case of a tax15 payer described in section 1(c) of such 

16 Code, 

17 (II) $30,000, in the case of a 

18 taxpayer described in section 1(b) of 

19 such Code, and 

20 (III) $38,000, in the case of a 

21 taxpayer described in section 1(a) of 

22 such Code. 

23 (B) INFLATION ADJUSTMENT.—

24 (i) IN GENERAL.—In the case of any 

25 taxable year beginning after 2004, each 
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•S 272 IS 

1 dollar amount referred to in subparagraph 

2 (A)(vii) shall be increased by an amount 

3 equal to—

4 (I) such dollar amount, multi5 plied by 

6 (II) the cost-of-living adjustment 

7 determined under section (1)(f)(3) of 

8 the Internal Revenue Code of 1986 

9 for the calendar year in which the tax10 able year begins, by substituting 

11 ‘‘2003’’ for ‘‘1992’’. 

12 (ii) ROUNDING.—If any amount as 

13 adjusted under clause (i) is not a multiple 

14 of $50, such amount shall be rounded to 

15 the nearest multiple of $50. 

16 (C) MODIFIED ADJUSTED GROSS IN17 COME.—For purposes of subparagraph (A)(v), 

18 the term ‘‘modified adjusted gross income’’ 

19 means adjusted gross income—

20 (i) determined without regard to sec21 tions 86, 893, 911, 931, and 933 of the 

22 Internal Revenue Code of 1986, and 

23 (ii) increased by the amount of inter24 est received or accrued by the taxpayer 
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•S 272 IS 

1 during the taxable year which is exempt 

2 from tax. 

3 (2) INDIVIDUAL DEVELOPMENT ACCOUNT.—

4 The term ‘‘Individual Development Account’’ means 

5 an account established for an eligible individual as 

6 part of a qualified individual development account 

7 program, but only if the written governing instru8 ment creating the account meets the following re9 quirements:

10 (A) The owner of the account is the indi11 vidual for whom the account was established. 

12 (B) No contribution will be accepted unless 

13 it is in cash, and, except in the case of any 

14 qualified rollover, contributions will not be ac15 cepted for the taxable year in excess of $1,500 

16 on behalf of any individual. 

17 (C) The trustee of the account is a quali18 fied financial institution. 

19 (D) The assets of the account will not be 

20 commingled with other property except in a 

21 common trust fund or common investment 

22 fund. 

23 (E) Except as provided in section 507(b), 

24 any amount in the account may be paid out
85

•S 272 IS 

1 only for the purpose of paying the qualified ex2 penses of the account owner. 

3 (3) PARALLEL ACCOUNT.—The term ‘‘parallel 

4 account’’ means a separate, parallel individual or 

5 pooled account for all matching funds and earnings 

6 dedicated to an Individual Development Account 

7 owner as part of a qualified individual development 

8 account program, the trustee of which is a qualified 

9 financial institution. 

10 (4) QUALIFIED FINANCIAL INSTITUTION.—The 

11 term ‘‘qualified financial institution’’ means any per12 son authorized to be a trustee of any individual re13 tirement account under section 408(a)(2) of the In14 ternal Revenue Code of 1986. 

15 (5) QUALIFIED INDIVIDUAL DEVELOPMENT AC16 COUNT PROGRAM.—The term ‘‘qualified individual 

17 development account program’’ means a program es18 tablished upon approval of the Secretary under sec19 tion 504 after December 31, 2002, under which—

20 (A) Individual Development Accounts and 

21 parallel accounts are held in trust by a qualified 

22 financial institution, and 

23 (B) additional activities determined by the 

24 Secretary, in consultation with the Secretary of 

25 Health and Human Services, as necessary to re-
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•S 272 IS 

1 sponsibly develop and administer accounts, in2 cluding recruiting, providing financial education 

3 and other training to Account owners, and reg4 ular program monitoring, are carried out by the 

5 qualified financial institution. 

6 (6) QUALIFIED EXPENSE DISTRIBUTION.—

7 (A) IN GENERAL.—The term ‘‘qualified ex8 pense distribution’’ means any amount paid (in9 cluding through electronic payments) or distrib10 uted out of an Individual Development Account 

11 or a parallel account established for an eligible 

12 individual if such amount—

13 (i) is used exclusively to pay the quali14 fied expenses of the Individual Develop15 ment Account owner or such owner’s 

16 spouse or dependents, 

17 (ii) is paid by the qualified financial 

18 institution—

19 (I) except as otherwise provided 

20 in this clause, directly to the unre21 lated third party to whom the amount 

22 is due, 

23 (II) in the case of any qualified 

24 rollover, directly to another Individual 
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•S 272 IS 

1 Development Account and parallel ac2 count, or 

3 (III) in the case of a qualified 

4 final distribution, directly to the 

5 spouse, dependent, or other named 

6 beneficiary of the deceased Account 

7 owner, and 

8 (iii) is paid after the Account owner 

9 has completed a financial education course 

10 if required under section 505(b). 

11 (B) QUALIFIED EXPENSES.—

12 (i) IN GENERAL.—The term ‘‘qualified 

13 expenses’’ means any of the following ex14 penses approved by the qualified financial 

15 institution: 

16 (I) Qualified higher education ex17 penses. 

18 (II) Qualified first-time home19 buyer costs. 

20 (III) Qualified business capital21 ization or expansion costs. 

22 (IV) Qualified rollovers. 

23 (V) Qualified final distribution. 

24 (ii) QUALIFIED HIGHER EDUCATION

25 EXPENSES.—
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•S 272 IS 

1 (I) IN GENERAL.—The term 

2 ‘‘qualified higher education expenses’’ 

3 has the meaning given such term by 

4 section 529(e)(3) of the Internal Rev5 enue Code of 1986, determined by 

6 treating the Account owner, the own7 er’s spouse, or one or more of the 

8 owner’s dependents as a designated 

9 beneficiary, and reduced as provided 

10 in section 25A(g)(2) of such Code. 

11 (II) COORDINATION WITH OTHER

12 BENEFITS.—The amount of expenses 

13 which may be taken into account for 

14 purposes of section 135, 529, or 530 

15 of such Code for any taxable year 

16 shall be reduced by the amount of any 

17 qualified higher education expenses 

18 taken into account as qualified ex19 pense distributions during such tax20 able year. 

21 (iii) QUALIFIED FIRST-TIME HOME22 BUYER COSTS.—The term ‘‘qualified first23 time homebuyer costs’’ means qualified ac24 quisition costs (as defined in section 

25 72(t)(8)(C) of the Internal Revenue Code 
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•S 272 IS 

1 of 1986) with respect to a principal resi2 dence (within the meaning of section 121 

3 of such Code) for a qualified first-time 

4 homebuyer (as defined in section 

5 72(t)(8)(D)(i) of such Code). 

6 (iv) QUALIFIED BUSINESS CAPITAL7 IZATION OR EXPANSION COSTS.—

8 (I) IN GENERAL.—The term 

9 ‘‘qualified business capitalization or 

10 expansion costs’’ means qualified ex11 penditures for the capitalization or ex12 pansion of a qualified business pursu13 ant to a qualified business plan. 

14 (II) QUALIFIED EXPENDI15 TURES.—The term ‘‘qualified expendi16 tures’’ means expenditures normally 

17 associated with starting or expanding 

18 a business and included in a qualified 

19 business plan, including costs for cap20 ital, plant, and equipment, inventory 

21 expenses, and attorney and accounting 

22 fees. 

23 (III) QUALIFIED BUSINESS.—

24 The term ‘‘qualified business’’ means
90

•S 272 IS 

1 any business that does not contravene 

2 any law. 

3 (IV) QUALIFIED BUSINESS

4 PLAN.—The term ‘‘qualified business 

5 plan’’ means a business plan which 

6 has been approved by the qualified fi7 nancial institution and which meets 

8 such requirements as the Secretary 

9 may specify. 

10 (v) QUALIFIED ROLLOVERS.—The 

11 term ‘‘qualified rollover’’ means the com12 plete distribution of the amounts in an In13 dividual Development Account and parallel 

14 account to another Individual Development 

15 Account and parallel account established in 

16 another qualified financial institution for 

17 the benefit of the Account owner. 

18 (vi) QUALIFIED FINAL DISTRIBU19 TION.—The term ‘‘qualified final distribu20 tion’’ means, in the case of a deceased Ac21 count owner, the complete distribution of 

22 the amounts in the Individual Development 

23 Account and parallel account directly to 

24 the spouse, any dependent, or other named 

25 beneficiary of the deceased. 
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•S 272 IS 

1 (7) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of the Treasury.

3 SEC. 504. STRUCTURE AND ADMINISTRATION OF QUALI4 FIED INDIVIDUAL DEVELOPMENT ACCOUNT 

5 PROGRAMS. 

6 (a) ESTABLISHMENT OF QUALIFIED INDIVIDUAL DE7 VELOPMENT ACCOUNT PROGRAMS.—Any qualified finan8 cial institution may apply to the Secretary for approval 

9 to establish 1 or more qualified individual development ac10 count programs which meet the requirements of this title 

11 and for an allocation of the Individual Development Ac12 count limitation under section 45G(i)(3) of the Internal 

13 Revenue Code of 1986 with respect to such programs. 

14 (b) BASIC PROGRAM STRUCTURE.—

15 (1) IN GENERAL.—All qualified individual de16 velopment account programs shall consist of the fol17 lowing 2 components for each participant: 

18 (A) An Individual Development Account to 

19 which an eligible individual may contribute cash 

20 in accordance with section 505.

21 (B) A parallel account to which all match22 ing funds shall be deposited in accordance with 

23 section 506. 

24 (2) TAILORED IDA PROGRAMS.—A qualified fi25 nancial institution may tailor its qualified individual 
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•S 272 IS 

1 development account program to allow matching 

2 funds to be spent on 1 or more of the categories of 

3 qualified expenses. 

4 (3) NO FEES MAY BE CHARGED TO IDAS.—A 

5 qualified financial institution may not charge any 

6 fees to any Individual Development Account or par7 allel account under a qualified individual develop8 ment account program. 

9 (c) COORDINATION WITH PUBLIC HOUSING AGENCY

10 INDIVIDUAL SAVINGS ACCOUNTS.—Section 3(e)(2) of the 

11 United States Housing Act of 1937 (42 U.S.C. 

12 1437a(e)(2)) is amended by inserting ‘‘or in any Indi13 vidual Development Account established under the Sav14 ings for Working Families Act of 2003’’ after ‘‘sub15 section’’.

16 (d) TAX TREATMENT OF PARALLEL ACCOUNTS.—

17 (1) IN GENERAL.—Chapter 77 (relating to mis18 cellaneous provisions) is amended by adding at the 

19 end the following new section: 

20 ‘‘SEC. 7525. TAX INCENTIVES FOR INDIVIDUAL DEVELOP21 MENT PARALLEL ACCOUNTS. 

22 ‘‘For purposes of this title—

23 ‘‘(1) any account described in section 

24 504(b)(1)(B) of the Savings for Working Families 

25 Act of 2003 shall be exempt from taxation, 
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•S 272 IS 

1 ‘‘(2) except as provided in section 45G, no item 

2 of income, expense, basis, gain, or loss with respect 

3 to such an account may be taken into account, and 

4 ‘‘(3) any amount withdrawn from such an ac5 count shall not be includible in gross income.’’. 

6 (2) CONFORMING AMENDMENT.—The table of 

7 sections for chapter 77 is amended by adding at the 

8 end the following new item:

‘‘Sec. 7525. Tax incentives for individual development parallel accounts.’’.

9 (e) COORDINATION OF CERTAIN EXPENSES.—Sec10 tion 25A(g)(2) is amended by striking ‘‘and’’ at the end 

11 of subparagraph (C), by striking the period at the end of 

12 subparagraph (D) and inserting ‘‘, and’’, and by adding 

13 at the end the following new subparagraph: 

14 ‘‘(D) a qualified expense distribution with 

15 respect to qualified higher education expenses 

16 from an Individual Development Account or a 

17 parallel account under section 507(a) of the 

18 Savings for Working Families Act of 2003.’’. 

19 SEC. 505. PROCEDURES FOR OPENING AND MAINTAINING 

20 AN INDIVIDUAL DEVELOPMENT ACCOUNT 

21 AND QUALIFYING FOR MATCHING FUNDS. 

22 (a) OPENING AN ACCOUNT.—An eligible individual 

23 may open an Individual Development Account with a 

24 qualified financial institution upon certification that such 
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•S 272 IS 

1 individual has never maintained any other Individual De2 velopment Account (other than an Individual Development 

3 Account to be terminated by a qualified rollover). 

4 (b) REQUIRED COMPLETION OF FINANCIAL EDU5 CATION COURSE.—

6 (1) IN GENERAL.—Before becoming eligible to 

7 withdraw funds to pay for qualified expenses, owners 

8 of Individual Development Accounts must complete 

9 1 or more financial education courses specified in 

10 the qualified individual development account pro11 gram. 

12 (2) STANDARD AND APPLICABILITY OF

13 COURSE.—The Secretary, in consultation with rep14 resentatives of qualified individual development ac15 count programs and financial educators, shall not 

16 later than January 1, 2004, establish minimum 

17 quality standards for the contents of financial edu18 cation courses and providers of such courses de19 scribed in paragraph (1) and a protocol to exempt 

20 individuals from the requirement under paragraph 

21 (1) in the case of hardship, lack of need, the attain22 ment of age 65, or a qualified final distribution. 

23 (c) PROOF OF STATUS AS AN ELIGIBLE INDI24 VIDUAL.—Federal income tax forms for the immediately 

25 preceding taxable year and any other evidence of eligibility
95

•S 272 IS 

1 which may be required by a qualified financial institution 

2 shall be presented to such institution at the time of the 

3 establishment of the Individual Development Account and 

4 in any taxable year in which contributions are made to 

5 the Account to qualify for matching funds under section 

6 506(b)(1)(A). 

7 (d) SPECIAL RULE IN THE CASE OF MARRIED INDI8 VIDUALS.—For purposes of this title, if, with respect to 

9 any taxable year, 2 married individuals file a Federal joint 

10 income tax return, then not more than 1 of such individ11 uals may be treated as an eligible individual with respect 

12 to the succeeding taxable year.

13 SEC. 506. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOP14 MENT ACCOUNT PROGRAMS. 

15 (a) PARALLEL ACCOUNTS.—The qualified financial 

16 institution shall deposit all matching funds for each Indi17 vidual Development Account into a parallel account at a 

18 qualified financial institution. 

19 (b) REGULAR DEPOSITS OF MATCHING FUNDS.—

20 (1) IN GENERAL.—Subject to paragraph (2), 

21 the qualified financial institution shall deposit into 

22 the parallel account with respect to each eligible in23 dividual the following amounts: 

24 (A) A dollar-for-dollar match for the first 

25 $500 contributed by the eligible individual into 
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•S 272 IS 

1 an Individual Development Account with re2 spect to any taxable year of such individual. 

3 (B) Any matching funds provided by State, 

4 local, or private sources in accordance with the 

5 matching ratio set by those sources.

6 (2) TIMING OF DEPOSITS.—A deposit of the 

7 amounts described in paragraph (1) shall be made 

8 into a parallel account—

9 (A) in the case of amounts described in 

10 paragraph (1)(A), not later than 30 days after 

11 the end of the calendar quarter during which 

12 the contribution described in such paragraph 

13 was made, and 

14 (B) in the case of amounts described in 

15 paragraph (1)(B), not later than 2 business 

16 days after such amounts were provided. 

17 (3) CROSS REFERENCE.—

For allowance of tax credit for Individual Development Account subsidies, including matching 

funds, see section 45G of the Internal Revenue Code 

of 1986.

18 (c) DEPOSIT OF MATCHING FUNDS INTO INDI19 VIDUAL DEVELOPMENT ACCOUNT OF INDIVIDUAL WHO

20 HAS ATTAINED AGE 65.—In the case of an Individual De21 velopment Account owner who attains the age of 65, the 

22 qualified financial institution shall deposit the funds in the 

23 parallel account with respect to such individual into the 
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•S 272 IS 

1 Individual Development Account of such individual on the 

2 later of—

3 (1) the day which is the 1-year anniversary of 

4 the deposit of such funds in the parallel account, or 

5 (2) the first business day of the taxable year of 

6 such individual following the taxable year in which 

7 such individual attained age 65.

8 (d) UNIFORM ACCOUNTING REGULATIONS.—To en9 sure proper recordkeeping and determination of the tax 

10 credit under section 45G of the Internal Revenue Code 

11 of 1986, the Secretary shall prescribe regulations with re12 spect to accounting for matching funds in the parallel ac13 counts. 

14 (e) REGULAR REPORTING OF ACCOUNTS.—Any 

15 qualified financial institution shall report the balances in 

16 any Individual Development Account and parallel account 

17 of an individual on not less than an annual basis to such 

18 individual.

19 SEC. 507. WITHDRAWAL PROCEDURES. 

20 (a) WITHDRAWALS FOR QUALIFIED EXPENSES.—

21 (1) IN GENERAL.—An Individual Development 

22 Account owner may withdraw funds in order to pay 

23 qualified expense distributions from such individ24 ual’s—
98

•S 272 IS 

1 (A) Individual Development Account, but 

2 only from funds which have been on deposit in 

3 such Account for at least 1 year, and 

4 (B) parallel account, but only—

5 (i) from matching funds which have 

6 been on deposit in such parallel account 

7 for at least 1 year, 

8 (ii) from earnings in such parallel ac9 count, after all matching funds described 

10 in clause (i) have been withdrawn, and 

11 (iii) to the extent such withdrawal 

12 does not result in a remaining balance in 

13 such parallel account which is less than the 

14 remaining balance in the Individual Devel15 opment Account after such withdrawal. 

16 (2) PROCEDURE.—Upon receipt of a with17 drawal request which meets the requirements of 

18 paragraph (1), the qualified financial institution 

19 shall directly transfer the funds electronically to the 

20 distributees described in section 503(6)(A)(ii). If a 

21 distributee is not equipped to receive funds electroni22 cally, the qualified financial institution may issue 

23 such funds by paper check to the distributee. 

24 (b) WITHDRAWALS FOR NONQUALIFIED EX25 PENSES.—An Individual Development Account owner may 
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•S 272 IS 

1 withdraw any amount of funds from the Individual Devel2 opment Account for purposes other than to pay qualified 

3 expense distributions, but if, after such withdrawal, the 

4 amount in the parallel account of such owner (excluding 

5 earnings on matching funds) exceeds the amount remain6 ing in such Individual Development Account, then such 

7 owner shall forfeit from the parallel account the lesser of 

8 such excess or the amount withdrawn. 

9 (c) WITHDRAWALS FROM ACCOUNTS OF NON10 ELIGIBLE INDIVIDUALS.—If the individual for whose ben11 efit an Individual Development Account is established 

12 ceases to be an eligible individual, such account shall re13 main an Individual Development Account, but such indi14 vidual shall not be eligible for any further matching funds 

15 under section 506(b)(1)(A) for contributions which are 

16 made to the Account during any taxable year when such 

17 individual is not an eligible individual. 

18 (d) EFFECT OF PLEDGING ACCOUNT AS SECU19 RITY.—If, during any taxable year of the individual for 

20 whose benefit an Individual Development Account is es21 tablished, that individual uses the Account, the individ22 ual’s parallel account, or any portion thereof as security 

23 for a loan, the portion so used shall be treated as a with24 drawal of such portion from the Individual Development 

25 Account for purposes other than to pay qualified expenses.
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•S 272 IS 

1 SEC. 508. CERTIFICATION AND TERMINATION OF QUALI2 FIED INDIVIDUAL DEVELOPMENT ACCOUNT 

3 PROGRAMS. 

4 (a) CERTIFICATION PROCEDURES.—Upon estab5 lishing a qualified individual development account pro6 gram under section 504, a qualified financial institution 

7 shall certify to the Secretary at such time and in such 

8 manner as may be prescribed by the Secretary and accom9 panied by any documentation required by the Secretary, 

10 that—

11 (1) the accounts described in subparagraphs 

12 (A) and (B) of section 504(b)(1) are operating pur13 suant to all the provisions of this title, and 

14 (2) the qualified financial institution agrees to 

15 implement an information system necessary to mon16 itor the cost and outcomes of the qualified individual 

17 development account program. 

18 (b) AUTHORITY TO TERMINATE QUALIFIED IDA 

19 PROGRAM.—If the Secretary determines that a qualified 

20 financial institution under this title is not operating a 

21 qualified individual development account program in ac22 cordance with the requirements of this title (and has not 

23 implemented any corrective recommendations directed by 

24 the Secretary), the Secretary shall terminate such institu25 tion’s authority to conduct the program. If the Secretary 

26 is unable to identify a qualified financial institution to as-
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•S 272 IS 

1 sume the authority to conduct such program, then any 

2 funds in a parallel account established for the benefit of 

3 any individual under such program shall be deposited into 

4 the Individual Development Account of such individual as 

5 of the first day of such termination. 

6 SEC. 509. REPORTING, MONITORING, AND EVALUATION. 

7 (a) RESPONSIBILITIES OF QUALIFIED FINANCIAL IN8 STITUTIONS.—

9 (1) IN GENERAL.—Each qualified financial in10 stitution that operates a qualified individual develop11 ment account program under section 504 shall re12 port annually to the Secretary within 90 days after 

13 the end of each calendar year on—

14 (A) the number of individuals making con15 tributions into Individual Development Ac16 counts and the amounts contributed,

17 (B) the amounts contributed into Indi18 vidual Development Accounts by eligible individ19 uals and the amounts deposited into parallel ac20 counts for matching funds, 

21 (C) the amounts withdrawn from Indi22 vidual Development Accounts and parallel ac23 counts, and the purposes for which such 

24 amounts were withdrawn, 
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•S 272 IS 

1 (D) the balances remaining in Individual 

2 Development Accounts and parallel accounts, 

3 and 

4 (E) such other information needed to help 

5 the Secretary monitor the effectiveness of the 

6 qualified individual development account pro7 gram (provided in a non-individually-identifiable 

8 manner). 

9 (2) ADDITIONAL REPORTING REQUIREMENTS.—

10 Each qualified financial institution that operates a 

11 qualified individual development account program 

12 under section 504 shall report at such time and in 

13 such manner as the Secretary may prescribe any ad14 ditional information that the Secretary requires to 

15 be provided for purposes of administering and super16 vising the qualified individual development account 

17 program. This additional data may include, without 

18 limitation, identifying information about Individual 

19 Development Account owners, their Accounts, addi20 tions to the Accounts, and withdrawals from the Ac21 counts. 

22 (b) RESPONSIBILITIES OF THE SECRETARY.—

23 (1) MONITORING PROTOCOL.—Not later than 

24 12 months after the date of the enactment of this 

25 Act, the Secretary, in consultation with the Sec-
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1 retary of Health and Human Services, shall develop 

2 and implement a protocol and process to monitor the 

3 cost and outcomes of the qualified individual devel4 opment account programs established under section 

5 504.

6 (2) ANNUAL REPORTS.—For each year after 

7 2003, the Secretary shall submit a progress report 

8 to Congress on the status of such qualified indi9 vidual development account programs. Such report 

10 shall, to the extent data are available, include from 

11 a representative sample of qualified individual devel12 opment account programs information on—

13 (A) the characteristics of participants, in14 cluding age, gender, race or ethnicity, marital 

15 status, number of children, employment status, 

16 and monthly income, 

17 (B) deposits, withdrawals, balances, uses 

18 of Individual Development Accounts, and par19 ticipant characteristics, 

20 (C) the characteristics of qualified indi21 vidual development account programs, including 

22 match rate, economic education requirements, 

23 permissible uses of accounts, staffing of pro24 grams in full time employees, and the total 

25 costs of programs, and 
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1 (D) process information on program imple2 mentation and administration, especially on 

3 problems encountered and how problems were 

4 solved. 

5 (3) REAUTHORIZATION REPORT ON COST AND

6 OUTCOMES OF IDAS.—

7 (A) IN GENERAL.—Not later than July 1, 

8 2008, the Secretary of the Treasury shall sub9 mit a report to Congress and the chairmen and 

10 ranking members of the Committee on Finance, 

11 the Committee on Banking, Housing, and 

12 Urban Affairs, and the Committee on Health, 

13 Education, Labor, and Pensions of the Senate 

14 and the Committee on Ways and Means, the 

15 Committee on Banking and Financial Services, 

16 and the Committee on Education and the 

17 Workforce of the House of Representatives, in 

18 which the Secretary shall—

19 (i) summarize the previously sub20 mitted annual reports required under para21 graph (2), 

22 (ii) from a representative sample of 

23 qualified individual development account 

24 programs, include an analysis of—
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1 (I) the economic, social, and be2 havioral outcomes, 

3 (II) the changes in savings rates, 

4 asset holdings, and household debt, 

5 and overall changes in economic sta6 bility, 

7 (III) the changes in outlooks, at8 titudes, and behavior regarding sav9 ings strategies, investment, education, 

10 and family, 

11 (IV) the integration into the fi12 nancial mainstream, including de13 creased reliance on alternative finan14 cial services, and increase in acquisi15 tion of mainstream financial products, 

16 and 

17 (V) the involvement in civic af18 fairs, including neighborhood schools 

19 and associations, 

20 associated with participation in qualified 

21 individual development account programs, 

22 (iii) from a representative sample of 

23 qualified individual development account 

24 programs, include a comparison of out25 comes associated with such programs with 
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1 outcomes associated with other Federal 

2 Government social and economic develop3 ment programs, including asset building 

4 programs, and 

5 (iv) make recommendations regarding 

6 the reauthorization of the qualified indi7 vidual development account programs, in8 cluding—

9 (I) recommendations regarding 

10 reforms that will improve the cost and 

11 outcomes of the such programs, in12 cluding the ability to help low income 

13 families save and accumulate produc14 tive assets, 

15 (II) recommendations regarding 

16 the appropriate levels of subsidies to 

17 provide effective incentives to financial 

18 institutions and Account owners under 

19 such programs, and 

20 (III) recommendations regarding 

21 how such programs should be inte22 grated into other Federal poverty re23 duction, asset building, and commu24 nity development policies and pro25 grams. 
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1 (B) AUTHORIZATION.—There is authorized 

2 to be appropriated $2,500,000, for carrying out 

3 the purposes of this paragraph. 

4 (4) USE OF ACCOUNTS IN RURAL AREAS EN5 COURAGED.—The Secretary shall develop methods to 

6 encourage the use of Individual Development Ac7 counts in rural areas. 

8 SEC. 510. AUTHORIZATION OF APPROPRIATIONS. 

9 There is authorized to be appropriated to the Sec10 retary $1,000,000 for fiscal year 2004 and for each fiscal 

11 year through 2011, for the purposes of implementing this 

12 title, including the reporting, monitoring, and evaluation 

13 required under section 509, to remain available until ex14 pended.

15 SEC. 511. MATCHING FUNDS FOR INDIVIDUAL DEVELOP16 MENT ACCOUNTS PROVIDED THROUGH A TAX 

17 CREDIT FOR QUALIFIED FINANCIAL INSTITU18 TIONS. 

19 (a) IN GENERAL.—Subpart D of part IV of sub20 chapter A of chapter 1 (relating to business related cred21 its) is amended by adding at the end the following new 

22 section: 
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1 ‘‘SEC. 45G. INDIVIDUAL DEVELOPMENT ACCOUNT INVEST2 MENT CREDIT. 

3 ‘‘(a) DETERMINATION OF AMOUNT.—For purposes of 

4 section 38, the individual development account investment 

5 credit determined under this section with respect to any 

6 eligible entity for any taxable year is an amount equal to 

7 the individual development account investment provided 

8 by such eligible entity during the taxable year under an 

9 individual development account program established under 

10 section 504 of the Savings for Working Families Act of 

11 2003. 

12 ‘‘(b) APPLICABLE TAX.—For the purposes of this 

13 section, the term ‘applicable tax’ means the excess (if any) 

14 of—

15 ‘‘(1) the tax imposed under this chapter (other 

16 than the taxes imposed under the provisions de17 scribed in subparagraphs (C) through (Q) of section 

18 26(b)(2)), over 

19 ‘‘(2) the credits allowable under subpart B 

20 (other than this section) and subpart D of this part. 

21 ‘‘(c) INDIVIDUAL DEVELOPMENT ACCOUNT INVEST22 MENT.—For purposes of this section, the term ‘individual 

23 development account investment’ means, with respect to 

24 an individual development account program in any taxable 

25 year, an amount equal to the sum of—
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1 ‘‘(1) the aggregate amount of dollar-for-dollar 

2 matches under such program under section 

3 506(b)(1)(A) of the Savings for Working Families 

4 Act of 2003 for such taxable year, plus 

5 ‘‘(2) $50 with respect to each Individual Devel6 opment Account maintained—

7 ‘‘(A) as of the end of such taxable year, 

8 but only if such taxable year is within the 7-

9 taxable-year period beginning with the taxable 

10 year in which such Account is opened, and 

11 ‘‘(B) with a balance of not less than $100 

12 (other than the taxable year in which such Ac13 count is opened). 

14 ‘‘(d) ELIGIBLE ENTITY.—For purposes of this sec15 tion, except as provided in regulations, the term ‘eligible 

16 entity’ means a qualified financial institution. 

17 ‘‘(e) OTHER DEFINITIONS.—For purposes of this 

18 section, any term used in this section and also in the Sav19 ings for Working Families Act of 2003 shall have the 

20 meaning given such term by such Act. 

21 ‘‘(f) DENIAL OF DOUBLE BENEFIT.—

22 ‘‘(1) IN GENERAL.—No deduction or credit 

23 (other than under this section) shall be allowed 

24 under this chapter with respect to any expense 

25 which—
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1 ‘‘(A) is taken into account under sub2 section (c)(1)(A) in determining the credit 

3 under this section, or 

4 ‘‘(B) is attributable to the maintenance of 

5 an Individual Development Account. 

6 ‘‘(2) DETERMINATION OF AMOUNT.—Solely for 

7 purposes of paragraph (1)(B), the amount attrib8 utable to the maintenance of an Individual Develop9 ment Account shall be deemed to be the dollar 

10 amount of the credit allowed under subsection 

11 (c)(l)(B) for each taxable year such Individual De12 velopment Account is maintained. 

13 ‘‘(g) CREDIT MAY BE TRANSFERRED.—

14 ‘‘(1) IN GENERAL.—An eligible entity may 

15 transfer any credit allowable to the eligible entity 

16 under subsection (a) to any person other than to an17 other eligible entity which is exempt from tax under 

18 this title. The determination as to whether a credit 

19 is allowable shall be made without regard to the tax20 exempt status of the eligible entity. 

21 ‘‘(2) CONSENT REQUIRED FOR REVOCATION.—

22 Any transfer under paragraph (1) may be revoked 

23 only with the consent of the Secretary. 
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1 ‘‘(h) REGULATIONS.—The Secretary may prescribe 

2 such regulations as may be necessary or appropriate to 

3 carry out this section, including 

4 ‘‘(1) such regulations as necessary to insure 

5 that any credit described in subsection (g)(1) is 

6 claimed once and not retransferred by a transferee, 

7 and 

8 ‘‘(2) regulations providing for a recapture of 

9 the credit allowed under this section (notwith10 standing any termination date described in sub11 section (i)) in cases where there is a forfeiture under 

12 section 507(b) of the Savings for Working Families 

13 Act of 2003 in a subsequent taxable year of any 

14 amount which was taken into account in determining 

15 the amount of such credit. 

16 ‘‘(i) APPLICATION OF SECTION.—

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

18 any expenditure made in any taxable year ending 

19 after December 31, 2003, and beginning on or be20 fore January 1, 2011, with respect to any Individual 

21 Development Account which—

22 ‘‘(A) is opened before January 1, 2011, 

23 and 
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•S 272 IS 

1 ‘‘(B) as determined by the Secretary, when 

2 added to all of the previously opened Individual 

3 Development Accounts, does not exceed—

4 ‘‘(i) 100,000 Accounts if opened after 

5 December 31, 2003, and before January 1, 

6 2007, 

7 ‘‘(ii) an additional 100,000 Accounts 

8 if opened after December 31, 2006, and 

9 before January 1, 2009, but only if, except 

10 as provided in paragraph (4), the total 

11 number of Accounts described in clause (i) 

12 are opened and the Secretary determines 

13 that such Accounts are being reasonably 

14 and responsibly administered, and 

15 ‘‘(iii) an additional 100,000 Accounts 

16 if opened after December 31, 2008, and 

17 before January 1, 2011, but only if the 

18 total number of Accounts described in 

19 clauses (i) and (ii) are opened and the Sec20 retary makes a determination described in 

21 paragraph (2). 

22 Notwithstanding the preceding sentence, this section 

23 shall apply to amounts which are described in sub24 section (c)(1)(A) and which are timely deposited into 

25 a parallel account during the 30-day period following 
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•S 272 IS 

1 the end of last taxable year beginning before Janu2 ary 1, 2011. 

3 ‘‘(2) DETERMINATION WITH RESPECT TO

4 THIRD GROUP OF ACCOUNTS.—A determination is 

5 described in this paragraph if the Secretary deter6 mines that—

7 ‘‘(A) substantially all of the previously 

8 opened Accounts have been reasonably and re9 sponsibly administered prior to the date of the 

10 determination, 

11 ‘‘(B) the individual development account 

12 programs have increased net savings of partici13 pants in the programs, 

14 ‘‘(C) participants in the individual develop15 ment account programs have increased Federal 

16 income tax liability and decreased utilization of 

17 Federal assistance programs relative to simi18 larly situated individuals that did not partici19 pate in the individual development account pro20 grams, and 

21 ‘‘(D) the sum of the estimated increased 

22 Federal tax liability and reduction of Federal 

23 assistance program benefits to participants in 

24 the individual development account programs is 

25 greater than the cost of the individual develop-
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•S 272 IS 

1 ment account programs to the Federal govern2 ment. 

3 ‘‘(3) DETERMINATION OF LIMITATION.—The 

4 limitation on the number of Individual Development 

5 Accounts under paragraph (1)(B) shall be allocated 

6 by the Secretary among qualified individual develop7 ment account programs selected by the Secretary 

8 and, in the case of the limitation under clause (iii) 

9 of such paragraph, shall be equally divided among 

10 the States. 

11 ‘‘(4) SPECIAL RULE IF SMALLER NUMBER OF

12 ACCOUNTS ARE OPENED.—For purposes of para13 graph (1)(B)(ii)—

14 ‘‘(i) IN GENERAL.—If less than 

15 100,000 Accounts are opened before Janu16 ary 1, 2007, such paragraph shall be ap17 plied by substituting ‘‘applicable number of 

18 Accounts’ for ‘100,000 Accounts’. 

19 ‘‘(ii) APPLICABLE NUMBER.—For pur20 poses of clause (i), the applicable number 

21 equals the lesser of—

22 ‘‘(I) 75,000, or 

23 ‘‘(II) 3 times the number of Ac24 counts opened before January 1, 

25 2007.’’.
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1 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec2 tion 38(b) (relating to current year business credit) is 

3 amended by striking ‘‘plus’’ at the end of paragraph (14), 

4 by striking the period at the end of paragraph (15) and 

5 inserting ‘‘, plus’’, and by adding at the end the following 

6 new paragraph: 

7 ‘‘(16) the individual development account in8 vestment credit determined under section 45G(a).’’. 

9 (c) NO CARRYBACKS.—Subsection (d) of section 39 

10 (relating to carryback and carryforward of unused credits) 

11 is amended by adding at the end the following: 

12 ‘‘(11) NO CARRYBACK OF SECTION 45G CREDIT

13 BEFORE EFFECTIVE DATE.—No portion of the un14 used business credit for any taxable year which is 

15 attributable to the individual development account 

16 investment credit determined under section 45G may 

17 be carried back to a taxable year ending before Jan18 uary 1, 2004.’’. 

19 (d) CONFORMING AMENDMENT.—The table of sec20 tions for subpart C of part IV of subchapter A of chapter 

21 1 is amended by adding at the end the following new item:

‘‘Sec. 45G. Individual development account investment credit.’’.

22 (e) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to taxable years ending after De24 cember 31, 2003. 
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1 SEC. 512. ACCOUNT FUNDS DISREGARDED FOR PURPOSES 

2 OF CERTAIN MEANS-TESTED FEDERAL PRO3 GRAMS. 

4 Notwithstanding any other provision of Federal law 

5 (other than the Internal Revenue Code of 1986) that re6 quires consideration of 1 or more financial circumstances 

7 of an individual, for the purpose of determining eligibility 

8 to receive, or the amount of, any assistance or benefit au9 thorized by such provision to be provided to or for the 

10 benefit of such individual, any amount (including earnings 

11 thereon) in any Individual Development Account of such 

12 individual and any matching deposit made on behalf of 

13 such individual (including earnings thereon) in any par14 allel account shall be disregarded for such purpose with 

15 respect to any period during which such individual main16 tains or makes contributions into such Individual Develop17 ment Account. 

18 TITLE VI—MANAGEMENT OF 

19 EXEMPT ORGANIZATIONS 

20 SEC. 601. AUTHORIZATION OF APPROPRIATIONS. 

21 (a) IN GENERAL.—There is authorized to be appro22 priated to the Secretary of the Treasury $80,000,000 for 

23 each fiscal year to carry out the administration of exempt 

24 organizations by the Internal Revenue Service. 

25 (b) IMPLEMENTATION OF SECTION 527.—There is 

26 authorized to be appropriated to the Secretary of the 
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•S 272 IS 

1 Treasury $3,000,000 to carry out the provisions of Public 

2 Laws 106–230 and 107–276 relating to section 527 of the 

3 Internal Revenue Code of 1986. 

4 TITLE VII—COMPASSION 

5 CAPITAL FUND 

6 SEC. 701. SUPPORT FOR NONPROFIT COMMUNITY-BASED 

7 ORGANIZATIONS; DEPARTMENT OF HEALTH 

8 AND HUMAN SERVICES. 

9 (a) SUPPORT FOR NONGOVERNMENTAL ORGANIZA10 TIONS.—The Secretary of Health and Human Services 

11 (referred to in this section as ‘‘the Secretary’’) may award 

12 grants to and enter into cooperative agreements with non13 governmental organizations, to—

14 (1) provide technical assistance for community15 based organizations, which may include—

16 (A) grant writing and grant management 

17 assistance, which may include assistance pro18 vided through workshops and other guidance; 

19 (B) legal assistance with incorporation; 

20 (C) legal assistance to obtain tax-exempt 

21 status; and 

22 (D) information on, and referrals to, other 

23 nongovernmental organizations that provide ex24 pertise in accounting, on legal issues, on tax 
118

•S 272 IS 

1 issues, in program development, and on a vari2 ety of other organizational topics; 

3 (2) provide information and assistance for com4 munity-based organizations on capacity building;

5 (3) provide for community-based organizations 

6 information on and assistance in identifying and 

7 using best practices for delivering assistance to per8 sons, families, and communities in need; 

9 (4) provide information on and assistance in 

10 utilizing regional intermediary organizations to in11 crease and strengthen the capabilities of nonprofit 

12 community-based organizations; 

13 (5) assist community-based organizations in 

14 replicating social service programs of demonstrated 

15 effectiveness; and 

16 (6) encourage research on the best practices of 

17 social service organizations. 

18 (b) SUPPORT FOR STATES.—The Secretary—

19 (1) may award grants to and enter into cooper20 ative agreements with States and political subdivi21 sions of States to provide seed money to establish 

22 State and local offices of faith-based and community 

23 initiatives; and 
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•S 272 IS 

1 (2) shall provide technical assistance to States 

2 and political subdivisions of States in administering 

3 the provisions of this Act. 

4 (c) APPLICATIONS.—To be eligible to receive a grant 

5 or enter into a cooperative agreement under this section, 

6 a nongovernmental organization, State, or political sub7 division shall submit an application to the Secretary at 

8 such time, in such manner, and containing such informa9 tion as the Secretary may require. 

10 (d) LIMITATION.—In order to widely disburse limited 

11 resources, no community-based organization (other than 

12 a direct recipient of a grant or cooperative agreement from 

13 the Secretary) may receive more than 1 grant or coopera14 tive agreement under this section for the same purpose. 

15 (e) AUTHORIZATION OF APPROPRIATIONS.—There 

16 are authorized to be appropriated to carry out this section 

17 $85,000,000 for fiscal year 2003, and such sums as may 

18 be necessary for each of fiscal years 2004 through 2007. 

19 (f) DEFINITION.—In this section, the term ‘‘commu20 nity-based organization’’ means a nonprofit corporation or 

21 association that has—

22 (1) not more than 6 full-time equivalent em23 ployees who are engaged in the provision of social 

24 services; or
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•S 272 IS 

1 (2) a current annual budget (current as of the 

2 date the entity seeks assistance under this section) 

3 for the provision of social services, compiled and 

4 adopted in good faith, of less than $450,000. 

5 SEC. 702. SUPPORT FOR NONPROFIT COMMUNITY-BASED 

6 ORGANIZATIONS; CORPORATION FOR NA7 TIONAL AND COMMUNITY SERVICE. 

8 (a) SUPPORT FOR NONGOVERNMENTAL ORGANIZA9 TIONS.—The Corporation for National and Community 

10 Service (referred to in this section as ‘‘the Corporation’’) 

11 may award grants to and enter into cooperative agree12 ments with nongovernmental organizations and State 

13 Commissions on National and Community Service estab14 lished under section 178 of the National and Community 

15 Service Act of 1990 (42 U.S.C. 12638), to—

16 (1) provide technical assistance for community17 based organizations, which may include—

18 (A) grant writing and grant management 

19 assistance, which may include assistance pro20 vided through workshops and other guidance;

21 (B) legal assistance with incorporation; 

22 (C) legal assistance to obtain tax-exempt 

23 status; and 

24 (D) information on, and referrals to, other 

25 nongovernmental organizations that provide ex-
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•S 272 IS 

1 pertise in accounting, on legal issues, on tax 

2 issues, in program development, and on a vari3 ety of other organizational topics; 

4 (2) provide information and assistance for com5 munity-based organizations on capacity building; 

6 (3) provide for community-based organizations 

7 information on and assistance in identifying and 

8 using best practices for delivering assistance to per9 sons, families, and communities in need; 

10 (4) provide information on and assistance in 

11 utilizing regional intermediary organizations to in12 crease and strengthen the capabilities of community13 based organizations;

14 (5) assist community-based organizations in 

15 replicating social service programs of demonstrated 

16 effectiveness; and 

17 (6) encourage research on the best practices of 

18 social service organizations. 

19 (b) APPLICATIONS.—To be eligible to receive a grant 

20 or enter into a cooperative agreement under this section, 

21 a nongovernmental organization, State Commission, 

22 State, or political subdivision shall submit an application 

23 to the Corporation at such time, in such manner, and con24 taining such information as the Corporation may require. 
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•S 272 IS 

1 (c) LIMITATION.—In order to widely disburse limited 

2 resources, no community-based organization (other than 

3 a direct recipient of a grant or cooperative agreement from 

4 the Secretary) may receive more than 1 grant or coopera5 tive agreement under this section for the same purpose. 

6 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

7 are authorized to be appropriated to carry out this section 

8 $15,000,000 for fiscal year 2003, and such sums as may 

9 be necessary for each of fiscal years 2004 through 2007. 

10 (e) DEFINITION.—In this section, the term ‘‘commu11 nity-based organization’’ means a nonprofit corporation or 

12 association that has—

13 (1) not more than 6 full-time equivalent em14 ployees who are engaged in the provision of social 

15 services; or 

16 (2) a current annual budget (current as of the 

17 date the entity seeks assistance under this section) 

18 for the provision of social services, compiled and 

19 adopted in good faith, of less than $450,000. 

20 SEC. 703. SUPPORT FOR NONPROFIT COMMUNITY-BASED 

21 ORGANIZATIONS; DEPARTMENT OF JUSTICE. 

22 (a) SUPPORT FOR NONGOVERNMENTAL ORGANIZA23 TIONS.—The Attorney General may award grants to and 

24 enter into cooperative agreements with nongovernmental 

25 organizations, to—
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1 (1) provide technical assistance for community2 based organizations, which may include—

3 (A) grant writing and grant management 

4 assistance, which may include assistance pro5 vided through workshops and other guidance; 

6 (B) legal assistance with incorporation; 

7 (C) legal assistance to obtain tax-exempt 

8 status; and 

9 (D) information on, and referrals to, other 

10 nongovernmental organizations that provide ex11 pertise in accounting, on legal issues, on tax 

12 issues, in program development, and on a vari13 ety of other organizational topics; 

14 (2) provide information and assistance for com15 munity-based organizations on capacity building; 

16 (3) provide for community-based organizations 

17 information on and assistance in identifying and 

18 using best practices for delivering assistance to per19 sons, families, and communities in need; 

20 (4) provide information on and assistance in 

21 utilizing regional intermediary organizations to in22 crease and strengthen the capabilities of nonprofit 

23 community-based organizations; 
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•S 272 IS 

1 (5) assist community-based organizations in 

2 replicating social service programs of demonstrated 

3 effectiveness; and 

4 (6) encourage research on the best practices of 

5 social service organizations. 

6 (b) APPLICATIONS.—To be eligible to receive a grant 

7 or enter into a cooperative agreement under this section, 

8 a nongovernmental organization, State, or political sub9 division shall submit an application to the Attorney Gen10 eral at such time, in such manner, and containing such 

11 information as the Attorney General may require. 

12 (c) LIMITATION.—In order to widely disburse limited 

13 resources, no community-based organization (other than 

14 a direct recipient of a grant or cooperative agreement from 

15 the Attorney General) may receive more than 1 grant or 

16 cooperative agreement under this section for the same pur17 pose. 

18 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

19 are authorized to be appropriated to carry out this section 

20 $35,000,000 for fiscal year 2003, and such sums as may 

21 be necessary for each of fiscal years 2004 through 2007. 

22 (e) DEFINITION.—In this section, the term ‘‘commu23 nity-based organization’’ means a nonprofit corporation or 

24 association that has—
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•S 272 IS 

1 (1) not more than 6 full-time equivalent em2 ployees who are engaged in the provision of social 

3 services; or 

4 (2) a current annual budget (current as of the 

5 date the entity seeks assistance under this section) 

6 for the provision of social services, compiled and 

7 adopted in good faith, of less than $450,000. 

8 SEC. 704. SUPPORT FOR NONPROFIT COMMUNITY-BASED 

9 ORGANIZATIONS; DEPARTMENT OF HOUSING 

10 AND URBAN DEVELOPMENT. 

11 (a) SUPPORT FOR NONGOVERNMENTAL ORGANIZA12 TIONS.—The Secretary of Housing and Urban Develop13 ment (referred to in this section ‘‘the Secretary’’) may 

14 award grants to and enter into cooperative agreements 

15 with nongovernmental organizations, to—

16 (1) provide technical assistance for community17 based organizations, which may include—

18 (A) grant writing and grant management 

19 assistance, which may include assistance pro20 vided through workshops and other guidance; 

21 (B) legal assistance with incorporation; 

22 (C) legal assistance to obtain tax-exempt 

23 status; and 

24 (D) information on, and referrals to, other 

25 nongovernmental organizations that provide ex-
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•S 272 IS 

1 pertise in accounting, on legal issues, on tax 

2 issues, in program development, and on a vari3 ety of other organizational topics; 

4 (2) provide information and assistance for com5 munity-based organizations on capacity building; 

6 (3) provide for community-based organizations 

7 information on and assistance in identifying and 

8 using best practices for delivering assistance to per9 sons, families, and communities in need; 

10 (4) provide information on and assistance in 

11 utilizing regional intermediary organizations to in12 crease and strengthen the capabilities of community13 based organizations; 

14 (5) assist community-based organizations in 

15 replicating social service programs of demonstrated 

16 effectiveness; and 

17 (6) encourage research on the best practices of 

18 social service organizations. 

19 (b) APPLICATIONS.—To be eligible to receive a grant 

20 or enter into a cooperative agreement under this section, 

21 a nongovernmental organization, State, or political sub22 division shall submit an application to the Secretary at 

23 such time, in such manner, and containing such informa24 tion as the Secretary may require. 
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•S 272 IS 

1 (c) LIMITATION.—In order to widely disburse limited 

2 resources, no community-based organization (other than 

3 a direct recipient of a grant or cooperative agreement from 

4 the Secretary) may receive more than 1 grant or coopera5 tive agreement under this section for the same purpose. 

6 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

7 are authorized to be appropriated to carry out this section 

8 $15,000,000 for fiscal year 2003, and such sums as may 

9 be necessary for each of fiscal years 2004 through 2007. 

10 (e) DEFINITION.—In this section, the term ‘‘commu11 nity-based organization’’ means a nonprofit corporation or 

12 association that has—

13 (1) not more than 6 full-time equivalent em14 ployees who are engaged in the provision of social 

15 services; or 

16 (2) a current annual budget (current as of the 

17 date the entity seeks assistance under this section) 

18 for the provision of social services, compiled and 

19 adopted in good faith, of less than $450,000. 

20 SEC. 705. COORDINATION. 

21 The Secretary of Health and Human Services, the 

22 Corporation for National and Community Service, the At23 torney General, and the Secretary of Housing and Urban 

24 Development shall coordinate their activities under this 

25 title to ensure—
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•S 272 IS 

1 (1) nonduplication of activities under this title; 

2 and 

3 (2) an equitable distribution of resources under 

4 this title. 

5 TITLE VIII—EQUAL TREATMENT 

6 FOR NONGOVERNMENTAL 

7 PROVIDERS 

8 SEC. 801. NONGOVERNMENTAL ORGANIZATIONS. 

9 (a) GENERAL AUTHORITY.—For any social service 

10 program, a nongovernmental organization that is (or is 

11 applying to be) involved in the delivery of social services 

12 for the program shall not be required—

13 (1) to alter or remove art, icons, scripture, or 

14 other symbols, or to alter its name, because the sym15 bols or name are religious; 

16 (2) to alter or remove provisions in its char17 tering documents because the provisions are reli18 gious, except that no such charter provisions shall 

19 affect the application to a nongovernmental organi20 zation of any law that would (notwithstanding this 

21 paragraph) apply to the nongovernmental organiza22 tion; or 

23 (3) to alter or remove religious qualifications 

24 for membership on its governing boards. 
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•S 272 IS 

1 (b) PRIOR EXPERIENCE.—A nongovernmental orga2 nization that has not previously been awarded a contract, 

3 grant, or cooperative agreement from an agency shall not, 

4 for that reason, be disadvantaged in a competition to se5 cure a contract, grant, or cooperative agreement to deliver 

6 services under a social service program from the agency 

7 administering the program. 

8 (c) INTERMEDIATE GRANTORS.—

9 (1) IN GENERAL.—An agency that administers 

10 a social service program, and that is authorized to 

11 award grants or cooperative agreements to non12 governmental organizations under the program, may 

13 award to a nongovernmental organization (referred 

14 to in this subsection as an ‘‘intermediate grantor’’) 

15 a grant or cooperative agreement, the terms of 

16 which authorize the intermediate grantor— 

17 (A) to provide subgrants or subagreements 

18 to nongovernmental providers (referred to indi19 vidually in this subsection as a ‘‘subrecipient’’), 

20 to deliver social services for the program; and 

21 (B) to manage the subgrants or subagree22 ments. 

23 (2) RESPONSIBILITIES AND RIGHTS OF SUB24 RECIPIENTS.—
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1 (A) RESPONSIBILITIES.—Except for those 

2 administrative responsibilities that the inter3 mediate grantor fully performs on behalf of the 

4 subrecipient, the subrecipient shall have the 

5 same responsibilities or duties with respect to 

6 the program as the subrecipient would have if 

7 it were the intermediate grantor. 

8 (B) RIGHTS.—The subrecipient shall have 

9 the same rights or authorities under this sec10 tion as the subrecipient would have if it were 

11 the intermediate grantor. 

12 (3) RESPONSIBILITIES AND RIGHTS OF AGEN13 CIES.—

14 (A) RESPONSIBILITIES.—Nothing in this 

15 subsection shall alter any of an agency’s re16 sponsibilities or duties with respect to the pro17 gram, the intermediate grantor, or the sub18 recipient. 

19 (B) RIGHTS.—Nothing in this subsection 

20 shall alter any of an agency’s rights or authori21 ties with respect to the program, the inter22 mediate grantor, or the subrecipient. 

23 (d) COMPLIANCE.—To enforce the provisions of this 

24 section against a Federal agency or official, a nongovern25 mental organization may bring an action for injunctive re-
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1 lief in an appropriate United States district court. To en2 force the provisions of this section against a State or local 

3 agency or official, a nongovernmental organization may 

4 bring an action for injunctive relief in an appropriate 

5 State court of general jurisdiction. 

6 (e) DEFINITIONS.—In this section: 

7 (1) FEDERAL FINANCIAL ASSISTANCE.—The 

8 term ‘‘Federal financial assistance’’ does not include 

9 a tax credit, deduction, or exemption. 

10 (2) SOCIAL SERVICE PROGRAM.—

11 (A) IN GENERAL.—The term ‘‘social serv12 ice program’’ means a program that—

13 (i) is administered by the Federal 

14 Government, or by a State or local govern15 ment using Federal financial assistance; 

16 and 

17 (ii) provides services directed at help18 ing people in need, reducing poverty, im19 proving outcomes of low-income children, 

20 revitalizing low-income communities, and 

21 empowering low-income families and low22 income individuals to become self-suffi23 cient, including—

24 (I) child care services, protective 

25 services for children and adults, serv-
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1 ices for children and adults in foster 

2 care, adoption services, services re3 lated to the management and mainte4 nance of the home, day care services 

5 for adults, and services to meet the 

6 special needs of children, older indi7 viduals, and individuals with disabil8 ities (including physical, mental, or 

9 emotional disabilities); 

10 (II) transportation services; 

11 (III) job training and related 

12 services, and employment services; 

13 (IV) information, referral, and 

14 counseling services; 

15 (V) the preparation and delivery 

16 of meals, and services related to soup 

17 kitchens or food banks; 

18 (VI) health support services; 

19 (VII) literacy and mentoring pro20 grams; 

21 (VIII) services for the prevention 

22 and treatment of juvenile delinquency 

23 and substance abuse, services for the 

24 prevention of crime and the provision 

25 of assistance to the victims and the 
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1 families of criminal offenders, and 

2 services related to the intervention in, 

3 and prevention of, domestic violence; 

4 and 

5 (IX) services related to the provi6 sion of assistance for housing under 

7 Federal law. 

8 (B) EXCLUSIONS.—The term does not in9 clude a program having the purpose of deliv10 ering educational assistance under the Elemen11 tary and Secondary Education Act of 1965 (20 

12 U.S.C. 6301 et seq.) or under the Higher Edu13 cation Act of 1965 (20 U.S.C. 1001 et seq.). 

14 TITLE IX—MATERNITY GROUP 

15 HOMES 

16 SEC. 901. MATERNITY GROUP HOMES. 

17 (a) PERMISSIBLE USE OF FUNDS.—Section 322 of 

18 the Runaway and Homeless Youth Act (42 U.S.C. 5714–

19 2) is amended—

20 (1) in subsection (a)(1), by inserting ‘‘(includ21 ing maternity group homes)’’ after ‘‘group homes’’; 

22 and 

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

24 ‘‘(c) MATERNITY GROUP HOME.—In this part, the 

25 term ‘maternity group home’ means a community-based, 
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1 adult-supervised group home that provides young mothers 

2 and their children with a supportive and supervised living 

3 arrangement in which such mothers are required to learn 

4 parenting skills, including child development, family budg5 eting, health and nutrition, and other skills to promote 

6 their long-term economic independence and the well-being 

7 of their children.’’. 

8 (b) CONTRACT FOR EVALUATION.—Part B of the 

9 Runaway and Homeless Youth Act (42 U.S.C. 5701 et 

10 seq.) is amended by adding at the end the following: 

11 ‘‘SEC. 323. CONTRACT FOR EVALUATION. 

12 ‘‘(a) IN GENERAL.—The Secretary shall enter into 

13 a contract with a public or private entity for an evaluation 

14 of the maternity group homes that are supported by grant 

15 funds under this Act. 

16 ‘‘(b) INFORMATION.—The evaluation described in 

17 subsection (a) shall include the collection of information 

18 about the relevant characteristics of individuals who ben19 efit from maternity group homes such as those that are 

20 supported by grant funds under this Act and what services 

21 provided by those maternity group homes are most bene22 ficial to such individuals. 

23 ‘‘(c) REPORT.—Not later than 2 years after the date 

24 on which the Secretary enters into a contract for an eval25 uation under subsection (a), and biennially thereafter, the 
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1 entity conducting the evaluation under this section shall 

2 submit to Congress a report on the status, activities, and 

3 accomplishments of maternity group homes that are sup4 ported by grant funds under this Act.’’. 

5 (c) AUTHORIZATION OF APPROPRIATIONS.—Section 

6 388 of the Runaway and Homeless Youth Act (42 U.S.C. 

7 5751) is amended—

8 (1) in subsection (a)(1)—

9 (A) by striking ‘‘There’’ and inserting the 

10 following: 

11 ‘‘(A) IN GENERAL.—There’’; 

12 (B) in subparagraph (A), as redesignated, 

13 by inserting ‘‘and the purpose described in sub14 paragraph (B)’’ after ‘‘other than part E’’; and 

15 (C) by adding at the end the following: 

16 ‘‘(B) MATERNITY GROUP HOMES.—There 

17 is authorized to be appropriated, for maternity 

18 group homes eligible for assistance under sec19 tion 322(a)(1)—

20 ‘‘(i) $33,000,000 for fiscal year 2003; 

21 and 

22 ‘‘(ii) such sums as may be necessary 

23 for fiscal year 2004.’’; and 
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1 (2) in subsection (a)(2)(A), by striking ‘‘para2 graph (1)’’ and inserting ‘‘paragraph (1)(A)’’.

Æ