IB 

Union Calendar No. 157

108TH CONGRESS 

1ST SESSION H. R. 7

[Report No. 108–270, Part I] 

To amend the Internal Revenue Code of 1986 to provide incentives for 

charitable contributions by individuals and businesses, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 7, 2003

Mr. BLUNT (for himself, Mr. FORD, Mr. HULSHOF, Mr. WYNN, Mr. 

HASTERT, Mr. GORDON, Mr. DELAY, Ms. NORTON, Ms. PRYCE of Ohio, 

Mr. MEEKS of New York, Mr. CANTOR, Mr. CRANE, Mr. RAMSTAD, Mr. 

ENGLISH, Mr. FOLEY, Mr. SHAYS, Mr. SMITH of Texas, Mr. UPTON, Mr. 

WOLF, Mr. GILLMOR, Mr. STEARNS, Mr. CAMP, Mr. KINGSTON, Mr. 

MCHUGH, Mr. BACHUS, Mr. BARTLETT of Maryland, Mr. BARTON of 

Texas, Mrs. MYRICK, Mr. NORWOOD, Mr. SOUDER, Mr. TIAHRT, Mr. 

WAMP, Mr. WICKER, Mr. DOOLITTLE, Mrs. NORTHUP, Mr. PETERSON of 

Pennsylvania, Mr. PICKERING, Mr. PITTS, Mr. REYNOLDS, Mr. SESSIONS, Mr. SHIMKUS, Mr. GREEN of Wisconsin, Mr. HAYES, Mr. 

ISAKSON, Mr. TERRY, Mr. AKIN, Mr. BOOZMAN, Mr. FORBES, Mr. 

GRAVES, Ms. HART, Mr. KELLER, Mr. PENCE, Mr. SCHROCK, Mr. SIMMONS, Mr. BARRETT of South Carolina, Mrs. BLACKBURN, Ms. GINNY

BROWN-WAITE of Florida, Mr. BURGESS, Mr. CHOCOLA, Mr. GARRETT

of New Jersey, Ms. HARRIS, Mr. JANKLOW, Mrs. MUSGRAVE, Mr. RENZI, 

and Mr. FOSSELLA) introduced the following bill; which was referred to 

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

on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

SEPTEMBER 16, 2003

Additional sponsors: Mr. MORAN of Kansas, Mr. BROWN of South Carolina, 

Mr. FEENEY, Mr. EMANUEL, Mr. MOLLOHAN, Mr. DOOLEY of California, 

Mr. FRANKS of Arizona, Mr. MCCOTTER, Mr. MURPHY, Mr. LEACH, Mr. 

HOSTETTLER, Mr. TURNER of Ohio, Mr. CRENSHAW, Mr. REGULA, Ms. 

HOOLEY of Oregon, Mr. CULBERSON, Mr. WILSON of South Carolina, 
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Mr. OTTER, Mr. BISHOP of Georgia, Mr. BURNS, Mr. CASE, Mr. DAVIS

of Illinois, and Mr. HYDE

SEPTEMBER 16, 2003

Reported from the Committee on Ways and Means with an amendment 

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

SEPTEMBER 16, 2003

Referral to the Committee on Education and the Workforce extended for a 

period ending not later than September 16, 2003

SEPTEMBER 16, 2003

Committee on Education and the Workforce discharged; committed to the 

Committee of the Whole House on the State of the Union and ordered 

to be printed 

[For text of introduced bill, see copy of bill as introduced on May 7, 2003] 

A BILL

To amend the Internal Revenue Code of 1986 to provide 

incentives for charitable contributions by individuals and 

businesses, 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 ‘‘Charitable Giving Act of 2003’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as otherwise 

7 expressly provided, whenever in this Act an amendment or 

8 repeal is expressed in terms of an amendment to, or repeal 

9 of, a section or other provision, the reference shall be consid10 ered to be made to a section or other provision of the Inter11 nal Revenue Code of 1986. 
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1 (c) TABLE OF CONTENTS.—

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 plans for charitable 

purposes. 

Sec. 103. Increase in cap on corporate charitable contributions. 

Sec. 104. Charitable deduction for contributions of food inventory. 

Sec. 105. Reform of certain excise taxes related to private foundations. 

Sec. 106. Excise tax on unrelated business taxable income of charitable remainder 

trusts. 

Sec. 107. Expansion of charitable contribution allowed for scientific property 

used for research and for computer technology and equipment 

used for educational purposes. 

Sec. 108. Adjustment to basis of S corporation stock for certain charitable contributions. 

Sec. 109. Charitable organizations permitted to make collegiate housing and infrastructure grants. 

Sec. 110. Conduct of certain games of chance not treated as unrelated trade or 

business. 

Sec. 111. Excise taxes exemption for blood collector organizations. 

Sec. 112. Nonrecognition of gain on the sale of property used in performance of 

an exempt function. 

Sec. 113. Exemption of qualified 501(c)(3) bonds for nursing homes from Federal 

guarantee prohibitions. 

TITLE II—TAX REFORM AND IMPROVEMENTS RELATING TO 

CHARITABLE ORGANIZATIONS AND PROGRAMS 

Sec. 201. Suspension of tax-exempt status of terrorist organizations. 

Sec. 202. Clarification of definition of church tax inquiry. 

Sec. 203. Extension of declaratory judgment remedy to tax-exempt organizations. 

Sec. 204. Landowner incentives programs. 

Sec. 205. Modifications to section 512(b)(13). 

Sec. 206. Simplification of lobbying expenditure limitation. 

Sec. 207. Pilot project for forest conservation activities. 

TITLE III—OTHER PROVISIONS 

Sec. 301. Compassion capital fund. 

Sec. 302. Reauthorization of assets for independence demonstration. 

Sec. 303. Sense of the Congress regarding corporate contributions to faith-based 

organizations, etc. 

Sec. 304. Maternity group homes. 

Sec. 305. Authority of States to use 10 percent of their TANF funds to carry out 

social services block grant programs.
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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 charitable, 

7 etc., contributions and gifts) is amended by redesignating 

8 subsection (m) as subsection (n) and by inserting after sub9 section (l) the following new subsection:

10 ‘‘(m) DEDUCTION FOR INDIVIDUALS NOT ITEMIZING

11 DEDUCTIONS.—

12 ‘‘(1) IN GENERAL.—In the case of an individual 

13 who does not itemize deductions for a taxable year, 

14 there shall be taken into account as a direct charitable 

15 deduction under section 63 an amount equal to the 

16 amount allowable under subsection (a) for the taxable 

17 year for cash contributions (determined without re18 gard to any carryover), to the extent that such con19 tributions exceed $250 ($500 in the case of a joint re20 turn) but do not exceed $500 ($1,000 in the case of 

21 a joint return). 

22 ‘‘(2) TERMINATION.—Paragraph (1) shall not 

23 apply to any taxable year beginning after December 

24 31, 2005.’’. 

25 (b) DIRECT CHARITABLE DEDUCTION.—
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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 pe4 riod 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 purposes 

13 of this section, the term ‘direct charitable deduction’ means 

14 that portion of the amount allowable under section 170(a) 

15 which is taken as a direct charitable deduction for the tax16 able year under section 170(m).’’. 

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

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

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

20 paragraph (2) and inserting ‘‘, and’’, and by adding 

21 at the end the following new paragraph: 

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

23 (c) STUDY.—

24 (1) IN GENERAL.—The Secretary of the Treasury 

25 shall study the effect of the amendments made by this 
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1 section on increased charitable giving and taxpayer 

2 compliance, including a comparison of taxpayer com3 pliance between taxpayers who itemize their chari4 table contributions and taxpayers who claim a direct 

5 charitable deduction. 

6 (2) REPORT.—Not later than December 31, 2006, 

7 the Secretary of the Treasury shall report on the 

8 study required under paragraph (1) to the Committee 

9 on Finance of the Senate and the Committee on Ways 

10 and Means of the House of Representatives. 

11 (d) EFFECTIVE DATE.—The amendments made by this 

12 section shall apply to taxable years beginning after Decem13 ber 31, 2003. 

14 SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE15 TIREMENT PLANS FOR CHARITABLE PUR16 POSES. 

17 (a) IN GENERAL.—Subsection (d) of section 408 (relat18 ing to individual retirement accounts) is amended by add19 ing at the end the following new paragraph: 

20 ‘‘(8) DISTRIBUTIONS FOR CHARITABLE PUR21 POSES.—

22 ‘‘(A) IN GENERAL.—No amount shall be in23 cludible in gross income by reason of a qualified 

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

3 ‘qualified charitable distribution’ means any dis4 tribution from an individual retirement plan 

5 other than a plan described in subsection (k) or 

6 (p) of section 408—

7 ‘‘(i) which is made on or after the date 

8 that the individual for whose benefit the 

plan is maintained has attained age 701 9 ⁄2, 

10 and 

11 ‘‘(ii) which is made directly by the 

12 trustee—

13 ‘‘(I) to an organization described 

14 in section 170(c), or 

15 ‘‘(II) to a split-interest entity. 

16 A distribution shall be treated as a qualified 

17 charitable distribution only to the extent that the 

18 distribution would be includible in gross income 

19 without regard to subparagraph (A) and, in the 

20 case of a distribution to a split-interest entity, 

21 only if no person holds an income interest in the 

22 amounts in the split-interest entity attributable 

23 to such distribution other than one or more of 

24 the following: the individual for whose benefit 

25 such plan is maintained, the spouse of such indi-
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1 vidual, or any organization described in section 

2 170(c). 

3 ‘‘(C) CONTRIBUTIONS MUST BE OTHERWISE

4 DEDUCTIBLE.—For purposes of this para5 graph—

6 ‘‘(i) DIRECT CONTRIBUTIONS.—A dis7 tribution to an organization described in 

8 section 170(c) shall be treated as a qualified

9 charitable distribution only if a deduction 

10 for the entire distribution would be allow11 able under section 170 (determined without 

12 regard to subsection (b) thereof and this 

13 paragraph). 

14 ‘‘(ii) SPLIT-INTEREST GIFTS.—A dis15 tribution to a split-interest entity shall be 

16 treated as a qualified charitable distribu17 tion only if a deduction for the entire value 

18 of the interest in the distribution for the use 

19 of an organization described in section 

20 170(c) would be allowable under section 170 

21 (determined without regard to subsection (b) 

22 thereof and this paragraph). 

23 ‘‘(D) APPLICATION OF SECTION 72.—Not24 withstanding section 72, in determining the ex25 tent to which a distribution is a qualified chari-
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1 table distribution, the entire amount of the dis2 tribution shall be treated as includible in gross 

3 income without regard to subparagraph (A) to 

4 the extent that such amount does not exceed the 

5 aggregate amount which would have been so in6 cludible if all amounts distributed from all indi7 vidual retirement plans were treated as 1 con8 tract under paragraph (2)(A) for purposes of de9 termining the inclusion of such distribution 

10 under section 72. Proper adjustments shall be 

11 made in applying section 72 to other distribu12 tions in such taxable year and subsequent tax13 able years. 

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

15 ENTITIES.—

16 ‘‘(i) CHARITABLE REMAINDER

17 TRUSTS.—Notwithstanding section 664(b), 

18 distributions made from a trust described in 

19 subparagraph (G)(i) shall be treated as or20 dinary income in the hands of the bene21 ficiary to whom is paid the annuity de22 scribed in section 664(d)(1)(A) or the pay23 ment described in section 664(d)(2)(A). 

24 ‘‘(ii) POOLED INCOME FUNDS.—No 

25 amount shall be includible in the gross in-
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1 come of a pooled income fund (as defined in 

2 subparagraph (G)(ii)) by reason of a quali3 fied charitable distribution to such fund, 

4 and all distributions from the fund which 

5 are attributable to qualified charitable dis6 tributions shall be treated as ordinary in7 come to the beneficiary. 

8 ‘‘(iii) CHARITABLE GIFT ANNUITIES.—

9 Qualified charitable distributions made for 

10 a charitable gift annuity shall not be treat11 ed as an investment in the contract. 

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

13 charitable distributions shall not be taken into 

14 account in determining the deduction under sec15 tion 170. 

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

17 For purposes of this paragraph, the term ‘split18 interest entity’ means—

19 ‘‘(i) a charitable remainder annuity 

20 trust or a charitable remainder unitrust (as 

21 such terms are defined in section 664(d)) 

22 which must be funded exclusively by quali23 fied charitable distributions,

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

25 in section 642(c)(5)), but only if the fund 
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1 accounts separately for amounts attrib2 utable to qualified charitable distributions, 

3 and 

4 ‘‘(iii) a charitable gift annuity (as de5 fined in section 501(m)(5)).’’. 

6 (b) MODIFICATIONS RELATING TO INFORMATION RE7 TURNS BY CERTAIN TRUSTS.—

8 (1) RETURNS.—Section 6034 (relating to returns 

9 by trusts described in section 4947(a)(2) or claiming 

10 charitable deductions under section 642(c)) is amend11 ed to read as follows: 

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

13 4947(a)(2) OR CLAIMING CHARITABLE DEDUC14 TIONS UNDER SECTION 642(c). 

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

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

17 such information with respect to the taxable year as the 

18 Secretary may by forms or regulations require. 

19 ‘‘(b) TRUSTS CLAIMING A CHARITABLE DEDUCTION

20 UNDER SECTION 642(c).—

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

22 file a return under subsection (a) but claiming a de23 duction under section 642(c) for the taxable year shall 

24 furnish such information with respect to such taxable 
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1 year as the Secretary may by forms or regulations 

2 prescribe, including—

3 ‘‘(A) the amount of the deduction taken 

4 under section 642(c) within such year, 

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

6 which represents amounts for which deductions 

7 under section 642(c) have been taken in prior 

8 years,

9 ‘‘(C) the amount for which such deductions 

10 have been taken in prior years but which has not 

11 been paid out at the beginning of such year, 

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

13 the current and prior years for the purposes de14 scribed in section 642(c), 

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

16 such year and the expenses attributable thereto, 

17 and 

18 ‘‘(F) a balance sheet showing the assets, li19 abilities, and net worth of the trust as of the be20 ginning of such year. 

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

22 apply to a trust for any taxable year if—

23 ‘‘(A) all the net income for such year, deter24 mined under the applicable principles of the law 
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1 of trusts, is required to be distributed currently 

2 to the beneficiaries, or 

3 ‘‘(B) the trust is described in section 

4 4947(a)(1).’’. 

5 (2) INCREASE IN PENALTY RELATING TO FILING

6 OF INFORMATION RETURN BY SPLIT-INTEREST

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

8 to returns by exempt organizations and by certain

9 trusts) is amended by adding at the end the following 

10 new subparagraph: 

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

12 of a trust which is required to file a return 

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

14 (B) of this paragraph shall not apply and para15 graph (1) shall apply in the same manner as if 

16 such return were required under section 6033, 

17 except that—

18 ‘‘(i) the 5 percent limitation in the sec19 ond sentence of paragraph (1)(A) shall not 

20 apply, 

21 ‘‘(ii) in the case of any trust with gross 

22 income in excess of $250,000, the first sen23 tence of paragraph (1)(A) shall be applied 

24 by substituting ‘$100’ for ‘$20’, and the sec-
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1 ond sentence thereof shall be applied by sub2 stituting ‘$50,000’ for ‘$10,000’, and 

3 ‘‘(iii) the third sentence of paragraph 

4 (1)(A) shall be disregarded. 

5 In addition to any penalty imposed on the trust 

6 pursuant to this subparagraph, if the person re7 quired to file such return knowingly fails to file 

8 the return, such penalty shall also be imposed on 

9 such person who shall be personally liable for 

10 such penalty.’’. 

11 (3) CONFIDENTIALITY OF NONCHARITABLE BENE12 FICIARIES.—Subsection (b) of section 6104 (relating 

13 to inspection of annual information returns) is 

14 amended by adding at the end the following new sen15 tence: ‘‘In the case of a trust which is required to file 

16 a return under section 6034(a), this subsection shall 

17 not apply to information regarding beneficiaries 

18 which are not organizations described in section 

19 170(c).’’. 

20 (c) EFFECTIVE DATES.—

21 (1) SUBSECTION (a).—The amendment made by 

22 subsection (a) shall apply to distributions made after 

23 December 31, 2003. 
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1 (2) SUBSECTION (b).—The amendments made by 

2 subsection (b) shall apply to returns for taxable years 

3 beginning after December 31, 2003. 

4 SEC. 103. INCREASE IN CAP ON CORPORATE CHARITABLE 

5 CONTRIBUTIONS. 

6 (a) IN GENERAL.—Paragraph (2) of section 170(b) 

7 (relating to corporations) is amended by striking ‘‘10 per8 cent’’ and inserting ‘‘the applicable percentage’’. 

9 (b) APPLICABLE PERCENTAGE.—Subsection (b) of sec10 tion 170 is amended by adding at the end the following 

11 new paragraph: 

12 ‘‘(3) APPLICABLE PERCENTAGE DEFINED.—For 

13 purposes of paragraph (2), the applicable percentage 

14 shall be determined in accordance with the following 

15 table:

‘‘For taxable years beginning The applicable 

in calendar year— percentage is—

2004 .................................................................................... 11

2005 .................................................................................... 12

2006 .................................................................................... 13

2007 .................................................................................... 14

2008 through 2011 ............................................................ 15

2012 and thereafter ........................................................... 20.’’.

16 (c) CONFORMING AMENDMENTS.—

17 (1) Sections 512(b)(10) and 805(b)(2)(A) are 

18 each amended by striking ‘‘10 percent’’ each place it 

19 occurs and inserting ‘‘the applicable percentage (de20 termined under section 170(b)(3))’’.
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1 (2) Sections 545(b)(2) and 556(b)(2) are each 

2 amended by striking ‘‘10-percent limitation’’ and in3 serting ‘‘applicable percentage limitation’’. 

4 (d) EFFECTIVE DATE.—The amendments made by this 

5 section shall apply to taxable years beginning after Decem6 ber 31, 2003. 

7 SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS 

8 OF FOOD INVENTORY. 

9 (a) IN GENERAL.—Paragraph (3) of section 170(e) (re10 lating to special rule for certain contributions of inventory 

11 and other property) is amended by redesignating subpara12 graph (C) as subparagraph (D) and by inserting after sub13 paragraph (B) the following new subparagraph: 

14 ‘‘(C) SPECIAL RULE FOR CONTRIBUTIONS

15 OF FOOD INVENTORY.—

16 ‘‘(i) GENERAL RULE.—In the case of a 

17 charitable contribution of food from any 

18 trade or business (or interest therein) of the 

19 taxpayer, this paragraph shall be applied—

20 ‘‘(I) without regard to whether the 

21 contribution is made by a C corpora22 tion, and 

23 ‘‘(II) only to food that is appar24 ently wholesome food. 
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1 ‘‘(ii) LIMITATION.—In the case of a 

2 taxpayer other than a C corporation, the 

3 aggregate amount of such contributions for 

4 any taxable year which may be taken into 

5 account under this section shall not exceed 

6 the applicable percentage (within the mean7 ing of subsection (b)(3)) of the taxpayer’s 

8 aggregate net income for such taxable year 

9 from all trades or businesses from which 

10 such contributions were made for such year, 

11 computed without regard to this section. 

12 ‘‘(iii) DETERMINATION OF FAIR MAR13 KET VALUE.—In the case of a qualified con14 tribution of apparently wholesome food to 

15 which this paragraph applies and which, 

16 solely by reason of internal standards of the 

17 taxpayer or lack of market, cannot or will 

18 not be sold, the fair market value of such 

19 food shall be determined by taking into ac20 count the price at which the same or sub21 stantially the same food items (as to both 

22 type and quality) are sold by the taxpayer 

23 at the time of the contribution (or, if not so 

24 sold at such time, in the recent past). 
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1 ‘‘(iv) APPARENTLY WHOLESOME

2 FOOD.—For purposes of this subparagraph, 

3 the term ‘apparently wholesome food’ has 

4 the meaning given to such term by section 

5 22(b)(2) of the Bill Emerson Good Samari6 tan Food Donation Act (42 U.S.C. 

7 1791(b)(2)), as in effect on the date of the 

8 enactment of this subparagraph.’’.

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

10 section shall apply to taxable years beginning after Decem11 ber 31, 2003. 

12 SEC. 105. REFORM OF CERTAIN EXCISE TAXES RELATED TO 

13 PRIVATE FOUNDATIONS. 

14 (a) REDUCTION OF TAX ON NET INVESTMENT IN15 COME.—Section 4940(a) (relating to tax-exempt founda16 tions) is amended by striking ‘‘2 percent’’ and inserting ‘‘1 

17 percent’’. 

18 (b) REPEAL OF REDUCTION IN TAX WHERE PRIVATE

19 FOUNDATION MEETS CERTAIN DISTRIBUTION REQUIRE20 MENTS.—Section 4940 (relating to excise tax based on in21 vestment income) is amended by striking subsection (e). 

22 (c) MODIFICATION OF EXCISE TAX ON SELF-DEAL23 ING.—The second sentence of section 4941(a)(1) (relating 

24 to initial excise tax imposed on self-dealer) is amended by 

25 striking ‘‘5 percent’’ and inserting ‘‘25 percent’’. 
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1 (d) MODIFICATION OF EXCISE TAX ON FAILURE TO

2 DISTRIBUTE INCOME.—

3 (1) CERTAIN ADMINISTRATIVE EXPENSES NOT

4 TREATED AS DISTRIBUTIONS.—Section 4942(g) is 

5 amended by striking paragraph (4) and inserting the 

6 following new paragraphs: 

7 ‘‘(4) LIMITATION ON ADMINISTRATIVE EXPENSES

8 TREATED AS DISTRIBUTIONS.—

9 ‘‘(A) IN GENERAL.—For purposes of para10 graph (1)(A), the following administrative ex11 penses shall not be treated as qualifying distribu12 tions: 

13 ‘‘(i) Any administrative expense which 

14 is not directly attributable to direct chari15 table activities, grant selection activities, 

16 grant monitoring and administration ac17 tivities, compliance with applicable Federal, 

18 State, or local law, or furthering public ac19 countability of the private foundation. 

20 ‘‘(ii) Any compensation paid to a dis21 qualified person to the extent that such com22 pensation exceeds an annual rate of 

23 $100,000. 

24 ‘‘(iii) Any expense incurred for trans25 portation by air unless such transportation 
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1 is regularly-scheduled commercial air trans2 portation. 

3 ‘‘(iv) Any expense incurred for regu4 larly-scheduled commercial air transpor5 tation to the extent that such expense ex6 ceeds the cost of such transportation in 

7 coach-class accommodations. 

8 ‘‘(B) ADJUSTMENT FOR INFLATION.—In the 

9 case of a taxable year beginning after December 

10 31, 2004, the $100,000 amount in subparagraph 

11 (A)(ii) shall be increased by an amount equal 

12 to—

13 ‘‘(i) such dollar amount, multiplied by 

14 ‘‘(ii) the cost-of-living adjustment de15 termined under section 1(f)(3) for the cal16 endar year in which the taxable year be17 gins, determined by substituting ‘calendar 

18 year 2003’ for ‘calendar year 1992’ in sub19 paragraph (B) thereof. 

20 If any amount as increased under the preceding 

21 sentence is not a multiple of $50, such amount 

22 shall be rounded to the next lowest multiple of 

23 $50. 

24 ‘‘(5) REGULATIONS.—The Secretary shall pre25 scribe such regulations as may be necessary to carry 
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1 out the purposes of paragraph (4). Such regulations 

2 shall provide that administrative expenses which are 

3 excluded from qualifying distributions solely by rea4 son of the limitations in paragraph (4) shall not for 

5 such reason subject a private foundation to any other 

6 excise taxes imposed by this subchapter.’’. 

7 (2) DISALLOWANCE NOT TO APPLY TO CERTAIN

8 PRIVATE FOUNDATIONS.—

9 (A) IN GENERAL.—Section 4942(j)(3) (de10 fining operating foundation) is amended—

11 (i) by striking ‘‘(within the meaning of 

12 paragraph (1) or (2) of subsection (g))’’ 

13 each place it appears, and 

14 (ii) by adding at the end the following 

15 new sentence: ‘‘For purposes of this para16 graph, the term ‘qualifying distributions’ 

17 means qualifying distributions within the 

18 meaning of paragraph (1) or (2) of sub19 section (g) (determined without regard to 

20 subsection (g)(4)).’’. 

21 (B) CONFORMING AMENDMENT.—Section 

22 4942(f)(2)(C)(i) is amended by inserting ‘‘(deter23 mined without regard to subsection (g)(4))’’ after 

24 ‘‘within the meaning of subsection (g)(1)(A)’’. 
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1 (e) EFFECTIVE DATE.—The amendments made by this 

2 section shall apply to taxable years beginning after Decem3 ber 31, 2003. 

4 SEC. 106. EXCISE TAX ON UNRELATED BUSINESS TAXABLE 

5 INCOME OF CHARITABLE REMAINDER 

6 TRUSTS. 

7 (a) IN GENERAL.—Subsection (c) of section 664 (relat8 ing 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 shall, 

13 for any taxable year, not be subject to any tax im14 posed by this subtitle. 

15 ‘‘(2) EXCISE TAX.—

16 ‘‘(A) IN GENERAL.—In the case of a chari17 table remainder annuity trust or a charitable re18 mainder unitrust that has unrelated business 

19 taxable income (within the meaning of section 

20 512, determined as if part III of subchapter F 

21 applied to such trust) for a taxable year, there 

22 is hereby imposed on such trust or unitrust an 

23 excise tax equal to the amount of such unrelated 

24 business taxable income. 
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1 ‘‘(B) CERTAIN RULES TO APPLY.—The tax 

2 imposed by subparagraph (A) shall be treated as 

3 imposed by chapter 42 for purposes of this title 

4 other than subchapter E of chapter 42.

5 ‘‘(C) CHARACTER OF DISTRIBUTIONS AND

6 COORDINATION WITH DISTRIBUTION REQUIRE7 MENTS.—The amounts taken into account in de8 termining unrelated business taxable income (as 

9 defined in subparagraph (A)) shall not be taken 

10 into account for purposes of—

11 ‘‘(i) subsection (b), 

12 ‘‘(ii) determining the value of trust as13 sets under subsection (d)(2), and 

14 ‘‘(iii) determining income under sub15 section (d)(3). 

16 ‘‘(D) TAX COURT PROCEEDINGS.—For pur17 poses of this paragraph, the references in section 

18 6212(c)(1) to section 4940 shall be deemed to in19 clude references to this paragraph.’’. 

20 (b) EFFECTIVE DATE.—The amendment made by this 

21 section shall apply to taxable years beginning after Decem22 ber 31, 2003. 
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1 SEC. 107. EXPANSION OF CHARITABLE CONTRIBUTION AL2 LOWED FOR SCIENTIFIC PROPERTY USED 

3 FOR RESEARCH AND FOR COMPUTER TECH4 NOLOGY AND EQUIPMENT USED FOR EDU5 CATIONAL PURPOSES. 

6 (a) SCIENTIFIC PROPERTY USED FOR RESEARCH.—

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

8 170(e)(4)(B) (defining qualified research contribu9 tions) is amended by inserting ‘‘or assembled’’ after 

10 ‘‘constructed’’. 

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

12 section 170(e)(4)(B) is amended by inserting ‘‘or as13 sembling’’ after ‘‘construction’’. 

14 (b) COMPUTER TECHNOLOGY AND EQUIPMENT FOR

15 EDUCATIONAL PURPOSES.—

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

17 170(e)(6)(B) is amended by inserting ‘‘or assembled’’ 

18 after ‘‘constructed’’ and ‘‘or assembling’’ after ‘‘con19 struction’’.

20 (2) SPECIAL RULE MADE PERMANENT.—Section 

21 170(e)(6) is amended by striking subparagraph (G). 

22 (3) CONFORMING AMENDMENTS.—Subparagraph 

23 (D) of section 170(e)(6) is amended by inserting ‘‘or 

24 assembled’’ after ‘‘constructed’’ and ‘‘or assembling’’ 

25 after ‘‘construction’’. 
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1 (c) EFFECTIVE DATE.—The amendments made by this 

2 section shall apply to taxable years beginning after Decem3 ber 31, 2003. 

4 SEC. 108. ADJUSTMENT TO BASIS OF S CORPORATION 

5 STOCK FOR CERTAIN CHARITABLE CON6 TRIBUTIONS. 

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

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

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

10 flush sentence: 

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

12 a charitable contribution (as defined in section 

13 170(c)) of property shall be the amount equal to the 

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

15 such property.’’.

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

17 section shall apply to taxable years beginning after Decem18 ber 31, 2003. 

19 SEC. 109. CHARITABLE ORGANIZATIONS PERMITTED TO 

20 MAKE COLLEGIATE HOUSING AND INFRA21 STRUCTURE GRANTS. 

22 (a) IN GENERAL.—Section 501 (relating to exemption 

23 from tax on corporations, certain trusts, etc.), as amended 

24 by section 201, is further amended by redesignating sub-
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1 section (q) as subsection (r) and by inserting after sub2 section (p) the following new subsection: 

3 ‘‘(q) TREATMENT OF ORGANIZATIONS MAKING COLLE4 GIATE HOUSING AND INFRASTRUCTURE IMPROVEMENT

5 GRANTS.—

6 ‘‘(1) IN GENERAL.—For purposes of subsection 

7 (c)(3) and sections 170(c)(2)(B), 2055(a), and 

8 2522(a)(2), an organization shall not fail to be treat9 ed as organized and operated exclusively for chari10 table or educational purposes solely because such or11 ganization makes collegiate housing and infrastruc12 ture grants to an organization described in subsection 

13 (c)(7), so long as, at the time of the grant, substan14 tially all of the active members of the recipient orga15 nization are full-time students at the college or uni16 versity with which such recipient organization is as17 sociated. 

18 ‘‘(2) HOUSING AND INFRASTRUCTURE GRANTS.—

19 For purposes of paragraph (1), collegiate housing and 

20 infrastructure grants are grants to provide, improve, 

21 operate, or maintain collegiate housing that may in22 volve more than incidental social, recreational, or pri23 vate purposes, so long as such grants are for purposes 

24 that would be permissible for a dormitory of the col25 lege or university referred to in paragraph (1). A 
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1 grant shall not be treated as a collegiate housing and 

2 infrastructure grant for purposes of paragraph (1) to 

3 the extent that such grant is used to provide physical 

4 fitness equipment. 

5 ‘‘(3) GRANTS TO CERTAIN ORGANIZATIONS HOLD6 ING TITLE TO PROPERTY, ETC.—For purposes of this 

7 subsection, a collegiate housing and infrastructure 

8 grant to an organization described in subsection 

9 (c)(2) or (c)(7) holding title to property exclusively 

10 for the benefit of an organization described in sub11 section (c)(7) shall be considered a grant to the orga12 nization described in subsection (c)(7) for whose ben13 efit such property is held.’’. 

14 (b) EFFECTIVE DATE.—The amendment made by this 

15 section shall apply to grants made after December 31, 2003. 

16 SEC. 110. CONDUCT OF CERTAIN GAMES OF CHANCE NOT 

17 TREATED AS UNRELATED TRADE OR BUSI18 NESS. 

19 (a) IN GENERAL.—Paragraph (1) of section 513(f) (re20 lating to certain bingo games) is amended to read as fol21 lows: 

22 ‘‘(1) IN GENERAL.—The term ‘unrelated trade or 

23 business’ does not include—

24 ‘‘(A) any trade or business which consists of 

25 conducting bingo games, and 
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1 ‘‘(B) any trade or business which consists of 

2 conducting qualified games of chance if the net 

3 proceeds from such trade or business are paid or 

4 set aside for payment for purposes described in

5 section 170(c)(2)(B), for the promotion of social 

6 welfare (within the meaning of section 

7 501(c)(4)), or for a purpose for which State law 

8 specifically authorizes the expenditure of such 

9 proceeds.’’. 

10 (b) QUALIFIED GAMES OF CHANCE.—Subsection (f) of 

11 section 513 is amended by adding at the end the following 

12 new paragraph: 

13 ‘‘(3) QUALIFIED GAMES OF CHANCE.—For pur14 poses of paragraph (1), the term ‘qualified game of 

15 chance’ means any game of chance (other than bingo) 

16 conducted by an organization if—

17 ‘‘(A) such organization is licensed pursuant 

18 to State law to conduct such game, 

19 ‘‘(B) only organizations which are orga20 nized as nonprofit corporations or are exempt 

21 from tax under section 501(a) may be so licensed 

22 to conduct such game within the State, and 

23 ‘‘(C) the conduct of such game does not vio24 late State or local law.’’
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1 (c) CLERICAL AMENDMENT.—The subsection heading 

2 of section 513(f) is amended by striking ‘‘BINGO GAMES’’ 

3 and inserting ‘‘GAMES OF CHANCE’’. 

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

5 this section shall apply to games conducted after December 

6 31, 2003.

7 SEC. 111. EXCISE TAXES EXEMPTION FOR BLOOD COL8 LECTOR ORGANIZATIONS. 

9 (a) EXEMPTION FROM IMPOSITION OF SPECIAL FUELS

10 TAX.—Section 4041(g) (relating to other exemptions) is 

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

12 by striking the period in paragraph (4) and inserting ‘‘; 

13 and’’, and by inserting after paragraph (4) the following 

14 new paragraph: 

15 ‘‘(5) with respect to the sale of any liquid to a 

16 qualified blood collector organization (as defined in 

17 section 7701(a)(48)) for such organization’s exclusive 

18 use, or with respect to the use by a qualified blood col19 lector organization of any liquid as a fuel.’’. 

20 (b) EXEMPTION FROM MANUFACTURERS EXCISE

21 TAX.—

22 (1) IN GENERAL.—Section 4221(a) (relating to 

23 certain tax-free sales) is amended by striking ‘‘or’’ at 

24 the end of paragraph (4), by adding ‘‘or’’ at the end 
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1 of paragraph (5), and by inserting after paragraph 

2 (5) the following new paragraph: 

3 ‘‘(6) to a qualified blood collector organization 

4 (as defined in section 7701(a)(48)) for such organiza5 tion’s exclusive use,’’. 

6 (2) CONFORMING AMENDMENTS.—

7 (A) The second sentence of section 4221(a) 

8 is amended by striking ‘‘Paragraphs (4) and 

9 (5)’’ and inserting ‘‘Paragraphs (4), (5), and 

10 (6)’’. 

11 (B) Section 6421(c) is amended by striking 

12 ‘‘or (5)’’ and inserting ‘‘(5), or (6)’’. 

13 (c) EXEMPTION FROM COMMUNICATION EXCISE

14 TAX.—

15 (1) IN GENERAL.—Section 4253 (relating to ex16 emptions) is amended by redesignating subsection (k) 

17 as subsection (l) and inserting after subsection (j) the 

18 following new subsection: 

19 ‘‘(k) EXEMPTION FOR QUALIFIED BLOOD COLLECTOR

20 ORGANIZATIONS.—Under regulations provided by the Sec21 retary, no tax shall be imposed under section 4251 on any 

22 amount paid by a qualified blood collector organization (as 

23 defined in section 7701(a)(48)) for services or facilities fur24 nished to such organization.’’. 
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1 (2) CONFORMING AMENDMENT.—Section 4253(l), 

2 as redesignated by paragraph (1), is amended by 

3 striking ‘‘or (j)’’ and inserting ‘‘(j), or (k)’’. 

4 (d) CREDIT FOR REFUND FOR CERTAIN TAXES ON

5 SALES AND SERVICES.—

6 (1) DEEMED OVERPAYMENT.—

7 (A) IN GENERAL.—Section 6416(b)(2) is 

8 amended by redesignating subparagraphs (E) 

9 and (F) as subparagraphs (F) and (G), respec10 tively, and by inserting after subparagraph (D) 

11 the following new subparagraph: 

12 ‘‘(E) sold to a qualified blood collector orga13 nization (as defined in section 7701(a)(48)) for 

14 such organization’s exclusive use;’’. 

15 (B) CONFORMING AMENDMENTS.—Section 

16 6416(b)(2) is amended—

17 (i) by striking ‘‘Subparagraphs (C) 

18 and (D)’’ and inserting ‘‘Subparagraphs 

19 (C), (D), and (E)’’, and 

20 (ii) by striking ‘‘(C), and (D)’’ and in21 serting ‘‘(C), (D), and (E)’’. 

22 (2) SALES OF TIRES.—Clause (ii) of section 

23 6416(b)(4)(B) is amended by inserting ‘‘sold to a 

24 qualified blood collector organization (as defined in 
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1 section 7701(a)(48)) for its exclusive use,’’ after ‘‘for 

2 its exclusive use,’’. 

3 (e) DEFINITION OF QUALIFIED BLOOD COLLECTOR

4 ORGANIZATION.—Section 7701(a) is amended by inserting 

5 at the end the following new paragraph: 

6 ‘‘(48) QUALIFIED BLOOD COLLECTOR ORGANIZA7 TION.—The term ‘qualified blood collector organiza8 tion’ means an organization which is—

9 ‘‘(A) described in section 501(c)(3) and ex10 empt from tax under section 501(a), 

11 ‘‘(B) registered by the Food and Drug Ad12 ministration to collect blood, and 

13 ‘‘(C) primarily engaged in the activity of 

14 the collection of blood.’’. 

15 (f) EFFECTIVE DATE.—The amendments made by this 

16 section shall take effect on January 1, 2004.

17 SEC. 112. NONRECOGNITION OF GAIN ON THE SALE OF 

18 PROPERTY USED IN PERFORMANCE OF AN 

19 EXEMPT FUNCTION. 

20 (a) IN GENERAL.—Subparagraph (D) of section 

21 512(a)(3) is amended to read as follows: 

22 ‘‘(D) NONRECOGNITION OF GAIN.—

23 ‘‘(i) IN GENERAL.—If property used 

24 directly in the performance of the exempt 

25 function of an organization described in 
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1 paragraph (7), (9), (17), or (20) of section 

2 501(c) is sold by such organization, and

3 within a period beginning 1 year before the 

4 date of such sale, and ending 3 years (10 

5 years, in the case of an organization de6 scribed in section 501(c)(7)) after such date, 

7 other property is purchased and used by 

8 such organization directly in the perform9 ance of its exempt function, gain (if any) 

10 from such sale shall be recognized only to 

11 the extent that such organization’s sales 

12 price of the old property exceeds the organi13 zation’s cost of purchasing the other prop14 erty. 

15 ‘‘(ii) STATUTE OF LIMITATIONS.—If an 

16 organization described in section 501(c)(7) 

17 sells property on which gain is not recog18 nized, in whole or in part, by reason of 

19 clause (i), then the statutory period for the 

20 assessment of any deficiency attributable to 

21 such gain shall not expire until the end of 

22 the 3-year period beginning on the date that 

23 the Secretary is notified by such organiza24 tion (in such manner as the Secretary may 

25 prescribe) that—
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1 ‘‘(I) the organization has met the 

2 requirements of clause (i) with respect 

3 to gain which was not recognized, 

4 ‘‘(II) the organization does not in5 tend to meet such requirements, or 

6 ‘‘(III) the organization failed to 

7 meet such requirements within the pre8 scribed period. 

9 For the purposes of this clause, any defi10 ciency may be assessed before the expiration 

11 of such 3-year period notwithstanding the 

12 provisions of any other law or rule of law 

13 which would otherwise prevent such assess14 ment. 

15 ‘‘(iii) DESTRUCTION AND LOSS.—For 

16 purposes of this subparagraph, the destruc17 tion in whole or in part, theft, seizure, req18 uisition, or condemnation of property, shall 

19 be treated as the sale of such property, and 

20 rules similar to the rules provided by sub21 sections (b), (c), (e), and (j) of section 1034 

22 (as in effect on the day before the date of the 

23 enactment of the Taxpayer Relief Act of 

24 1997) shall apply.’’. 
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1 (b) EFFECTIVE DATE.—The amendment made by this 

2 section shall apply with respect to the sale of any property 

3 for which the 3-year period for offsetting gain by pur4 chasing other property under subparagraph (D) of section 

5 512(a)(3) of the Internal Revenue Code (as in effect on the 

6 day before the date of the enactment of this Act) had not 

7 expired as of January 1, 2001.

8 SEC. 113. EXEMPTION OF QUALIFIED 501(c)(3) BONDS FOR 

9 NURSING HOMES FROM FEDERAL GUAR10 ANTEE PROHIBITIONS. 

11 (a) IN GENERAL.—For purposes of section 149(b)(1) 

12 of the Internal Revenue Code of 1986, any qualified 

13 501(c)(3) bond (as defined in section 145 of such Code) shall 

14 not be treated as federally guaranteed solely because such 

15 bond is part of an issue supported by a letter of credit, 

16 if such bond—

17 (1) is issued after December 31, 2003, and before 

18 the date which is 1 year after the date of the enact19 ment of this Act, and 

20 (2) is part of an issue 95 percent or more of the 

21 net proceeds of which are to be used to finance 1 or 

22 more of the following facilities primarily for the ben23 efit of the elderly: 

24 (A) Licensed nursing home facility. 
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1 (B) Licensed or certified assisted living fa2 cility. 

3 (C) Licensed personal care facility. 

4 (D) Continuing care retirement community. 

5 (b) LIMITATION ON ISSUER.—Subsection (a) shall not 

6 apply to any bond described in such subsection if the aggre7 gate authorized face amount of the issue of which such bond 

8 is a part, when increased by the outstanding amount of 

9 such bonds issued by the issuer during the period described 

10 in subsection (a)(1) exceeds $15,000,000. 

11 (c) LIMITATION ON BENEFICIARY.—Rules similar to 

12 the rules of section 144(a)(10) of the Internal Revenue Code 

13 of 1986 shall apply for purposes of this section, except 

14 that—

15 (1) ‘‘$15,000,000’’ shall be substituted for 

16 ‘‘$40,000,000’’ in subparagraph (A) thereof, and 

17 (2) such rules shall be applied—

18 (A) only with respect to bonds described in 

19 this section, and 

20 (B) with respect to the aggregate authorized 

21 face amount of all issues of such bonds which are 

22 allocable to the beneficiary. 

23 (d) CONTINUING CARE RETIREMENT COMMUNITY.—

24 For purposes of this section, the term ‘‘continuing care re25 tirement community’’ means a community which provides, 
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1 on the same campus, a consortium of residential living op2 tions and support services to persons at least 60 years of 

3 age under a written agreement. For purposes of the pre4 ceding sentence, the residential living options shall include 

5 independent living units, nursing home beds, and either as6 sisted living units or personal care beds. 

7 TITLE II—TAX REFORM AND IM8 PROVEMENTS RELATING TO 

9 CHARITABLE ORGANIZATIONS 

10 AND PROGRAMS 

11 SEC. 201. SUSPENSION OF TAX-EXEMPT STATUS OF TER12 RORIST ORGANIZATIONS. 

13 (a) IN GENERAL.—Section 501 (relating to exemption 

14 from tax on corporations, certain trusts, etc.) is amended 

15 by redesignating subsection (p) as subsection (q) and by in16 serting after subsection (o) the following new subsection: 

17 ‘‘(p) SUSPENSION OF TAX-EXEMPT STATUS OF TER18 RORIST ORGANIZATIONS.—

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

20 under subsection (a) with respect to any organization 

21 described in paragraph (2), and the eligibility of any 

22 organization described in paragraph (2) to apply for 

23 recognition of exemption under subsection (a), shall 

24 be suspended during the period described in para25 graph (3).
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1 ‘‘(2) TERRORIST ORGANIZATIONS.—An organiza2 tion is described in this paragraph if such organiza3 tion is designated or otherwise individually identi4 fied— 

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

6 219 of the Immigration and Nationality Act as 

7 a terrorist organization or foreign terrorist orga8 nization, 

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

10 which is related to terrorism and issued under 

11 the authority of the International Emergency 

12 Economic Powers Act or section 5 of the United 

13 Nations Participation Act of 1945 for the pur14 pose of imposing on such organization an eco15 nomic or other sanction, or 

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

17 issued under the authority of any Federal law 

18 if—

19 ‘‘(i) the organization is designated or 

20 otherwise individually identified in or pur21 suant to such Executive order as supporting 

22 or engaging in terrorist activity (as defined 

23 in section 212(a)(3)(B) of the Immigration 

24 and Nationality Act) or supporting ter25 rorism (as defined in section 140(d)(2) of 
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1 the Foreign Relations Authorization Act, 

2 Fiscal Years 1988 and 1989); and 

3 ‘‘(ii) such Executive order refers to this 

4 subsection. 

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

6 any organization described in paragraph (2), the pe7 riod of suspension—

8 ‘‘(A) begins on the later of—

9 ‘‘(i) the date of the first publication of 

10 a designation or identification described in 

11 paragraph (2) with respect to such organi12 zation, or 

13 ‘‘(ii) the date of the enactment of this 

14 subsection, and 

15 ‘‘(B) ends on the first date that all designa16 tions and identifications described in paragraph 

17 (2) with respect to such organization are re18 scinded pursuant to the law or Executive order 

19 under which such designation or identification 

20 was made. 

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

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

23 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 for any 

24 contribution to an organization described in para-
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1 graph (2) during the period described in paragraph 

2 (3). 

3 ‘‘(5) DENIAL OF ADMINISTRATIVE OR JUDICIAL

4 CHALLENGE OF SUSPENSION OR DENIAL OF DEDUC5 TION.—Notwithstanding section 7428 or any other 

6 provision of law, no organization or other person may 

7 challenge a suspension under paragraph (1), a des8 ignation or identification described in paragraph (2), 

9 the period of suspension described in paragraph (3), 

10 or a denial of a deduction under paragraph (4) in 

11 any administrative or judicial proceeding relating to 

12 the Federal tax liability of such organization or other 

13 person. 

14 ‘‘(6) ERRONEOUS DESIGNATION.—

15 ‘‘(A) IN GENERAL.—If—

16 ‘‘(i) the tax exemption of any organi17 zation described in paragraph (2) is sus18 pended under paragraph (1), 

19 ‘‘(ii) each designation and identifica20 tion described in paragraph (2) which has 

21 been made with respect to such organization 

22 is determined to be erroneous pursuant to 

23 the law or Executive order under which 

24 such designation or identification was 

25 made, and 
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1 ‘‘(iii) the erroneous designations and 

2 identifications result in an overpayment of 

3 income tax for any taxable year by such or4 ganization, 

5 credit or refund (with interest) with respect to 

6 such overpayment shall be made. 

7 ‘‘(B) WAIVER OF LIMITATIONS.—If the cred8 it or refund of any overpayment of tax described 

9 in subparagraph (A)(iii) is prevented at any 

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

11 (including res judicata), such credit or refund 

12 may nevertheless be allowed or made if the claim 

13 therefor is filed before the close of the 1-year pe14 riod beginning on the date of the last determina15 tion described in subparagraph (A)(ii). 

16 ‘‘(7) NOTICE OF SUSPENSIONS.—If the tax ex17 emption of any organization is suspended under this 

18 subsection, the Internal Revenue Service shall update 

19 the listings of tax-exempt organizations and shall 

20 publish appropriate notice to taxpayers of such sus21 pension and of the fact that contributions to such or22 ganization are not deductible during the period of 

23 such suspension.’’.
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1 (b) EFFECTIVE DATE.—The amendments made by this 

2 section shall apply to designations made before, on, or after 

3 the date of the enactment of this Act. 

4 SEC. 202. 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. 203. EXTENSION 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 qualification 

25 or continuing qualification of an organization as
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1 an organization described in subsection (c) 

2 (other than paragraph (3)) or (d) of section 501 

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 for 

9 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 or 

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

13 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 this 

17 section shall apply to pleadings filed with respect to deter18 minations (or requests for determinations) made after the 

19 date of the enactment of this Act. 

20 SEC. 204. LANDOWNER INCENTIVES PROGRAMS. 

21 (a) IN GENERAL.—Subsection (a) of section 126 is 

22 amended by redesignating paragraph (10) as paragraph 

23 (11) and by inserting after paragraph (9) the following new 

24 paragraph: 
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1 ‘‘(10) Landowner initiatives programs to con2 serve threatened, endangered, or imperiled species, or 

3 protect or restore habitat carried out under—

4 ‘‘(A) the Fish and Wildlife Coordination 

5 Act (16 U.S.C. 661 et seq.), 

6 ‘‘(B) the Fish and Wildlife Act of 1956 (16 

7 U.S.C. 742f), or 

8 ‘‘(C) section 6 of the Endangered Species 

9 Act (16 U.S.C. 11531 et seq.).’’. 

10 (b) EXCLUDABLE PORTION.—Subparagraph (A) of sec11 tion 126(b)(1) is amended by inserting after ‘‘Secretary of 

12 Agriculture’’ the following: ‘‘(the Secretary of the Interior, 

13 in the case of the landowner incentives programs described 

14 in subsection (a)(10) and the programs described in sub15 section (a)(11) that are implemented by the Department of 

16 the Interior)’’. 

17 (c) EFFECTIVE DATE.—The amendments made by this 

18 section shall apply to amounts received after December 31, 

19 2003, in taxable years ending after such date. 

20 SEC. 205. MODIFICATIONS TO SECTION 512(b)(13). 

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

22 (relating to special rules for certain amounts received from 

23 controlled entities) is amended by redesignating subpara24 graph (E) as subparagraph (F) and by inserting after sub25 paragraph (D) the following new subparagraph: 
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1 ‘‘(E) PARAGRAPH TO APPLY ONLY TO EX2 CESS PAYMENTS.—

3 ‘‘(i) IN GENERAL.—Subparagraph (A) 

4 shall apply only to the portion of a speci5 fied payment received or accrued by the 

6 controlling organization that exceeds the 

7 amount which would have been paid or ac8 crued if such payment met the requirements 

9 prescribed under section 482. 

10 ‘‘(ii) ADDITION TO TAX FOR VALUATION

11 MISSTATEMENTS.—The tax imposed by this 

12 chapter on the controlling organization 

13 shall be increased by an amount equal to 20 

14 percent of the larger of—

15 ‘‘(I) such excess determined with16 out regard to any amendment or sup17 plement to a return of tax, or 

18 ‘‘(II) such excess determined with 

19 regard to all such amendments and 

20 supplements.’’. 

21 (b) EFFECTIVE DATE.—

22 (1) IN GENERAL.—The amendment made by this 

23 section shall apply to payments received or accrued 

24 after December 31, 2003. 
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1 (2) PAYMENTS SUBJECT TO BINDING CONTRACT

2 TRANSITION RULE.—If the amendments made by sec3 tion 1041 of the Taxpayer Relief Act of 1997 did not 

4 apply to any amount received or accrued in the first 

5 2 taxable years beginning on or after the date of the 

6 enactment of the Taxpayer Relief Act of 1997 under 

7 any contract described in subsection (b)(2) of such 

8 section, such amendments also shall not apply to 

9 amounts received or accrued under such contract be10 fore January 1, 2001. 

11 SEC. 206. SIMPLIFICATION OF LOBBYING EXPENDITURE 

12 LIMITATION. 

13 (a) REPEAL OF GRASSROOTS EXPENDITURE LIMIT.—

14 Paragraph (1) of section 501(h) (relating to expenditures 

15 by public charities to influence legislation) is amended to 

16 read as follows: 

17 ‘‘(1) GENERAL RULE.—In the case of an organi18 zation to which this subsection applies, exemption 

19 from taxation under subsection (a) shall be denied be20 cause a substantial part of the activities of such orga21 nization consists of carrying on propaganda, or oth22 erwise attempting, to influence legislation, but only if 

23 such organization normally makes lobbying expendi24 tures in excess of the lobbying ceiling amount for such 

25 organization for each taxable year.’’. 
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1 (b) EXCESS LOBBYING EXPENDITURES.—Section 

2 4911(b) is amended to read as follows: 

3 ‘‘(b) EXCESS LOBBYING EXPENDITURES.—For pur4 poses of this section, the term ‘excess lobbying expenditures’ 

5 means, for a taxable year, the amount by which the lobbying 

6 expenditures made by the organization during the taxable 

7 year exceed the lobbying nontaxable amount for such orga8 nization for such taxable year.’’. 

9 (c) CONFORMING AMENDMENTS.—

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

11 subparagraphs (C) and (D). 

12 (2) Section 4911(c) is amended by striking para13 graphs (3) and (4). 

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

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

16 have’’ and inserting ‘‘limit of section 501(h)(1) has’’. 

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

18 amended by striking ‘‘limits of section 501(h)(1) are’’ 

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

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

21 4911(f) are each amended by striking ‘‘limits of sec22 tion 501(h)(1)’’ and inserting ‘‘limit of section 

23 501(h)(1)’’. 

24 (6) Paragraph (8) of section 6033(b) (relating to 

25 certain organizations described in section 501(c)(3))
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1 is amended by inserting ‘‘and’’ at the end of subpara2 graph (A) and by striking subparagraphs (C) and 

3 (D). 

4 (d) EFFECTIVE DATE.—The amendments made by this 

5 section shall apply to taxable years beginning after Decem6 ber 31, 2003. 

7 SEC. 207. PILOT PROJECT FOR FOREST CONSERVATION AC8 TIVITIES. 

9 (a) TAX-EXEMPT BOND FINANCING.—

10 (1) IN GENERAL.—For purposes of the Internal 

11 Revenue Code of 1986, any qualified forest conserva12 tion bond shall be treated as an exempt facility bond 

13 under section 142 of such Code. 

14 (2) QUALIFIED FOREST CONSERVATION BOND.—

15 For purposes of this section, the term ‘‘qualified forest 

16 conservation bond’’ means any bond issued as part of 

17 an issue if—

18 (A) 95 percent or more of the net proceeds 

19 (as defined in section 150(a)(3) of such Code) of 

20 such issue are to be used for qualified project 

21 costs, 

22 (B) such bond is an obligation of the State 

23 of Washington or any political subdivision there24 of, and 
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1 (C) such bond is issued for a qualified orga2 nization before December 31, 2006. 

3 (3) LIMITATION ON AGGREGATE AMOUNT

4 ISSUED.—The maximum aggregate face amount of 

5 bonds which may be issued under this subsection shall 

6 not exceed $250,000,000. 

7 (4) QUALIFIED PROJECT COSTS.—For purposes 

8 of this subsection, the term ‘‘qualified project costs’’ 

9 means the sum of—

10 (A) the cost of acquisition by the qualified 

11 organization from an unrelated person of forests 

12 and forest land located in the State of Wash13 ington which at the time of acquisition or imme14 diately thereafter are subject to a conservation 

15 restriction described in subsection (c)(2), 

16 (B) interest on the qualified forest conserva17 tion bonds for the 3-year period beginning on the 

18 date of issuance of such bonds, and 

19 (C) credit enhancement fees which constitute 

20 qualified guarantee fees (within the meaning of 

21 section 148 of such Code). 

22 (5) SPECIAL RULES.—In applying the Internal 

23 Revenue Code of 1986 to any qualified forest con24 servation bond, the following modifications shall 

25 apply: 
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1 (A) Section 146 of such Code (relating to 

2 volume cap) shall not apply. 

3 (B) For purposes of section 147(b) of such 

4 Code (relating to maturity may not exceed 120 

5 percent of economic life), the land and standing 

6 timber acquired with proceeds of qualified forest 

7 conservation bonds shall have an economic life of 

8 35 years. 

9 (C) Subsections (c) and (d) of section 147 

10 of such Code (relating to limitations on acquisi11 tion of land and existing property) shall not 

12 apply. 

13 (D) Section 57(a)(5) of such Code (relating 

14 to tax-exempt interest) shall not apply to interest 

15 on qualified forest conservation bonds. 

16 (6) TREATMENT OF CURRENT REFUNDING

17 BONDS.—Paragraphs (2)(C) and (3) shall not apply 

18 to any bond (or series of bonds) issued to refund a 

19 qualified forest conservation bond issued before De20 cember 31, 2006, if—

21 (A) the average maturity date of the issue 

22 of which the refunding bond is a part is not later 

23 than the average maturity date of the bonds to 

24 be refunded by such issue, 
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1 (B) the amount of the refunding bond does 

2 not exceed the outstanding amount of the re3 funded bond, and 

4 (C) the net proceeds of the refunding bond 

5 are used to redeem the refunded bond not later 

6 than 90 days after the date of the issuance of the 

7 refunding bond. 

8 For purposes of subparagraph (A), average maturity 

9 shall be determined in accordance with section 

10 147(b)(2)(A) of such Code. 

11 (7) EFFECTIVE DATE.—This subsection shall 

12 apply to obligations issued on or after the date of en13 actment of this Act. 

14 (b) ITEMS FROM QUALIFIED HARVESTING ACTIVITIES

15 NOT SUBJECT TO TAX OR TAKEN INTO ACCOUNT.—

16 (1) IN GENERAL.—Income, gains, deductions, 

17 losses, or credits from a qualified harvesting activity 

18 conducted by a qualified organization shall not be 

19 subject to tax or taken into account under subtitle A 

20 of the Internal Revenue Code of 1986. 

21 (2) LIMITATION.—The amount of income ex22 cluded from gross income under paragraph (1) for 

23 any taxable year shall not exceed the amount used by 

24 the qualified organization to make debt service pay-
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1 ments during such taxable year for qualified forest 

2 conservation bonds. 

3 (3) QUALIFIED HARVESTING ACTIVITY.—For 

4 purposes of paragraph (1)—

5 (A) IN GENERAL.—The term ‘‘qualified har6 vesting activity’’ means the sale, lease, or har7 vesting, of standing timber—

8 (i) on land owned by a qualified orga9 nization which was acquired with proceeds 

10 of qualified forest conservation bonds, and 

11 (ii) pursuant to a qualified conserva12 tion plan adopted by the qualified organiza13 tion. 

14 (B) EXCEPTIONS.—

15 (i) CESSATION AS QUALIFIED ORGANI16 ZATION.—The term ‘‘qualified harvesting 

17 activity’’ shall not include any sale, lease, 

18 or harvesting for any period during which 

19 the organization ceases to qualify as a 

20 qualified organization. 

21 (ii) EXCEEDING LIMITS ON HAR22 VESTING.—The term ‘‘qualified harvesting 

23 activity’’ shall not include any sale, lease, 

24 or harvesting of standing timber on land
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1 acquired with proceeds of qualified forest 

2 conservation bonds to the extent that—

3 (I) the average annual area of 

4 timber harvested from such land ex5 ceeds 2.5 percent of the total area of 

6 such land, or 

7 (II) the quantity of timber re8 moved from such land exceeds the 

9 quantity which can be removed from 

10 such land annually in perpetuity on a 

11 sustained-yield basis with respect to 

12 such land. 

13 The limitations under subclauses (I) and 

14 (II) shall not apply to post-fire restoration 

15 and rehabilitation or sanitation harvesting 

16 of timber stands which are substantially 

17 damaged by fire, windthrow, or other catas18 trophes, or which are in imminent danger 

19 from insect or disease attack. 

20 (4) TERMINATION.—This subsection shall not 

21 apply to any qualified harvesting activity occurring 

22 after the date on which there is no outstanding quali23 fied forest conservation bond or any such bond ceases 

24 to be a tax-exempt bond. 
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1 (5) PARTIAL RECAPTURE OF BENEFITS IF HAR2 VESTING LIMIT EXCEEDED.—If, as of the date that 

3 this subsection ceases to apply under paragraph (4), 

4 the average annual area of timber harvested from the 

5 land exceeds the requirement of paragraph 

6 (3)(B)(ii)(I), the tax imposed by chapter 1 of such 

7 Code shall be increased, under rules prescribed by the 

8 Secretary of the Treasury, by the sum of the tax bene9 fits attributable to such excess and interest at the un10 derpayment rate under section 6621 of such Code for 

11 the period of the underpayment. 

12 (c) DEFINITIONS.—For purposes of this section—

13 (1) QUALIFIED CONSERVATION PLAN.—The term 

14 ‘‘qualified conservation plan’’ means a multiple land 

15 use program or plan which—

16 (A) is designed and administered primarily 

17 for the purposes of protecting and enhancing 

18 wildlife and fish, timber, scenic attributes, recre19 ation, and soil and water quality of the forest 

20 and forest land, 

21 (B) mandates that conservation of forest 

22 and forest land is the single-most significant use 

23 of the forest and forest land, and 

24 (C) requires that timber harvesting be con25 sistent with—
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1 (i) restoring and maintaining reference 

2 conditions for the region’s ecotype, 

3 (ii) restoring and maintaining a rep4 resentative sample of young, mid, and late 

5 successional forest age classes, 

6 (iii) maintaining or restoring the re7 sources’ ecological health for purposes of 

8 preventing damage from fire, insect, or dis9 ease, 

10 (iv) maintaining or enhancing wildlife 

11 or fish habitat, or 

12 (v) enhancing research opportunities 

13 in sustainable renewable resource uses. 

14 (2) CONSERVATION RESTRICTION.—The conserva15 tion restriction described in this paragraph is a re16 striction which—

17 (A) is granted in perpetuity to an unrelated 

18 person which is described in section 170(h)(3) of 

19 such Code and which, in the case of a nongovern20 mental unit, is organized and operated for con21 servation purposes, 

22 (B) meets the requirements of clause (ii) or 

23 (iii)(II) of section 170(h)(4)(A) of such Code, 

24 (C) obligates the qualified organization to 

25 pay the costs incurred by the holder of the con-
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1 servation restriction in monitoring compliance 

2 with such restriction, and 

3 (D) requires an increasing level of conserva4 tion benefits to be provided whenever cir5 cumstances allow it. 

6 (3) QUALIFIED ORGANIZATION.—The term 

7 ‘‘qualified organization’’ means an organization—

8 (A) which is a nonprofit organization sub9 stantially all the activities of which are chari10 table, scientific, or educational, including ac11 quiring, protecting, restoring, managing, and de12 veloping forest lands and other renewable re13 sources for the long-term charitable, educational, 

14 scientific and public benefit, 

15 (B) more than half of the value of the prop16 erty of which consists of forests and forest land 

17 acquired with the proceeds from qualified forest 

18 conservation bonds, 

19 (C) which periodically conducts educational 

20 programs designed to inform the public of envi21 ronmentally sensitive forestry management and 

22 conservation techniques, 

23 (D) which has at all times a board of direc24 tors—
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1 (i) at least 20 percent of the members 

2 of which represent the holders of the con3 servation restriction described in paragraph 

4 (2), 

5 (ii) at least 20 percent of the members 

6 of which are public officials, and 

7 (iii) not more than one-third of the 

8 members of which are individuals who are 

9 or were at any time within 5 years before 

10 the beginning of a term of membership on 

11 the board, an employee of, independent con12 tractor with respect to, officer of, director of, 

13 or held a material financial interest in, a 

14 commercial forest products enterprise with 

15 which the qualified organization has a con16 tractual or other financial arrangement, 

17 (E) the bylaws of which require at least 

18 two-thirds of the members of the board of direc19 tors to vote affirmatively to approve the qualified 

20 conservation plan and any change thereto, and 

21 (F) upon dissolution, is required to dedicate 

22 its assets to—

23 (i) an organization described in section 

24 501(c)(3) of such Code which is organized 

25 and operated for conservation purposes, or
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1 (ii) a governmental unit described in 

2 section 170(c)(1) of such Code. 

3 (4) UNRELATED PERSON.—The term ‘‘unrelated 

4 person’’ means a person who is not a related person. 

5 (5) RELATED PERSON.—A person shall be treat6 ed as related to another person if—

7 (A) such person bears a relationship to such 

8 other person described in section 267(b) (deter9 mined without regard to paragraph (9) thereof), 

10 or 707(b)(1), of such Code, determined by sub11 stituting ‘‘25 percent’’ for ‘‘50 percent’’ each 

12 place it appears therein, and 

13 (B) in the case such other person is a non14 profit organization, if such person controls di15 rectly or indirectly more than 25 percent of the 

16 governing body of such organization.

17 (d) REPORT.—

18 (1) IN GENERAL.—The Comptroller General of 

19 the United States shall conduct a study on the pilot 

20 project for forest conservation activities under this 

21 section. Such study shall examine the extent to which 

22 forests and forest lands were managed during the 5-

23 year period beginning on the date of the enactment of 

24 this Act to achieve the goals of such project. 
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1 (2) SUBMISSION OF REPORT TO CONGRESS.—Not 

2 later than six years after the date of the enactment 

3 of this Act, the Comptroller General shall submit a re4 port of such study to the Committee on Ways and 

5 Means and the Committee on Resources of the House 

6 of Representatives and the Committee on Finance and 

7 the Committee on Energy and Natural Resources of 

8 the Senate. 

9 TITLE III—OTHER PROVISIONS 

10 SEC. 301. COMPASSION CAPITAL FUND. 

11 Title IV of the Social Security Act (42 U.S.C. 601–

12 679b) is amended by adding at the end the following: 

13 ‘‘PART F—COMPASSION CAPITAL FUND 

14 ‘‘SEC. 481. SECRETARY’S FUND TO SUPPORT AND REP15 LICATE PROMISING SOCIAL SERVICE PRO16 GRAMS. 

17 ‘‘(a) GRANT AUTHORITY.—

18 ‘‘(1) IN GENERAL.—The Secretary may make 

19 grants to support any private entity that operates a 

20 promising social services program. 

21 ‘‘(2) APPLICATIONS.—An entity desiring to re22 ceive a grant under paragraph (1) shall submit to the 

23 Secretary an application for the grant, which shall 

24 contain such information as the Secretary may re25 quire. 
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1 ‘‘(b) CONTRACT AUTHORITY, ETC.—The Secretary may 

2 enter into a grant, contract, or cooperative agreement with 

3 any entity under which the entity would provide technical 

4 assistance to another entity to operate a social service pro5 gram that assists persons and families in need, including 

6 by—

7 ‘‘(1) providing the other entity with—

8 ‘‘(A) technical assistance and information, 

9 including legal assistance and other business as10 sistance; 

11 ‘‘(B) information on capacity-building; 

12 ‘‘(C) information and assistance in identi13 fying and using best practices for serving per14 sons and families in need; or 

15 ‘‘(D) assistance in replicating programs 

16 with demonstrated effectiveness in assisting per17 sons and families in need; or 

18 ‘‘(2) supporting research on the best practices of 

19 social service organizations. 

20 ‘‘(c) GUIDANCE AND TECHNICAL ASSISTANCE.—The 

21 Secretary may use not more than 25 percent of the amount 

22 appropriated under this section for a fiscal year to provide 

23 guidance and technical assistance to States and political 

24 subdivisions of States with respect to the implementation 

25 of any social service program. 
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1 ‘‘(d) SOCIAL SERVICES PROGRAM DEFINED.—In this 

2 section, the term ‘social services program’ means a program 

3 that provides benefits or services of any kind to persons and 

4 families in need. 

5 ‘‘(e) LIMITATIONS ON AUTHORIZATION OF APPROPRIA6 TIONS.—To carry out this section, there are authorized to 

7 be appropriated to the Secretary $150,000,000 for fiscal 

8 year 2004, and such sums as may be necessary for fiscal 

9 years 2005 through 2008.’’. 

10 SEC. 302. REAUTHORIZATION OF ASSETS FOR INDEPEND11 ENCE DEMONSTRATION. 

12 (a) IN GENERAL.—Section 416 of the Assets for Inde13 pendence Act (title IV of Public Law 105–285; 42 U.S.C. 

14 604 note) is amended by striking ‘‘and 2003’’ and inserting 

15 ‘‘2003, 2004, 2005, 2006, 2007, and 2008’’. 

16 (b) REMOVAL OF ECONOMIC LITERACY ACTIVITIES

17 FROM LIMITATION ON USE OF AMOUNTS IN THE RESERVE

18 FUND.—Section 407(c)(3) of such Act (title IV of Public 

19 Law 105–285; 42 U.S.C. 604 note) is amended by adding 

20 at the end the following: ‘‘The preceding sentences of this 

21 paragraph shall not apply to amounts used by an entity 

22 for any activity described in paragraph (1)(A).’’. 

23 (c) ELIGIBILITY EXPANDED TO INCLUDE INDIVIDUALS

24 IN HOUSEHOLDS WITH INCOME NOT EXCEEDING 50 PER25 CENT OF AREA MEDIAN INCOME.—Section 408(a)(1) of 
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1 such Act (title IV of Public Law 105–285; 42 U.S.C. 604 

2 note) is amended to read as follows: 

3 ‘‘(1) INCOME TEST.—The adjusted gross income 

4 of the household—

5 ‘‘(A) does not exceed 200 percent of the pov6 erty line (as determined by the Office of Manage7 ment and Budget) or the earned income amount 

8 described in section 32 of the Internal Revenue 

9 Code of 1986 (taking into account the size of the 

10 household); or 

11 ‘‘(B) does not exceed 50 percent of the area 

12 median income (as determined by the Secretary 

13 of Housing and Urban Development) for the area 

14 in which the household is located.’’. 

15 (d) EXTENSION OF TIME FOR ACCOUNT HOLDERS TO

16 ACCESS FEDERAL FUNDS.—Section 407(d) of such Act 

17 (title IV of Public Law 105–285; 42 U.S.C. 604 note) is 

18 amended—

19 (1) in the subsection heading, by striking 

20 ‘‘WHEN PROJECT TERMINATES’’; and 

21 (2) by striking ‘‘upon’’ and inserting ‘‘on the 

22 date that is 6 months after’’. 

23 (e) VERIFICATION OF POSTSECONDARY EDUCATION

24 EXPENSES.—Section 404(8)(A) of such Act (title IV of Pub25 lic Law 105–285; 42 U.S.C. 604 note) is amended in the
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1 1st sentence by inserting ‘‘or a vendor, but only to the extent 

2 that the expenses are described in a document which ex3 plains the educational items to be purchased, and the docu4 ment and the expenses are approved by the qualified entity’’ 

5 before the period. 

6 (f) AUTHORITY TO USE EXCESS INTEREST TO FUND

7 OTHER INDIVIDUAL DEVELOPMENT ACCOUNTS.—Section 

8 410 of such Act (title IV of Public Law 105–285; 42 U.S.C. 

9 604 note) is amended—

10 (1) in subsection (a)(3)—

11 (A) by striking ‘‘any interest that has ac12 crued’’ and inserting ‘‘interest that has accrued 

13 during that period’’; and 

14 (B) by striking the period and inserting ‘‘, 

15 but only to the extent that the amount of the in16 terest does not exceed the amount of interest that 

17 has accrued during that period on amounts de18 posited in the account by that individual.’’; and 

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

20 ‘‘(f) USE OF EXCESS INTEREST TO FUND OTHER IN21 DIVIDUAL DEVELOPMENT ACCOUNTS.—To the extent that a 

22 qualified entity has an amount that, but for the limitation 

23 in subsection (a)(3), would be required by that subsection 

24 to be deposited into the individual development account of 

25 an individual or into a parallel account maintained by the 
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1 qualified entity, the qualified entity may deposit the 

2 amount into the individual development account of any in3 dividual or into any such parallel account maintained by 

4 the qualified entity.’’. 

5 SEC. 303. SENSE OF THE CONGRESS REGARDING COR6 PORATE CONTRIBUTIONS TO FAITH-BASED 

7 ORGANIZATIONS, ETC. 

8 (a) FINDINGS.—The Congress finds as follows: 

9 (1) America’s community of faith has long 

10 played a leading role in dealing with difficult societal 

11 problems that might otherwise have gone unaddressed. 

12 (2) President Bush has called upon Americans 

13 ‘‘to revive the spirit of citizenship . . . to marshal the 

14 compassion of our people to meet the continuing needs 

15 of our Nation’’. 

16 (3) Although the work of faith-based organiza17 tions should not be used by government as an excuse 

18 for backing away from its historic and rightful com19 mitment to help those who are disadvantaged and in 

20 need, such organizations can and should be seen as a 

21 valuable partner with government in meeting societal 

22 challenges. 

23 (4) Every day faith-based organizations in the 

24 United States help people recover from drug and alco25 hol addiction, provide food and shelter for the home-
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1 less, rehabilitate prison inmates so that they can 

2 break free from the cycle of recidivism, and teach peo3 ple job skills that will allow them to move from pov4 erty to productivity. 

5 (5) Faith-based organizations are often more 

6 successful in dealing with difficult societal problems 

7 than government and non-sectarian organizations. 

8 (6) As President Bush has stated, ‘‘It is not suf9 ficient to praise charities and community groups; we 

10 must support them. And this is both a public obliga11 tion and a personal responsibility.’’. 

12 (7) Corporate foundations contribute billions of 

13 dollars each year to a variety of philanthropic causes. 

14 (8) According to a study produced by the Cap15 ital Research Center, the 10 largest corporate founda16 tions in the United States contributed $1,900,000,000 

17 to such causes. 

18 (9) According to the same study, faith-based or19 ganizations only receive a small fraction of the con20 tributions made by corporations in the United States, 

21 and 6 of the 10 corporations that give the most to 

22 philanthropic causes explicitly ban or restrict con23 tributions to faith-based organizations. 

24 (b) CORPORATIONS ENCOURAGED TO CONTRIBUTE TO

25 FAITH-BASED ORGANIZATIONS.—The Congress calls on cor-
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1 porations in the United States, in the words of the Presi2 dent, ‘‘to give more and to give better’’ by making greater 

3 contributions to faith-based organizations that are on the 

4 front lines battling some of the great societal challenges of 

5 our day. 

6 (c) SENSE OF THE CONGRESS.—It is the sense of Con7 gress that—

8 (1) corporations in the United States are impor9 tant partners with government in efforts to overcome 

10 difficult societal problems; and 

11 (2) no corporation in the United States should 

12 adopt policies that prohibit the corporation from con13 tributing to an organization that is successfully ad14 vancing a philanthropic cause merely because such 

15 organization is faith based. 

16 SEC. 304. MATERNITY GROUP HOMES. 

17 (a) PERMISSIBLE USE OF FUNDS.—Section 322 of the 

18 Runaway and Homeless Youth Act (42 U.S.C. 5714–2) is 

19 amended—

20 (1) in subsection (a)(1), by inserting ‘‘(including 

21 maternity group homes)’’ after ‘‘group homes’’; and 

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

23 ‘‘(c) MATERNITY GROUP HOME.—In this part, the 

24 term ‘maternity group home’ means a community-based, 

25 adult-supervised group home that provides— 
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1 ‘‘(1) young mothers and their children with a 

2 supportive and supervised living arrangement in 

3 which such mothers are required to learn parenting 

4 skills, including child development, family budgeting, 

5 health and nutrition, and other skills to promote their 

6 long-term economic independence and the well-being 

7 of their children; and 

8 ‘‘(2) pregnant women with—

9 ‘‘(A) information regarding the option of 

10 placing children for adoption through licensed 

11 adoption service providers; 

12 ‘‘(B) assistance with prenatal care and 

13 child birthing; and 

14 ‘‘(C) pre- and post-placement adoption 

15 counseling.’’. 

16 (b) CONTRACT FOR EVALUATION.—Part B of the Run17 away and Homeless Youth Act (42 U.S.C. 5701 et seq.) is 

18 amended by adding at the end the following: 

19 ‘‘SEC. 323. CONTRACT FOR EVALUATION. 

20 ‘‘(a) IN GENERAL.—The Secretary shall enter into a 

21 contract with a public or private entity for an evaluation 

22 of the maternity group homes that are supported by grant 

23 funds under this Act. 

24 ‘‘(b) INFORMATION.—The evaluation described in sub25 section (a) shall include the collection of information about
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1 the relevant characteristics of individuals who benefit from 

2 maternity group homes such as those that are supported 

3 by grant funds under this Act and what services provided 

4 by those maternity group homes are most beneficial to such 

5 individuals. 

6 ‘‘(c) REPORT.—Not later than 2 years after the date 

7 on which the Secretary enters into a contract for an evalua8 tion under subsection (a), and biennially thereafter, the en9 tity conducting the evaluation under this section shall sub10 mit to Congress a report on the status, activities, and ac11 complishments of maternity group homes that are sup12 ported by grant funds under this Act.’’. 

13 (c) AUTHORIZATION OF APPROPRIATIONS.—Section 

14 388 of the Runaway and Homeless Youth Act (42 U.S.C. 

15 5751) is amended—

16 (1) in subsection (a)(1)—

17 (A) by striking ‘‘There’’ and inserting the 

18 following: 

19 ‘‘(A) IN GENERAL.—There’’; 

20 (B) in subparagraph (A), as redesignated, 

21 by inserting ‘‘and the purpose described in sub22 paragraph (B)’’ after ‘‘other than part E’’; and 

23 (C) by adding at the end the following: 

24 ‘‘(B) MATERNITY GROUP HOMES.—There is 

25 authorized to be appropriated, for maternity 
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1 group homes eligible for assistance under section 

2 322(a)(1)—

3 ‘‘(i) $33,000,000 for fiscal year 2003; 

4 and 

5 ‘‘(ii) such sums as may be necessary 

6 for fiscal year 2004.’’; and 

7 (2) in subsection (a)(2)(A), by striking ‘‘para8 graph (1)’’ and inserting ‘‘paragraph (1)(A)’’.

9 SEC. 305. AUTHORITY OF STATES TO USE 10 PERCENT OF 

10 THEIR TANF FUNDS TO CARRY OUT SOCIAL 

11 SERVICES BLOCK GRANT PROGRAMS. 

12 Section 404(d)(2) of the Social Security Act (42 U.S.C. 

13 604(d)(2)) is amended to read as follows: 

14 ‘‘(2) LIMITATION ON AMOUNT TRANSFERABLE TO

15 TITLE XX PROGRAMS.—A State may use not more 

16 than 10 percent of the amount of any grant made to 

17 the State under section 403(a) for a fiscal year to 

18 carry out State programs pursuant to title XX.’’. 
Union Calendar No. 157

108TH CONGRESS 

1ST SESSION H. R. 7

[Report No. 108–270, Part I] 

A BILL

To amend the Internal Revenue Code of 1986 to 

provide incentives for charitable contributions by individuals and businesses, and for other purposes. 

SEPTEMBER 16, 2003

Reported from the Committee on Ways and Means with 

an amendment 

Referral to the Committee on Education and the Workforce extended for a period ending not later than September 16, 2003Committee on Education and the Workforce discharged; 

committed to the Committee of the Whole House on the State of the Union and ordered to be printed