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103D CONGRESS

1ST SESSION H. R. 2000

To amend the Internal Revenue Code of 1986 to provide changes in

application of wagering taxes to charitable organizations.

IN THE HOUSE OF REPRESENTATIVES

MAY 5, 1993

Mr. HOAGLAND (for himself and Mr. PETERSON of Minnesota) introduced the

following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide

changes in application of wagering taxes to charitable

organizations.

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

3 SECTION 1. CHANGES IN APPLICATION OF WAGERING

4 TAXES TO CHARITABLE ORGANIZATIONS.

5 (a) EXEMPTION FROM OCCUPATIONAL TAX FOR

6 CHARITABLE ORGANIZATIONS.—Section 4411 of the In7 ternal Revenue Code of 1986 (relating to occupational tax

8 on wagering) is amended by adding at the end thereof the

9 following new subsection:
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1 ‘‘(c) EXCEPTION FOR CHARITABLE ORGANIZATIONS,

2 ETC.—No tax shall be imposed by subsection (a) on—

3 ‘‘(1) any organization exempt from tax under

4 section 501 or 521, and

5 ‘‘(2) any person who is engaged in receiving wa6 gers only for or on behalf of such an organization,

7 if the only wagers accepted by such organization (and such

8 person) are authorized under the law of the State in which

9 accepted.’’

10 (b) EXCEPTION FROM WAGERING TAX FOR CHARI11 TABLE ORGANIZATIONS.—Section 4402 of such Code (re12 lating to exemptions from tax on wagers) is amended by

13 inserting ‘‘(a) IN GENERAL.—’’ before ‘‘No tax’’ and by

14 adding at the end thereof the following new subsection:

15 ‘‘(b) CHARITABLE ORGANIZATIONS, ETC.—

16 ‘‘(1) EXEMPTION WHERE CHARITABLE EX17 PENDITURES EXCEED WINNINGS.—If the amount of

18 charitable expenditures of any organization de19 scribed in section 4411(c) for any calendar quarter

20 equals or exceeds the amount of wagering winnings

21 of such organization for such quarter, no tax shall

22 be imposed by this subchapter on wagers placed dur23 ing such calendar quarter with such organization or

24 with any person described in section 4411(c)(2) with

25 respect to such organization.
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1 ‘‘(2) REDUCTION OF TAX WHERE WINNINGS EX2 CEED CHARITABLE EXPENDITURES.—

3 ‘‘(A) IN GENERAL.—If paragraph (1) does

4 not apply to an organization or person de5 scribed in section 4411(c) for any calendar

6 quarter, the tax imposed by this subchapter on

7 wagers placed with such organization or person

8 during such quarter shall be the applicable per9 centage of the tax which would (but for this

10 paragraph) be imposed on such wagers during

11 such quarter.

12 ‘‘(B) APPLICABLE PERCENTAGE.—For

13 purposes of subparagraph (A), the applicable

14 percentage for any calendar quarter is the ex15 cess of 100 percent over the percentage which

16 the charitable expenditures of such organization

17 for such quarter is of the wagering winnings of

18 such organization for such quarter.

19 ‘‘(3) DEFINITIONS AND SPECIAL RULE.—For

20 purposes of this subsection—

21 ‘‘(A) CHARITABLE EXPENDITURES.—The

22 term ‘charitable expenditures’ means, for any

23 calendar quarter, the sum of—

24 ‘‘(i) the amount paid by such organi25 zation during such quarter to accomplish 1
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1 or more of the purposes described in sec2 tion 170(c)(2)(B) or to acquire an asset

3 used (or held for use) directly in carrying

4 out 1 or more of such purposes, and

5 ‘‘(ii) the amount permanently set6 aside by such organization during such

7 quarter for 1 or more of such purposes.

8 ‘‘(B) WAGERING WINNINGS.—The term

9 ‘wagering winnings’ means, with respect to any

10 calendar quarter, the excess of the wagers

11 which would (but for this subsection) be subject

12 to tax under this subchapter and which are

13 placed with the organization during such cal14 endar quarter over the winnings paid on such

15 wagers.

16 ‘‘(C) SPECIAL RULE.—Wagers received by

17 any person for or on behalf of an organization

18 shall be treated as received by such organiza19 tion.’’

20 (c) EFFECTIVE DATES.—

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

22 by subsection (a) shall apply to taxes imposed for

23 periods beginning after the date of the enactment of

24 this Act.
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1 (2) SUBSECTION (b).—The amendment made

2 by subsection (b) shall apply to wagers placed in cal3 endar quarters beginning after the date of the enact4 ment of this Act.

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