I
107TH CONGRESS
1ST SESSION
H. R. 7
To provide incentives for charitable contributions by individuals and busi-
nesses, to improve the effectiveness and efficiency of government program
delivery to individuals and families in need, and to enhance the ability
of low-income Americans to gain financial security by building assets.
IN THE HOUSE OF REPRESENTATIVES
MARCH 29, 2001
Mr. WATTS of Oklahoma (for himself, Mr. HALL of Ohio, and Mr. HASTERT)
introduced the following bill; which was referred to the Committee on
Ways and Means, and in addition to the Committee on the Judiciary, for
a period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned
A BILL
To provide incentives for charitable contributions by individ-
uals and businesses, to improve the effectiveness and
efficiency of government program delivery to individuals
and families in need, and to enhance the ability of low-
income Americans to gain financial security by building
assets.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Community Solutions Act of 2001’’.
(b) TABLE OF CONTENTS.—The table of contents is
as follows:
Sec. 1. Short title; table of contents.
TITLE I—CHARITABLE GIVING INCENTIVES PACKAGE
Sec. 101. Deduction for portion of charitable contributions to be allowed to in-
dividuals who do not itemize deductions.
Sec. 102. Tax-free distributions from individual retirement accounts for chari-
table purposes.
Sec. 103. Charitable deduction for contributions of food inventory.
Sec. 104. Charitable donations liability reform for in-kind corporate contribu-
tions.
TITLE II—EXPANSION OF CHARITABLE CHOICE
Sec. 201. Provision of assistance under government programs by religious and
community organizations.
TITLE III—INDIVIDUAL DEVELOPMENT ACCOUNTS
Sec. 301. Purposes.
Sec. 302. Definitions.
Sec. 303. Structure and administration of qualified individual development ac-
count programs.
Sec. 304. Procedures for opening and maintaining an individual development
account and qualifying for matching funds.
Sec. 305. Deposits by qualified individual development account programs.
Sec. 306. Withdrawal procedures.
Sec. 307. Certification and termination of qualified individual development ac-
count programs.
Sec. 308. Reporting, monitoring, and evaluation.
Sec. 309. Authorization of appropriations.
Sec. 310. Account funds disregarded for purposes of certain means-tested Fed-
eral programs.
Sec. 311. Matching funds for individual development accounts provided through
a tax credit for qualified financial institutions.
TITLE I—CHARITABLE GIVING
INCENTIVES PACKAGE
SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CON-
TRIBUTIONS TO BE ALLOWED TO INDIVID-
UALS WHO DO NOT ITEMIZE DEDUCTIONS.
(a) IN GENERAL.—Section 170 of the Internal Rev-
enue Code of 1986 (relating to charitable, etc., contribu-
tions and gifts) is amended by redesignating subsection
(m) as subsection (n) and by inserting after subsection
(l) the following new subsection:
‘‘(m) DEDUCTION FOR INDIVIDUALS NOT ITEMIZING
DEDUCTIONS.—In the case of an individual who does not
itemize his deductions for the taxable year, there shall be
taken into account as a direct charitable deduction under
section 63 an amount equal to the lesser of—
‘‘(1) the amount allowable under subsection (a)
for the taxable year, or
‘‘(2) the amount of the standard deduction.’’
(b) DIRECT CHARITABLE DEDUCTION.—
(1) IN GENERAL.—Subsection (b) of section 63
of such Code is amended by striking ‘‘and’’ at the
end of paragraph (1), by striking the period at the
end of paragraph (2) and inserting ‘‘, and’’, and by
adding at the end thereof the following new para-
graph:
retirement accounts) is amended by adding at the end the
following new paragraph:
‘‘(8) DISTRIBUTIONS
FOR
CHARITABLE
PUR-
POSES.—
‘‘(A) IN GENERAL.—No amount shall be
includible in gross income by reason of a quali-
fied charitable distribution from an individual
retirement account to an organization described
in section 170(c).
‘‘(B) SPECIAL RULES RELATING TO CHARI-
TABLE
REMAINDER
TRUSTS, POOLED
INCOME
FUNDS, AND CHARITABLE GIFT ANNUITIES.—
‘‘(i) IN GENERAL.—No amount shall
be includible in gross income by reason of
a qualified charitable distribution from an
individual retirement account—
‘‘(I) to a charitable remainder
annuity trust or a charitable remain-
der unitrust (as such terms are de-
fined in section 664(d)),
‘‘(II) to a pooled income fund (as
defined in section 642(c)(5)), or
‘‘(III) for the issuance of a chari-
table gift annuity (as defined in sec-
tion 501(m)(5)).
The preceding sentence shall apply only if
no person holds an income interest in the
amounts in the trust, fund, or annuity at-
tributable to such distribution other than
one or more of the following: the individual
for whose benefit such account is main-
tained, the spouse of such individual, or
any organization described in section
170(c).
‘‘(ii) DETERMINATION OF INCLUSION
OF
AMOUNTS
DISTRIBUTED.—In deter-
mining the amount includible in the gross
income of any person by reason of a pay-
ment or distribution from a trust referred
to in clause (i)(I) or a charitable gift annu-
ity (as so defined), the portion of any
qualified charitable distribution to such
trust or for such annuity which would (but
for this subparagraph) have been includible
in gross income—
‘‘(I) shall be treated as income
described in section 664(b)(1), and
‘‘(II) shall not be treated as an
investment in the contract.
‘‘(iii) NO INCLUSION FOR DISTRIBU-
TION
TO
POOLED
INCOME
FUND.—No
amount shall be includible in the gross in-
come of a pooled income fund (as so de-
fined) by reason of a qualified charitable
distribution to such fund.
‘‘(C) QUALIFIED
CHARITABLE
DISTRIBU-
TION.—For purposes of this paragraph, the
term ‘qualified charitable distribution’ means
any distribution from an individual retirement
account—
‘‘(i) which is made on or after the
date that the individual for whose benefit
the account is maintained has attained age
591⁄2, and
‘‘(ii) which is made directly from the
account to—
‘‘(I) an organization described in
section 170(c), or
‘‘(II) a trust, fund, or annuity re-
ferred to in subparagraph (B).
‘‘(D) 
DENIAL
OF
DEDUCTION.—The
amount allowable as a deduction under section
170 to the taxpayer for the taxable year shall
be reduced (but not below zero) by the sum of
the amounts of the qualified charitable distribu-
tions during such year which would be includ-
ible in the gross income of the taxpayer for
such year but for this paragraph.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
the date of the enactment of this Act.
SEC. 103. CHARITABLE DEDUCTION FOR CONTRIBUTIONS
OF FOOD INVENTORY.
(a) IN GENERAL.—Subsection (e) of section 170 of
the Internal Revenue Code of 1986 (relating to certain
contributions of ordinary income and capital gain prop-
erty) is amended by adding at the end the following new
paragraph:
‘‘(7) SPECIAL RULE FOR CONTRIBUTIONS OF
FOOD INVENTORY.—For purposes of this section—
‘‘(A) CONTRIBUTIONS BY NON-CORPORATE
TAXPAYERS.—In the case of a charitable con-
tribution of food by a taxpayer, paragraph
(3)(A) shall be applied without regard to wheth-
er or not the contribution is made by a corpora-
tion.
‘‘(B) LIMIT ON REDUCTION.—In the case
of a charitable contribution of food which is a
qualified contribution (within the meaning of
paragraph (3)(A), as modified by subparagraph
(A) of this paragraph)—
‘‘(i) paragraph (3)(B) shall not apply,
and
‘‘(ii) the reduction under paragraph
(1)(A) for such contribution shall be no
greater than the amount (if any) by which
the amount of such contribution exceeds
twice the basis of such food.
‘‘(C) DETERMINATION
OF
BASIS.—For
purposes of this paragraph, if a taxpayer uses
the cash method of accounting, the basis of any
qualified contribution of such taxpayer shall be
deemed to be 50 percent of the fair market
value of such contribution.
‘‘(D) DETERMINATION
OF
FAIR
MARKET
VALUE.—In the case of a charitable contribu-
tion of food which is a qualified contribution
(within the meaning of paragraph (3), as modi-
fied by subparagraphs (A) and (B) of this para-
graph) and which, solely by reason of internal
standards of the taxpayer, lack of market, or
similar circumstances, or which is produced by
the taxpayer exclusively for the purposes of
transferring the food to an organization de-
scribed in paragraph (3)(A), cannot or will not
be sold, the fair market value of such contribu-
tion shall be determined—
‘‘(i) without regard to such internal
standards, such lack of market, such cir-
cumstances, or such exclusive purpose, and
‘‘(ii) if applicable, by taking into ac-
count the price at which the same or simi-
lar food items are sold by the taxpayer at
the time of the contribution (or, if not so
sold at such time, in the recent past).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 2001.
SEC. 104. CHARITABLE DONATIONS LIABILITY REFORM
FOR IN-KIND CORPORATE CONTRIBUTIONS.
(a) DEFINITIONS.—For purposes of this section:
(1) AIRCRAFT.—The term ‘‘aircraft’’ has the
meaning provided that term in section 40102(6) of
title 49, United States Code.
(2) BUSINESS
ENTITY.—The term ‘‘business
entity’’ means a firm, corporation, association, part-
nership, consortium, joint venture, or other form of
enterprise.
(3) EQUIPMENT.—The term ‘‘equipment’’ in-
cludes mechanical equipment, electronic equipment,
and office equipment.
(4) FACILITY.—The term ‘‘facility’’ means any
real property, including any building, improvement,
or appurtenance.
(5) GROSS
NEGLIGENCE.—The term ‘‘gross
negligence’’ means voluntary and conscious conduct
by a person with knowledge (at the time of the con-
duct) that the conduct is likely to be harmful to the
health or well-being of another person.
(6) INTENTIONAL
MISCONDUCT.—The term
‘‘intentional misconduct’’ means conduct by a person
with knowledge (at the time of the conduct) that the
conduct is harmful to the health or well-being of an-
other person.
(7) MOTOR VEHICLE.—The term ‘‘motor vehi-
cle’’ has the meaning provided that term in section
30102(6) of title 49, United States Code.
(8) NONPROFIT
ORGANIZATION.—The term
‘‘nonprofit organization’’ means—
(A) any organization described in section
501(c)(3) of the Internal Revenue Code of 1986
and exempt from tax under section 501(a) of
such Code; or
(B) any not-for-profit organization orga-
nized and conducted for public benefit and op-
erated primarily for charitable, civic, edu-
cational, religious, welfare, or health purposes.
(9) STATE.—The term ‘‘State’’ means each of
the several States, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands,
Guam, American Samoa, the Northern Mariana Is-
lands, any other territory or possession of the
United States, or any political subdivision of any
such State, territory, or possession.
(b) LIABILITY.—
(1) LIABILITY
OF
BUSINESS
ENTITIES
THAT
DONATE
EQUIPMENT
TO
NONPROFIT
ORGANIZA-
TIONS.—
(A) IN GENERAL.—Subject to subsection
(c), a business entity shall not be subject to
civil liability relating to any injury or death that
results from the use of equipment donated by a
business entity to a nonprofit organization.
(B) APPLICATION.—This paragraph shall
apply with respect to civil liability under Fed-
eral and State law.
(2) LIABILITY
OF
BUSINESS
ENTITIES
PRO-
VIDING USE OF FACILITIES TO NONPROFIT ORGANI-
ZATIONS.—
(A) IN GENERAL.—Subject to subsection
(c), a business entity shall not be subject to
civil liability relating to any injury or death oc-
curring at a facility of the business entity in
connection with a use of such facility by a non-
profit organization, if—
(i) the use occurs outside of the scope
of business of the business entity;
(ii) such injury or death occurs during
a period that such facility is used by the
nonprofit organization; and
(iii) the business entity authorized the
use of such facility by the nonprofit orga-
nization.
(B) APPLICATION.—This paragraph shall
apply—
(i) with respect to civil liability under
Federal and State law; and
(ii) regardless of whether a nonprofit
organization pays for the use of a facility.
(3) LIABILITY
OF
BUSINESS
ENTITIES
PRO-
VIDING USE OF A MOTOR VEHICLE OR AIRCRAFT.—
(A) IN GENERAL.—Subject to subsection
(c), a business entity shall not be subject to
civil liability relating to any injury or death oc-
curring as a result of the operation of aircraft
or a motor vehicle of a business entity loaned
to a nonprofit organization for use outside of
the scope of business of the business entity, if—
(i) such injury or death occurs during
a period that such motor vehicle or aircraft
is used by a nonprofit organization; and
(ii) the business entity authorized the
use by the nonprofit organization of motor
vehicle or aircraft that resulted in the in-
jury or death.
(B) APPLICATION.—This paragraph shall
apply—
(i) with respect to civil liability under
Federal and State law; and
(ii) regardless of whether a nonprofit
organization pays for the use of the air-
craft or motor vehicle.
(4) LIABILITY
OF
BUSINESS
ENTITIES
PRO-
VIDING TOURS OF FACILITIES.—
(A) IN GENERAL.—Subject to subsection
(c), a business entity shall not be subject to
civil liability relating to any injury to, or death
of an individual occurring at a facility of the
business entity, if—
(i) such injury or death occurs during
a tour of the facility in an area of the fa-
cility that is not otherwise accessible to the
general public; and
(ii) the business entity authorized the
tour.
(B) APPLICATION.—This paragraph shall
apply—
(i) with respect to civil liability under
Federal and State law; and
(ii) regardless of whether an indi-
vidual pays for the tour.
(c) EXCEPTIONS.—Subsection (b) shall not apply to
an injury or death that results from an act or omission
of a business entity that constitutes gross negligence or
intentional misconduct, including any misconduct that—
(1) constitutes a crime of violence (as that term
is defined in section 16 of title 18, United States
Code) or act of international terrorism (as that term
is defined in section 2331 of title 18, United States
Code) for which the defendant has been convicted in
any court;
(2) constitutes a hate crime (as that term is
used in the Hate Crime Statistics Act (28 U.S.C.
534 note));
(3) involves a sexual offense, as defined by ap-
plicable State law, for which the defendant has been
convicted in any court; or
(4) involves misconduct for which the defendant
has been found to have violated a Federal or State
civil rights law.
(d) SUPERSEDING PROVISION.—
(1) IN
GENERAL.—Subject to paragraph (2)
and subsection (e), this title preempts the laws of
any State to the extent that such laws are incon-
sistent with this title, except that this title shall not
preempt any State law that provides additional pro-
tection for a business entity for an injury or death
described in a paragraph of subsection (b) with re-
spect to which the conditions specified in such para-
graph apply.
(2) LIMITATION.—Nothing in this title shall be
construed to supersede any Federal or State health
or safety law.
(e) ELECTION OF STATE REGARDING NONAPPLICA-
BILITY.—A provision of this title shall not apply to any
civil action in a State court against a business entity in
which all parties are citizens of the State if such State
enacts a statute—
(1) citing the authority of this section;
(2) declaring the election of such State that
such provision shall not apply to such civil action in
the State; and
(3) containing no other provisions.
(f) EFFECTIVE DATE.—This section shall apply to in-
juries (and deaths resulting therefrom) occurring on or
after the date of the enactment of this Act.
TITLE II—EXPANSION OF
CHARITABLE CHOICE
SEC. 201. PROVISION OF ASSISTANCE UNDER GOVERN-
MENT PROGRAMS BY RELIGIOUS AND COM-
MUNITY ORGANIZATIONS.
Title XXIV of the Revised Statutes is amended by
inserting after section 1990 (42 U.S.C. 1994) the fol-
lowing:
‘‘SEC. 1994A. CHARITABLE CHOICE.
‘‘(a) SHORT TITLE.—This section may be cited as the
‘Charitable Choice Act of 2001’.
‘‘(b) PURPOSES.—The purposes of this section are—
‘‘(1) to provide assistance to individuals and
families in need in the most effective and efficient
manner;
‘‘(2) to prohibit discrimination against religious
organizations on the basis of religion in the adminis-
tration and distribution of government assistance
under the government programs described in sub-
section (c)(4);
‘‘(3) to allow religious organizations to assist in
the administration and distribution of such assist-
ance without impairing the religious character of
such organizations; and
‘‘(4) to protect the religious freedom of individ-
uals and families in need who are eligible for govern-
ment assistance, including expanding the possibility
of choosing to receive services from a religious orga-
nization providing such assistance.
‘‘(c) RELIGIOUS ORGANIZATIONS INCLUDED AS NON-
GOVERNMENTAL PROVIDERS.—
‘‘(1) IN GENERAL.—
‘‘(A) INCLUSION.—For any program de-
scribed in paragraph (4) that is carried out by
the Federal Government, or by a State or local
government with Federal funds, the government
shall consider, on the same basis as other non-
governmental organizations, religious organiza-
tions to provide the assistance under the pro-
gram, if the program is implemented in a man-
ner that is consistent with the Establishment
Clause and the Free Exercise Clause of the
first amendment to the Constitution.
‘‘(B) DISCRIMINATION PROHIBITED.—Nei-
ther the Federal Government nor a State or
local government receiving funds under a pro-
gram described in paragraph (4) shall discrimi-
nate against an organization that provides as-
sistance under, or applies to provide assistance
under, such program, on the basis that the or-
ganization has a religious character.
‘‘(2) FUNDS NOT AID TO RELIGION.—Federal,
State, or local government funds or other assistance
that is received by a religious organization for the
provision of services under this section constitutes
aid to individuals and families in need, the ultimate
beneficiaries of such services, and not aid to the reli-
gious organization.
‘‘(3) FUNDS
NOT
ENDORSEMENT
OF
RELI-
GION.—The receipt by a religious organization of
Federal, State, or local government funds or other
assistance under this section is not and should not
be perceived as an endorsement by the government
of religion or the organization’s religious beliefs or
practices.
‘‘(4) PROGRAMS.—For purposes of this section,
a program is described in this paragraph—
‘‘(A) if it involves activities carried out
using Federal funds—
‘‘(i) related to the prevention and
treatment of juvenile delinquency and the
improvement of the juvenile justice system,
including programs funded under the Juve-
nile Justice and Delinquency Prevention
Act of 1974 (42 U.S.C. 5601 et seq.);
‘‘(ii) related to the prevention of
crime, including programs funded under
title I of the Omnibus Crime Control and
Safe Streets Act of 1968 (42 U.S.C. 3701
et seq.);
‘‘(iii) under the Federal housing laws;
‘‘(iv) under title I of the Workforce
Investment Act of 1998 (29 U.S.C. 2801
et seq.)
‘‘(v) under the Older Americans Act
of 1965 (42 U.S.C. 3001 et seq.);
‘‘(vi) under the Child Care Develop-
ment Block Grant Act of 1990 (42 U.S.C.
9858 et seq.);
‘‘(vii) under the Community Develop-
ment Block Grant Program established
under title I of the Housing and Commu-
nity Development Act of 1974 (42 U.S.C.
5301 et seq.);
‘‘(viii) related to the intervention in
and prevention of domestic violence;
‘‘(ix) related to hunger relief activi-
ties; or
‘‘(x) under the Job Access and Re-
verse Commute grant program established
under section 3037 of the Federal Transit
Act of 1998 (49 U.S.C. 5309 note); or
‘‘(B)(i) if it involves activities to assist stu-
dents in obtaining the recognized equivalents of
secondary school diplomas and activities relat-
ing to non-school-hours programs; and
‘‘(ii) except as provided in subparagraph
(A) and clause (i), does not include activities
carried out under Federal programs providing
education to children eligible to attend elemen-
tary schools or secondary schools, as defined in
section 14101 of the Elementary and Secondary
Education Act of 1965 (20 U.S.C. 8801).
ees adhere to the religious practices of the organiza-
tion.
‘‘(2) TITLE VII EXEMPTION.—The exemption of
a religious organization provided under section 702
or 703(e)(2) of the Civil Rights Act of 1964 (42
U.S.C. 2000e–1, 2000e–2(e)(2)) regarding employ-
ment practices shall not be affected by the religious
organization’s provision of assistance under, or re-
ceipt of funds from, a program described in sub-
section (c)(4).
‘‘(3) EFFECT
ON
OTHER
LAWS.—Nothing in
this section alters the duty of a religious organiza-
tion to comply with the nondiscrimination provisions
in title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d et seq.) (prohibiting discrimination on
the basis of race, color, and national origin), title IX
of the Education Amendments of 1972 (20 U.S.C.
1681–1686) (prohibiting discrimination in edu-
cational institutions on the basis of sex and visual
impairment), section 504 of the Rehabilitation Act
of 1973 (29 U.S.C. 794) (prohibiting discrimination
against otherwise qualified disabled individuals), and
the Age Discrimination Act of 1975 (42 U.S.C.
6101–6107) (prohibiting discrimination on the basis
of age).
‘‘(f) RIGHTS OF BENEFICIARIES OF ASSISTANCE.—
‘‘(1) IN GENERAL.—If an individual described
in paragraph (3) has an objection to the religious
character of the organization from which the indi-
vidual receives, or would receive, assistance funded
under any program described in subsection (c)(4),
the appropriate Federal, State, or local govern-
mental entity shall provide to such individual (if oth-
erwise eligible for such assistance) within a reason-
able period of time after the date of such objection,
assistance that—
‘‘(A) is an alternative, including a nonreli-
gious alternative, that is accessible to the indi-
vidual; and
‘‘(B) has a value that is not less than the
value of the assistance that the individual would
have received from such organization.
‘‘(2) NOTICE.—The appropriate Federal, State,
or local governmental entity shall guarantee that no-
tice is provided to the individuals described in para-
graph (3) of the rights of such individuals under this
section.
‘‘(3) INDIVIDUAL
DESCRIBED.—An individual
described in this paragraph is an individual who re-
ceives or applies for assistance under a program de-
scribed in subsection (c)(4).
‘‘(g) 
NONDISCRIMINATION
AGAINST
BENE-
FICIARIES.—
‘‘(1) GRANTS AND CONTRACTS.—A religious or-
ganization providing assistance through a grant or
contract under a program described in subsection
(c)(4) shall not discriminate, in carrying out the pro-
gram, against an individual described in subsection
(f)(3)on the basis of religion, a religious belief, or a
refusal to hold a religious belief..
‘‘(2) INDIRECT FORMS OF DISBURSEMENT.—A
religious organization providing assistance through a
voucher, certificate, or other form of indirect dis-
bursement under a program described in subsection
(c)(4) shall not discriminate, in carrying out the pro-
gram, against an individual described in subsection
(f)(3) on the basis of religion, a religious belief, or
a refusal to hold a religious belief.
‘‘(h) ACCOUNTABILITY.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), a religious organization providing assist-
ance under any program described in subsection
(c)(4) shall be subject to the same regulations as
other nongovernmental organizations to account in
accord with generally accepted accounting principles
for the use of such funds provided under such pro-
gram.
‘‘(2) LIMITED AUDIT.—Such organization shall
segregate government funds provided under such
program into a separate account or accounts. Only
the government funds shall be subject to audit by
the government.
‘‘(i) LIMITATIONS ON USE OF FUNDS FOR CERTAIN
PURPOSES.—No funds provided through a grant or con-
tract to a religious organization to provide assistance
under any program described in subsection (c)(4) shall be
expended for sectarian worship, instruction, or proselytiza-
tion. A certificate shall be signed by such organizations
and filed with the government agency that disbursed the
funds that gives assurance the organization will comply
with this subsection.
‘‘(j) EFFECT ON STATE AND LOCAL FUNDS.—If a
State or local government contributes State or local funds
to carry out a program described in subsection (c)(4), the
State or local government may segregate the State or local
funds from the Federal funds provided to carry out the
program or may commingle the State or local funds with
the Federal funds. If the State or local government com-
mingles the State or local funds, the provisions of this sec-
tion shall apply to the commingled funds in the same man-
ner, and to the same extent, as the provisions apply to
the Federal funds.
‘‘(k) TREATMENT
OF
INTERMEDIATE
CONTRAC-
TORS.—If a nongovernmental organization (referred to in
this subsection as an ‘intermediate contractor’), acting
under a contract or other agreement with the Federal Gov-
ernment or a State or local government, is given the au-
thority under the contract or agreement to select non-
governmental organizations to provide assistance under
the programs described in subsection (c)(4), the inter-
mediate contractor shall have the same duties under this
section as the government when selecting or otherwise
dealing with subcontractors, but the intermediate con-
tractor, if it is a religious organization, shall retain all
other rights of a religious organization under this section.
‘‘(l) COMPLIANCE.—A party alleging that the rights
of the party under this section have been violated by a
State or local government may bring a civil action pursu-
ant to section 1979 against the official or government
agency that has allegedly committed such violation. A
party alleging that the rights of the party under this sec-
tion have been violated by the Federal Government may
bring a civil action for appropriate relief in Federal dis-
trict court against the official or government agency that
has allegedly committed such violation.’’.
TITLE III—INDIVIDUAL
DEVELOPMENT ACCOUNTS
SEC. 301. PURPOSES.
The purposes of this title are to provide for the estab-
lishment of individual development account programs that
will—
(1) provide individuals and families with limited
means an opportunity to accumulate assets and to
enter the financial mainstream;
(2) promote education, homeownership, and the
development of small businesses;
(3) stabilize families and build communities;
and
(4) support United States economic expansion.
SEC. 302. DEFINITIONS.
As used in this title:
(1) ELIGIBLE INDIVIDUAL.—
(A) IN GENERAL.—The term ‘‘eligible indi-
vidual’’ means an individual who—
(i) has attained the age of 18 years
but not the age of 61;
(ii) is a citizen or legal resident of the
United States;
(iii) is not a student (as defined in
section 151(c)(4)); and
(iv) is a taxpayer the adjusted gross
income of whom for the preceding taxable
year does not exceed—
(I) $20,000, in the case of a tax-
payer described in section 1(c) or 1(d)
of the Internal Revenue Code of 1986;
(II) $25,000, in the case of a
taxpayer described in section 1(b) of
such Code; and
(III) $40,000, in the case of a
taxpayer described in section 1(a) of
such Code.
(B) INFLATION ADJUSTMENT.—
(i) IN GENERAL.—In the case of any
taxable year beginning after 2002, each
dollar amount referred to in subparagraph
(A)(iv) shall be increased by an amount
equal to—
(I) such dollar amount, multi-
plied by
(II) the cost-of-living adjustment
determined under section (1)(f)(3) of
the Internal Revenue Code of 1986
for the calendar year in which the tax-
able year begins, by substituting
‘‘2001’’ for ‘‘1992’’.
(ii) ROUNDING.—If any amount as
adjusted under clause (i) is not a multiple
of $50, such amount shall be rounded to
the nearest multiple of $50.
(2) INDIVIDUAL
DEVELOPMENT
ACCOUNT.—
The term ‘‘Individual Development Account’’ means
an account established for an eligible individual as
part of a qualified individual development account
program, but only if the written governing instru-
ment creating the account meets the following re-
quirements:
(A) The sole owner of the account is the
individual for whom the account was estab-
lished.
(B) No contribution will be accepted unless
it is in cash.
(C) The holder of the account is a quali-
fied financial institution.
(D) The assets of the account will not be
commingled with other property except in a
common trust fund or common investment
fund.
(E) Except as provided in section 306(b),
any amount in the account may be paid out
only for the purpose of paying the qualified ex-
penses of the account owner.
(3) PARALLEL ACCOUNT.—The term ‘‘parallel
account’’ means a separate, parallel individual or
pooled account for all matching funds and earnings
dedicated to an Individual Development Account
owner as part of a qualified individual development
account program, the sole owner of which is a quali-
fied financial institution, a qualified nonprofit orga-
nization, or an Indian tribe.
(4) QUALIFIED FINANCIAL INSTITUTION.—
(A) IN GENERAL.—The term ‘‘qualified fi-
nancial institution’’ means any person author-
ized to be a trustee of any individual retirement
account under section 408(a)(2).
(B) RULE OF CONSTRUCTION.—Nothing in
this paragraph shall be construed as preventing
a person described in subparagraph (A) from
collaborating with 1 or more contractual affili-
ates, qualified nonprofit organizations, or In-
dian tribes to carry out an individual develop-
ment account program established under sec-
tion 303.
(5) QUALIFIED
NONPROFIT
ORGANIZATION.—
The 
term 
‘‘qualified 
nonprofit 
organization’’
means—
(A) any organization described in section
501(c)(3) of the Internal Revenue Code of 1986
and exempt from taxation under section 501(a)
of such Code;
(B) any community development financial
institution certified by the Community Develop-
ment Financial Institution Fund; or
(C) any credit union chartered under Fed-
eral or State law.
(6) INDIAN TRIBE.—The term ‘‘Indian tribe’’
means any Indian tribe as defined in section 4(12)
of the Native American Housing Assistance and
Self-Determination 
Act 
of 
1996 
(25 
U.S.C.
4103(12), and includes any tribal subsidiary, sub-
division, or other wholly owned tribal entity.
(7) QUALIFIED INDIVIDUAL DEVELOPMENT AC-
COUNT PROGRAM.—The term ‘‘qualified individual
development account program’’ means a program es-
tablished under section 303 under which—
(A) Individual Development Accounts and
parallel accounts are held by a qualified finan-
cial institution; and
(B) additional activities determined by the
Secretary as necessary to responsibly develop
and administer accounts, including recruiting,
providing financial education and other training
to account owners, and regular program moni-
toring, are carried out by the qualified financial
institution, a qualified nonprofit organization,
or an Indian tribe.
(8) QUALIFIED EXPENSE DISTRIBUTION.—
(A) IN GENERAL.—The term ‘‘qualified ex-
pense distribution’’ means any amount paid (in-
cluding through electronic payments) or distrib-
uted out of an Individual Development Account
and a parallel account established for an eligible
individual if such amount—
(i) is used exclusively to pay the quali-
fied expenses of the Individual Develop-
ment Account owner or such owner’s
spouse or dependents, as approved by the
qualified financial institution, qualified
nonprofit organization, or Indian tribe;
(ii) is paid by the qualified financial
institution, qualified nonprofit organiza-
tion, or Indian tribe—
(I) except as otherwise provided
in this clause, directly to the unre-
lated third party to whom the amount
is due;
(II) in the case of distributions
for working capital under a qualified
business plan (as defined in subpara-
graph (B)(iv)(IV)), directly to the ac-
count owner;
(III) in the case of any qualified
rollover, directly to another Individual
Development Account and parallel ac-
count; or
(IV) in the case of a qualified
final distribution, directly to the
spouse, dependent, or other named
beneficiary of the deceased account
owner; and
(iii) is paid after the account owner
has completed a financial education course
as required under section 304(b).
(B) QUALIFIED EXPENSES.—
(i) IN GENERAL.—The term ‘‘qualified
expenses’’ means any of the following:
(I) Qualified higher education ex-
penses.
(II) Qualified first-time home-
buyer costs.
(III) Qualified business capital-
ization or expansion costs.
(IV) Qualified rollovers.
(V) Qualified final distribution.
(ii) QUALIFIED
HIGHER
EDUCATION
EXPENSES.—
(I) 
IN
GENERAL.—The 
term
‘‘qualified higher education expenses’’
has the meaning given such term by
section 72(t)(7) of the Internal Rev-
enue Code of 1986, determined by
treating postsecondary vocational edu-
cational schools as eligible educational
institutions.
(II) 
POSTSECONDARY
VOCA-
TIONAL
EDUCATION
SCHOOL.—The
term ‘‘postsecondary vocational edu-
cational school’’ means an area voca-
tional education school (as defined in
subparagraph (C) or (D) of section
521(4) of the Carl D. Perkins Voca-
tional and Applied Technology Edu-
cation Act (20 U.S.C. 2471(4)))
which is in any State (as defined in
section 521(33) of such Act), as such
sections are in effect on the date of
the enactment of this Act.
(III) 
COORDINATION
WITH
OTHER
BENEFITS.—The amount of
qualified higher education expenses
for any taxable year shall be reduced
as provided in section 25A(g)(2) of
such Code and may not be taken into
account for purposes of determining
qualified higher education expenses
under section 135 or 530 of the Inter-
nal Revenue Code of 1986.
(iii) QUALIFIED
FIRST-TIME
HOME-
BUYER COSTS.—The term ‘‘qualified first-
time homebuyer costs’’ means qualified ac-
quisition costs (as defined in section
72(t)(8) of such Code without regard to
subparagraph (B) thereof) with respect to
a principal residence (within the meaning
of section 121 of such Code) for a qualified
first-time homebuyer (as defined in section
72(t)(8) of such Code).
(iv) QUALIFIED
BUSINESS
CAPITAL-
IZATION OR EXPANSION COSTS.—
(I) 
IN
GENERAL.—The 
term
‘‘qualified business capitalization or
expansion costs’’ means qualified ex-
penditures for the capitalization or ex-
pansion of a qualified business pursu-
ant to a qualified business plan.
(II) 
QUALIFIED
EXPENDI-
TURES.—The term ‘‘qualified expendi-
tures’’ means expenditures included in
a qualified business plan, including
capital, plant, equipment, working
capital, inventory expenses, attorney
and accounting fees, and other costs
normally associated with starting or
expanding a business.
(III) 
QUALIFIED
BUSINESS.—
The term ‘‘qualified business’’ means
any business that does not contravene
any law.
(IV) 
QUALIFIED
BUSINESS
PLAN.—The term ‘‘qualified business
plan’’ means a business plan which
has been approved by the qualified fi-
nancial institution, qualified nonprofit
organization, or Indian tribe and
which meets such requirements as the
Secretary may specify.
(v) 
QUALIFIED
ROLLOVERS.—The
term ‘‘qualified rollover’’ means the com-
plete distribution of the amounts in an In-
dividual Development Account and parallel
account to another Individual Development
Account and parallel account established in
another 
qualified 
financial 
institution,
qualified nonprofit organization, or Indian
tribe for the benefit of the account owner.
(vi) 
QUALIFIED
FINAL
DISTRIBU-
TION.—The term ‘‘qualified final distribu-
tion’’ means, in the case of a deceased ac-
count owner, the complete distribution of
the amounts in an Individual Development
Account and parallel account directly to
the spouse, any dependent, or other named
beneficiary of the deceased.
(9) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of the Treasury.
SEC. 303. STRUCTURE AND ADMINISTRATION OF QUALI-
FIED INDIVIDUAL DEVELOPMENT ACCOUNT
PROGRAMS.
(a) ESTABLISHMENT OF QUALIFIED INDIVIDUAL DE-
VELOPMENT ACCOUNT PROGRAMS.—Any qualified finan-
cial institution, qualified nonprofit organization, or Indian
tribe may establish 1 or more qualified individual develop-
ment account programs which meet the requirements of
this title.
(b) BASIC PROGRAM STRUCTURE.—
(1) IN GENERAL.—All qualified individual de-
velopment account programs shall consist of the fol-
lowing 2 components:
(A) An Individual Development Account to
which an eligible individual may contribute cash
in accordance with section 304.
(B) A parallel account to which all match-
ing funds shall be deposited in accordance with
section 305.
(2) TAILORED IDA PROGRAMS.—A qualified fi-
nancial institution, a qualified nonprofit organiza-
tion, or an Indian tribe may tailor its qualified indi-
vidual development account program to allow match-
ing funds to be spent on 1 or more of the categories
of qualified expenses.
(c) TAX TREATMENT OF PARALLEL ACCOUNTS.—
Any account described in subparagraph (B) of subsection
(b)(1) is exempt from taxation under the Internal Revenue
Code of 1986.
SEC. 304. PROCEDURES FOR OPENING AND MAINTAINING
AN INDIVIDUAL DEVELOPMENT ACCOUNT
AND QUALIFYING FOR MATCHING FUNDS.
(a) OPENING AN ACCOUNT.—An eligible individual
may open an Individual Development Account with a
qualified financial institution, a qualified nonprofit organi-
zation, or an Indian tribe upon certification that such indi-
vidual maintains no other Individual Development Ac-
count (other than an Individual Development Account to
be terminated by a qualified rollover).
(b) REQUIRED COMPLETION OF FINANCIAL EDU-
CATION COURSE.—
(1) IN GENERAL.—Before becoming eligible to
withdraw matching funds to pay for qualified ex-
penses, owners of Individual Development Accounts
must complete a financial education course offered
by a qualified financial institution, a qualified non-
profit organization, an Indian tribe, or a government
entity.
(2) 
STANDARD
AND
APPLICABILITY
OF
COURSE.—The Secretary, in consultation with rep-
resentatives of qualified individual development ac-
count programs and financial educators, shall estab-
lish minimum quality standards for the contents of
financial education courses and providers of such
courses offered under paragraph (1) and a protocol
to exempt individuals from the requirement under
paragraph (1) because of hardship or lack of need.
(c) STATUS AS AN ELIGIBLE INDIVIDUAL.—Federal
income tax forms from the preceding taxable year (or in
the absence of such forms, such documentation as speci-
fied by the Secretary proving the eligible individual’s ad-
justed gross income and the status of the individual as
an eligible individual) shall be presented to the qualified
financial institution, qualified nonprofit organization, or
Indian tribe at the time of the establishment of the Indi-
vidual Development Account and in any taxable year in
which contributions are made to the Account to qualify
for matching funds under section 305(b)(1)(A).
(d) DIRECT DEPOSITS.—The Secretary may, under
regulations, provide for the direct deposit of any portion
(not less than $1) of any overpayment of Federal tax of
an individual as a contribution to the Individual Develop-
ment Account of such individual.
SEC. 305. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOP-
MENT ACCOUNT PROGRAMS.
(a) PARALLEL ACCOUNTS.—The qualified financial
institution, qualified nonprofit organization, or Indian
tribe shall deposit all matching funds for each Individual
Development Account into a parallel account at a qualified
financial institution, a qualified nonprofit organization, or
an Indian tribe.
(b) REGULAR DEPOSITS OF MATCHING FUNDS.—
(1) IN GENERAL.—Subject to paragraph (2),
the qualified financial institution, qualified nonprofit
organization, or Indian tribe shall not less than
quarterly (or upon a proper withdrawal request
under section 306, if necessary) deposit into the par-
allel account with respect to each eligible individual
the following:
(A) A dollar-for-dollar match for the first
$500 contributed by the eligible individual into
an Individual Development Account with re-
spect to any taxable year.
(B) Any matching funds provided by State,
local, or private sources in accordance to the
matching ratio set by those sources.
(2) INFLATION ADJUSTMENT.—
(A) IN GENERAL.—In the case of any tax-
able year beginning after 2002, the dollar
amount referred to in paragraph (1)(A) shall be
increased by an amount equal to—
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment de-
termined under section (1)(f)(3) of the In-
ternal Revenue Code of 1986 for the cal-
endar year in which the taxable year be-
gins, by substituting ‘‘2001’’ for ‘‘1992’’.
(B) ROUNDING.—If any amount as ad-
justed under subparagraph (A) is not a multiple
of $20, such amount shall be rounded to the
nearest multiple of $20.
(3) CROSS REFERENCE.—
For allowance of tax credit for Individual Devel-
opment 
Account 
subsidies, 
including 
matching
funds, see section 30B of the Internal Revenue Code
of 1986.
(c) DEPOSIT
OF MATCHING FUNDS INTO INDI-
VIDUAL DEVELOPMENT ACCOUNT OF INDIVIDUAL WHO
HAS ATTAINED AGE 61.—In the case of an Individual De-
velopment Account owner who attains the age of 61, the
qualified financial institution, qualified nonprofit organi-
zation, or Indian tribe which holds the parallel account
for such individual shall deposit the funds in such parallel
account into the Individual Development Account of such
individual on the first day of the succeeding taxable year
of such individual.
(d) UNIFORM ACCOUNTING REGULATIONS.—To en-
sure proper recordkeeping and determination of the tax
credit under section 30B of the Internal Revenue Code
of 1986, the Secretary shall prescribe regulations with re-
spect to accounting for matching funds in the parallel ac-
counts.
(e) REGULAR
REPORTING
OF
ACCOUNTS.—Any
qualified financial institution, qualified nonprofit organi-
zation, or Indian tribe shall report the balances in any
Individual Development Account and parallel account of
an individual on not less than an annual basis to such
individual.
SEC. 306. WITHDRAWAL PROCEDURES.
(a) WITHDRAWALS FOR QUALIFIED EXPENSES.—To
withdraw money from an individual’s Individual Develop-
ment Account to pay qualified expenses of such individual
or such individual’s spouse or dependents, the qualified
financial institution, qualified nonprofit organization, or
Indian tribe shall directly transfer such funds from the
Individual Development Account, and, if applicable, from
the parallel account electronically to the distributees de-
scribed in section 302(8)(A)(ii). If the distributee is not
equipped to receive funds electronically, the qualified fi-
nancial institution, qualified nonprofit organization, or In-
dian tribe may issue such funds by paper check to the
distributee.
(b) 
WITHDRAWALS
FOR
NONQUALIFIED
EX-
PENSES.—An Individual Development Account owner may
unilaterally withdraw any amount of funds from the Indi-
vidual Development Account for purposes other than to
pay qualified expenses, but shall forfeit a proportionate
amount of matching funds from the individual’s parallel
account by doing so, unless such withdrawn funds are re-
contributed to such Account by September 30 following
the withdrawal.
(c) WITHDRAWALS
FROM
ACCOUNTS
OF
NON-
ELIGIBLE INDIVIDUALS.—If the individual for whose ben-
efit an Individual Development Account is established
ceases to be an eligible individual, such account shall re-
main an Individual Development Account, but such indi-
vidual shall not be eligible for any further matching funds
under section 305(b)(1)(A) during the period—
(1) beginning on the first day of the taxable
year of such individual following the beginning of
such ineligibility, and
(2) ending on the last day of the taxable year
of such individual in which such ineligibility ceases.
(d) TAX TREATMENT OF MATCHING FUNDS.—Any
amount withdrawn from a parallel account shall not be
includible in an eligible individual’s gross income.
(e) WITHDRAWAL LIABILITY RESTS ONLY WITH EL-
IGIBLE INDIVIDUALS.—Nothing in this title may be con-
strued to impose liability on a qualified financial institu-
tion, a qualified nonprofit organization, or an Indian tribe
for non-compliance with the requirements of this title re-
lated to withdrawals from Individual Development Ac-
counts.
SEC. 307. CERTIFICATION AND TERMINATION OF QUALI-
FIED INDIVIDUAL DEVELOPMENT ACCOUNT
PROGRAMS.
(a) CERTIFICATION
PROCEDURES.—Upon estab-
lishing a qualified individual development account pro-
gram under section 303, a qualified financial institution,
a qualified nonprofit organization, or an Indian tribe shall
certify to the Secretary on forms prescribed by the Sec-
retary and accompanied by any documentation required
by the Secretary, that—
(1) the accounts described in subparagraphs
(A) and (B) of section 303(b)(1) are operating pur-
suant to all the provisions of this title; and
(2) the qualified financial institution, qualified
nonprofit organization, or Indian tribe agrees to im-
plement an information system necessary to monitor
the cost and outcomes of the qualified individual de-
velopment account program.
(b) AUTHORITY TO TERMINATE QUALIFIED IDA
PROGRAM.—If the Secretary determines that a qualified
financial institution, a qualified nonprofit organization, or
an Indian tribe under this title is not operating a qualified
individual development account program in accordance
with the requirements of this title (and has not imple-
mented any corrective recommendations directed by the
Secretary), the Secretary shall terminate such institu-
tion’s, nonprofit organization’s, or Indian tribe’s authority
to conduct the program. If the Secretary is unable to iden-
tify a qualified financial institution, a qualified nonprofit
organization, or an Indian tribe to assume the authority
to conduct such program, then any funds in a parallel ac-
count established for the benefit of any individual under
such program shall be deposited into the Individual Devel-
opment Account of such individual as of the first day of
such termination.
SEC. 308. REPORTING, MONITORING, AND EVALUATION.
(a) RESPONSIBILITIES OF QUALIFIED FINANCIAL IN-
STITUTIONS, QUALIFIED NONPROFIT ORGANIZATIONS,
AND INDIAN TRIBES.—Each qualified financial institu-
tion, qualified nonprofit organization, or Indian tribe that
operates a qualified individual development account pro-
gram under section 303 shall report annually to the Sec-
retary within 90 days after the end of each calendar year
on—
(1) the number of eligible individuals making
contributions into Individual Development Accounts;
(2) the amounts contributed into Individual De-
velopment Accounts and deposited into parallel ac-
counts for matching funds;
(3) the amounts withdrawn from Individual De-
velopment Accounts and parallel accounts, and the
purposes for which such amounts were withdrawn;
(4) the balances remaining in Individual Devel-
opment Accounts and parallel accounts; and
(5) such other information needed to help the
Secretary monitor the cost and outcomes of the
qualified individual development account program
(provided in a non-individually-identifiable manner).
(b) RESPONSIBILITIES OF THE SECRETARY.—
(1) MONITORING
PROTOCOL.—Not later than
12 months after the date of the enactment of this
Act, the Secretary shall develop and implement a
protocol and process to monitor the cost and out-
comes of the qualified individual development ac-
count programs established under section 303.
(2) ANNUAL REPORTS.—In each year after the
date of the enactment of this Act, the Secretary
shall submit a progress report to Congress on the
status of such qualified individual development ac-
count programs. Such report shall include from a
representative sample of qualified individual develop-
ment account programs information on—
(A) the characteristics of participants, in-
cluding age, gender, race or ethnicity, marital
status, number of children, employment status,
and monthly income;
(B) deposits, withdrawals, balances, uses
of Individual Development Accounts, and par-
ticipant characteristics;
(C) the characteristics of qualified indi-
vidual development account programs, including
match rate, economic education requirements,
permissible uses of accounts, staffing of pro-
grams in full time employees, and the total
costs of programs; and
(D) information on program implementa-
tion and administration, especially on problems
encountered and how problems were solved.
SEC. 309. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated to the Sec-
retary $1,000,000 for fiscal year 2002 and for each fiscal
year through 2008, for the purposes of implementing this
title, including the reporting, monitoring, and evaluation
required under section 308, to remain available until ex-
pended.
SEC. 310. ACCOUNT FUNDS DISREGARDED FOR PURPOSES
OF CERTAIN MEANS-TESTED FEDERAL PRO-
GRAMS.
Notwithstanding any other provision of Federal law
that requires consideration of 1 or more financial cir-
cumstances of an individual, for the purposes of deter-
mining eligibility to receive, or the amount of, any assist-
ance or benefit authorized by such provision to be provided
to or for the benefit of such individual, an amount equal
to the sum of—
(1) all amounts (including earnings thereon) in
any Individual Development Account; plus
(2) the matching deposits made on behalf of
such individual (including earnings thereon) in any
parallel account,
shall be disregarded for such purposes.
SEC. 311. MATCHING FUNDS FOR INDIVIDUAL DEVELOP-
MENT ACCOUNTS PROVIDED THROUGH A TAX
CREDIT FOR QUALIFIED FINANCIAL INSTITU-
TIONS.
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to other credits) is amended by inserting
after section 30A the following new section:
‘‘SEC. 30B. INDIVIDUAL DEVELOPMENT ACCOUNT INVEST-
MENT CREDIT FOR QUALIFIED FINANCIAL IN-
STITUTIONS.
‘‘(a) DETERMINATION OF AMOUNT.—There shall be
allowed as a credit against the applicable tax for the tax-
able year an amount equal to the individual development
account investment provided by an eligible entity during
the taxable year under an individual development account
program established under section 303 of the Community
Solutions Act of 2001.
‘‘(b) APPLICABLE TAX.—For the purposes of this
section, the term ‘applicable tax’ means the excess (if any)
of—
‘‘(1) the tax imposed under this chapter (other
than the taxes imposed under the provisions de-
scribed in subparagraphs (C) through (Q) of section
26(b)(2)), over