H. R. 2488—102 
‘‘(ii) An entity is described in this clause if it is an entity 
or fund created before January 1, 1999, pursuant to State 
law and organized and operated exclusively to receive, hold, 
and invest remittances from an association described in 
subparagraph (A) and exempt from tax under subsection (a), 
to make disbursements to pay claims on insurance contracts 
issued by such association, and to make disbursements to sup-
port governmental programs to prepare for or mitigate the 
effects of natural catastrophic events.’’. 
(b) UNRELATED BUSINESS TAXABLE INCOME.—Subsection (a) of 
section 512 (relating to unrelated business taxable income) is 
amended by adding at the end the following new paragraph: 
‘‘(6) 
SPECIAL
RULE
APPLICABLE
TO
ORGANIZATIONS 
DESCRIBED IN SECTION 501(C)(28).—In the case of an organization 
described in section 501(c)(28), the term ‘unrelated business 
taxable income’ means taxable income for a taxable year com-
puted without the application of section 501(c)(28) if at the 
end of the immediately preceding taxable year the organiza-
tion’s net equity exceeded 15 percent of the total coverage 
in force under insurance contracts issued by the organization 
and outstanding at the end of such preceding year.’’. 
(c) TRANSITIONAL RULE.—No income or gain shall be recognized 
by an association as a result of a change in status to that of 
an association described by section 501(c)(28) of the Internal Rev-
enue Code of 1986, as amended by subsection (a). 
(d) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to taxable years beginning after December 31, 1999. 
SEC. 1002. MODIFICATION OF SPECIAL ARBITRAGE RULE FOR CERTAIN 
FUNDS. 
(a) IN GENERAL.—Paragraph (1) of section 648 of the Tax 
Reform Act of 1984 is amended to read as follows: 
‘‘(1) such securities or obligations are held in a fund— 
‘‘(A) which, except to the extent of the investment 
earnings on such securities or obligations, cannot be used, 
under State constitutional or statutory restrictions continu-
ously in effect since October 9, 1969, through the date 
of issue of the bond issue, to pay debt service on the 
bond issue or to finance the facilities that are to be financed 
with the proceeds of the bonds, or 
‘‘(B) the annual distributions from which cannot exceed 
7 percent of the average fair market value of the assets 
held in such fund except to the extent distributions are 
necessary to pay debt service on the bond issue,’’. 
(b) CONFORMING AMENDMENT.—Paragraph (3) of such section 
is amended by striking ‘‘the investment earnings of’’ and inserting 
‘‘distributions from’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall take effect on January 1, 2000. 
SEC. 1003. EXEMPTION PROCEDURE FROM TAXES ON SELF-DEALING. 
(a) IN GENERAL.—Subsection (d) of section 4941 (relating to 
taxes on self-dealing) is amended by adding at the end the following 
new paragraph: 
‘‘(3) SPECIAL EXEMPTION.—The Secretary shall establish an 
exemption procedure for purposes of this subsection. Pursuant 
to such procedure, the Secretary may grant a conditional or 
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H. R. 2488—103 
unconditional exemption of any disqualified person or trans-
action or class of disqualified persons or transactions, from 
all or part of the restrictions imposed by paragraph (1). The 
Secretary may not grant an exemption under this paragraph 
unless he finds that such exemption is— 
‘‘(A) administratively feasible, 
‘‘(B) in the interests of the private foundation, and 
‘‘(C) protective of the rights of the private foundation. 
Before granting an exemption under this paragraph, the Sec-
retary shall require adequate notice to be given to interested 
persons and shall publish notice in the Federal Register of 
the pendency of such exemption and shall afford interested 
persons an opportunity to present views.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to transactions occurring after the date of the enactment 
of this Act. 
SEC. 1004. EXPANSION OF DECLARATORY JUDGMENT REMEDY TO TAX- 
EXEMPT ORGANIZATIONS. 
(a) IN GENERAL.—Subsection (a) of section 7428 (relating to 
creation of remedy) is amended— 
(1) in subparagraph (B) by inserting after ‘‘509(a))’’ the 
following: ‘‘or as a private operating foundation (as defined 
in section 4942( j)(3))’’, and 
(2) by amending subparagraph (C) to read as follows: 
‘‘(C) with respect to the initial qualification or con-
tinuing qualification of an organization as an organization 
described in section 501(c) (other than paragraph (3)) which 
is exempt from tax under section 501(a), or’’. 
(b) COURT JURISDICTION.—Subsection (a) of section 7428 is 
amended in the material following paragraph (2) by striking ‘‘United 
States Tax Court, the United States Claims Court, or the district 
court of the United States for the District of Columbia’’ and 
inserting the following: ‘‘United States Tax Court (in the case of 
any such determination or failure) or the United States Claims 
Court or the district court of the United States for the District 
of Columbia (in the case of a determination or failure with respect 
to an issue referred to in subparagraph (A) or (B) of paragraph 
(1)),’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to pleadings filed with respect to determinations (or 
requests for determinations) made after the date of the enactment 
of this Act. 
SEC. 1005. MODIFICATIONS TO SECTION 512(b)(13). 
(a) IN GENERAL.—Paragraph (13) of section 512(b) is amended 
by redesignating subparagraph (E) as subparagraph (F) and by 
inserting after subparagraph (D) the following new paragraph: 
‘‘(E) PARAGRAPH TO APPLY ONLY TO EXCESS PAYMENTS.— 
‘‘(i) IN GENERAL.—Subparagraph (A) shall apply 
only to the portion of a specified payment received 
by the controlling organization that exceeds the 
amount which would have been paid if such payment 
met the requirements prescribed under section 482. 
‘‘(ii) 
ADDITION
TO
TAX
FOR
VALUATION 
MISSTATEMENTS.—The tax imposed by this chapter on 
the controlling organization shall be increased by an 
amount equal to 20 percent of such excess.’’. 
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H. R. 2488—104 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendment made by this section 
shall apply to payments received or accrued after December 
31, 1999. 
(2) PAYMENTS SUBJECT TO BINDING CONTRACT TRANSITION 
RULE.—If the amendments made by section 1041 of the Tax-
payer Relief Act of 1997 do not apply to any amount received 
or accrued after the date of the enactment of this Act under 
any contract described in subsection (b)(2) of such section, 
such amendments also shall not apply to amounts received 
or accrued under such contract before January 1, 2000. 
SEC. 1006. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS 
EXCLUDED FROM GROSS INCOME. 
(a) IN GENERAL.—Part III of subchapter B of chapter 1 is 
amended by inserting after section 138 the following new section: 
‘‘SEC. 138A. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUN-
TEERS. 
‘‘(a) IN GENERAL.—Gross income of an individual does not 
include amounts received, from an organization described in section 
170(c), as reimbursement of operating expenses with respect to 
use of a passenger automobile for the benefit of such organization 
for which a deduction would otherwise be allowable under section 
170. The preceding sentence shall apply only to the extent that 
such reimbursement would be deductible under section 274(d) 
(determined by applying the standard business mileage rate estab-
lished pursuant to section 274(d)) if the organization were not 
so described and such individual were an employee of such organiza-
tion. 
‘‘(b) NO DOUBLE BENEFIT.—Subsection (a) shall not apply with 
respect to any expenses if the individual claims a deduction or 
credit for such expenses under any other provision of this title. 
‘‘(c) EXEMPTION
FROM
REPORTING
REQUIREMENTS.—Section 
6041 shall not apply with respect to reimbursements excluded from 
income under subsection (a).’’. 
(b) CLERICAL AMENDMENT.—The table of sections for part III 
of subchapter B of chapter 1 is amended by inserting after the 
item relating to section 138 the following new items: 
‘‘Sec. 138A. Reimbursement for use of passenger automobile for charity.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 1999. 
SEC. 1007. CHARITABLE CONTRIBUTION DEDUCTION FOR CERTAIN 
EXPENSES INCURRED IN SUPPORT OF NATIVE ALASKAN 
SUBSISTENCE WHALING. 
(a) IN GENERAL.—Section 170 (relating to charitable, etc., con-
tributions and gifts) is amended by redesignating subsection (m) 
as subsection (n) and by inserting after subsection (l) the following 
new subsection: 
‘‘(m) EXPENSES PAID BY CERTAIN WHALING CAPTAINS IN SUP-
PORT OF NATIVE ALASKAN SUBSISTENCE WHALING.— 
‘‘(1) IN
GENERAL.—In the case of an individual who is 
recognized by the Alaska Eskimo Whaling Commission as a 
whaling captain charged with the responsibility of maintaining 
and carrying out sanctioned whaling activities and who engages 
in such activities during the taxable year, the amount described 
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H. R. 2488—105 
in paragraph (2) (to the extent such amount does not exceed 
$7,500 for the taxable year) shall be treated for purposes of 
this section as a charitable contribution. 
‘‘(2) AMOUNT DESCRIBED.— 
‘‘(A) IN GENERAL.—The amount described in this para-
graph is the aggregate of the reasonable and necessary 
whaling expenses paid by the taxpayer during the taxable 
year in carrying out sanctioned whaling activities. 
‘‘(B) WHALING
EXPENSES.—For purposes of subpara-
graph (A), the term ‘whaling expenses’ includes expenses 
for— 
‘‘(i) the acquisition and maintenance of whaling 
boats, weapons, and gear used in sanctioned whaling 
activities, 
‘‘(ii) the supplying of food for the crew and other 
provisions for carrying out such activities, and 
‘‘(iii) storage and distribution of the catch from 
such activities. 
‘‘(3) SANCTIONED WHALING ACTIVITIES.—For purposes of this 
subsection, the term ‘sanctioned whaling activities’ means 
subsistence bowhead whale hunting activities conducted pursu-
ant to the management plan of the Alaska Eskimo Whaling 
Commission.’’. 
(b) EFFECTIVE DATE.—The amendments made by subsection 
(a) shall apply to taxable years beginning after December 31, 1999. 
SEC. 1008. SIMPLIFICATION OF LOBBYING EXPENDITURE LIMITATION. 
(a) REPEAL OF GRASSROOTS EXPENDITURE LIMIT.—Paragraph 
(1) of section 501(h) (relating to expenditures by public charities 
to influence legislation) is amended to read as follows: 
‘‘(1) GENERAL
RULE.—In the case of an organization to 
which this subsection applies, exemption from taxation under 
subsection (a) shall be denied because a substantial part of 
the activities of such organization consists of carrying on propa-
ganda, or otherwise attempting, to influence legislation, but 
only if such organization normally makes lobbying expenditures 
in excess of the lobbying ceiling amount for such organization 
for each taxable year.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 501(h)(2) is amended by striking subparagraphs 
(C) and (D). 
(2) Section 4911(b) is amended to read as follows: 
‘‘(b) EXCESS LOBBYING EXPENDITURES.—For purposes of this 
section, the term ‘excess lobbying expenditures’ means, for a taxable 
year, the amount by which the lobbying expenditures made by 
the organization during the taxable year exceed the lobbying non-
taxable amount for such organization for such taxable year.’’. 
(3) Section 4911(c) is amended by striking paragraphs (3) 
and (4). 
(4) Paragraph (1)(A) of section 4911(f ) is amended by 
striking ‘‘limits of section 501(h)(1) have’’ and inserting ‘‘limit 
of section 501(h)(1) has’’. 
(5) Paragraph (1)(C) of section 4911(f ) is amended by 
striking ‘‘limits of section 501(h)(1) are’’ and inserting ‘‘limit 
of section 501(h)(1) is’’. 
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