844 
credit counseling organization or its affili-
ates), and 
‘‘(iii) not more than 49 percent of the 
voting power of which is vested in persons 
who are employed by the organization or 
who will benefit financially, directly or in-
directly, from the organization’s activities 
(other than through the receipt of reason-
able directors’ fees). 
‘‘(E) The organization does not own more 
than 35 percent of— 
‘‘(i) the total combined voting power 
of any corporation (other than a corpora-
tion which is an organization described in 
subsection (c)(3) and exempt from tax 
under subsection (a)) which is in the trade 
or business of lending money, repairing 
credit, or providing debt management plan 
services, payment processing, or similar 
services, 
‘‘(ii) the profits interest of any part-
nership (other than a partnership which is 
an organization described in subsection 
(c)(3) and exempt from tax under sub-
section (a)) which is in the trade or busi-
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ccoleman on PROD1PC71 with BILLS
845 
ness of lending money, repairing credit, or 
providing debt management plan services, 
payment processing, or similar services, 
and 
‘‘(iii) the beneficial interest of any 
trust or estate (other than a trust which is 
an organization described in subsection 
(c)(3) and exempt from tax under sub-
section (a)) which is in the trade or busi-
ness of lending money, repairing credit, or 
providing debt management plan services, 
payment processing, or similar services. 
‘‘(F) The organization receives no amount 
for providing referrals to others for debt man-
agement plan services, and pays no amount to 
others for obtaining referrals of consumers. 
‘‘(2) ADDITIONAL REQUIREMENTS FOR ORGANI-
ZATIONS DESCRIBED IN SUBSECTION (c)(3).— 
‘‘(A) IN GENERAL.—In addition to the re-
quirements under paragraph (1), an organiza-
tion with respect to which the provision of cred-
it counseling services is a substantial purpose 
and which is described in paragraph (3) of sub-
section (c) shall not be exempt from tax under 
subsection (a) unless such organization is orga-
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ccoleman on PROD1PC71 with BILLS
846 
nized and operated in accordance with the fol-
lowing requirements: 
‘‘(i) The organization does not solicit 
contributions from consumers during the 
initial counseling process or while the con-
sumer is receiving services from the orga-
nization. 
‘‘(ii) The aggregate revenues of the 
organization which are from payments of 
creditors of consumers of the organization 
and which are attributable to debt manage-
ment plan services do not exceed the appli-
cable percentage of the total revenues of 
the organization. 
‘‘(B) APPLICABLE PERCENTAGE.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(ii), the applicable per-
centage is 50 percent. 
‘‘(ii) TRANSITION
RULE.—Notwith-
standing clause (i), in the case of an orga-
nization with respect to which the provi-
sion of credit counseling services is a sub-
stantial purpose and which is described in 
paragraph (3) of subsection (c) and ex-
empt from tax under subsection (a) on the 
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ccoleman on PROD1PC71 with BILLS
847 
date of the enactment of this subsection, 
the applicable percentage is— 
‘‘(I) 80 percent for the first tax-
able year of such organization begin-
ning after the date which is 1 year 
after the date of the enactment of this 
subsection, and 
‘‘(II) 70 percent for the second 
such taxable year beginning after such 
date, and 
‘‘(III) 60 percent for the third 
such taxable year beginning after such 
date. 
‘‘(3) ADDITIONAL REQUIREMENT FOR ORGANI-
ZATIONS DESCRIBED IN SUBSECTION (c)(4).—In ad-
dition to the requirements under paragraph (1), an 
organization with respect to which the provision of 
credit counseling services is a substantial purpose 
and which is described in paragraph (4) of sub-
section (c) shall not be exempt from tax under sub-
section (a) unless such organization notifies the Sec-
retary, in such manner as the Secretary may by reg-
ulations prescribe, that it is applying for recognition 
as a credit counseling organization. 
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ccoleman on PROD1PC71 with BILLS
848 
‘‘(4) CREDIT
COUNSELING
SERVICES; DEBT 
MANAGEMENT
PLAN
SERVICES.—For purposes of 
this subsection— 
‘‘(A) CREDIT
COUNSELING
SERVICES.— 
The term ‘credit counseling services’ means— 
‘‘(i) the providing of educational infor-
mation to the general public on budgeting, 
personal finance, financial literacy, saving 
and spending practices, and the sound use 
of consumer credit, 
‘‘(ii) the assisting of individuals and 
families with financial problems by pro-
viding them with counseling, or 
‘‘(iii) a combination of the activities 
described in clauses (i) and (ii). 
‘‘(B) DEBT
MANAGEMENT
PLAN
SERV-
ICES.—The term ‘debt management plan serv-
ices’ means services related to the repayment, 
consolidation, or restructuring of a consumer’s 
debt, and includes the negotiation with creditors 
of lower interest rates, the waiver or reduction 
of fees, and the marketing and processing of 
debt management plans.’’. 
(b) DEBT MANAGEMENT PLAN SERVICES TREATED 
AS AN UNRELATED BUSINESS.—Section 513 (relating to 
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ccoleman on PROD1PC71 with BILLS
849 
unrelated trade or business) is amended by adding at the 
end the following: 
‘‘(j) DEBT MANAGEMENT PLAN SERVICES.—The 
term ‘unrelated trade or business’ includes the provision 
of debt management plan services (as defined in section 
501(q)(4)(B)) by any organization other than an organiza-
tion which meets the requirements of section 501(q).’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after the date 
of the enactment of this Act. 
(2) TRANSITION RULE FOR EXISTING ORGANI-
ZATIONS.—In the case of any organization described 
in paragraph (3) or (4) section 501(c) of the Inter-
nal Revenue Code of 1986 and with respect to which 
the provision of credit counseling services is a sub-
stantial purpose on the date of the enactment of this 
Act, the amendments made by this section shall 
apply to taxable years beginning after the date 
which is 1 year after the date of the enactment of 
this Act. 
SEC. 1221. EXPANSION OF THE BASE OF TAX ON PRIVATE 
FOUNDATION NET INVESTMENT INCOME. 
(a) GROSS INVESTMENT INCOME.— 
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