857
‘‘(ii) the issuance of a letter of pro-
posed deficiency of tax imposed under sec-
tion 507 or chapter 41 or 42, and 
‘‘(iii) the names, addresses, and tax-
payer identification numbers of organiza-
tions which have applied for recognition as 
organizations 
described 
in 
section 
501(c)(3). 
‘‘(B) ADDITIONAL DISCLOSURES.—Returns 
and return information of organizations with 
respect to which information is disclosed under 
subparagraph (A) may be made available for in-
spection by or disclosed to an appropriate State 
officer. 
‘‘(C) PROCEDURES FOR DISCLOSURE.—In-
formation may be inspected or disclosed under 
subparagraph (A) or (B) only—
‘‘(i) upon written request by an ap-
propriate State officer, and 
‘‘(ii) for the purpose of, and only to 
the extent necessary in, the administration 
of State laws regulating such organiza-
tions. 
Such information may only be inspected by or 
disclosed to a person other than the appropriate
858
State officer if such person is an officer or em-
ployee of the State and is designated by the ap-
propriate State officer to receive the returns or 
return information under this paragraph on be-
half of the appropriate State officer. 
‘‘(D) DISCLOSURES OTHER THAN BY RE-
QUEST.—The Secretary may make available for 
inspection or disclose returns and return infor-
mation of an organization to which paragraph 
(1) applies to an appropriate State officer of 
any State if the Secretary determines that such 
returns or return information may constitute 
evidence of noncompliance under the laws with-
in the jurisdiction of the appropriate State offi-
cer. 
‘‘(3) DISCLOSURE WITH RESPECT TO CERTAIN 
OTHER EXEMPT ORGANIZATIONS.—Upon written re-
quest by an appropriate State officer, the Secretary 
may make available for inspection or disclosure re-
turns and return information of any organization de-
scribed in section 501(c) (other than organizations 
described in paragraph (1) or (3) thereof) for the 
purpose of, and only to the extent necessary in, the 
administration of State laws regulating the solicita-
tion or administration of the charitable funds or
859
charitable assets of such organizations. Such infor-
mation may only be inspected by or disclosed to a 
person other than the appropriate State officer if 
such person is an officer or employee of the State 
and is designated by the appropriate State officer to 
receive the returns or return information under this 
paragraph on behalf of the appropriate State officer. 
‘‘(4) USE IN CIVIL JUDICIAL AND ADMINISTRA-
TIVE PROCEEDINGS.—Returns and return informa-
tion disclosed pursuant to this subsection may be 
disclosed in civil administrative and civil judicial pro-
ceedings pertaining to the enforcement of State laws 
regulating such organizations in a manner pre-
scribed by the Secretary similar to that for tax ad-
ministration proceedings under section 6103(h)(4). 
‘‘(5) NO
DISCLOSURE
IF
IMPAIRMENT.—Re-
turns and return information shall not be disclosed 
under this subsection, or in any proceeding described 
in paragraph (4), to the extent that the Secretary 
determines that such disclosure would seriously im-
pair Federal tax administration. 
‘‘(6) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) RETURN
AND
RETURN
INFORMA-
TION.—The terms ‘return’ and ‘return informa-
860
tion’ have the respective meanings given to such 
terms by section 6103(b). 
‘‘(B) APPROPRIATE STATE OFFICER.—The 
term ‘appropriate State officer’ means—
‘‘(i) the State attorney general, 
‘‘(ii) the State tax officer, 
‘‘(iii) in the case of an organization to 
which paragraph (1) applies, any other 
State official charged with overseeing orga-
nizations of the type described in section 
501(c)(3), and 
‘‘(iv) in the case of an organization to 
which paragraph (3) applies, the head of 
an agency designated by the State attorney 
general as having primary responsibility 
for overseeing the solicitation of funds for 
charitable purposes.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 6103(a) is amend-
ed by inserting ‘‘or section 6104(c)’’ after ‘‘this sec-
tion’’. 
(2) Subparagraph (A) of section 6103(p)(3) is 
amended by inserting ‘‘and section 6104(c)’’ after 
‘‘section’’ in the first sentence.
861
(3) Paragraph (4) of section 6103(p) is amend-
ed—
(A) in the matter preceding subparagraph 
(A), by inserting ‘‘, any appropriate State offi-
cer (as defined in section 6104(c)),’’ before ‘‘or 
any other person’’, 
(B) in subparagraph (F)(i), by inserting 
‘‘any appropriate State officer (as defined in 
section 6104(c)),’’ before ‘‘or any other per-
son’’, and 
(C) in the matter following subparagraph 
(F), by inserting ‘‘, an appropriate State officer 
(as defined in section 6104(c)),’’ after ‘‘includ-
ing an agency’’ each place it appears. 
(4) The heading for paragraph (1) of section 
6104(c) is amended by inserting ‘‘FOR CHARITABLE 
ORGANIZATIONS’’ after ‘‘RULE’’. 
(5) Paragraph (2) of section 7213(a) is amend-
ed by inserting ‘‘or under section 6104(c)’’ after 
‘‘6103’’. 
(6) Paragraph (2) of section 7213A(a) is 
amended by inserting ‘‘or under section 6104(c)’’ 
after ‘‘7213(a)(2)’’.
862
(7) Paragraph (2) of section 7431(a) is amend-
ed by inserting ‘‘ or in violation of section 6104(c)’’ 
after ‘‘6103’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act but shall not apply to requests made before 
such date. 
SEC. 1225. PUBLIC DISCLOSURE OF INFORMATION RELAT-
ING TO UNRELATED BUSINESS INCOME TAX 
RETURNS. 
(a) IN GENERAL.—Subparagraph (A) of section 
6104(d)(1) is amended by redesignating clauses (ii) and 
(iii) as clauses (iii) and (iv), respectively, and by inserting 
after clause (i) the following new clause: 
‘‘(ii) any annual return filed under 
section 6011 which relates to any tax im-
posed by section 511 (relating to imposi-
tion of tax on unrelated business income of 
charitable, etc., organizations) by such or-
ganization, but only if such organization is 
described in section 501(c)(3),’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to returns filed after the date of 
the enactment of this Act.
863
SEC. 1226. STUDY ON DONOR ADVISED FUNDS AND SUP-
PORTING ORGANIZATIONS. 
(a) STUDY.—The Secretary of the Treasury shall un-
dertake a study on the organization and operation of 
donor advised funds (as defined in section 4966(d)(2) of 
the Internal Revenue Code of 1986, as added by this Act) 
and of organizations described in section 509(a)(3) of such 
Code. The study shall specifically consider—
(1) whether the deductions allowed for the in-
come, gift, or estate taxes for charitable contribu-
tions to sponsoring organizations (as defined in sec-
tion 4966(d)(1) of such Code, as added by this Act) 
of donor advised funds or to organizations described 
in section 509(a)(3) of such Code are appropriate in 
consideration of—
(A) the use of contributed assets (including 
the type, extent, and timing of such use), or 
(B) the use of the assets of such organiza-
tions for the benefit of the person making the 
charitable contribution (or a person related to 
such person), 
(2) whether donor advised funds should be re-
quired to distribute for charitable purposes a speci-
fied amount (whether based on the income or assets 
of the fund) in order to ensure that the sponsoring 
organization with respect to such donor advised fund
864
is operating consistent with the purposes or func-
tions constituting the basis for its exemption under 
section 501, or its status as an organization de-
scribed in section 509(a), of such Code, 
(3) whether the retention by donors to organi-
zations described in paragraph (1) of rights or privi-
leges with respect to amounts transferred to such or-
ganizations (including advisory rights or privileges 
with respect to the making of grants or the invest-
ment of assets) is consistent with the treatment of 
such transfers as completed gifts that qualify for a 
deduction for income, gift, or estate taxes, and 
(4) whether the issues raised by paragraphs 
(1), (2), and (3) are also issues with respect to other 
forms of charities or charitable donations. 
(b) REPORT.—Not later than 1 year after the date 
of the enactment of this Act, the Secretary of the Treasury 
shall submit to the Committee on Finance of the Senate 
and the Committee on Ways and Means of the House of 
Representatives a report on the study conducted under 
subsection (a) and make such recommendations as the 
Secretary of the Treasury considers appropriate.
865
PART 2—IMPROVED ACCOUNTABILITY OF DONOR 
ADVISED FUNDS 
SEC. 1231. EXCISE TAXES RELATING TO DONOR ADVISED 
FUNDS. 
(a) IN GENERAL.—Chapter 42 (relating to private 
foundations and certain other tax-exempt organizations), 
as amended by the Tax Increase Prevention and Reconcili-
ation Act of 2005, is amended by adding at the end the 
following new subchapter: 
‘‘Subchapter G—Donor Advised Funds
‘‘Sec. 4966. Taxes on taxable distributions. 
‘‘Sec. 4967. Taxes on prohibited benefits.
‘‘SEC. 4966. TAXES ON TAXABLE DISTRIBUTIONS. 
‘‘(a) IMPOSITION OF TAXES.—
‘‘(1) ON
THE
SPONSORING
ORGANIZATION.—
There is hereby imposed on each taxable distribution 
a tax equal to 20 percent of the amount thereof. The 
tax imposed by this paragraph shall be paid by the 
sponsoring organization with respect to the donor 
advised fund. 
‘‘(2) ON THE FUND MANAGEMENT.—There is 
hereby imposed on the agreement of any fund man-
ager to the making of a distribution, knowing that 
it is a taxable distribution, a tax equal to 5 percent 
of the amount thereof. The tax imposed by this
866
paragraph shall be paid by any fund manager who 
agreed to the making of the distribution. 
‘‘(b) SPECIAL RULES.—For purposes of subsection 
(a)—
‘‘(1) JOINT AND SEVERAL LIABILITY.—If more 
than one person is liable under subsection (a)(2) 
with respect to the making of a taxable distribution, 
all such persons shall be jointly and severally liable 
under such paragraph with respect to such distribu-
tion. 
‘‘(2) LIMIT FOR MANAGEMENT.—With respect 
to any one taxable distribution, the maximum 
amount of the tax imposed by subsection (a)(2) shall 
not exceed $10,000. 
‘‘(c) TAXABLE DISTRIBUTION.—For purposes of this 
section—
‘‘(1) IN GENERAL.—The term ‘taxable distribu-
tion’ means any distribution from a donor advised 
fund—
‘‘(A) to any natural person, or 
‘‘(B) to any other person if—
‘‘(i) such distribution is for any pur-
pose other than one specified in section 
170(c)(2)(B), or