I
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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. CHANGES IN APPLICATION OF WAGERING
TAXES TO CHARITABLE ORGANIZATIONS.
(a) EXEMPTION FROM OCCUPATIONAL TAX
FOR
CHARITABLE ORGANIZATIONS.—Section 4411 of the In-
ternal Revenue Code of 1986 (relating to occupational tax
on wagering) is amended by adding at the end thereof the
following new subsection:
‘‘(c) EXCEPTION FOR CHARITABLE ORGANIZATIONS,
ETC.—No tax shall be imposed by subsection (a) on—
‘‘(1) any organization exempt from tax under
section 501 or 521, and
‘‘(2) any person who is engaged in receiving wa-
gers only for or on behalf of such an organization,
if the only wagers accepted by such organization (and such
person) are authorized under the law of the State in which
accepted.’’
(b) EXCEPTION FROM WAGERING TAX FOR CHARI-
TABLE ORGANIZATIONS.—Section 4402 of such Code (re-
lating to exemptions from tax on wagers) is amended by
inserting ‘‘(a) IN GENERAL.—’’ before ‘‘No tax’’ and by
adding at the end thereof the following new subsection:
‘‘(b) CHARITABLE ORGANIZATIONS, ETC.—
‘‘(1) EXEMPTION
WHERE
CHARITABLE
EX-
PENDITURES EXCEED WINNINGS.—If the amount of
charitable expenditures of any organization de-
scribed in section 4411(c) for any calendar quarter
equals or exceeds the amount of wagering winnings
of such organization for such quarter, no tax shall
be imposed by this subchapter on wagers placed dur-
ing such calendar quarter with such organization or
with any person described in section 4411(c)(2) with
respect to such organization.
‘‘(2) REDUCTION OF TAX WHERE WINNINGS EX-
CEED CHARITABLE EXPENDITURES.—
‘‘(A) IN GENERAL.—If paragraph (1) does
not apply to an organization or person de-
scribed in section 4411(c) for any calendar
quarter, the tax imposed by this subchapter on
wagers placed with such organization or person
during such quarter shall be the applicable per-
centage of the tax which would (but for this
paragraph) be imposed on such wagers during
such quarter.
‘‘(B) 
APPLICABLE
PERCENTAGE.—For
purposes of subparagraph (A), the applicable
percentage for any calendar quarter is the ex-
cess of 100 percent over the percentage which
the charitable expenditures of such organization
for such quarter is of the wagering winnings of
such organization for such quarter.
‘‘(3) DEFINITIONS
AND
SPECIAL
RULE.—For
purposes of this subsection—
‘‘(A) CHARITABLE
EXPENDITURES.—The
term ‘charitable expenditures’ means, for any
calendar quarter, the sum of—
‘‘(i) the amount paid by such organi-
zation during such quarter to accomplish 1
or more of the purposes described in sec-
tion 170(c)(2)(B) or to acquire an asset
used (or held for use) directly in carrying
out 1 or more of such purposes, and
‘‘(ii) the amount permanently set-
aside by such organization during such
quarter for 1 or more of such purposes.
‘‘(B) WAGERING
WINNINGS.—The term
‘wagering winnings’ means, with respect to any
calendar quarter, the excess of the wagers
which would (but for this subsection) be subject
to tax under this subchapter and which are
placed with the organization during such cal-
endar quarter over the winnings paid on such
wagers.
‘‘(C) SPECIAL RULE.—Wagers received by
any person for or on behalf of an organization
shall be treated as received by such organiza-
tion.’’
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendment made
by subsection (a) shall apply to taxes imposed for
periods beginning after the date of the enactment of
this Act.
(2) SUBSECTION (b).—The amendment made
by subsection (b) shall apply to wagers placed in cal-
endar quarters beginning after the date of the enact-
ment of this Act.
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