determination 
described 
in 
subparagraph 
(A)(ii). 
‘‘(7) NOTICE OF SUSPENSIONS.—If the tax ex-
emption of any organization is suspended under this 
subsection, the Internal Revenue Service shall up-
date the listings of tax-exempt organizations and 
shall publish appropriate notice to taxpayers of such 
suspension and of the fact that contributions to such 
organization are not deductible during the period of 
such suspension.’’.
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to designations made before, on, 
or after the date of the enactment of this Act. 
SEC. 202. CLARIFICATION OF DEFINITION OF CHURCH TAX 
INQUIRY. 
Subsection (i) of section 7611 (relating to section not 
to apply to criminal investigations, etc.) is amended by 
striking ‘‘or’’ at the end of paragraph (4), by striking the 
period at the end of paragraph (5) and inserting ‘‘, or’’, 
and by inserting after paragraph (5) the following: 
‘‘(6) information provided by the Secretary re-
lated to the standards for exemption from tax under 
this title and the requirements under this title relat-
ing to unrelated business taxable income.’’.
SEC. 203. EXPANSION OF DECLARATORY JUDGMENT REM-
EDY TO TAX-EXEMPT ORGANIZATIONS. 
(a) IN GENERAL.—Paragraph (1) of section 7428(a) 
(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 qualifica-
tion or continuing qualification of an organiza-
tion as an organization described in subsection 
(c) (other than paragraph (3)) or (d) of section 
501 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 deter-
mination 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. 204. LANDOWNER INCENTIVES PROGRAMS. 
(a) IN GENERAL.—Subsection (a) of section 126 is 
amended by redesignating paragraph (10) as paragraph 
(11) and by inserting after paragraph (9) the following 
new paragraph: 
‘‘(10) Landowner initiatives programs to con-
serve threatened, endangered, or imperiled species, 
or protect or restore habitat carried out under—
‘‘(A) the Fish and Wildlife Coordination 
Act (16 U.S.C. 661 et seq.), 
‘‘(B) the Fish and Wildlife Act of 1956 
(16 U.S.C. 742f), or 
‘‘(C) section 6 of the Endangered Species 
Act (16 U.S.C. 11531 et seq.).’’. 
(b) EXCLUDABLE PORTION.—Subparagraph (A) of 
section 126(b)(1) is amended by inserting after ‘‘Secretary 
of Agriculture’’ the following: ‘‘(the Secretary of the Inte-
rior, in the case of the landowner incentives programs de-
scribed in subsection (a)(10) and the programs described 
in subsection (a)(11) that are implemented by the Depart-
ment of the Interior)’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts received after the date 
of the enactment of this Act, in taxable years ending after 
such date. 
SEC. 205. MODIFICATIONS TO SECTION 512(b)(13). 
(a) IN GENERAL.—Paragraph (13) of section 512(b) 
(relating to special rules for certain amounts received from 
controlled entities) is amended by redesignating subpara-
graph (E) as subparagraph (F) and by inserting after sub-
paragraph (D) the following new subparagraph: 
‘‘(E) PARAGRAPH TO APPLY ONLY TO EX-
CESS PAYMENTS.—
‘‘(i) IN GENERAL.—Subparagraph (A) 
shall apply only to the portion of a speci-
fied payment received or accrued by the 
controlling organization that exceeds the 
amount which would have been paid or ac-
crued if such payment met the require-
ments prescribed under section 482. 
‘‘(ii) ADDITION
TO
TAX
FOR
VALU-
ATION MISSTATEMENTS.—The tax imposed 
by this chapter on the controlling organiza-
tion shall be increased by an amount equal 
to 20 percent of the larger of—
‘‘(I) such excess determined with-
out regard to any amendment or sup-
plement to a return of tax, or 
‘‘(II) such excess determined 
with regard to all such amendments 
and supplements.’’. 
(b) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendment made by 
this section shall apply to payments received or ac-
crued after December 31, 2003. 
(2) PAYMENTS SUBJECT TO BINDING CONTRACT 
TRANSITION
RULE.—If the amendments made by 
section 1041 of the Taxpayer Relief Act of 1997 did 
not apply to any amount received or accrued in the 
first 2 taxable years beginning on or after the date 
of the enactment of the Taxpayer Relief Act of 1997 
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, 2001. 
SEC. 206. SIMPLIFICATION OF LOBBYING EXPENDITURE 
LIMITATION. 
(a) 
REPEAL
OF
GRASSROOTS
EXPENDITURE 
LIMIT.—Paragraph (1) of section 501(h) (relating to ex-
penditures by public charities to influence legislation) is 
amended to read as follows: 
‘‘(1) GENERAL RULE.—In the case of an orga-
nization 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 propaganda, 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) EXCESS
LOBBYING
EXPENDITURES.—Section 
4911(b) is amended to read as follows: 
‘‘(b) EXCESS LOBBYING EXPENDITURES.—For pur-
poses of this section, the term ‘excess lobbying expendi-
tures’ means, for a taxable year, the amount by which the 
lobbying expenditures made by the organization during the 
taxable year exceed the lobbying nontaxable amount for 
such organization for such taxable year.’’. 
(c) CONFORMING AMENDMENTS.—
(1) Section 501(h)(2) is amended by striking 
subparagraphs (C) and (D). 
(2) Section 4911(c) is amended by striking 
paragraphs (3) and (4).
(3) 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’’. 
(4) 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’’. 
(5) Paragraphs (4)(A) and (4)(B) of section 
4911(f) are each amended by striking ‘‘limits of sec-
tion 501(h)(1)’’ and inserting ‘‘limit of section 
501(h)(1)’’. 
(6) Paragraph (8) of section 6033(b) (relating 
to 
certain 
organizations 
described 
in 
section 
501(c)(3)) is amended by inserting ‘‘and’’ at the end 
of subparagraph (A) and by striking subparagraphs 
(C) and (D). 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2003. 
SEC. 207. PERMITTED HOLDINGS OF PRIVATE FOUNDATION 
WHERE CORPORATION IS PUBLICLY TRADED 
AND PUBLICLY CONTROLLED. 
(a) IN GENERAL.—Paragraph (2) of section 4943(c) 
(relating to the permitted holdings in a corporation) is
amended by adding at the end the following new subpara-
graphs: 
‘‘(D) PERMITTED HOLDINGS WHERE COR-
PORATION IS PUBLICLY-TRADED AND PUBLICLY 
CONTROLLED.—A private foundation shall not 
be treated as having excess business holdings in 
any corporation in any calendar year in which 
it (together with all other private foundations 
which are described in section 4946(a)(1)(H)) 
owns not more than 5 percent of the voting 
stock and not more than 5 percent in value of 
all outstanding shares of all classes of stock 
if—
‘‘(i) the common stock of the corpora-
tion, and any other class of stock of which 
shares are held by the private foundation, 
are regularly traded on an established se-
curities market (within the meaning of sec-
tion 897(c)(3)), 
‘‘(ii) more than 50 percent of—
‘‘(I) the total combined voting 
power of all classes of stock of such 
corporation entitled to vote, and 
‘‘(II) the total value of the stock 
of such corporation,
is owned directly or indirectly by persons 
other than the private foundation and per-
sons who are disqualified persons with re-
spect to the private foundation, 
‘‘(iii) the Board of Directors of such 
corporation consists of a majority of per-
sons who are not disqualified persons with 
respect to the private foundation, and 
‘‘(iv) any undistributed income (within 
the meaning of section 4942(c)) of the pri-
vate foundation for such year (determined 
after substituting ‘6 percent’ for ‘5 per-
cent’ in section 4942(e)(1)) shall have been 
distributed within the required period 
under section 4942(a) so as to avoid appli-
cation of the initial tax on such undistrib-
uted income. 
‘‘(E) EXCEPTION
TO
PERMITTED
HOLD-
INGS WHERE CORPORATION IS PUBLICLY-TRAD-
ED AND PUBLICLY CONTROLLED.—No stock of 
a corporation held by the private foundation 
shall be considered permitted holdings pursuant 
to subparagraph (D) to the extent such stock 
was acquired by the private foundation by pur-
chase in a taxable transaction or was acquired
from a disqualified person who acquired such 
stock by purchase in a taxable transaction with-
in the 5 years immediately preceding the trans-
fer of such stock to the private foundation. 
Solely for purposes of applying the preceding 
sentence—
‘‘(i) any such stock acquired by pur-
chase in a taxable transaction by such dis-
qualified person within such 5 year period 
shall be treated as included in such trans-
fer to the extent of such transfer, 
‘‘(ii) all stock acquired by such dis-
qualified person by purchase in a taxable 
transaction during the 24 month period be-
ginning on the date of the transfer to the 
private foundation shall be treated as held 
by such disqualified person on the date of 
such transfer and included in such trans-
fer, and 
‘‘(iii) the private foundation may spe-
cifically designate any shares of stock not 
considered permitted holdings for purposes 
of allowing such private foundation to dis-
pose of such stock.’’.
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2003. 
TITLE III—OTHER PROVISIONS 
SEC. 301. COMPASSION CAPITAL FUND. 
Title IV of the Social Security Act (42 U.S.C. 601–
679b) is amended by adding at the end the following:
‘‘PART F—COMPASSION CAPITAL FUND 
‘‘SEC. 481. SECRETARY’S FUND TO SUPPORT AND REP-
LICATE PROMISING SOCIAL SERVICE PRO-
GRAMS. 
‘‘(a) GRANT AUTHORITY.—
‘‘(1) IN GENERAL.—The Secretary may make 
grants to support any private entity that operates a 
promising social services program. 
‘‘(2) APPLICATIONS.—An entity desiring to re-
ceive a grant under paragraph (1) shall submit to 
the Secretary an application for the grant, which 
shall contain such information as the Secretary may 
require. 
‘‘(b) CONTRACT AUTHORITY, ETC.—The Secretary 
may enter into a grant, contract, or cooperative agreement 
with any entity under which the entity would provide tech-
nical assistance to another entity to operate a social serv-
ice program that assists persons and families in need, in-
cluding by—
‘‘(1) providing the other entity with—
‘‘(A) technical assistance and information, 
including legal assistance and other business as-
sistance; 
‘‘(B) information on capacity-building; 
‘‘(C) information and assistance in identi-
fying and using best practices for serving per-
sons and families in need; or 
‘‘(D) assistance in replicating programs 
with demonstrated effectiveness in assisting 
persons and families in need; or 
‘‘(2) supporting research on the best practices 
of social service organizations. 
‘‘(c) GUIDANCE AND TECHNICAL ASSISTANCE.—The 
Secretary may use not more than 25 percent of the 
amount appropriated under this section for a fiscal year 
to provide guidance and technical assistance to States and 
political subdivisions of States with respect to the imple-
mentation of any social service program. 
‘‘(d) SOCIAL SERVICES PROGRAM DEFINED.—In this 
section, the term ‘social services program’ means a pro-
gram that provides benefits or services of any kind to per-
sons and families in need.
‘‘(e) LIMITATIONS ON AUTHORIZATION OF APPRO-
PRIATIONS.—To carry out this section, there are author-
ized to be appropriated to the Secretary $150,000,000 for 
fiscal year 2003, and such sums as may be necessary for 
fiscal years 2004 through 2007.’’. 
SEC. 302. REAUTHORIZATION OF ASSETS FOR INDEPEND-
ENCE DEMONSTRATION. 
Section 416 of the Assets for Independence Act (title 
IV of Public Law 105–285; 42 U.S.C. 604 note) is amend-
ed by striking ‘‘and 2003’’ and inserting ‘‘2003, 2004, 
2005, 2006, 2007, and 2008’’. 
SEC. 303. SENSE OF THE CONGRESS REGARDING COR-
PORATE CONTRIBUTIONS TO FAITH-BASED 
ORGANIZATIONS, ETC. 
(a) FINDINGS.—The Congress finds as follows: 
(1) America’s community of faith has long 
played a leading role in dealing with difficult societal 
problems 
that 
might 
otherwise 
have 
gone 
unaddressed. 
(2) President Bush has called upon Americans 
‘‘to revive the spirit of citizenship . . . to marshal 
the compassion of our people to meet the continuing 
needs of our Nation’’. 
(3) Although the work of faith-based organiza-
tions should not be used by government as an excuse
for backing away from its historic and rightful com-
mitment to help those who are disadvantaged and in 
need, such organizations can and should be seen as 
a valuable partner with government in meeting soci-
etal challenges. 
(4) Every day faith-based organizations in the 
United States help people recover from drug and al-
cohol addiction, provide food and shelter for the 
homeless, rehabilitate prison inmates so that they 
can break free from the cycle of recidivism, and 
teach people job skills that will allow them to move 
from poverty to productivity. 
(5) Faith-based organizations are often more 
successful in dealing with difficult societal problems 
than government and non-sectarian organizations. 
(6) As President Bush has stated, ‘‘It is not 
sufficient to praise charities and community groups; 
we must support them. And this is both a public ob-
ligation and a personal responsibility.’’. 
(7) Corporate foundations contribute billions of 
dollars each year to a variety of philanthropic 
causes. 
(8) According to a study produced by the Cap-
ital Research Center, the 10 largest corporate foun-
dations 
in 
the 
United 
States 
contributed 
$1,900,000,000 to such causes. 
(9) According to the same study, faith-based or-
ganizations only receive a small fraction of the con-
tributions made by corporations in the United 
States, and 6 of the 10 corporations that give the 
most to philanthropic causes explicitly ban or re-
strict contributions to faith-based organizations. 
(b) CORPORATIONS ENCOURAGED TO CONTRIBUTE 
TO FAITH-BASED ORGANIZATIONS.—The Congress calls 
on corporations in the United States, in the words of the 
President, ‘‘to give more and to give better’’ by making 
greater contributions to faith-based organizations that are 
on the front lines battling some of the great societal chal-
lenges of our day. 
(c) SENSE OF THE CONGRESS.—It is the sense of 
Congress that—
(1) corporations in the United States are im-
portant partners with government in efforts to over-
come difficult societal problems; and 
(2) no corporation in the United States should 
adopt policies that prohibit the corporation from 
contributing to an organization that is successfully 
advancing a philanthropic cause merely because such 
organization is faith based.
SEC. 304. MATERNITY GROUP HOMES. 
(a) PERMISSIBLE USE OF FUNDS.—Section 322 of 
the Runaway and Homeless Youth Act (42 U.S.C. 5714–
2) is amended—
(1) in subsection (a)(1), by inserting ‘‘(includ-
ing maternity group homes)’’ after ‘‘group homes’’; 
and 
(2) by adding at the end the following: 
‘‘(c) MATERNITY GROUP HOME.—In this part, the 
term ‘maternity group home’ means a community-based, 
adult-supervised group home that provides— 
‘‘(1) young mothers and their children with a 
supportive and supervised living arrangement in 
which such mothers are required to learn parenting 
skills, including child development, family budgeting, 
health and nutrition, and other skills to promote 
their long-term economic independence and the well-
being of their children; and 
‘‘(2) pregnant women with—
‘‘(A) information regarding the option of 
placing children for adoption through licensed 
adoption service providers; 
‘‘(B) assistance with prenatal care and 
child birthing; and 
‘‘(C) pre- and post-placement adoption 
counseling.’’.
(b) CONTRACT FOR EVALUATION.—Part B of the 
Runaway and Homeless Youth Act (42 U.S.C. 5701 et 
seq.) is amended by adding at the end the following: 
‘‘SEC. 323. CONTRACT FOR EVALUATION. 
‘‘(a) IN GENERAL.—The Secretary shall enter into 
a contract with a public or private entity for an evaluation 
of the maternity group homes that are supported by grant 
funds under this Act. 
‘‘(b) INFORMATION.—The evaluation described in 
subsection (a) shall include the collection of information 
about the relevant characteristics of individuals who ben-
efit from maternity group homes such as those that are 
supported by grant funds under this Act and what services 
provided by those maternity group homes are most bene-
ficial to such individuals. 
‘‘(c) REPORT.—Not later than 2 years after the date 
on which the Secretary enters into a contract for an eval-
uation under subsection (a), and biennially thereafter, the 
entity conducting the evaluation under this section shall 
submit to Congress a report on the status, activities, and 
accomplishments of maternity group homes that are sup-
ported by grant funds under this Act.’’. 
(c) AUTHORIZATION OF APPROPRIATIONS.—Section 
388 of the Runaway and Homeless Youth Act (42 U.S.C. 
5751) is amended—
(1) in subsection (a)(1)—
(A) by striking ‘‘There’’ and inserting the 
following: 
‘‘(A) IN GENERAL.—There’’; 
(B) in subparagraph (A), as redesignated, 
by inserting ‘‘and the purpose described in sub-
paragraph (B)’’ after ‘‘other than part E’’; and 
(C) by adding at the end the following: 
‘‘(B) MATERNITY GROUP HOMES.—There 
is authorized to be appropriated, for maternity 
group homes eligible for assistance under sec-
tion 322(a)(1)—
‘‘(i) $33,000,000 for fiscal year 2003; 
and 
‘‘(ii) such sums as may be necessary 
for fiscal year 2004.’’; and 
(2) in subsection (a)(2)(A), by striking ‘‘para-
graph (1)’’ and inserting ‘‘paragraph (1)(A)’’.
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