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)’’. 
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ccoleman on PROD1PC71 with BILLS
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(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. 
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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 
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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. 
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ccoleman on PROD1PC71 with BILLS
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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 
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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 
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‘‘(ii) the sponsoring organization does 
not exercise expenditure responsibility with 
respect to such distribution in accordance 
with section 4945(h). 
‘‘(2) EXCEPTIONS.—Such term shall not in-
clude any distribution from a donor advised fund— 
‘‘(A) to any organization described in sec-
tion 170(b)(1)(A) (other than a disqualified 
supporting organization), 
‘‘(B) to the sponsoring organization of 
such donor advised fund, or 
‘‘(C) to any other donor advised fund. 
‘‘(d) DEFINITIONS.—For purposes of this sub-
chapter— 
‘‘(1) SPONSORING
ORGANIZATION.—The term 
‘sponsoring organization’ means any organization 
which— 
‘‘(A) is described in section 170(c) (other 
than in paragraph (1) thereof, and without re-
gard to paragraph (2)(A) thereof), 
‘‘(B) is not a private foundation (as de-
fined in section 509(a)), and 
‘‘(C) maintains 1 or more donor advised 
funds. 
‘‘(2) DONOR ADVISED FUND.— 
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‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B) or (C), the term ‘donor ad-
vised fund’ means a fund or account— 
‘‘(i) which is separately identified by 
reference to contributions of a donor or do-
nors, 
‘‘(ii) which is owned and controlled by 
a sponsoring organization, and 
‘‘(iii) with respect to which a donor 
(or any person appointed or designated by 
such donor) has, or reasonably expects to 
have, advisory privileges with respect to 
the distribution or investment of amounts 
held in such fund or account by reason of 
the donor’s status as a donor. 
‘‘(B) EXCEPTIONS.—The term ‘donor ad-
vised fund’ shall not include any fund or ac-
count— 
‘‘(i) which makes distributions only to 
a single identified organization or govern-
mental entity, or 
‘‘(ii) with respect to which a person 
described in subparagraph (A)(iii) advises 
as to which individuals receive grants for 
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ccoleman on PROD1PC71 with BILLS
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travel, study, or other similar purposes, 
if— 
‘‘(I) such person’s advisory privi-
leges are performed exclusively by 
such person in the person’s capacity 
as a member of a committee all of the 
members of which are appointed by 
the sponsoring organization, 
‘‘(II) no combination of persons 
described in subparagraph (A)(iii) (or 
persons related to such persons) con-
trol, directly or indirectly, such com-
mittee, and 
‘‘(III) all grants from such fund 
or account are awarded on an objec-
tive and nondiscriminatory basis pur-
suant to a procedure approved in ad-
vance by the board of directors of the 
sponsoring organization, and such 
procedure is designed to ensure that 
all such grants meet the requirements 
of paragraphs (1), (2), or (3) of sec-
tion 4945(g). 
‘‘(C) SECRETARIAL AUTHORITY.—The Sec-
retary may exempt a fund or account not de-
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ccoleman on PROD1PC71 with BILLS
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scribed in subparagraph (B) from treatment as 
a donor advised fund— 
‘‘(i) if such fund or account is advised 
by a committee not directly or indirectly 
controlled by the donor or any person ap-
pointed or designated by the donor for the 
purpose of advising with respect to dis-
tributions from such fund (and any related 
parties), or 
‘‘(ii) if such fund benefits a single 
identified charitable purpose. 
‘‘(3) FUND MANAGER.—The term ‘fund man-
ager’ means, with respect to any sponsoring organi-
zation— 
‘‘(A) an officer, director, or trustee of such 
sponsoring organization (or an individual hav-
ing powers or responsibilities similar to those of 
officers, directors, or trustees of the sponsoring 
organization), and 
‘‘(B) with respect to any act (or failure to 
act), the employees of the sponsoring organiza-
tion having authority or responsibility with re-
spect to such act (or failure to act). 
‘‘(4) DISQUALIFIED
SUPPORTING
ORGANIZA-
TION.— 
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871 
‘‘(A) IN GENERAL.—The term ‘disqualified 
supporting organization’ means, with respect to 
any distribution— 
‘‘(i) any type III supporting organiza-
tion (as defined in section 4943(f)(5)(A)) 
which is not a functionally integrated type 
III supporting organization (as defined in 
section 4943(f)(5)(B)), and 
‘‘(ii) any organization which is de-
scribed in subparagraph (B) or (C) if— 
‘‘(I) the donor or any person des-
ignated by the donor for the purpose 
of advising with respect to distribu-
tions from a donor advised fund (and 
any related parties) directly or indi-
rectly controls a supported organiza-
tion (as defined in section 509(f)(3)) 
of such organization, or 
‘‘(II) the Secretary determines by 
regulations that a distribution to such 
organization otherwise is inappro-
priate. 
‘‘(B) TYPE I AND TYPE II SUPPORTING OR-
GANIZATIONS.—An organization is described in 
this subparagraph if the organization meets the 
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ccoleman on PROD1PC71 with BILLS
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requirements of subparagraphs (A) and (C) of 
section 509(a)(3) and is— 
‘‘(i) operated, supervised, or controlled 
by one or more organizations described in 
paragraph (1) or (2) of section 509(a), or 
‘‘(ii) supervised or controlled in con-
nection with one or more such organiza-
tions. 
‘‘(C) FUNCTIONALLY
INTEGRATED
TYPE 
III SUPPORTING ORGANIZATIONS.—An organiza-
tion is described in this subparagraph if the or-
ganization is a functionally integrated type III 
supporting organization (as defined under sec-
tion 4943(f)(5)(B)). 
‘‘SEC. 4967. TAXES ON PROHIBITED BENEFITS. 
‘‘(a) IMPOSITION OF TAXES.— 
‘‘(1) ON THE DONOR, DONOR ADVISOR, OR RE-
LATED PERSON.—There is hereby imposed on the 
advice of any person described in subsection (d) to 
have a sponsoring organization make a distribution 
from a donor advised fund which results in such per-
son or any other person described in subsection (d) 
receiving, directly or indirectly, a more than inci-
dental benefit as a result of such distribution, a tax 
equal to 125 percent of such benefit. The tax im-
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ccoleman on PROD1PC71 with BILLS
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posed by this paragraph shall be paid by any person 
described in subsection (d) who advises as to the dis-
tribution or who receives such a benefit as a result 
of the distribution. 
‘‘(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 
such distribution would confer a benefit described in 
paragraph (1), a tax equal to 10 percent of the 
amount of such benefit. The tax imposed by this 
paragraph shall be paid by any fund manager who 
agreed to the making of the distribution. 
‘‘(b) EXCEPTION.—No tax shall be imposed under 
this section with respect to any distribution if a tax has 
been imposed with respect to such distribution under sec-
tion 4958. 
‘‘(c) SPECIAL RULES.—For purposes of subsection 
(a)— 
‘‘(1) JOINT AND SEVERAL LIABILITY.—If more 
than one person is liable under paragraph (1) or (2) 
of subsection (a) with respect to a distribution de-
scribed in subsection (a), all such persons shall be 
jointly and severally liable under such paragraph 
with respect to such distribution. 
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‘‘(2) LIMIT FOR MANAGEMENT.—With respect 
to any one distribution described in subsection (a), 
the maximum amount of the tax imposed by sub-
section (a)(2) shall not exceed $10,000. 
‘‘(d) PERSON DESCRIBED.—A person is described in 
this subsection if such person is described in section 
4958(f)(7) with respect to a donor advised fund.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 4963 is amended by inserting 
‘‘4966, 4967,’’ after ‘‘4958,’’ each place it appears 
in subsections (a) and (c). 
(2) The table of subchapters for chapter 42 is 
amended by adding at the end the following new 
item: 
‘‘SUBCHAPTER G. DONOR ADVISED FUNDS’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 1232. EXCESS BENEFIT TRANSACTIONS INVOLVING 
DONOR ADVISED FUNDS AND SPONSORING 
ORGANIZATIONS. 
(a) DISQUALIFIED PERSONS.— 
(1) IN
GENERAL.—Paragraph (1) of section 
4958(f) is amended by striking ‘‘and’’ at the end of 
subparagraph (B), by striking the period at the end 
of subparagraph (C) and inserting a comma, and by 
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ccoleman on PROD1PC71 with BILLS
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adding after subparagraph (C) the following new 
subparagraphs: 
‘‘(D) which involves a donor advised fund 
(as defined in section 4966(d)(2)), any person 
who is described in paragraph (7) with respect 
to such donor advised fund (as so defined), and 
‘‘(E) which involves a sponsoring organiza-
tion (as defined in section 4966(d)(1)), any per-
son who is described in paragraph (8) with re-
spect to such sponsoring organization (as so de-
fined).’’. 
(2) DONORS, DONOR ADVISORS, AND INVEST-
MENT ADVISORS TREATED AS DISQUALIFIED PER-
SONS.—Section 4958(f) is amended by adding at the 
end the following new paragraphs: 
‘‘(7) DONORS AND DONOR ADVISORS.—For pur-
poses of paragraph (1)(E), a person is described in 
this paragraph if such person— 
‘‘(A) 
is 
described 
in 
section 
4966(d)(2)(A)(iii), 
‘‘(B) is a member of the family of an indi-
vidual described in subparagraph (A), or 
‘‘(C) is a 35-percent controlled entity (as 
defined in paragraph (3) by substituting ‘per-
sons described in subparagraph (A) or (B) of 
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paragraph (7)’ for ‘persons described in sub-
paragraph (A) or (B) of paragraph (1)’ in sub-
paragraph (A)(i) thereof). 
‘‘(8) INVESTMENT ADVISORS.—For purposes of 
paragraph (1)(F)— 
‘‘(A) IN GENERAL.—A person is described 
in this paragraph if such person— 
‘‘(i) is an investment advisor, 
‘‘(ii) is a member of the family of an 
individual described in clause (i), or 
‘‘(iii) is a 35-percent controlled entity 
(as defined in paragraph (3) by sub-
stituting ‘persons described in clause (i) or 
(ii) of paragraph (8)(A)’ for ‘persons de-
scribed in subparagraph (A) or (B) of 
paragraph (1)’ in subparagraph (A)(i) 
thereof). 
‘‘(B) INVESTMENT
ADVISOR
DEFINED.— 
For purposes of subparagraph (A), the term 
‘investment advisor’ means, with respect to any 
sponsoring organization (as defined in section 
4966(d)(1)), any person (other than an em-
ployee of such organization) compensated by 
such organization for managing the investment 
of, or providing investment advice with respect 
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to, assets maintained in donor advised funds 
(as defined in section 4966(d)(2)) owned by 
such organization.’’. 
(b) CERTAIN TRANSACTIONS TREATED AS EXCESS 
BENEFIT TRANSACTIONS.— 
(1) IN GENERAL.—Section 4958(c) is amended 
by redesignating paragraph (2) as paragraph (3) 
and by inserting after paragraph (1) the following 
new paragraph: 
‘‘(2) SPECIAL
RULES
FOR
DONOR
ADVISED 
FUNDS.—In the case of any donor advised fund (as 
defined in section 4966(d)(2))— 
‘‘(A) the term ‘excess benefit transaction’ 
includes any grant, loan, compensation, or other 
similar payment from such fund to a person de-
scribed in subsection (f)(7) with respect to such 
fund, and 
‘‘(B) the term ‘excess benefit’ includes, 
with respect to any transaction described in 
subparagraph (A), the amount of any such 
grant, loan, compensation, or other similar pay-
ment.’’. 
(2) SPECIAL RULE FOR CORRECTION OF TRANS-
ACTION.—Section 4958(f)(6) is amended by insert-
ing ‘‘, except that in the case of any correction of 
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an excess benefit transaction described in subsection 
(c)(2), no amount repaid in a manner prescribed by 
the Secretary may be held in any donor advised 
fund’’ after ‘‘standards’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transactions occurring after the 
date of the enactment of this Act. 
SEC. 1233. EXCESS BUSINESS HOLDINGS OF DONOR AD-
VISED FUNDS. 
(a) IN GENERAL.—Section 4943 is amended by add-
ing at the end the following new subsection: 
‘‘(e) APPLICATION
OF TAX
TO DONOR ADVISED 
FUNDS.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, a donor advised fund (as defined in section 
4966(d)(2)) shall be treated as a private foundation. 
‘‘(2) DISQUALIFIED PERSON.—In applying this 
section to any donor advised fund (as so defined), 
the term ‘disqualified person’ means, with respect to 
the donor advised fund, any person who is— 
‘‘(A) 
described 
in 
section 
4966(d)(2)(A)(iii), 
‘‘(B) a member of the family of an indi-
vidual described in subparagraph (A), or 
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