H. R. 4—266
requirements of section 204(b)(5)(B)(i), the plan shall 
be treated as meeting the requirements of clause (i) 
with respect to any plan year if each participant 
receives pay credit for the year which is not less than 
the percentage of compensation determined in accord-
ance with the following table:
‘‘If the participant’s age as of the 
beginning of the year is—
The 
percentage 
is—
30 or less ................................................................................
Over 30 but less than 40 .......................................................
40 or over but less than 50 ...................................................
50 or over ...............................................................................
8.
‘‘(iv) YEARS
OF
SERVICE.—For purposes of this 
subparagraph, years of service shall be determined 
under the rules of paragraphs (1), (2), and (3) of section 
203(b), except that the plan may not disregard any 
year of service because of a participant making, or 
failing to make, any elective deferral with respect to 
the qualified cash or deferred arrangement to which 
subparagraph (C) applies. 
‘‘(C) CONTRIBUTION REQUIREMENTS.—
‘‘(i) IN GENERAL.—The contribution requirements 
of this subparagraph with respect to any applicable 
individual account plan forming part of an eligible 
combined plan are met if—
‘‘(I) the qualified cash or deferred arrangement 
included in such plan constitutes an automatic 
contribution arrangement, and 
‘‘(II) the employer is required to make 
matching contributions on behalf of each employee 
eligible to participate in the arrangement in an 
amount equal to 50 percent of the elective contribu-
tions of the employee to the extent such elective 
contributions do not exceed 4 percent of compensa-
tion. 
Rules similar to the rules of clauses (ii) and (iii) of 
section 401(k)(12)(B) of the Internal Revenue Code of 
1986 shall apply for purposes of this clause. 
‘‘(ii) NONELECTIVE CONTRIBUTIONS.—An applicable 
individual account plan shall not be treated as failing 
to meet the requirements of clause (i) because the 
employer makes nonelective contributions under the 
plan but such contributions shall not be taken into 
account in determining whether the requirements of 
clause (i)(II) are met. 
‘‘(D) VESTING
REQUIREMENTS.—The vesting require-
ments of this subparagraph are met if—
‘‘(i) in the case of a defined benefit plan forming 
part of an eligible combined plan an employee who 
has completed at least 3 years of service has a non-
forfeitable right to 100 percent of the employee’s 
accrued benefit under the plan derived from employer 
contributions, and 
‘‘(ii) in the case of an applicable individual account 
plan forming part of eligible combined plan—
H. R. 4—267
‘‘(I) an employee has a nonforfeitable right 
to any matching contribution made under the 
qualified cash or deferred arrangement included 
in such plan by an employer with respect to any 
elective contribution, including matching contribu-
tions in excess of the contributions required under 
subparagraph (C)(i)(II), and 
‘‘(II) an employee who has completed at least 
3 years of service has a nonforfeitable right to 
100 percent of the employee’s accrued benefit 
derived under the arrangement from nonelective 
contributions of the employer. 
For purposes of this subparagraph, the rules of section 
203 shall apply to the extent not inconsistent with 
this subparagraph. 
‘‘(E) UNIFORM PROVISION OF CONTRIBUTIONS AND BENE-
FITS.—In the case of a defined benefit plan or applicable 
individual account plan forming part of an eligible com-
bined plan, the requirements of this subparagraph are 
met if all contributions and benefits under each such plan, 
and all rights and features under each such plan, must 
be provided uniformly to all participants. 
‘‘(F) REQUIREMENTS MUST BE MET WITHOUT TAKING INTO 
ACCOUNT SOCIAL SECURITY AND SIMILAR CONTRIBUTIONS AND 
BENEFITS OR OTHER PLANS.—
‘‘(i) IN
GENERAL.—The requirements of this 
subparagraph are met if the requirements of clauses 
(ii) and (iii) are met. 
‘‘(ii) SOCIAL
SECURITY
AND
SIMILAR
CONTRIBU-
TIONS.—The requirements of this clause are met if—
‘‘(I) the requirements of subparagraphs (B) and 
(C) are met without regard to section 401(l) of 
the Internal Revenue Code of 1986, and 
‘‘(II) the requirements of sections 401(a)(4) and 
410(b) of the Internal Revenue Code of 1986 are 
met with respect to both the applicable defined 
contribution plan and defined benefit plan forming 
part of an eligible combined plan without regard 
to section 401(l) of the Internal Revenue Code 
of 1986. 
‘‘(iii) OTHER
PLANS
AND
ARRANGEMENTS.—The 
requirements of this clause are met if the applicable 
defined contribution plan and defined benefit plan 
forming part of an eligible combined plan meet the 
requirements of sections 401(a)(4) and 410(b) of the 
Internal Revenue Code of 1986 without being combined 
with any other plan. 
‘‘(3) NONDISCRIMINATION
REQUIREMENTS
FOR
QUALIFIED 
CASH OR DEFERRED ARRANGEMENT.—
‘‘(A) IN
GENERAL.—A qualified cash or deferred 
arrangement which is included in an applicable individual 
account plan forming part of an eligible combined plan 
shall be treated as meeting the requirements of section 
401(k)(3)(A)(ii) of the Internal Revenue Code of 1986 if 
the requirements of paragraph (2) are met with respect 
to such arrangement.
H. R. 4—268
‘‘(B) MATCHING CONTRIBUTIONS.—In applying section 
401(m)(11) of such Code to any matching contribution with 
respect to a contribution to which paragraph (2)(C) applies, 
the contribution requirement of paragraph (2)(C) and the 
notice requirements of paragraph (5)(B) shall be substituted 
for the requirements otherwise applicable under clauses 
(i) and (ii) of section 401(m)(11)(A) of such Code. 
‘‘(4) AUTOMATIC
CONTRIBUTION
ARRANGEMENT.—For pur-
poses of this subsection—
‘‘(A) IN
GENERAL.—A qualified cash or deferred 
arrangement shall be treated as an automatic contribution 
arrangement if the arrangement—
‘‘(i) provides that each employee eligible to partici-
pate in the arrangement is treated as having elected 
to have the employer make elective contributions in 
an amount equal to 4 percent of the employee’s com-
pensation unless the employee specifically elects not 
to have such contributions made or to have such con-
tributions made at a different rate, and 
‘‘(ii) meets the notice requirements under subpara-
graph (B). 
‘‘(B) NOTICE REQUIREMENTS.—
‘‘(i) IN
GENERAL.—The requirements of this 
subparagraph are met if the requirements of clauses 
(ii) and (iii) are met. 
‘‘(ii) REASONABLE PERIOD TO MAKE ELECTION.—The 
requirements of this clause are met if each employee 
to whom subparagraph (A)(i) applies—
‘‘(I) receives a notice explaining the employee’s 
right under the arrangement to elect not to have 
elective contributions made on the employee’s 
behalf or to have the contributions made at a 
different rate, and 
‘‘(II) has a reasonable period of time after 
receipt of such notice and before the first elective 
contribution is made to make such election. 
‘‘(iii) ANNUAL
NOTICE
OF
RIGHTS
AND
OBLIGA-
TIONS.—The requirements of this clause are met if 
each employee eligible to participate in the arrange-
ment is, within a reasonable period before any year, 
given notice of the employee’s rights and obligations 
under the arrangement. 
The requirements of this subparagraph shall not be treated 
as met unless the requirements of clauses (i) and (ii) of 
section 401(k)(12)(D) of the Internal Revenue Code of 1986 
are met with respect to the notices described in clauses 
(ii) and (iii) of this subparagraph. 
‘‘(5) COORDINATION WITH OTHER REQUIREMENTS.—
‘‘(A) TREATMENT
OF
SEPARATE
PLANS.—The except 
clause in section 3(35) shall not apply to an eligible com-
bined plan. 
‘‘(B) REPORTING.—An eligible combined plan shall be 
treated as a single plan for purposes of section 103. 
‘‘(6) APPLICABLE INDIVIDUAL ACCOUNT PLAN.—For purposes 
of this subsection—
H. R. 4—269
‘‘(A) IN
GENERAL.—The term ‘applicable individual 
account plan’ means an individual account plan which 
includes a qualified cash or deferred arrangement. 
‘‘(B) QUALIFIED CASH OR DEFERRED ARRANGEMENT.—
The term ‘qualified cash or deferred arrangement’ has the 
meaning given such term by section 401(k)(2) of the 
Internal Revenue Code of 1986.’’. 
(2) CONFORMING CHANGES.—
(A) The heading for section 210 of such Act is amended 
to read as follows: 
‘‘SEC. 210. MULTIPLE EMPLOYER PLANS AND OTHER SPECIAL RULES.’’. 
(B) The table of contents in section 1 of such Act 
is amended by striking the item relating to section 210 
and inserting the following new item:
‘‘Sec. 210. Multiple employer plans and other special rules.’’.
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to plan years beginning after December 31, 2009. 
SEC. 904. FASTER VESTING OF EMPLOYER NONELECTIVE CONTRIBU-
TIONS. 
(a) AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.—
(1) IN GENERAL.—Paragraph (2) of section 411(a) of the 
Internal Revenue Code of 1986 (relating to employer contribu-
tions) is amended to read as follows: 
‘‘(2) EMPLOYER CONTRIBUTIONS.—
‘‘(A) DEFINED BENEFIT PLANS.—
‘‘(i) IN GENERAL.—In the case of a defined benefit 
plan, a plan satisfies the requirements of this para-
graph if it satisfies the requirements of clause (ii) 
or (iii). 
‘‘(ii) 5-YEAR VESTING.—A plan satisfies the require-
ments of this clause if an employee who has completed 
at least 5 years of service has a nonforfeitable right 
to 100 percent of the employee’s accrued benefit derived 
from employer contributions. 
‘‘(iii) 3 TO 7 YEAR VESTING.—A plan satisfies the 
requirements of this clause if an employee has a non-
forfeitable right to a percentage of the employee’s 
accrued benefit derived from employer contributions 
determined under the following table:
‘‘Years of service: 
The 
nonforfeitable 
percentage is:
3 ..............................................................................................
4 ..............................................................................................
5 ..............................................................................................
6 ..............................................................................................
7 or more ................................................................................
100.
‘‘(B) DEFINED CONTRIBUTION PLANS.—
‘‘(i) IN GENERAL.—In the case of a defined contribu-
tion plan, a plan satisfies the requirements of this 
paragraph if it satisfies the requirements of clause 
(ii) or (iii). 
‘‘(ii) 3-YEAR VESTING.—A plan satisfies the require-
ments of this clause if an employee who has completed 
at least 3 years of service has a nonforfeitable right
H. R. 4—270
to 100 percent of the employee’s accrued benefit derived 
from employer contributions. 
‘‘(iii) 2 TO 6 YEAR VESTING.—A plan satisfies the 
requirements of this clause if an employee has a non-
forfeitable right to a percentage of the employee’s 
accrued benefit derived from employer contributions 
determined under the following table:
‘‘Years of service: 
The 
nonforfeitable 
percentage is:
2 ..............................................................................................
3 ..............................................................................................
4 ..............................................................................................
5 ..............................................................................................
6 or more ................................................................................
100.’’.
(2) CONFORMING AMENDMENT.—Section 411(a) of such Code 
(relating to general rule for minimum vesting standards) is 
amended by striking paragraph (12). 
(b) AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECU-
RITY ACT OF 1974.—
(1) IN GENERAL.—Paragraph (2) of section 203(a) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1053(a)(2)) is amended to read as follows: 
‘‘(2)(A)(i) In the case of a defined benefit plan, a plan 
satisfies the requirements of this paragraph if it satisfies the 
requirements of clause (ii) or (iii). 
‘‘(ii) A plan satisfies the requirements of this clause if 
an employee who has completed at least 5 years of service 
has a nonforfeitable right to 100 percent of the employee’s 
accrued benefit derived from employer contributions. 
‘‘(iii) A plan satisfies the requirements of this clause if 
an employee has a nonforfeitable right to a percentage of the 
employee’s accrued benefit derived from employer contributions 
determined under the following table:
‘‘Years of service: 
The 
nonforfeitable 
percentage is:
3 ..............................................................................................
4 ..............................................................................................
5 ..............................................................................................
6 ..............................................................................................
7 or more ................................................................................
100.
‘‘(B)(i) In the case of an individual account plan, a plan 
satisfies the requirements of this paragraph if it satisfies the 
requirements of clause (ii) or (iii). 
‘‘(ii) A plan satisfies the requirements of this clause if 
an employee who has completed at least 3 years of service 
has a nonforfeitable right to 100 percent of the employee’s 
accrued benefit derived from employer contributions. 
‘‘(iii) A plan satisfies the requirements of this clause if 
an employee has a nonforfeitable right to a percentage of the 
employee’s accrued benefit derived from employer contributions 
determined under the following table:
‘‘Years of service: 
The 
nonforfeitable 
percentage is:
2 ..............................................................................................
3 ..............................................................................................
4 ..............................................................................................
H. R. 4—271
‘‘Years of service: 
The 
nonforfeitable 
percentage is:
5 ..............................................................................................
6 or more ................................................................................
100.’’.
(2) CONFORMING AMENDMENT.—Section 203(a) of such Act 
is amended by striking paragraph (4). 
(c) EFFECTIVE DATES.—
(1) IN
GENERAL.—Except as provided in paragraphs (2) 
and (4), the amendments made by this section shall apply 
to contributions for plan years beginning after December 31, 
2006. 
(2) COLLECTIVE BARGAINING AGREEMENTS.—In the case of 
a plan maintained pursuant to one or more collective bargaining 
agreements between employee representatives and one or more 
employers ratified before the date of the enactment of this 
Act, the amendments made by this section shall not apply 
to contributions on behalf of employees covered by any such 
agreement for plan years beginning before the earlier of—
(A) the later of—
(i) the date on which the last of such collective 
bargaining agreements terminates (determined without 
regard to any extension thereof on or after such date 
of the enactment); or 
(ii) January 1, 2007; or 
(B) January 1, 2009. 
(3) SERVICE
REQUIRED.—With respect to any plan, the 
amendments made by this section shall not apply to any 
employee before the date that such employee has 1 hour of 
service under such plan in any plan year to which the amend-
ments made by this section apply. 
(4) SPECIAL RULE FOR STOCK OWNERSHIP PLANS.—Notwith-
standing paragraph (1) or (2), in the case of an employee 
stock ownership plan (as defined in section 4975(e)(7) of the 
Internal Revenue Code of 1986) which had outstanding on 
September 26, 2005, a loan incurred for the purpose of acquiring 
qualifying employer securities (as defined in section 4975(e)(8) 
of such Code), the amendments made by this section shall 
not apply to any plan year beginning before the earlier of—
(A) the date on which the loan is fully repaid, or 
(B) the date on which the loan was, as of September 
26, 2005, scheduled to be fully repaid. 
SEC. 905. DISTRIBUTIONS DURING WORKING RETIREMENT. 
(a) AMENDMENT TO THE EMPLOYEE RETIREMENT INCOME SECU-
RITY ACT
OF 1974.—Subparagraph (A) of section 3(2) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1002(2)) is amended by adding at the end the following new sen-
tence: ‘‘A distribution from a plan, fund, or program shall not 
be treated as made in a form other than retirement income or 
as a distribution prior to termination of covered employment solely 
because such distribution is made to an employee who has attained 
age 62 and who is not separated from employment at the time 
of such distribution.’’. 
(b) AMENDMENT TO THE INTERNAL REVENUE CODE OF 1986.—
Subsection (a) of section 401 of the Internal Revenue Code of 
1986 (as amended by this Act) is amended by inserting after para-
graph (35) the following new paragraph:
H. R. 4—272
‘‘(36) DISTRIBUTIONS
DURING
WORKING
RETIREMENT.—A 
trust forming part of a pension plan shall not be treated as 
failing to constitute a qualified trust under this section solely 
because the plan provides that a distribution may be made 
from such trust to an employee who has attained age 62 and 
who is not separated from employment at the time of such 
distribution.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distributions in plan years beginning after December 
31, 2006. 
SEC. 906. TREATMENT OF CERTAIN PENSION PLANS OF INDIAN TRIBAL 
GOVERNMENTS. 
(a) DEFINITION OF GOVERNMENT PLAN TO INCLUDE CERTAIN 
PENSION PLANS OF INDIAN TRIBAL GOVERNMENTS.—
(1) AMENDMENT TO INTERNAL REVENUE CODE OF 1986.—
Section 414(d) of the Internal Revenue Code of 1986 (defining 
governmental plan) is amended by adding at the end the fol-
lowing: ‘‘The term ‘governmental plan’ includes a plan which 
is established and maintained by an Indian tribal government 
(as defined in section 7701(a)(40)), a subdivision of an Indian 
tribal government (determined in accordance with section 
7871(d)), or an agency or instrumentality of either, and all 
of the participants of which are employees of such entity 
substantially all of whose services as such an employee are 
in the performance of essential governmental functions but 
not in the performance of commercial activities (whether or 
not an essential government function).’’. 
(2) AMENDMENT TO EMPLOYEE RETIREMENT INCOME SECU-
RITY ACT OF 1974.—
(A) Section 3(32) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(32)) is amended by 
adding at the end the following: ‘‘The term ‘governmental 
plan’ includes a plan which is established and maintained 
by an Indian tribal government (as defined in section 
7701(a)(40) of the Internal Revenue Code of 1986), a sub-
division of an Indian tribal government (determined in 
accordance with section 7871(d) of such Code), or an agency 
or instrumentality of either, and all of the participants 
of which are employees of such entity substantially all 
of whose services as such an employee are in the perform-
ance of essential governmental functions but not in the 
performance of commercial activities (whether or not an 
essential government function)’’. 
(B) Section 4021(b)(2) of such Act is amended by adding 
at the end the following: ‘‘or which is described in the 
last sentence of section 3(32)’’. 
(b) CLARIFICATION THAT TRIBAL GOVERNMENTS ARE SUBJECT 
TO THE SAME PENSION PLAN RULES AND REGULATIONS APPLIED 
TO STATE
AND OTHER LOCAL GOVERNMENTS
AND THEIR POLICE 
AND FIREFIGHTERS.—
(1) AMENDMENTS TO INTERNAL REVENUE CODE OF 1986.—
(A) POLICE AND FIREFIGHTERS.—Subparagraph (H) sec-
tion 415(b)(2) of the Internal Revenue Code of 1986 
(defining participant) is amended—
H. R. 4—273
(i) in clause (i), by striking ‘‘State or political sub-
division’’ and inserting ‘‘State, Indian tribal govern-
ment (as defined in section 7701(a)(40)), or any political 
subdivision’’; and 
(ii) in clause (ii)(I), by striking ‘‘State or political 
subdivision’’ each place it appears and inserting ‘‘State, 
Indian tribal government (as so defined), or any polit-
ical subdivision’’. 
(B) STATE AND LOCAL GOVERNMENT PLANS.—
(i) IN
GENERAL.—Subparagraph (A) of section 
415(b)(10) of such Code (relating to limitation to equal 
accrued benefit) is amended by inserting ‘‘or a govern-
mental plan described in the last sentence of section 
414(d) (relating to plans of Indian tribal governments),’’ 
after ‘‘foregoing,’’. 
(ii) CONFORMING
AMENDMENT.—The heading of 
paragraph (1) of section 415(b) of such Code is amended 
by striking ‘‘SPECIAL
RULE
FOR
STATE
AND’’ and 
inserting ‘‘SPECIAL
RULE
FOR
STATE, INDIAN
TRIBAL, 
AND’’. 
(C) GOVERNMENT PICK UP CONTRIBUTIONS.—Paragraph 
(2) of section 414(h) of such Code (relating to designation 
by units of government) is amended by inserting ‘‘or a 
governmental plan described in the last sentence of section 
414(d) (relating to plans of Indian tribal governments),’’ 
after ‘‘foregoing,’’. 
(2) AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECU-
RITY ACT OF 1974.—Section 4021(b) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1321(b)) is amended—
(A) in paragraph (12), by striking ‘‘or’’ at the end; 
(B) in paragraph (13), by striking ‘‘plan.’’ and inserting 
‘‘plan; or’’; and 
(C) by adding at the end the following: 
‘‘(14) established and maintained by an Indian tribal 
government (as defined in section 7701(a)(40) of the Internal 
Revenue Code of 1986), a subdivision of an Indian tribal govern-
ment (determined in accordance with section 7871(d) of such 
Code), or an agency or instrumentality of either, and all of 
the participants of which are employees of such entity substan-
tially all of whose services as such an employee are in the 
performance of essential governmental functions but not in 
the performance of commercial activities (whether or not an 
essential government function).’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to any year beginning on or after the date of the 
enactment of this Act. 
TITLE X—PROVISIONS RELATING TO 
SPOUSAL PENSION PROTECTION 
SEC. 1001. REGULATIONS ON TIME AND ORDER OF ISSUANCE OF 
DOMESTIC RELATIONS ORDERS. 
Not later than 1 year after the date of the enactment of this 
Act, the Secretary of Labor shall issue regulations under section 
206(d)(3) of the Employee Retirement Security Act of 1974 and
H. R. 4—274
section 414(p) of the Internal Revenue Code of 1986 which clarify 
that—
(1) a domestic relations order otherwise meeting the 
requirements to be a qualified domestic relations order, 
including the requirements of section 206(d)(3)(D) of such Act 
and section 414(p)(3) of such Code, shall not fail to be treated 
as a qualified domestic relations order solely because—
(A) the order is issued after, or revises, another 
domestic relations order or qualified domestic relations 
order; or 
(B) of the time at which it is issued; and 
(2) any order described in paragraph (1) shall be subject 
to the same requirements and protections which apply to quali-
fied domestic relations orders, including the provisions of sec-
tion 206(d)(3)(H) of such Act and section 414(p)(7) of such 
Code. 
SEC. 1002. ENTITLEMENT OF DIVORCED SPOUSES TO RAILROAD 
RETIREMENT ANNUITIES INDEPENDENT OF ACTUAL 
ENTITLEMENT OF EMPLOYEE. 
(a) IN GENERAL.—Section 2 of the Railroad Retirement Act 
of 1974 (45 U.S.C. 231a) is amended—
(1) in subsection (c)(4)(i), by striking ‘‘(A) is entitled to 
an annuity under subsection (a)(1) and (B)’’; and 
(2) in subsection (e)(5), by striking ‘‘or divorced wife’’ the 
second place it appears. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall take effect 1 year after the date of the enactment of this 
Act. 
SEC. 1003. EXTENSION OF TIER II RAILROAD RETIREMENT BENEFITS 
TO 
SURVIVING 
FORMER 
SPOUSES 
PURSUANT 
TO 
DIVORCE AGREEMENTS. 
(a) IN GENERAL.—Section 5 of the Railroad Retirement Act 
of 1974 (45 U.S.C. 231d) is amended by adding at the end the 
following: 
‘‘(d) Notwithstanding any other provision of law, the payment 
of any portion of an annuity computed under section 3(b) to a 
surviving former spouse in accordance with a court decree of divorce, 
annulment, or legal separation or the terms of any court-approved 
property settlement incident to any such court decree shall not 
be terminated upon the death of the individual who performed 
the service with respect to which such annuity is so computed 
unless such termination is otherwise required by the terms of 
such court decree.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall take effect 1 year after the date of the enactment of this 
Act. 
SEC. 1004. REQUIREMENT FOR ADDITIONAL SURVIVOR ANNUITY 
OPTION. 
(a) AMENDMENTS TO INTERNAL REVENUE CODE.—
(1) ELECTION OF SURVIVOR ANNUITY.—Section 417(a)(1)(A) 
of the Internal Revenue Code of 1986 is amended—
(A) in clause (i), by striking ‘‘, and’’ and inserting 
a comma; 
(B) by redesignating clause (ii) as clause (iii); and 
(C) by inserting after clause (i) the following:
H. R. 4—275
‘‘(ii) if the participant elects a waiver under clause 
(i), may elect the qualified optional survivor annuity at 
any time during the applicable election period, and’’. 
(2) DEFINITION.—Section 417 of such Code is amended by 
adding at the end the following: 
‘‘(g) DEFINITION OF QUALIFIED OPTIONAL SURVIVOR ANNUITY.—
‘‘(1) IN GENERAL.—For purposes of this section, the term 
‘qualified optional survivor annuity’ means an annuity—
‘‘(A) for the life of the participant with a survivor 
annuity for the life of the spouse which is equal to the 
applicable percentage of the amount of the annuity which 
is payable during the joint lives of the participant and 
the spouse, and 
‘‘(B) which is the actuarial equivalent of a single 
annuity for the life of the participant. 
Such term also includes any annuity in a form having the 
effect of an annuity described in the preceding sentence. 
‘‘(2) APPLICABLE PERCENTAGE.—
‘‘(A) IN GENERAL.—For purposes of paragraph (1), if 
the survivor annuity percentage—
‘‘(i) is less than 75 percent, the applicable percent-
age is 75 percent, and 
‘‘(ii) is greater than or equal to 75 percent, the 
applicable percentage is 50 percent. 
‘‘(B) SURVIVOR ANNUITY PERCENTAGE.—For purposes of 
subparagraph (A), the term ‘survivor annuity percentage’ 
means the percentage which the survivor annuity under 
the plan’s qualified joint and survivor annuity bears to 
the annuity payable during the joint lives of the participant 
and the spouse.’’. 
(3) NOTICE.—Section 417(a)(3)(A)(i) of such Code is 
amended by inserting ‘‘and of the qualified optional survivor 
annuity’’ after ‘‘annuity’’. 
(b) AMENDMENTS TO ERISA.—
(1) ELECTION OF SURVIVOR ANNUITY.—Section 205(c)(1)(A) 
of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1055(c)(1)(A)) is amended—
(A) in clause (i), by striking ‘‘, and’’ and inserting 
a comma; 
(B) by redesignating clause (ii) as clause (iii); and 
(C) by inserting after clause (i) the following: 
‘‘(ii) if the participant elects a waiver under clause 
(i), may elect the qualified optional survivor annuity at 
any time during the applicable election period, and’’. 
(2) DEFINITION.—Section 205(d) of such Act (29 U.S.C. 
1055(d)) is amended—
(A) by inserting ‘‘(1)’’ after ‘‘(d)’’; 
(B) by redesignating paragraphs (1) and (2) as subpara-
graphs (A) and (B), respectively; and 
(C) by adding at the end the following: 
‘‘(2)(A) For purposes of this section, the term ‘qualified optional 
survivor annuity’ means an annuity—
‘‘(i) for the life of the participant with a survivor annuity 
for the life of the spouse which is equal to the applicable 
percentage of the amount of the annuity which is payable 
during the joint lives of the participant and the spouse, and
H. R. 4—276
‘‘(ii) which is the actuarial equivalent of a single annuity 
for the life of the participant. 
Such term also includes any annuity in a form having the effect 
of an annuity described in the preceding sentence. 
‘‘(B)(i) For purposes of subparagraph (A), if the survivor annuity 
percentage—
‘‘(I) is less than 75 percent, the applicable percentage is 
75 percent, and 
‘‘(II) is greater than or equal to 75 percent, the applicable 
percentage is 50 percent. 
‘‘(ii) For purposes of clause (i), the term ‘survivor annuity 
percentage’ means the percentage which the survivor annuity under 
the plan’s qualified joint and survivor annuity bears to the annuity 
payable during the joint lives of the participant and the spouse.’’. 
(3) NOTICE.—Section 205(c)(3)(A)(i) of such Act (29 U.S.C. 
1055(c)(3)(A)(i)) is amended by inserting ‘‘and of the qualified 
optional survivor annuity’’ after ‘‘annuity’’. 
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by this section 
shall apply to plan years beginning after December 31, 2007. 
(2) SPECIAL RULE FOR COLLECTIVELY BARGAINED PLANS.—
In the case of a plan maintained pursuant to 1 or more collective 
bargaining agreements between employee representatives and 
1 or more employers ratified on or before the date of the 
enactment of this Act, the amendments made by this section 
shall not apply to plan years beginning before the earlier of—
(A) the later of—
(i) January 1, 2008, or 
(ii) the date on which the last collective bargaining 
agreement related to the plan terminates (determined 
without regard to any extension thereof after the date 
of enactment of this Act), or 
(B) January 1, 2009. 
TITLE XI—ADMINISTRATIVE 
PROVISIONS 
SEC. 1101. EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM. 
(a) IN GENERAL.—The Secretary of the Treasury shall have 
full authority to establish and implement the Employee Plans 
Compliance Resolution System (or any successor program) and any 
other employee plans correction policies, including the authority 
to waive income, excise, or other taxes to ensure that any tax, 
penalty, or sanction is not excessive and bears a reasonable relation-
ship to the nature, extent, and severity of the failure. 
(b) IMPROVEMENTS.—The Secretary of the Treasury shall con-
tinue to update and improve the Employee Plans Compliance Reso-
lution System (or any successor program), giving special attention 
to—
(1) increasing the awareness and knowledge of small 
employers concerning the availability and use of the program; 
(2) taking into account special concerns and circumstances 
that small employers face with respect to compliance and correc-
tion of compliance failures;
H. R. 4—277
(3) extending the duration of the self-correction period 
under the Self-Correction Program for significant compliance 
failures; 
(4) expanding the availability to correct insignificant 
compliance failures under the Self-Correction Program during 
audit; and 
(5) assuring that any tax, penalty, or sanction that is 
imposed by reason of a compliance failure is not excessive 
and bears a reasonable relationship to the nature, extent, and 
severity of the failure. 
SEC. 1102. NOTICE AND CONSENT PERIOD REGARDING DISTRIBU-
TIONS. 
(a) EXPANSION OF PERIOD.—
(1) AMENDMENT OF INTERNAL REVENUE CODE.—
(A) IN GENERAL.—Section 417(a)(6)(A) of the Internal 
Revenue Code of 1986 is amended by striking ‘‘90-day’’ 
and inserting ‘‘180-day’’. 
(B) MODIFICATION OF REGULATIONS.—The Secretary of 
the Treasury shall modify the regulations under sections 
402(f), 411(a)(11), and 417 of the Internal Revenue Code 
of 1986 by substituting ‘‘180 days’’ for ‘‘90 days’’ each place 
it appears in Treasury Regulations sections 1.402(f)–1, 
1.411(a)–11(c), and 1.417(e)–1(b). 
(2) AMENDMENT OF ERISA.—
(A) IN GENERAL.—Section 205(c)(7)(A) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1055(c)(7)(A)) is amended by striking ‘‘90-day’’ and inserting 
‘‘180-day’’. 
(B) MODIFICATION OF REGULATIONS.—The Secretary of 
the Treasury shall modify the regulations under part 2 
of subtitle B of title I of the Employee Retirement Income 
Security Act of 1974 relating to sections 203(e) and 205 
of such Act by substituting ‘‘180 days’’ for ‘‘90 days’’ each 
place it appears. 
(3) EFFECTIVE DATE.—The amendments and modifications 
made or required by this subsection shall apply to years begin-
ning after December 31, 2006. 
(b) NOTIFICATION OF RIGHT TO DEFER.—
(1) IN
GENERAL.—The Secretary of the Treasury shall 
modify the regulations under section 411(a)(11) of the Internal 
Revenue Code of 1986 and under section 205 of the Employee 
Retirement Income Security Act of 1974 to provide that the 
description of a participant’s right, if any, to defer receipt 
of a distribution shall also describe the consequences of failing 
to defer such receipt. 
(2) EFFECTIVE DATE.—
(A) IN GENERAL.—The modifications required by para-
graph (1) shall apply to years beginning after December 
31, 2006. 
(B) REASONABLE NOTICE.—A plan shall not be treated 
as failing to meet the requirements of section 411(a)(11) 
of such Code or section 205 of such Act with respect to 
any description of consequences described in paragraph 
(1) made within 90 days after the Secretary of the Treasury 
issues the modifications required by paragraph (1) if the
H. R. 4—278
plan administrator makes a reasonable attempt to comply 
with such requirements. 
SEC. 1103. REPORTING SIMPLIFICATION. 
(a) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR OWNERS AND 
THEIR SPOUSES.—
(1) IN
GENERAL.—The Secretary of the Treasury shall 
modify the requirements for filing annual returns with respect 
to one-participant retirement plans to ensure that such plans 
with assets of $250,000 or less as of the close of the plan 
year need not file a return for that year. 
(2) ONE-PARTICIPANT RETIREMENT PLAN DEFINED.—For pur-
poses of this subsection, the term ‘‘one-participant retirement 
plan’’ means a retirement plan with respect to which the fol-
lowing requirements are met: 
(A) on the first day of the plan year—
(i) the plan covered only one individual (or the 
individual and the individual’s spouse) and the indi-
vidual owned 100 percent of the plan sponsor (whether 
or not incorporated), or 
(ii) the plan covered only one or more partners 
(or partners and their spouses) in the plan sponsor; 
(B) the plan meets the minimum coverage require-
ments of section 410(b) of the Internal Revenue Code of 
1986 without being combined with any other plan of the 
business that covers the employees of the business; 
(C) the plan does not provide benefits to anyone except 
the individual (and the individual’s spouse) or the partners 
(and their spouses); 
(D) the plan does not cover a business that is a member 
of an affiliated service group, a controlled group of corpora-
tions, or a group of businesses under common control; 
and 
(E) the plan does not cover a business that uses the 
services of leased employees (within the meaning of section 
414(n) of such Code). 
For purposes of this paragraph, the term ‘‘partner’’ includes 
a 2-percent shareholder (as defined in section 1372(b) of such 
Code) of an S corporation. 
(3) OTHER
DEFINITIONS.—Terms used in paragraph (2) 
which are also used in section 414 of the Internal Revenue 
Code of 1986 shall have the respective meanings given such 
terms by such section. 
(4) EFFECTIVE
DATE.—The provisions of this subsection 
shall apply to plan years beginning on or after January 1, 
2007. 
(b) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR PLANS WITH 
FEWER THAN 25 PARTICIPANTS.—In the case of plan years beginning 
after December 31, 2006, the Secretary of the Treasury and the 
Secretary of Labor shall provide for the filing of a simplified annual 
return for any retirement plan which covers less than 25 partici-
pants on the first day of a plan year and which meets the require-
ments described in subparagraphs (B), (D), and (E) of subsection 
(a)(2).
H. R. 4—279
SEC. 1104. VOLUNTARY EARLY RETIREMENT INCENTIVE AND EMPLOY-
MENT RETENTION PLANS MAINTAINED BY LOCAL EDU-
CATIONAL AGENCIES AND OTHER ENTITIES. 
(a) VOLUNTARY EARLY RETIREMENT INCENTIVE PLANS.—
(1) TREATMENT AS PLAN PROVIDING SEVERANCE PAY.—Sec-
tion 457(e)(11) of the Internal Revenue Code of 1986 (relating 
to certain plans excluded) is amended by adding at the end 
the following new subparagraph: 
‘‘(D) CERTAIN VOLUNTARY EARLY RETIREMENT INCEN-
TIVE PLANS.—
‘‘(i) IN GENERAL.—If an applicable voluntary early 
retirement incentive plan—
‘‘(I) makes payments or supplements as an 
early retirement benefit, a retirement-type sub-
sidy, or a benefit described in the last sentence 
of section 411(a)(9), and 
‘‘(II) such payments or supplements are made 
in coordination with a defined benefit plan which 
is described in section 401(a) and includes a trust 
exempt from tax under section 501(a) and which 
is maintained by an eligible employer described 
in paragraph (1)(A) or by an education association 
described in clause (ii)(II), 
such applicable plan shall be treated for purposes of 
subparagraph (A)(i) as a bona fide severance pay plan 
with respect to such payments or supplements to the 
extent such payments or supplements could otherwise 
have been provided under such defined benefit plan 
(determined as if section 411 applied to such defined 
benefit plan). 
‘‘(ii) APPLICABLE
VOLUNTARY
EARLY
RETIREMENT 
INCENTIVE PLAN.—For purposes of this subparagraph, 
the term ‘applicable voluntary early retirement incen-
tive plan’ means a voluntary early retirement incentive 
plan maintained by—
‘‘(I) a local educational agency (as defined in 
section 9101 of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 7801)), or 
‘‘(II) an education association which principally 
represents employees of 1 or more agencies 
described in subclause (I) and which is described 
in section 501(c) (5) or (6) and exempt from tax 
under section 501(a).’’. 
(2) AGE
DISCRIMINATION
IN
EMPLOYMENT
ACT.—Section 
4(l)(1) of the Age Discrimination in Employment Act of 1967 
(29 U.S.C. 623(l)(1)) is amended—
(A) by inserting ‘‘(A)’’ after ‘‘(1)’’, 
(B) by redesignating subparagraphs (A) and (B) as 
clauses (i) and (ii), respectively, 
(C) by redesignating clauses (i) and (ii) of subparagraph 
(B) (as in effect before the amendments made by subpara-
graph (B)) as subclauses (I) and (II), respectively, and 
(D) by adding at the end the following: 
‘‘(B) A voluntary early retirement incentive plan that—
‘‘(i) is maintained by—
H. R. 4—280
‘‘(I) a local educational agency (as defined in sec-
tion 9101 of the Elementary and Secondary Education 
Act of 1965 (20 U.S.C. 7801), or 
‘‘(II) an education association which principally 
represents employees of 1 or more agencies described 
in subclause (I) and which is described in section 501(c) 
(5) or (6) of the Internal Revenue Code of 1986 and 
exempt from taxation under section 501(a) of such 
Code, and 
‘‘(ii) makes payments or supplements described in sub-
clauses (I) and (II) of subparagraph (A)(ii) in coordination 
with a defined benefit plan (as so defined) maintained 
by an eligible employer described in section 457(e)(1)(A) 
of such Code or by an education association described in 
clause (i)(II), 
shall be treated solely for purposes of subparagraph (A)(ii) 
as if it were a part of the defined benefit plan with respect 
to such payments or supplements. Payments or supplements 
under such a voluntary early retirement incentive plan shall 
not constitute severance pay for purposes of paragraph (2).’’. 
(b) EMPLOYMENT RETENTION PLANS.—
(1) IN GENERAL.—Section 457(f)(2) of the Internal Revenue 
Code of 1986 (relating to exceptions) is amended by striking 
‘‘and’’ at the end of subparagraph (D), by striking the period 
at the end of subparagraph (E) and inserting ‘‘, and’’, and 
by adding at the end the following: 
‘‘(F) that portion of any applicable employment reten-
tion plan described in paragraph (4) with respect to any 
participant.’’. 
(2) DEFINITIONS
AND
RULES
RELATING
TO
EMPLOYMENT 
RETENTION PLANS.—Section 457(f) of such Code is amended 
by adding at the end the following new paragraph: 
‘‘(4) EMPLOYMENT RETENTION PLANS.—For purposes of para-
graph (2)(F)—
‘‘(A) IN GENERAL.—The portion of an applicable employ-
ment retention plan described in this paragraph with 
respect to any participant is that portion of the plan which 
provides benefits payable to the participant not in excess 
of twice the applicable dollar limit determined under sub-
section (e)(15). 
‘‘(B) OTHER RULES.—
‘‘(i) LIMITATION.—Paragraph (2)(F) shall only apply 
to the portion of the plan described in subparagraph 
(A) for years preceding the year in which such portion 
is paid or otherwise made available to the participant. 
‘‘(ii) TREATMENT.—A plan shall not be treated for 
purposes of this title as providing for the deferral of 
compensation for any year with respect to the portion 
of the plan described in subparagraph (A). 
‘‘(C) APPLICABLE EMPLOYMENT RETENTION PLAN.—The 
term ‘applicable employment retention plan’ means an 
employment retention plan maintained by—
‘‘(i) a local educational agency (as defined in section 
9101 of the Elementary and Secondary Education Act 
of 1965 (20 U.S.C. 7801), or 
‘‘(ii) an education association which principally rep-
resents employees of 1 or more agencies described in
H. R. 4—281
clause (i) and which is described in section 501(c) (5) 
or (6) and exempt from taxation under section 501(a). 
‘‘(D) 
EMPLOYMENT
RETENTION
PLAN.—The 
term 
‘employment retention plan’ means a plan to pay, upon 
termination of employment, compensation to an employee 
of a local educational agency or education association 
described in subparagraph (C) for purposes of—
‘‘(i) retaining the services of the employee, or 
‘‘(ii) rewarding such employee for the employee’s 
service with 1 or more such agencies or associations.’’. 
(c) COORDINATION
WITH
ERISA.—Section 3(2)(B) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1002(2)(B)) is amended by adding at the end the following: ‘‘An 
applicable voluntary early retirement incentive plan (as defined 
in section 457(e)(11)(D)(ii) of the Internal Revenue Code of 1986) 
making 
payments 
or 
supplements 
described 
in 
section 
457(e)(11)(D)(i) of such Code, and an applicable employment reten-
tion plan (as defined in section 457(f)(4)(C) of such Code) making 
payments of benefits described in section 457(f)(4)(A) of such Code, 
shall, for purposes of this title, be treated as a welfare plan (and 
not a pension plan) with respect to such payments and supple-
ments.’’. 
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by this Act shall 
take effect on the date of the enactment of this Act. 
(2) TAX
AMENDMENTS.—The amendments made by sub-
sections (a)(1) and (b) shall apply to taxable years ending after 
the date of the enactment of this Act. 
(3) ERISA AMENDMENTS.—The amendment made by sub-
section (c) shall apply to plan years ending after the date 
of the enactment of this Act. 
(4) CONSTRUCTION.—Nothing in the amendments made by 
this section shall alter or affect the construction of the Internal 
Revenue Code of 1986, the Employee Retirement Income Secu-
rity Act of 1974, or the Age Discrimination in Employment 
Act of 1967 as applied to any plan, arrangement, or conduct 
to which such amendments do not apply. 
SEC. 1105. NO REDUCTION IN UNEMPLOYMENT COMPENSATION AS 
A RESULT OF PENSION ROLLOVERS. 
(a) IN GENERAL.—Section 3304(a) of the Internal Revenue Code 
of 1986 (relating to requirements for State unemployment laws) 
is amended by adding at the end the following new flush sentence: 
‘‘Compensation shall not be reduced under paragraph (15) for any 
pension, retirement or retired pay, annuity, or similar payment 
which is not includible in gross income of the individual for the 
taxable year in which paid because it was part of a rollover distribu-
tion.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to weeks beginning on or after the date of the enactment 
of this Act. 
SEC. 1106. REVOCATION OF ELECTION RELATING TO TREATMENT AS 
MULTIEMPLOYER PLAN. 
(a) AMENDMENT
TO ERISA.—Section 3(37) of the Employee 
Retirement Income Security Act of 1974 is amended by adding 
at the end the following new subparagraph (G):
H. R. 4—282
‘‘(G)(i) Within 1 year after the enactment of the Pension 
Protection Act of 2006—
‘‘(I) an election under subparagraph (E) may be 
revoked, pursuant to procedures prescribed by the Pension 
Benefit Guaranty Corporation, if, for each of the 3 plan 
years prior to the date of the enactment of that Act, the 
plan would have been a multiemployer plan but for the 
election under subparagraph (E), and 
‘‘(II) a plan that meets the criteria in clauses (i) and 
(ii) of subparagraph (A) of this paragraph or that is 
described in clause (vi) may, pursuant to procedures pre-
scribed by the Pension Benefit Guaranty Corporation, elect 
to be a multiemployer plan, if—
‘‘(aa) for each of the 3 plan years immediately 
before the date of the enactment of the Pension Protec-
tion Act of 2006, the plan has met those criteria or 
is so described, 
‘‘(bb) substantially all of the plan’s employer con-
tributions for each of those plan years were made 
or required to be made by organizations that were 
exempt from tax under section 501 of the Internal 
Revenue Code of 1986, and 
‘‘(cc) the plan was established prior to September 
2, 1974. 
‘‘(ii) An election under this paragraph shall be effective 
for all purposes under this Act and under the Internal Revenue 
Code of 1986, starting with the first plan year ending after 
the date of the enactment of the Pension Protection Act of 
2006. 
‘‘(iii) Once made, an election under this paragraph shall 
be irrevocable, except that a plan described in subclause (i)(II) 
shall cease to be a multiemployer plan as of the plan year 
beginning immediately after the first plan year for which the 
majority of its employer contributions were made or required 
to be made by organizations that were not exempt from tax 
under section 501 of the Internal Revenue Code of 1986. 
‘‘(iv) The fact that a plan makes an election under clause 
(i)(II) does not imply that the plan was not a multiemployer 
plan prior to the date of the election or would not be a multiem-
ployer plan without regard to the election. 
‘‘(v)(I) No later than 30 days before an election is made 
under this paragraph, the plan administrator shall provide 
notice of the pending election to each plan participant and 
beneficiary, each labor organization representing such partici-
pants or beneficiaries, and each employer that has an obligation 
to contribute to the plan, describing the principal differences 
between the guarantee programs under title IV and the benefit 
restrictions under this title for single employer and multiem-
ployer plans, along with such other information as the plan 
administrator chooses to include. 
‘‘(II) Within 180 days after the date of enactment of the 
Pension Protection Act of 2006, the Secretary shall prescribe 
a model notice under this subparagraph. 
‘‘(III) A plan administrator’s failure to provide the notice 
required under this subparagraph shall be treated for purposes
H. R. 4—283
of section 502(c)(2) as a failure or refusal by the plan adminis-
trator to file the annual report required to be filed with the 
Secretary under section 101(b)(4). 
‘‘(vi) A plan is described in this clause if it is a plan—
‘‘(I) that was established in Chicago, Illinois, on August 
12, 1881; and 
‘‘(II) sponsored by an organization described in section 
501(c)(5) of the Internal Revenue Code of 1986 and exempt 
from tax under section 501(a) of such Code.’’. 
(b) AMENDMENT TO INTERNAL REVENUE CODE.—Subsection (f) 
of section 414 of the Internal Revenue Code of 1986 is amended 
by adding at the end the following new paragraph (6): 
‘‘(6) ELECTION WITH REGARD TO MULTIEMPLOYER STATUS.—
‘‘(A) Within 1 year after the enactment of the Pension 
Protection Act of 2006—
‘‘(i) An election under paragraph (5) may be 
revoked, pursuant to procedures prescribed by the Pen-
sion Benefit Guaranty Corporation, if, for each of the 
3 plan years prior to the date of the enactment of 
that Act, the plan would have been a multiemployer 
plan but for the election under paragraph (5), and 
‘‘(ii) a plan that meets the criteria in subparagraph 
(A) and (B) of paragraph (1) of this subsection or that 
is described in subparagraph (E) may, pursuant to 
procedures prescribed by the Pension Benefit Guaranty 
Corporation, elect to be a multiemployer plan, if—
‘‘(I) for each of the 3 plan years immediately 
before the date of enactment of the Pension Protec-
tion Act of 2006, the plan has met those criteria 
or is so described, 
‘‘(II) substantially all of the plan’s employer 
contributions for each of those plan years were 
made or required to be made by organizations 
that were exempt from tax under section 501, and 
‘‘(III) the plan was established prior to Sep-
tember 2, 1974. 
‘‘(B) An election under this paragraph shall be effective 
for all purposes under this Act and under the Employee 
Retirement Income Security Act of 1974, starting with the 
first plan year ending after the date of the enactment 
of the Pension Protection Act of 2006. 
‘‘(C) Once made, an election under this paragraph shall 
be irrevocable, except that a plan described in subpara-
graph (A)(ii) shall cease to be a multiemployer plan as 
of the plan year beginning immediately after the first plan 
year for which the majority of its employer contributions 
were made or required to be made by organizations that 
were not exempt from tax under section 501. 
‘‘(D) The fact that a plan makes an election under 
subparagraph (A)(ii) does not imply that the plan was 
not a multiemployer plan prior to the date of the election 
or would not be a multiemployer plan without regard to 
the election. 
‘‘(E) A plan is described in this subparagraph if it 
is a plan—
‘‘(i) that was established in Chicago, Illinois, on 
August 12, 1881; and
H. R. 4—284
‘‘(ii) sponsored by an organization described in sec-
tion 501(c)(5) and exempt from tax under section 
501(a).’’. 
SEC. 1107. PROVISIONS RELATING TO PLAN AMENDMENTS. 
(a) IN GENERAL.—If this section applies to any pension plan 
or contract amendment—
(1) such pension plan or contract shall be treated as being 
operated in accordance with the terms of the plan during the 
period described in subsection (b)(2)(A), and 
(2) except as provided by the Secretary of the Treasury, 
such pension plan shall not fail to meet the requirements 
of section 411(d)(6) of the Internal Revenue Code of 1986 and 
section 204(g) of the Employee Retirement Income Security 
Act of 1974 by reason of such amendment. 
(b) AMENDMENTS TO WHICH SECTION APPLIES.—
(1) IN GENERAL.—This section shall apply to any amend-
ment to any pension plan or annuity contract which is made—
(A) pursuant to any amendment made by this Act 
or pursuant to any regulation issued by the Secretary 
of the Treasury or the Secretary of Labor under this Act, 
and 
(B) on or before the last day of the first plan year 
beginning on or after January 1, 2009. 
In the case of a governmental plan (as defined in section 
414(d) of the Internal Revenue Code of 1986), this paragraph 
shall be applied by substituting ‘‘2011’’ for ‘‘2009’’. 
(2) CONDITIONS.—This section shall not apply to any 
amendment unless—
(A) during the period—
(i) beginning on the date the legislative or regu-
latory amendment described in paragraph (1)(A) takes 
effect (or in the case of a plan or contract amendment 
not required by such legislative or regulatory amend-
ment, the effective date specified by the plan), and 
(ii) ending on the date described in paragraph 
(1)(B) (or, if earlier, the date the plan or contract 
amendment is adopted), the plan or contract is oper-
ated as if such plan or contract amendment were in 
effect; and 
(B) such plan or contract amendment applies retro-
actively for such period. 
TITLE XII—PROVISIONS RELATING TO 
EXEMPT ORGANIZATIONS 
Subtitle A—Charitable Giving Incentives 
SEC. 1201. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT 
PLANS FOR CHARITABLE PURPOSES. 
(a) IN GENERAL.—Subsection (d) of section 408 (relating to 
individual retirement accounts) is amended by adding at the end 
the following new paragraph: 
‘‘(8) DISTRIBUTIONS FOR CHARITABLE PURPOSES.—
H. R. 4—285
‘‘(A) IN GENERAL.—So much of the aggregate amount 
of qualified charitable distributions with respect to a tax-
payer made during any taxable year which does not exceed 
$100,000 shall not be includible in gross income of such 
taxpayer for such taxable year. 
‘‘(B) QUALIFIED CHARITABLE DISTRIBUTION.—For pur-
poses of this paragraph, the term ‘qualified charitable dis-
tribution’ means any distribution from an individual retire-
ment plan (other than a plan described in subsection (k) 
or (p))—
‘‘(i) which is made directly by the trustee to an 
organization described in section 170(b)(1)(A) (other 
than any organization described in section 509(a)(3) 
or any fund or account described in section 4966(d)(2)), 
and 
‘‘(ii) which is made on or after the date that the 
individual for whose benefit the plan is maintained 
has attained age 701⁄2. 
A distribution shall be treated as a qualified charitable 
distribution only to the extent that the distribution would 
be includible in gross income without regard to subpara-
graph (A). 
‘‘(C) CONTRIBUTIONS
MUST
BE
OTHERWISE
DEDUCT-
IBLE.—For purposes of this paragraph, a distribution to 
an organization described in subparagraph (B)(i) shall be 
treated as a qualified charitable distribution only if a 
deduction for the entire distribution would be allowable 
under section 170 (determined without regard to subsection 
(b) thereof and this paragraph). 
‘‘(D) APPLICATION
OF
SECTION 72.—Notwithstanding 
section 72, in determining the extent to which a distribution 
is a qualified charitable distribution, the entire amount 
of the distribution shall be treated as includible in gross 
income without regard to subparagraph (A) to the extent 
that such amount does not exceed the aggregate amount 
which would have been so includible if all amounts distrib-
uted from all individual retirement plans were treated 
as 1 contract under paragraph (2)(A) for purposes of deter-
mining the inclusion of such distribution under section 
72. Proper adjustments shall be made in applying section 
72 to other distributions in such taxable year and subse-
quent taxable years. 
‘‘(E) DENIAL OF DEDUCTION.—Qualified charitable dis-
tributions which are not includible in gross income pursu-
ant to subparagraph (A) shall not be taken into account 
in determining the deduction under section 170. 
‘‘(F) TERMINATION.—This paragraph shall not apply 
to distributions made in taxable years beginning after 
December 31, 2007.’’. 
(b) MODIFICATIONS RELATING
TO INFORMATION RETURNS
BY 
CERTAIN TRUSTS.—
(1) RETURNS.—Section 6034 (relating to returns by trusts 
described in section 4947(a)(2) or claiming charitable deductions 
under section 642(c)) is amended to read as follows:
H. R. 4—286
‘‘SEC. 6034. RETURNS BY CERTAIN TRUSTS. 
‘‘(a) SPLIT-INTEREST TRUSTS.—Every trust described in section 
4947(a)(2) shall furnish such information with respect to the taxable 
year as the Secretary may by forms or regulations require. 
‘‘(b) TRUSTS CLAIMING CERTAIN CHARITABLE DEDUCTIONS.—
‘‘(1) IN GENERAL.—Every trust not required to file a return 
under subsection (a) but claiming a deduction under section 
642(c) for the taxable year shall furnish such information with 
respect to such taxable year as the Secretary may by forms 
or regulations prescribe, including—
‘‘(A) the amount of the deduction taken under section 
642(c) within such year, 
‘‘(B) the amount paid out within such year which rep-
resents amounts for which deductions under section 642(c) 
have been taken in prior years, 
‘‘(C) the amount for which such deductions have been 
taken in prior years but which has not been paid out 
at the beginning of such year, 
‘‘(D) the amount paid out of principal in the current 
and prior years for the purposes described in section 642(c), 
‘‘(E) the total income of the trust within such year 
and the expenses attributable thereto, and 
‘‘(F) a balance sheet showing the assets, liabilities, 
and net worth of the trust as of the beginning of such 
year. 
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not apply to a trust 
for any taxable year if—
‘‘(A) all the net income for such year, determined under 
the applicable principles of the law of trusts, is required 
to be distributed currently to the beneficiaries, or 
‘‘(B) the trust is described in section 4947(a)(1).’’. 
(2) INCREASE IN PENALTY RELATING TO FILING OF INFORMA-
TION RETURN BY SPLIT-INTEREST TRUSTS.—Paragraph (2) of sec-
tion 6652(c) (relating to returns by exempt organizations and 
by certain trusts) is amended by adding at the end the following 
new subparagraph: 
‘‘(C) SPLIT-INTEREST TRUSTS.—In the case of a trust 
which is required to file a return under section 6034(a), 
subparagraphs (A) and (B) of this paragraph shall not 
apply and paragraph (1) shall apply in the same manner 
as if such return were required under section 6033, except 
that—
‘‘(i) the 5 percent limitation in the second sentence 
of paragraph (1)(A) shall not apply, 
‘‘(ii) in the case of any trust with gross income 
in excess of $250,000, the first sentence of paragraph 
(1)(A) shall be applied by substituting ‘$100’ for ‘$20’, 
and the second sentence thereof shall be applied by 
substituting ‘$50,000’ for ‘$10,000’, and 
‘‘(iii) the third sentence of paragraph (1)(A) shall 
be disregarded. 
In addition to any penalty imposed on the trust pursuant 
to this subparagraph, if the person required to file such 
return knowingly fails to file the return, such penalty shall 
also be imposed on such person who shall be personally 
liable for such penalty.’’.
H. R. 4—287
(3) CONFIDENTIALITY OF NONCHARITABLE BENEFICIARIES.—
Subsection (b) of section 6104 (relating to inspection of annual 
information returns) is amended by adding at the end the 
following new sentence: ‘‘In the case of a trust which is required 
to file a return under section 6034(a), this subsection shall 
not apply to information regarding beneficiaries which are not 
organizations described in section 170(c).’’. 
(4) CLERICAL AMENDMENT.—The item in the table of sec-
tions for subpart A of part III of subchapter A of chapter 
61 relating to section 6034 is amended to read as follows:
‘‘Sec. 6034. Returns by certain trusts.’’.
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendment made by subsection 
(a) shall apply to distributions made in taxable years beginning 
after December 31, 2005. 
(2) SUBSECTION (b).—The amendments made by subsection 
(b) shall apply to returns for taxable years beginning after 
December 31, 2006. 
SEC. 1202. EXTENSION OF MODIFICATION OF CHARITABLE DEDUCTION 
FOR CONTRIBUTIONS OF FOOD INVENTORY. 
(a) IN GENERAL.—Section 170(e)(3)(C)(iv) (relating to termi-
nation) is amended by striking ‘‘2005’’ and inserting ‘‘2007’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to contributions made after December 31, 2005. 
SEC. 1203. BASIS ADJUSTMENT TO STOCK OF S CORPORATION 
CONTRIBUTING PROPERTY. 
(a) IN GENERAL.—Paragraph (2) of section 1367(a) (relating 
to adjustments to basis of stock of shareholders, etc.) is amended 
by adding at the end the following new flush sentence: 
‘‘The decrease under subparagraph (B) by reason of a charitable 
contribution (as defined in section 170(c)) of property shall 
be the amount equal to the shareholder’s pro rata share of 
the adjusted basis of such property. The preceding sentence 
shall not apply to contributions made in taxable years beginning 
after December 31, 2007.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to contributions made in taxable years beginning after 
December 31, 2005. 
SEC. 1204. EXTENSION OF MODIFICATION OF CHARITABLE DEDUCTION 
FOR CONTRIBUTIONS OF BOOK INVENTORY. 
(a) IN GENERAL.—Section 170(e)(3)(D)(iv) (relating to termi-
nation) is amended by striking ‘‘2005’’ and inserting ‘‘2007’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to contributions made after December 31, 2005. 
SEC. 1205. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS 
TO CONTROLLING EXEMPT ORGANIZATIONS. 
(a) IN GENERAL.—Paragraph (13) of section 512(b) (relating 
to special rules for certain amounts received from controlled entities) 
is amended by redesignating subparagraph (E) as subparagraph 
(F) and by inserting after subparagraph (D) the following new 
subparagraph: 
‘‘(E) PARAGRAPH TO APPLY ONLY TO CERTAIN EXCESS 
PAYMENTS.—
H. R. 4—288
‘‘(i) IN GENERAL.—Subparagraph (A) shall apply 
only to the portion of a qualifying specified payment 
received or accrued by the controlling organization that 
exceeds the amount which would have been paid or 
accrued if such payment met the requirements pre-
scribed under section 482. 
‘‘(ii) 
ADDITION
TO
TAX
FOR
VALUATION 
MISSTATEMENTS.—The tax imposed by this chapter on 
the controlling organization shall be increased by an 
amount equal to 20 percent of the larger of—
‘‘(I) such excess determined without regard to 
any amendment or supplement to a return of tax, 
or 
‘‘(II) such excess determined with regard to 
all such amendments and supplements. 
‘‘(iii) QUALIFYING SPECIFIED PAYMENT.—The term 
‘qualifying specified payment’ means a specified pay-
ment which is made pursuant to—
‘‘(I) a binding written contract in effect on 
the date of the enactment of this subparagraph, 
or 
‘‘(II) a contract which is a renewal, under 
substantially similar terms, of a contract described 
in subclause (I). 
‘‘(iv) TERMINATION.—This subparagraph shall not 
apply to payments received or accrued after December 
31, 2007.’’. 
(b) REPORTING.—
(1) IN
GENERAL.—Section 6033 (relating to returns by 
exempt organizations) is amended by redesignating subsection 
(h) as subsection (i) and by inserting after subsection (g) the 
following new subsection: 
‘‘(h) CONTROLLING ORGANIZATIONS.—Each controlling organiza-
tion (within the meaning of section 512(b)(13)) which is subject 
to the requirements of subsection (a) shall include on the return 
required under subsection (a)—
‘‘(1) any interest, annuities, royalties, or rents received 
from each controlled entity (within the meaning of section 
512(b)(13)), 
‘‘(2) any loans made to each such controlled entity, and 
‘‘(3) any transfers of funds between such controlling 
organization and each such controlled entity.’’. 
(2) REPORT TO CONGRESS.—Not later than January 1, 2009, 
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 effective-
ness of the Internal Revenue Service in administering the 
amendments made by subsection (a) and on the extent to which 
payments by controlled entities (within the meaning of section 
512(b)(13) of the Internal Revenue Code of 1986) to controlling 
organizations (within the meaning of section 512(b)(13) of such 
Code) meet the requirements under section 482 of such Code. 
Such report shall include the results of any audit of any control-
ling organization or controlled entity and recommendations 
relating to the tax treatment of payments from controlled enti-
ties to controlling organizations. 
(c) EFFECTIVE DATE.—
H. R. 4—289
(1) SUBSECTION (a).—The amendments made by subsection 
(a) shall apply to payments received or accrued after December 
31, 2005. 
(2) SUBSECTION (b).—The amendments made by subsection 
(b) shall apply to returns the due date (determined without 
regard to extensions) of which is after the date of the enactment 
of this Act. 
SEC. 1206. ENCOURAGEMENT OF CONTRIBUTIONS OF CAPITAL GAIN 
REAL PROPERTY MADE FOR CONSERVATION PURPOSES. 
(a) IN GENERAL.—
(1) INDIVIDUALS.—Paragraph (1) of section 170(b) (relating 
to percentage limitations) is amended by redesignating subpara-
graphs (E) and (F) as subparagraphs (F) and (G), respectively, 
and by inserting after subparagraph (D) the following new 
subparagraph: 
‘‘(E) CONTRIBUTIONS OF QUALIFIED CONSERVATION CON-
TRIBUTIONS.—
‘‘(i) IN GENERAL.—Any qualified conservation con-
tribution (as defined in subsection (h)(1)) shall be 
allowed to the extent the aggregate of such contribu-
tions does not exceed the excess of 50 percent of the 
taxpayer’s contribution base over the amount of all 
other charitable contributions allowable under this 
paragraph. 
‘‘(ii) CARRYOVER.—If the aggregate amount of con-
tributions described in clause (i) exceeds the limitation 
of clause (i), such excess shall be treated (in a manner 
consistent with the rules of subsection (d)(1)) as a 
charitable contribution to which clause (i) applies in 
each of the 15 succeeding years in order of time. 
‘‘(iii) 
COORDINATION
WITH
OTHER
SUBPARA-
GRAPHS.—For purposes of applying this subsection and 
subsection (d)(1), contributions described in clause (i) 
shall not be treated as described in subparagraph (A), 
(B), (C), or (D) and such subparagraphs shall apply 
without regard to such contributions. 
‘‘(iv) SPECIAL RULE FOR CONTRIBUTION OF PROPERTY 
USED
IN
AGRICULTURE
OR
LIVESTOCK
PRODUCTION.—
‘‘(I) IN GENERAL.—If the individual is a quali-
fied farmer or rancher for the taxable year for 
which the contribution is made, clause (i) shall 
be applied by substituting ‘100 percent’ for ‘50 
percent’. 
‘‘(II) EXCEPTION.—Subclause (I) shall not apply 
to any contribution of property made after the 
date of the enactment of this subparagraph which 
is used in agriculture or livestock production (or 
available for such production) unless such con-
tribution is subject to a restriction that such prop-
erty remain available for such production. This 
subparagraph shall be applied separately with 
respect to property to which subclause (I) does 
not apply by reason of the preceding sentence prior 
to its application to property to which subclause 
(I) does apply.
H. R. 4—290
‘‘(v) DEFINITION.—For purposes of clause (iv), the 
term ‘qualified farmer or rancher’ means a taxpayer 
whose gross income from the trade or business of 
farming (within the meaning of section 2032A(e)(5)) 
is greater than 50 percent of the taxpayer’s gross 
income for the taxable year. 
‘‘(vi) TERMINATION.—This subparagraph shall not 
apply to any contribution made in taxable years begin-
ning after December 31, 2007.’’. 
(2) CORPORATIONS.—Paragraph (2) of section 170(b) is 
amended to read as follows: 
‘‘(2) CORPORATIONS.—In the case of a corporation—
‘‘(A) IN
GENERAL.—The total deductions under sub-
section (a) for any taxable year (other than for contributions 
to which subparagraph (B) applies) shall not exceed 10 
percent of the taxpayer’s taxable income. 
‘‘(B) QUALIFIED CONSERVATION CONTRIBUTIONS BY CER-
TAIN CORPORATE FARMERS AND RANCHERS.—
‘‘(i) IN GENERAL.—Any qualified conservation con-
tribution (as defined in subsection (h)(1))—
‘‘(I) which is made by a corporation which, 
for the taxable year during which the contribution 
is made, is a qualified farmer or rancher (as 
defined in paragraph (1)(E)(v)) and the stock of 
which is not readily tradable on an established 
securities market at any time during such year, 
and 
‘‘(II) which, in the case of contributions made 
after the date of the enactment of this subpara-
graph, is a contribution of property which is used 
in agriculture or livestock production (or available 
for such production) and which is subject to a 
restriction that such property remain available for 
such production, 
shall be allowed to the extent the aggregate of such 
contributions does not exceed the excess of the tax-
payer’s taxable income over the amount of charitable 
contributions allowable under subparagraph (A). 
‘‘(ii) CARRYOVER.—If the aggregate amount of con-
tributions described in clause (i) exceeds the limitation 
of clause (i), such excess shall be treated (in a manner 
consistent with the rules of subsection (d)(2)) as a 
charitable contribution to which clause (i) applies in 
each of the 15 succeeding years in order of time. 
‘‘(iii) TERMINATION.—This subparagraph shall not 
apply to any contribution made in taxable years begin-
ning after December 31, 2007. 
‘‘(C) TAXABLE INCOME.—For purposes of this paragraph, 
taxable income shall be computed without regard to—
‘‘(i) this section, 
‘‘(ii) part VIII (except section 248), 
‘‘(iii) any net operating loss carryback to the tax-
able year under section 172, 
‘‘(iv) section 199, and 
‘‘(v) any capital loss carryback to the taxable year 
under section 1212(a)(1).’’. 
(b) CONFORMING AMENDMENTS.—
H. R. 4—291
(1) Paragraph (2) of section 170(d) is amended by striking 
‘‘subsection (b)(2)’’ each place it appears and inserting ‘‘sub-
section (b)(2)(A)’’. 
(2) Section 545(b)(2) is amended by striking ‘‘and (D)’’ and 
inserting ‘‘(D), and (E)’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to contributions made in taxable years beginning after 
December 31, 2005. 
SEC. 1207. EXCISE TAXES EXEMPTION FOR BLOOD COLLECTOR 
ORGANIZATIONS. 
(a) EXEMPTION FROM IMPOSITION
OF SPECIAL FUELS TAX.—
Section 4041(g) (relating to other exemptions) is amended by 
striking ‘‘and’’ at the end of paragraph (3), by striking the period 
in paragraph (4) and inserting ‘‘; and’’, and by inserting after 
paragraph (4) the following new paragraph: 
‘‘(5) with respect to the sale of any liquid to a qualified 
blood collector organization (as defined in section 7701(a)(49)) 
for such organization’s exclusive use in the collection, storage, 
or transportation of blood.’’. 
(b) EXEMPTION FROM MANUFACTURERS EXCISE TAX.—
(1) IN GENERAL.—Section 4221(a) (relating to certain tax-
free sales) is amended by striking ‘‘or’’ at the end of paragraph 
(4), by adding ‘‘or’’ at the end of paragraph (5), and by inserting 
after paragraph (5) the following new paragraph: 
‘‘(6) to a qualified blood collector organization (as defined 
in section 7701(a)(49)) for such organization’s exclusive use 
in the collection, storage, or transportation of blood,’’. 
(2) NO EXEMPTION WITH RESPECT TO VACCINES AND REC-
REATIONAL EQUIPMENT.—Section 4221(a) is amended by adding 
at the end the following new sentence: ‘‘In the case of taxes 
imposed by subchapter C or D, paragraph (6) shall not apply.’’. 
(3) CONFORMING AMENDMENTS.—
(A) The second sentence of section 4221(a) is amended 
by striking ‘‘Paragraphs (4) and (5)’’ and inserting ‘‘Para-
graphs (4), (5), and (6)’’. 
(B) Section 6421(c) is amended by striking ‘‘or (5)’’ 
and inserting ‘‘(5), or (6)’’. 
(c) EXEMPTION FROM COMMUNICATION EXCISE TAX.—
(1) IN GENERAL.—Section 4253 (relating to exemptions) is 
amended by redesignating subsection (k) as subsection (l) and 
inserting after subsection (j) the following new subsection: 
‘‘(k) EXEMPTION FOR QUALIFIED BLOOD COLLECTOR ORGANIZA-
TIONS.—Under regulations provided by the Secretary, no tax shall 
be imposed under section 4251 on any amount paid by a qualified 
blood collector organization (as defined in section 7701(a)(49)) for 
services or facilities furnished to such organization.’’. 
(2) CONFORMING AMENDMENT.—Section 4253(l), as redesig-
nated by paragraph (1), is amended by striking ‘‘or (j)’’ and 
inserting ‘‘(j), or (k)’’. 
(d) EXEMPTION FROM TAX ON HEAVY VEHICLES.—Section 4483 
is amended by redesignating subsection (h) as subsection (i) and 
by inserting after subsection (g) the following new subsection: 
‘‘(h) EXEMPTION FOR VEHICLES USED IN BLOOD COLLECTION.—
‘‘(1) IN GENERAL.—No tax shall be imposed by section 4481 
on the use of any qualified blood collector vehicle by a qualified 
blood collector organization.
H. R. 4—292
‘‘(2) QUALIFIED BLOOD COLLECTOR VEHICLE.—For purposes 
of this subsection, the term ‘qualified blood collector vehicle’ 
means a vehicle at least 80 percent of the use of which during 
the prior taxable period was by a qualified blood collector 
organization in the collection, storage, or transportation of 
blood. 
‘‘(3) SPECIAL RULE FOR VEHICLES FIRST PLACED IN SERVICE 
IN A TAXABLE PERIOD.—In the case of a vehicle first placed 
in service in a taxable period, a vehicle shall be treated as 
a qualified blood collector vehicle for such taxable period if 
such qualified blood collector organization certifies to the Sec-
retary that the organization reasonably expects at least 80 
percent of the use of such vehicle by the organization during 
such taxable period will be in the collection, storage, or 
transportation of blood. 
‘‘(4) QUALIFIED
BLOOD
COLLECTOR
ORGANIZATION.—The 
term ‘qualified blood collector organization’ has the meaning 
given such term by section 7701(a)(49).’’. 
(e) CREDIT
OR REFUND
FOR CERTAIN TAXES
ON SALES
AND 
SERVICES.—
(1) DEEMED OVERPAYMENT.—
(A) IN
GENERAL.—Section 6416(b)(2) is amended by 
redesignating subparagraphs (E) and (F) as subparagraphs 
(F) and (G), respectively, and by inserting after subpara-
graph (D) the following new subparagraph: 
‘‘(E) sold to a qualified blood collector organization 
(as defined in section 7701(a)(49)) for such organization’s 
exclusive use in the collection, storage, or transportation 
of blood;’’. 
(B) NO
CREDIT
OR
REFUND
FOR
VACCINES
OR
REC-
REATIONAL EQUIPMENT.—Section 6416(b)(2) is amended by 
adding at the end the following new sentence: ‘‘In the 
case of taxes imposed by subchapter C or D of chapter 
32, subparagraph (E) shall not apply.’’. 
(C) CONFORMING AMENDMENTS.—Section 6416(b)(2) is 
amended—
(i) by striking ‘‘Subparagraphs (C) and (D)’’ in the 
second sentence and inserting ‘‘Subparagraphs (C), (D), 
and (E)’’. 
(ii) by striking ‘‘(B), (C), and (D)’’ and inserting 
‘‘(B), (C), (D), and (E)’’. 
(2) SALES OF TIRES.—Section 6416(b)(4)(B) is amended by 
striking ‘‘or’’ at the end of clause (i), by striking the period 
at the end of clause (ii) and inserting ‘‘, or’’, and by adding 
after clause (ii) the following: 
‘‘(iii) sold to a qualified blood collector organization 
for its exclusive use in connection with a vehicle the 
organization certifies will be primarily used in the 
collection, storage, or transportation of blood.’’. 
(f) DEFINITION
OF QUALIFIED BLOOD COLLECTOR ORGANIZA-
TION.—Section 7701(a) is amended by inserting at the end the 
following new paragraph: 
‘‘(49) QUALIFIED
BLOOD
COLLECTOR
ORGANIZATION.—The 
term ‘qualified blood collector organization’ means an organiza-
tion which is—
‘‘(A) described in section 501(c)(3) and exempt from 
tax under section 501(a),
H. R. 4—293
‘‘(B) primarily engaged in the activity of the collection 
of human blood, 
‘‘(C) registered with the Secretary for purposes of excise 
tax exemptions, and 
‘‘(D) registered by the Food and Drug Administration 
to collect blood.’’. 
(g) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section 
shall take effect on January 1, 2007. 
(2) SUBSECTION (d).—The amendment made by subsection 
(d) shall apply to taxable periods beginning on or after July 
1, 2007. 
Subtitle B—Reforming Exempt 
Organizations 
PART 1—GENERAL REFORMS 
SEC. 1211. REPORTING ON CERTAIN ACQUISITIONS OF INTERESTS IN 
INSURANCE CONTRACTS IN WHICH CERTAIN EXEMPT 
ORGANIZATIONS HOLD AN INTEREST. 
(a) REPORTING REQUIREMENTS.—
(1) IN GENERAL.—Subpart B of part III of subchapter A 
of chapter 61 (relating to information concerning transactions 
with other persons), as amended by this Act, is amended by 
adding at the end the following new section: 
‘‘SEC. 6050V. RETURNS RELATING TO APPLICABLE INSURANCE CON-
TRACTS IN WHICH CERTAIN EXEMPT ORGANIZATIONS 
HOLD INTERESTS. 
‘‘(a) IN GENERAL.—Each applicable exempt organization which 
makes a reportable acquisition shall make the return described 
in subsection (c). 
‘‘(b) TIME
FOR
MAKING
RETURN.—Any applicable exempt 
organization required to make a return under subsection (a) shall 
file such return at such time as may be established by the Secretary. 
‘‘(c) FORM AND MANNER OF RETURNS.—A return is described 
in this subsection if such return—
‘‘(1) is in such form as the Secretary prescribes, 
‘‘(2) contains the name, address, and taxpayer identification 
number of the applicable exempt organization and the issuer 
of the applicable insurance contract, and 
‘‘(3) contains such other information as the Secretary may 
prescribe. 
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) 
REPORTABLE
ACQUISITION.—The 
term 
‘reportable 
acquisition’ means the acquisition by an applicable exempt 
organization of a direct or indirect interest in any applicable 
insurance contract in any case in which such acquisition is 
a part of a structured transaction involving a pool of such 
contracts. 
‘‘(2) APPLICABLE INSURANCE CONTRACT.—
‘‘(A) IN GENERAL.—The term ‘applicable insurance con-
tract’ means any life insurance, annuity, or endowment 
contract with respect to which both an applicable exempt 
organization and a person other than an applicable exempt
H. R. 4—294
organization have directly or indirectly held an interest 
in the contract (whether or not at the same time). 
‘‘(B) EXCEPTIONS.—Such term shall not include a life 
insurance, annuity, or endowment contract if—
‘‘(i) all persons directly or indirectly holding any 
interest in the contract (other than applicable exempt 
organizations) have an insurable interest in the 
insured under the contract independent of any interest 
of an applicable exempt organization in the contract, 
‘‘(ii) the sole interest in the contract of an 
applicable exempt organization or each person other 
than an applicable exempt organization is as a named 
beneficiary, or 
‘‘(iii) the sole interest in the contract of each person 
other than an applicable exempt organization is—
‘‘(I) as a beneficiary of a trust holding an 
interest in the contract, but only if the person’s 
designation as such beneficiary was made without 
consideration and solely on a purely gratuitous 
basis, or 
‘‘(II) as a trustee who holds an interest in 
the contract in a fiduciary capacity solely for the 
benefit of applicable exempt organizations or per-
sons otherwise described in subclause (I) or clause 
(i) or (ii). 
‘‘(3) 
APPLICABLE
EXEMPT
ORGANIZATION.—The 
term 
‘applicable exempt organization’ means—
‘‘(A) an organization described in section 170(c), 
‘‘(B) 
an 
organization 
described 
in 
section 
168(h)(2)(A)(iv), or 
‘‘(C) an organization not described in paragraph (1) 
or (2) which is described in section 2055(a) or section 
2522(a). 
‘‘(e) TERMINATION.—This section shall not apply to reportable 
acquisitions occurring after the date which is 2 years after the 
date of the enactment of this section.’’. 
(2) CONFORMING AMENDMENT.—The table of sections for 
subpart B of part III of subchapter A of chapter 61 is amended 
by adding at the end the following new item:
‘‘Sec. 6050V. Returns relating to applicable insurance contracts in which certain ex-
empt organizations hold interests.’’.
(b) PENALTIES.—
(1) IN GENERAL.—Subparagraph (B) of section 6724(d)(1), 
as amended by this Act, is amended by redesignating clauses 
(xiv) through (xix) as clauses (xv) through (xx) and by inserting 
after clause (xiii) the following new clause: 
‘‘(xiv) section 6050V (relating to returns relating 
to applicable insurance contracts in which certain 
exempt organizations hold interests),’’. 
(2) 
INTENTIONAL
DISREGARD.—Section 
6721(e)(2) 
is 
amended by striking ‘‘or’’ at the end of subparagraph (B), by 
striking ‘‘and’’ at the end of subparagraph (C) and inserting 
‘‘or’’, and by adding at the end the following new subparagraph: 
‘‘(D) in the case of a return required to be filed under 
section 6050V, 10 percent of the value of the benefit of 
any contract with respect to which information is required 
to be included on the return, and’’.
H. R. 4—295
(c) STUDY.—
(1) IN
GENERAL.—The Secretary of the Treasury shall 
undertake a study on—
(A) the use by tax exempt organizations of applicable 
insurance contracts (as defined under section 6050V(d)(2) 
of the Internal Revenue Code of 1986, as added by sub-
section (a)) for the purpose of sharing the benefits of the 
organization’s insurable interest in individuals insured 
under such contracts with investors, and 
(B) whether such activities are consistent with the 
tax exempt status of such organizations. 
(2) REPORT.—Not later than 30 months after the date of 
the enactment of this Act, the Secretary of the Treasury shall 
report on the study conducted under paragraph (1) to the 
Committee on Finance of the Senate and the Committee on 
Ways and Means of the House of Representatives. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to acquisitions of contracts after the date of enactment 
of this Act. 
SEC. 1212. INCREASE IN PENALTY EXCISE TAXES RELATING TO PUBLIC 
CHARITIES, SOCIAL WELFARE ORGANIZATIONS, AND PRI-
VATE FOUNDATIONS. 
(a) TAXES
ON SELF-DEALING
AND EXCESS BENEFIT TRANS-
ACTIONS.—
(1) IN GENERAL.—Section 4941(a) (relating to initial taxes) 
is amended—
(A) in paragraph (1), by striking ‘‘5 percent’’ and 
inserting ‘‘10 percent’’, and 
(B) in paragraph (2), by striking ‘‘21⁄2 percent’’ and 
inserting ‘‘5 percent’’. 
(2) INCREASED
LIMITATION
FOR
MANAGERS
ON
SELF-
DEALING.—Section 4941(c)(2) is amended by striking ‘‘$10,000’’ 
each place it appears in the text and heading thereof and 
inserting ‘‘$20,000’’. 
(3) INCREASED LIMITATION FOR MANAGERS ON EXCESS BEN-
EFIT TRANSACTIONS.—Section 4958(d)(2) is amended by striking 
‘‘$10,000’’ and inserting ‘‘$20,000’’. 
(b) TAXES ON FAILURE TO DISTRIBUTE INCOME.—Section 4942(a) 
(relating to initial tax) is amended by striking ‘‘15 percent’’ and 
inserting ‘‘30 percent’’. 
(c) TAXES ON EXCESS BUSINESS HOLDINGS.—Section 4943(a)(1) 
(relating to imposition) is amended by striking ‘‘5 percent’’ and 
inserting ‘‘10 percent’’. 
(d) TAXES
ON INVESTMENTS WHICH JEOPARDIZE CHARITABLE 
PURPOSE.—
(1) IN GENERAL.—Section 4944(a) (relating to initial taxes) 
is amended by striking ‘‘5 percent’’ both places it appears and 
inserting ‘‘10 percent’’. 
(2) 
INCREASED
LIMITATION
FOR
MANAGERS.—Section 
4944(d)(2) is amended—
(A) by striking ‘‘$5,000,’’ and inserting ‘‘$10,000,’’, and 
(B) by striking ‘‘$10,000.’’ and inserting ‘‘$20,000.’’. 
(e) TAXES ON TAXABLE EXPENDITURES.—
(1) IN GENERAL.—Section 4945(a) (relating to initial taxes) 
is amended—
H. R. 4—296
(A) in paragraph (1), by striking ‘‘10 percent’’ and 
inserting ‘‘20 percent’’, and 
(B) in paragraph (2), by striking ‘‘21⁄2 percent’’ and 
inserting ‘‘5 percent’’. 
(2) 
INCREASED
LIMITATION
FOR
MANAGERS.—Section 
4945(c)(2) is amended—
(A) by striking ‘‘$5,000,’’ and inserting ‘‘$10,000,’’, and 
(B) by striking ‘‘$10,000.’’ and inserting ‘‘$20,000.’’. 
(f) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after the date of the enact-
ment of this Act. 
SEC. 1213. REFORM OF CHARITABLE CONTRIBUTIONS OF CERTAIN 
EASEMENTS IN REGISTERED HISTORIC DISTRICTS AND 
REDUCED DEDUCTION FOR PORTION OF QUALIFIED 
CONSERVATION 
CONTRIBUTION 
ATTRIBUTABLE 
TO 
REHABILITATION CREDIT. 
(a) SPECIAL RULES WITH RESPECT TO BUILDINGS IN REGISTERED 
HISTORIC DISTRICTS.—
(1) IN GENERAL.—Paragraph (4) of section 170(h) (relating 
to definition of conservation purpose) is amended by redesig-
nating subparagraph (B) as subparagraph (C) and by inserting 
after subparagraph (A) the following new subparagraph: 
‘‘(B) SPECIAL RULES WITH RESPECT TO BUILDINGS IN 
REGISTERED HISTORIC DISTRICTS.—In the case of any con-
tribution of a qualified real property interest which is a 
restriction with respect to the exterior of a building 
described in subparagraph (C)(ii), such contribution shall 
not be considered to be exclusively for conservation pur-
poses unless—
‘‘(i) such interest—
‘‘(I) includes a restriction which preserves the 
entire exterior of the building (including the front, 
sides, rear, and height of the building), and 
‘‘(II) prohibits any change in the exterior of 
the building which is inconsistent with the histor-
ical character of such exterior, 
‘‘(ii) the donor and donee enter into a written 
agreement certifying, under penalty of perjury, that 
the donee—
‘‘(I) is a qualified organization (as defined in 
paragraph (3)) with a purpose of environmental 
protection, land conservation, open space preserva-
tion, or historic preservation, and 
‘‘(II) has the resources to manage and enforce 
the restriction and a commitment to do so, and 
‘‘(iii) in the case of any contribution made in a 
taxable year beginning after the date of the enactment 
of this subparagraph, the taxpayer includes with the 
taxpayer’s return for the taxable year of the contribu-
tion—
‘‘(I) a qualified appraisal (within the meaning 
of subsection (f)(11)(E)) of the qualified property 
interest, 
‘‘(II) photographs of the entire exterior of the 
building, and
H. R. 4—297
‘‘(III) a description of all restrictions on the 
development of the building.’’. 
(b) DISALLOWANCE OF DEDUCTION FOR STRUCTURES AND LAND 
IN REGISTERED HISTORIC DISTRICTS.—Subparagraph (C) of section 
170(h)(4), as redesignated by subsection (a), is amended—
(1) by striking ‘‘any building, structure, or land area which’’, 
(2) by inserting ‘‘any building, structure, or land area 
which’’ before ‘‘is listed’’ in clause (i), and 
(3) by inserting ‘‘any building which’’ before ‘‘is located’’ 
in clause (ii). 
(c) FILING FEE FOR CERTAIN CONTRIBUTIONS.—Subsection (f) 
of section 170 (relating to disallowance of deduction in certain 
cases and special rules) is amended by adding at the end the 
following new paragraph: 
‘‘(13) CONTRIBUTIONS OF CERTAIN INTERESTS IN BUILDINGS 
LOCATED IN REGISTERED HISTORIC DISTRICTS.—
‘‘(A) IN GENERAL.—No deduction shall be allowed with 
respect to any contribution described in subparagraph (B) 
unless the taxpayer includes with the return for the taxable 
year of the contribution a $500 filing fee. 
‘‘(B) CONTRIBUTION
DESCRIBED.—A contribution is 
described in this subparagraph if such contribution is a 
qualified conservation contribution (as defined in sub-
section (h)) which is a restriction with respect to the exte-
rior of a building described in subsection (h)(4)(C)(ii) and 
for which a deduction is claimed in excess of $10,000. 
‘‘(C) DEDICATION OF FEE.—Any fee collected under this 
paragraph shall be used for the enforcement of the provi-
sions of subsection (h).’’. 
(d) REDUCED DEDUCTION
FOR PORTION
OF QUALIFIED CON-
SERVATION CONTRIBUTION ATTRIBUTABLE TO THE REHABILITATION 
CREDIT.—Subsection (f) of section 170, as amended by subsection 
(c), is amended by adding at the end the following new paragraph: 
‘‘(14) 
REDUCTION
FOR
AMOUNTS
ATTRIBUTABLE
TO 
REHABILITATION CREDIT.—In the case of any qualified conserva-
tion contribution (as defined in subsection (h)), the amount 
of the deduction allowed under this section shall be reduced 
by an amount which bears the same ratio to the fair market 
value of the contribution as—
‘‘(A) the sum of the credits allowed to the taxpayer 
under section 47 for the 5 preceding taxable years with 
respect to any building which is a part of such contribution, 
bears to 
‘‘(B) the fair market value of the building on the date 
of the contribution.’’. 
(e) EFFECTIVE DATES.—
(1) SPECIAL RULES FOR BUILDINGS IN REGISTERED HISTORIC 
DISTRICTS.—The amendments made by subsection (a) shall 
apply to contributions made after July 25, 2006. 
(2) DISALLOWANCE
OF
DEDUCTION
FOR
STRUCTURES
AND 
LAND; REDUCTION FOR REHABILITATION CREDIT.—The amend-
ments made by subsections (b) and (d) shall apply to contribu-
tions made after the date of the enactment of this Act. 
(3) FILING FEE.—The amendment made by subsection (c) 
shall apply to contributions made 180 days after the date 
of the enactment of this Act.
H. R. 4—298
SEC. 1214. CHARITABLE CONTRIBUTIONS OF TAXIDERMY PROPERTY. 
(a) DENIAL OF LONG-TERM CAPITAL GAIN.—Subparagraph (B) 
of section 170(e)(1) is amended by striking ‘‘or’’ at the end of 
clause (ii), by inserting ‘‘or’’ at the end of clause (iii), and by 
inserting after clause (iii) the following new clause: 
‘‘(iv) of any taxidermy property which is contrib-
uted by the person who prepared, stuffed, or mounted 
the property or by any person who paid or incurred 
the cost of such preparation, stuffing, or mounting,’’. 
(b) TREATMENT
OF BASIS.—Subsection (f) of section 170, as 
amended by this Act, is amended by adding at the end the following 
new paragraph: 
‘‘(15) SPECIAL RULE FOR TAXIDERMY PROPERTY.—
‘‘(A) BASIS.—For purposes of this section and notwith-
standing section 1012, in the case of a charitable contribu-
tion of taxidermy property which is made by the person 
who prepared, stuffed, or mounted the property or by any 
person who paid or incurred the cost of such preparation, 
stuffing, or mounting, only the cost of the preparing, 
stuffing, or mounting shall be included in the basis of 
such property. 
‘‘(B) TAXIDERMY PROPERTY.—For purposes of this sec-
tion, the term ‘taxidermy property’ means any work of 
art which—
‘‘(i) is the reproduction or preservation of an 
animal, in whole or in part, 
‘‘(ii) is prepared, stuffed, or mounted for purposes 
of recreating one or more characteristics of such 
animal, and 
‘‘(iii) contains a part of the body of the dead 
animal.’’. 
(c) EFFECTIVE DATE.—The amendment made by this section 
shall apply to contributions made after July 25, 2006. 
SEC. 1215. RECAPTURE OF TAX BENEFIT FOR CHARITABLE CONTRIBU-
TIONS OF EXEMPT USE PROPERTY NOT USED FOR AN 
EXEMPT USE. 
(a) RECAPTURE OF DEDUCTION ON CERTAIN SALES OF EXEMPT 
USE PROPERTY.—
(1) IN GENERAL.—Clause (i) of section 170(e)(1)(B) (related 
to certain contributions of ordinary income and capital gain 
property) is amended to read as follows: 
‘‘(i) of tangible personal property—
‘‘(I) if the use by the donee is unrelated to 
the purpose or function constituting the basis for 
its exemption under section 501 (or, in the case 
of a governmental unit, to any purpose or function 
described in subsection (c)), or 
‘‘(II) which is applicable property (as defined 
in paragraph (7)(C)) which is sold, exchanged, or 
otherwise disposed of by the donee before the last 
day of the taxable year in which the contribution 
was made and with respect to which the donee 
has not made a certification in accordance with 
paragraph (7)(D),’’.
H. R. 4—299
(2) DISPOSITIONS AFTER CLOSE OF TAXABLE YEAR.—Section 
170(e) is amended by adding at the end the following new 
paragraph: 
‘‘(7) RECAPTURE OF DEDUCTION ON CERTAIN DISPOSITIONS 
OF EXEMPT USE PROPERTY.—
‘‘(A) IN GENERAL.—In the case of an applicable disposi-
tion of applicable property, there shall be included in the 
income of the donor of such property for the taxable year 
of such donor in which the applicable disposition occurs 
an amount equal to the excess (if any) of—
‘‘(i) the amount of the deduction allowed to the 
donor under this section with respect to such property, 
over 
‘‘(ii) the donor’s basis in such property at the time 
such property was contributed. 
‘‘(B) APPLICABLE
DISPOSITION.—For purposes of this 
paragraph, the term ‘applicable disposition’ means any sale, 
exchange, or other disposition by the donee of applicable 
property—
‘‘(i) after the last day of the taxable year of the 
donor in which such property was contributed, and 
‘‘(ii) before the last day of the 3-year period begin-
ning on the date of the contribution of such property, 
unless the donee makes a certification in accordance with 
subparagraph (D). 
‘‘(C) APPLICABLE PROPERTY.—For purposes of this para-
graph, the term ‘applicable property’ means charitable 
deduction property (as defined in section 6050L(a)(2)(A))—
‘‘(i) which is tangible personal property the use 
of which is identified by the donee as related to the 
purpose or function constituting the basis of the donee’s 
exemption under section 501, and 
‘‘(ii) for which a deduction in excess of the donor’s 
basis is allowed. 
‘‘(D) CERTIFICATION.—A certification meets the require-
ments of this subparagraph if it is a written statement 
which is signed under penalty of perjury by an officer 
of the donee organization and—
‘‘(i) which—
‘‘(I) certifies that the use of the property by 
the donee was related to the purpose or function 
constituting the basis for the donee’s exemption 
under section 501, and 
‘‘(II) describes how the property was used and 
how such use furthered such purpose or function, 
or 
‘‘(ii) which—
‘‘(I) states the intended use of the property 
by the donee at the time of the contribution, and 
‘‘(II) certifies that such intended use has 
become impossible or infeasible to implement.’’. 
(b) REPORTING
REQUIREMENTS.—Paragraph (1) of section 
6050L(a) (relating to returns relating to certain dispositions of 
donated property) is amended—
(1) by striking ‘‘2 years’’ and inserting ‘‘3 years’’, and
H. R. 4—300
(2) by striking ‘‘and’’ at the end of subparagraph (D), by 
striking the period at the end of subparagraph (E) and inserting 
a comma, and by inserting at the end the following: 
‘‘(F) a description of the donee’s use of the property, 
and 
‘‘(G) a statement indicating whether the use of the 
property was related to the purpose or function constituting 
the basis for the donee’s exemption under section 501. 
In any case in which the donee indicates that the use of 
applicable property (as defined in section 170(e)(7)(C)) was 
related to the purpose or function constituting the basis for 
the exemption of the donee under section 501 under subpara-
graph (G), the donee shall include with the return the certifi-
cation described in section 170(e)(7)(D) if such certification is 
made under section 170(e)(7).’’. 
(c) PENALTY.—
(1) IN GENERAL.—Part I of subchapter B of chapter 68 
(relating to assessable penalties) is amended by inserting after 
section 6720A the following new section: 
‘‘SEC. 6720B. FRAUDULENT IDENTIFICATION OF EXEMPT USE PROP-
ERTY. 
‘‘In addition to any criminal penalty provided by law, any 
person who identifies applicable property (as defined in section 
170(e)(7)(C)) as having a use which is related to a purpose or 
function constituting the basis for the donee’s exemption under 
section 501 and who knows that such property is not intended 
for such a use shall pay a penalty of $10,000.’’. 
(2) CLERICAL AMENDMENT.—The table of sections for part 
I of subchapter B of chapter 68 is amended by adding after 
the item relating to section 6720A the following new item:
‘‘Sec. 6720B. Fraudulent identification of exempt use property.’’.
(d) EFFECTIVE DATE.—
(1) RECAPTURE.—The amendments made by subsection (a) 
shall apply to contributions after September 1, 2006. 
(2) REPORTING.—The amendments made by subsection (b) 
shall apply to returns filed after September 1, 2006. 
(3) PENALTY.—The amendments made by subsection (c) 
shall apply to identifications made after the date of the enact-
ment of this Act. 
SEC. 1216. LIMITATION OF DEDUCTION FOR CHARITABLE CONTRIBU-
TIONS OF CLOTHING AND HOUSEHOLD ITEMS. 
(a) IN GENERAL.—Subsection (f) of section 170, as amended 
by this Act, is amended by adding at the end the following new 
paragraph: 
‘‘(16) CONTRIBUTIONS
OF
CLOTHING
AND
HOUSEHOLD 
ITEMS.—
‘‘(A) IN GENERAL.—In the case of an individual, partner-
ship, or corporation, no deduction shall be allowed under 
subsection (a) for any contribution of clothing or a house-
hold item unless such clothing or household item is in 
good used condition or better. 
‘‘(B) ITEMS
OF
MINIMAL
VALUE.—Notwithstanding 
subparagraph (A), the Secretary may by regulation deny 
a deduction under subsection (a) for any contribution of
H. R. 4—301
clothing or a household item which has minimal monetary 
value. 
‘‘(C) EXCEPTION
FOR
CERTAIN
PROPERTY.—Subpara-
graphs (A) and (B) shall not apply to any contribution 
of a single item of clothing or a household item for which 
a deduction of more than $500 is claimed if the taxpayer 
includes with the taxpayer’s return a qualified appraisal 
with respect to the property. 
‘‘(D) HOUSEHOLD ITEMS.—For purposes of this para-
graph—
‘‘(i) IN
GENERAL.—The term ‘household items’ 
includes furniture, furnishings, electronics, appliances, 
linens, and other similar items. 
‘‘(ii) EXCLUDED
ITEMS.—Such term does not 
include—
‘‘(I) food, 
‘‘(II) paintings, antiques, and other objects of 
art, 
‘‘(III) jewelry and gems, and 
‘‘(IV) collections. 
‘‘(E) SPECIAL RULE FOR PASS-THRU ENTITIES.—In the 
case of a partnership or S corporation, this paragraph 
shall be applied at the entity level, except that the deduc-
tion shall be denied at the partner or shareholder level.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to contributions made after the date of enactment of 
this Act. 
SEC. 1217. MODIFICATION OF RECORDKEEPING REQUIREMENTS FOR 
CERTAIN CHARITABLE CONTRIBUTIONS. 
(a) RECORDKEEPING REQUIREMENT.—Subsection (f) of section 
170, as amended by this Act, is amended by adding at the end 
the following new paragraph: 
‘‘(17) RECORDKEEPING.—No deduction shall be allowed 
under subsection (a) for any contribution of a cash, check, 
or other monetary gift unless the donor maintains as a record 
of such contribution a bank record or a written communication 
from the donee showing the name of the donee organization, 
the date of the contribution, and the amount of the contribu-
tion.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to contributions made in taxable years beginning after 
the date of the enactment of this Act. 
SEC. 1218. CONTRIBUTIONS OF FRACTIONAL INTERESTS IN TANGIBLE 
PERSONAL PROPERTY. 
(a) INCOME TAX.—Section 170 (relating to charitable, etc., con-
tributions and gifts) is amended by redesignating subsection (o) 
as subsection (p) and by inserting after subsection (n) the following 
new subsection: 
‘‘(o) SPECIAL RULES FOR FRACTIONAL GIFTS.—
‘‘(1) DENIAL OF DEDUCTION IN CERTAIN CASES.—
‘‘(A) IN GENERAL.—No deduction shall be allowed for 
a contribution of an undivided portion of a taxpayer’s entire 
interest in tangible personal property unless all interest 
in the property is held immediately before such contribution 
by—
‘‘(i) the taxpayer, or
H. R. 4—302
‘‘(ii) the taxpayer and the donee. 
‘‘(B) EXCEPTIONS.—The Secretary may, by regulation, 
provide for exceptions to subparagraph (A) in cases where 
all persons who hold an interest in the property make 
proportional contributions of an undivided portion of the 
entire interest held by such persons. 
‘‘(2) VALUATION OF SUBSEQUENT GIFTS.—In the case of any 
additional contribution, the fair market value of such contribu-
tion shall be determined by using the lesser of—
‘‘(A) the fair market value of the property at the time 
of the initial fractional contribution, or 
‘‘(B) the fair market value of the property at the time 
of the additional contribution. 
‘‘(3) RECAPTURE OF DEDUCTION IN CERTAIN CASES; ADDITION 
TO TAX.—
‘‘(A) RECAPTURE.—The Secretary shall provide for the 
recapture of the amount of any deduction allowed under 
this section (plus interest) with respect to any contribution 
of an undivided portion of a taxpayer’s entire interest in 
tangible personal property—
‘‘(i) in any case in which the donor does not con-
tribute all of the remaining interest in such property 
to the donee (or, if such donee is no longer in existence, 
to any person described in section 170(c)) before the 
earlier of—
‘‘(I) the date that is 10 years after the date 
of the initial fractional contribution, or 
‘‘(II) the date of the death of the donor, and 
‘‘(ii) in any case in which the donee has not, during 
the period beginning on the date of the initial fractional 
contribution and ending on the date described in clause 
(i)—
‘‘(I) had substantial physical possession of the 
property, and 
‘‘(II) used the property in a use which is 
related to a purpose or function constituting the 
basis for the organizations’ exemption under sec-
tion 501. 
‘‘(B) ADDITION TO TAX.—The tax imposed under this 
chapter for any taxable year for which there is a recapture 
under subparagraph (A) shall be increased by 10 percent 
of the amount so recaptured. 
‘‘(4) DEFINITIONS.—For purposes of this subsection—
‘‘(A) ADDITIONAL CONTRIBUTION.—The term ‘additional 
contribution’ means any charitable contribution by the tax-
payer of any interest in property with respect to which 
the taxpayer has previously made an initial fractional con-
tribution. 
‘‘(B) INITIAL FRACTIONAL CONTRIBUTION.—The term ‘ini-
tial fractional contribution’ means, with respect to any 
taxpayer, the first charitable contribution of an undivided 
portion of the taxpayer’s entire interest in any tangible 
personal property.’’. 
(b) ESTATE TAX.—Section 2055 (relating to transfers for public, 
charitable, and religious uses) is amended by redesignating sub-
section (g) as subsection (h) and by inserting after subsection (f) 
the following new subsection:
H. R. 4—303
‘‘(g) VALUATION OF SUBSEQUENT GIFTS.—
‘‘(1) IN GENERAL.—In the case of any additional contribu-
tion, the fair market value of such contribution shall be deter-
mined by using the lesser of—
‘‘(A) the fair market value of the property at the time 
of the initial fractional contribution, or 
‘‘(B) the fair market value of the property at the time 
of the additional contribution. 
‘‘(2) DEFINITIONS.—For purposes of this paragraph—
‘‘(A) ADDITIONAL CONTRIBUTION.—The term ‘additional 
contribution’ means a bequest, legacy, devise, or transfer 
described in subsection (a) of any interest in a property 
with respect to which the decedent had previously made 
an initial fractional contribution. 
‘‘(B) INITIAL FRACTIONAL CONTRIBUTION.—The term ‘ini-
tial fractional contribution’ means, with respect to any 
decedent, any charitable contribution of an undivided por-
tion of the decedent’s entire interest in any tangible per-
sonal property for which a deduction was allowed under 
section 170.’’. 
(c) GIFT TAX.—Section 2522 (relating to charitable and similar 
gifts) is amended by redesignating subsection (e) as subsection 
(f) and by inserting after subsection (d) the following new subsection: 
‘‘(e) SPECIAL RULES FOR FRACTIONAL GIFTS.—
‘‘(1) DENIAL OF DEDUCTION IN CERTAIN CASES.—
‘‘(A) IN GENERAL.—No deduction shall be allowed for 
a contribution of an undivided portion of a taxpayer’s entire 
interest in tangible personal property unless all interest 
in the property is held immediately before such contribution 
by—
‘‘(i) the taxpayer, or 
‘‘(ii) the taxpayer and the donee. 
‘‘(B) EXCEPTIONS.—The Secretary may, by regulation, 
provide for exceptions to subparagraph (A) in cases where 
all persons who hold an interest in the property make 
proportional contributions of an undivided portion of the 
entire interest held by such persons. 
‘‘(2) VALUATION OF SUBSEQUENT GIFTS.—In the case of any 
additional contribution, the fair market value of such contribu-
tion shall be determined by using the lesser of—
‘‘(A) the fair market value of the property at the time 
of the initial fractional contribution, or 
‘‘(B) the fair market value of the property at the time 
of the additional contribution. 
‘‘(3) RECAPTURE OF DEDUCTION IN CERTAIN CASES; ADDITION 
TO TAX.—
‘‘(A) IN GENERAL.—The Secretary shall provide for the 
recapture of an amount equal to any deduction allowed 
under this section (plus interest) with respect to any con-
tribution of an undivided portion of a taxpayer’s entire 
interest in tangible personal property—
‘‘(i) in any case in which the donor does not con-
tribute all of the remaining interest in such property 
to the donee (or, if such donee is no longer in existence, 
to any person described in section 170(c)) before the 
earlier of—
H. R. 4—304
‘‘(I) the date that is 10 years after the date 
of the initial fractional contribution, or 
‘‘(II) the date of the death of the donor, and 
‘‘(ii) in any case in which the donee has not, during 
the period beginning on the date of the initial fractional 
contribution and ending on the date described in clause 
(i)—
‘‘(I) had substantial physical possession of the 
property, and 
‘‘(II) used the property in a use which is 
related to a purpose or function constituting the 
basis for the organizations’ exemption under sec-
tion 501. 
‘‘(B) ADDITION TO TAX.—The tax imposed under this 
chapter for any taxable year for which there is a recapture 
under subparagraph (A) shall be increased by 10 percent 
of the amount so recaptured. 
‘‘(4) DEFINITIONS.—For purposes of this subsection—
‘‘(A) ADDITIONAL CONTRIBUTION.—The term ‘additional 
contribution’ means any gift for which a deduction is 
allowed under subsection (a) or (b) of any interest in a 
property with respect to which the donor has previously 
made an initial fractional contribution. 
‘‘(B) INITIAL FRACTIONAL CONTRIBUTION.—The term ‘ini-
tial fractional contribution’ means, with respect to any 
donor, the first gift of an undivided portion of the donor’s 
entire interest in any tangible personal property for which 
a deduction is allowed under subsection (a) or (b).’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to contributions, bequests, and gifts made after the 
date of the enactment of this Act. 
SEC. 1219. PROVISIONS RELATING TO SUBSTANTIAL AND GROSS OVER-
STATEMENTS OF VALUATIONS. 
(a) MODIFICATION OF THRESHOLDS FOR SUBSTANTIAL AND GROSS 
VALUATION MISSTATEMENTS.—
(1) SUBSTANTIAL VALUATION MISSTATEMENT.—
(A) INCOME
TAXES.—Subparagraph (A) of section 
6662(e)(1) (relating to substantial valuation misstatement 
under chapter 1) is amended by striking ‘‘200 percent’’ 
and inserting ‘‘150 percent’’. 
(B) ESTATE AND GIFT TAXES.—Paragraph (1) of section 
6662(g) is amended by striking ‘‘50 percent’’ and inserting 
‘‘65 percent’’. 
(2) GROSS VALUATION MISSTATEMENT.—
(A) INCOME
TAXES.—Clauses (i) and (ii) of section 
6662(h)(2)(A) (relating to increase in penalty in case of 
gross valuation misstatements) are amended to read as 
follows: 
‘‘(i) in paragraph (1)(A), ‘200 percent’ for ‘150 per-
cent’, 
‘‘(ii) in paragraph (1)(B)(i)—
‘‘(I) ‘400 percent’ for ‘200 percent’, and 
‘‘(II) ‘25 percent’ for ‘50 percent’, and’’. 
(B) ESTATE AND GIFT TAXES.—Subparagraph (C) of sec-
tion 6662(h)(2) is amended by striking ‘‘ ‘25 percent’ for 
‘50 percent’ ’’ and inserting ‘‘ ‘40 percent’ for ‘65 percent’ ’’.
H. R. 4—305
(3) ELIMINATION
OF
REASONABLE
CAUSE
EXCEPTION
FOR 
GROSS MISSTATEMENTS.—Section 6664(c)(2) (relating to reason-
able cause exception for underpayments) is amended by striking 
‘‘paragraph (1) shall not apply unless’’ and inserting ‘‘paragraph 
(1) shall not apply. The preceding sentence shall not apply 
to a substantial valuation overstatement under chapter 1 if’’. 
(b) PENALTY
ON APPRAISERS WHOSE APPRAISALS RESULT
IN 
SUBSTANTIAL OR GROSS VALUATION MISSTATEMENTS.—
(1) IN GENERAL.—Part I of subchapter B of chapter 68 
(relating to assessable penalties) is amended by inserting after 
section 6695 the following new section: 
‘‘SEC. 6695A. SUBSTANTIAL AND GROSS VALUATION MISSTATEMENTS 
ATTRIBUTABLE TO INCORRECT APPRAISALS. 
‘‘(a) IMPOSITION OF PENALTY.—If—
‘‘(1) a person prepares an appraisal of the value of property 
and such person knows, or reasonably should have known, 
that the appraisal would be used in connection with a return 
or a claim for refund, and 
‘‘(2) the claimed value of the property on a return or claim 
for refund which is based on such appraisal results in a substan-
tial valuation misstatement under chapter 1 (within the 
meaning of section 6662(e)), or a gross valuation misstatement 
(within the meaning of section 6662(h)), with respect to such 
property, then such person shall pay a penalty in the amount 
determined under subsection (b). 
‘‘(b) AMOUNT OF PENALTY.—The amount of the penalty imposed 
under subsection (a) on any person with respect to an appraisal 
shall be equal to the lesser of—
‘‘(1) the greater of—
‘‘(A) 10 percent of the amount of the underpayment 
(as defined in section 6664(a)) attributable to the 
misstatement described in subsection (a)(2), or 
‘‘(B) $1,000, or 
‘‘(2) 125 percent of the gross income received by the person 
described in subsection (a)(1) from the preparation of the 
appraisal. 
‘‘(c) EXCEPTION.—No penalty shall be imposed under subsection 
(a) if the person establishes to the satisfaction of the Secretary 
that the value established in the appraisal was more likely than 
not the proper value.’’. 
(2) RULES APPLICABLE TO PENALTY.—Section 6696 (relating 
to rules applicable with respect to sections 6694 and 6695) 
is amended—
(A) by striking ‘‘6694 and 6695’’ each place it appears 
in the text and heading thereof and inserting ‘‘6694, 6695, 
and 6695A’’, and 
(B) by striking ‘‘6694 or 6695’’ each place it appears 
in the text and inserting ‘‘6694, 6695, or 6695A’’. 
(3) CONFORMING AMENDMENT.—The table of sections for 
part I of subchapter B of chapter 68 is amended by striking 
the item relating to section 6696 and inserting the following 
new items:
‘‘Sec. 6695A. Substantial and gross valuation misstatements attributable to incor-
rect appraisals. 
‘‘Sec. 6696. Rules applicable with respect to sections 6694, 6695, and 6695A.’’.
(c) QUALIFIED APPRAISERS AND APPRAISALS.—
H. R. 4—306
(1) IN GENERAL.—Subparagraph (E) of section 170(f)(11) 
is amended to read as follows: 
‘‘(E) QUALIFIED APPRAISAL AND APPRAISER.—For pur-
poses of this paragraph—
‘‘(i) QUALIFIED
APPRAISAL.—The term ‘qualified 
appraisal’ means, with respect to any property, an 
appraisal of such property which—
‘‘(I) is treated for purposes of this paragraph 
as a qualified appraisal under regulations or other 
guidance prescribed by the Secretary, and 
‘‘(II) is conducted by a qualified appraiser in 
accordance with generally accepted appraisal 
standards and any regulations or other guidance 
prescribed under subclause (I). 
‘‘(ii) QUALIFIED APPRAISER.—Except as provided in 
clause (iii), the term ‘qualified appraiser’ means an 
individual who—
‘‘(I) has earned an appraisal designation from 
a recognized professional appraiser organization 
or has otherwise met minimum education and 
experience requirements set forth in regulations 
prescribed by the Secretary, 
‘‘(II) regularly performs appraisals for which 
the individual receives compensation, and 
‘‘(III) meets such other requirements as may 
be prescribed by the Secretary in regulations or 
other guidance. 
‘‘(iii) SPECIFIC
APPRAISALS.—An individual shall 
not be treated as a qualified appraiser with respect 
to any specific appraisal unless—
‘‘(I) the individual demonstrates verifiable edu-
cation and experience in valuing the type of prop-
erty subject to the appraisal, and 
‘‘(II) the individual has not been prohibited 
from practicing before the Internal Revenue 
Service by the Secretary under section 330(c) of 
title 31, United States Code, at any time during 
the 3-year period ending on the date of the 
appraisal.’’. 
(2) REASONABLE
CAUSE
EXCEPTION.—Subparagraphs (B) 
and (C) of section 6664(c)(3) are amended to read as follows: 
‘‘(B) 
QUALIFIED
APPRAISAL.—The 
term 
‘qualified 
appraisal’ has the meaning given such term by section 
170(f)(11)(E)(i). 
‘‘(C) 
QUALIFIED
APPRAISER.—The 
term 
‘qualified 
appraiser’ has the meaning given such term by section 
170(f)(11)(E)(ii).’’. 
(d) DISCIPLINARY ACTIONS AGAINST APPRAISERS.—Section 330(c) 
of title 31, United States Code, is amended by striking ‘‘with respect 
to whom a penalty has been assessed under section 6701(a) of 
the Internal Revenue Code of 1986’’. 
(e) EFFECTIVE DATES.—
(1) MISSTATEMENT PENALTIES.—Except as provided in para-
graph (3), the amendments made by subsection (a) shall apply 
to returns filed after the date of the enactment of this Act. 
(2) APPRAISER PROVISIONS.—Except as provided in para-
graph (3), the amendments made by subsections (b), (c), and
H. R. 4—307
(d) shall apply to appraisals prepared with respect to returns 
or submissions filed after the date of the enactment of this 
Act. 
(3) SPECIAL RULE FOR CERTAIN EASEMENTS.—In the case 
of a contribution of a qualified real property interest which 
is a restriction with respect to the exterior of a building 
described in section 170(h)(4)(C)(ii) of the Internal Revenue 
Code of 1986, and an appraisal with respect to the contribution, 
the amendments made by subsections (a) and (b) shall apply 
to returns filed after July 25, 2006. 
SEC. 1220. ADDITIONAL STANDARDS FOR CREDIT COUNSELING 
ORGANIZATIONS. 
(a) IN GENERAL.—Section 501 (relating to exemption from tax 
on corporations, certain trusts, etc.) is amended by redesignating 
subsection (q) as subsection (r) and by inserting after subsection 
(p) the following new subsection: 
‘‘(q) SPECIAL RULES FOR CREDIT COUNSELING ORGANIZATIONS.—
‘‘(1) IN GENERAL.—An organization with respect to which 
the provision of credit counseling services is a substantial pur-
pose shall not be exempt from tax under subsection (a) unless 
such organization is described in paragraph (3) or (4) of sub-
section (c) and such organization is organized and operated 
in accordance with the following requirements: 
‘‘(A) The organization—
‘‘(i) provides credit counseling services tailored to 
the specific needs and circumstances of consumers, 
‘‘(ii) makes no loans to debtors (other than loans 
with no fees or interest) and does not negotiate the 
making of loans on behalf of debtors, 
‘‘(iii) provides services for the purpose of improving 
a consumer’s credit record, credit history, or credit 
rating only to the extent that such services are inci-
dental to providing credit counseling services, and 
‘‘(iv) does not charge any separately stated fee 
for services for the purpose of improving any con-
sumer’s credit record, credit history, or credit rating. 
‘‘(B) The organization does not refuse to provide credit 
counseling services to a consumer due to the inability of 
the consumer to pay, the ineligibility of the consumer for 
debt management plan enrollment, or the unwillingness 
of the consumer to enroll in a debt management plan. 
‘‘(C) The organization establishes and implements a 
fee policy which—
‘‘(i) requires that any fees charged to a consumer 
for services are reasonable, 
‘‘(ii) allows for the waiver of fees if the consumer 
is unable to pay, and 
‘‘(iii) except to the extent allowed by State law, 
prohibits charging any fee based in whole or in part 
on a percentage of the consumer’s debt, the consumer’s 
payments to be made pursuant to a debt management 
plan, or the projected or actual savings to the consumer 
resulting from enrolling in a debt management plan. 
‘‘(D) At all times the organization has a board of direc-
tors or other governing body—
H. R. 4—308
‘‘(i) which is controlled by persons who represent 
the broad interests of the public, such as public officials 
acting in their capacities as such, persons having spe-
cial knowledge or expertise in credit or financial edu-
cation, and community leaders, 
‘‘(ii) not more than 20 percent of the voting power 
of which is vested in persons who are employed by 
the organization or who will benefit financially, directly 
or indirectly, from the organization’s activities (other 
than through the receipt of reasonable directors’ fees 
or the repayment of consumer debt to creditors other 
than the credit counseling organization or its affiliates), 
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 indirectly, from the organization’s activities (other 
than through the receipt of reasonable directors’ fees). 
‘‘(E) The organization does not own more than 35 per-
cent of—
‘‘(i) the total combined voting power of any corpora-
tion (other than a corporation 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 partnership (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 business 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 business 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 management plan services, and 
pays no amount to others for obtaining referrals of con-
sumers. 
‘‘(2) 
ADDITIONAL
REQUIREMENTS
FOR
ORGANIZATIONS 
DESCRIBED IN SUBSECTION (c)(3).—
‘‘(A) IN
GENERAL.—In addition 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 (3) of sub-
section (c) shall not be exempt from tax under subsection 
(a) unless such organization is organized and operated 
in accordance with the following requirements: 
‘‘(i) The organization does not solicit contributions 
from consumers during the initial counseling process 
or while the consumer is receiving services from the 
organization.
H. R. 4—309
‘‘(ii) The aggregate revenues of the organization 
which are from payments of creditors of consumers 
of the organization and which are attributable to debt 
management plan services do not exceed the applicable 
percentage of the total revenues of the organization. 
‘‘(B) APPLICABLE PERCENTAGE.—
‘‘(i) IN GENERAL.—For purposes of subparagraph 
(A)(ii), the applicable percentage is 50 percent. 
‘‘(ii) TRANSITION
RULE.—Notwithstanding clause 
(i), in the case of an organization with respect to which 
the provision of credit counseling services is a substan-
tial purpose and which is described in paragraph (3) 
of subsection (c) and exempt from tax under subsection 
(a) on the date of the enactment of this subsection, 
the applicable percentage is—
‘‘(I) 80 percent for the first taxable year of 
such organization beginning 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
ORGANIZATIONS 
DESCRIBED IN SUBSECTION (c)(4).—In addition to the require-
ments 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 subsection 
(c) shall not be exempt from tax under subsection (a) unless 
such organization notifies the Secretary, in such manner as 
the Secretary may by regulations prescribe, that it is applying 
for recognition as a credit counseling organization. 
‘‘(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 information 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 providing them with counseling, 
or 
‘‘(iii) a combination of the activities described in 
clauses (i) and (ii). 
‘‘(B) DEBT
MANAGEMENT
PLAN
SERVICES.—The term 
‘debt management plan services’ means services related 
to the repayment, consolidation, or restructuring of a con-
sumer’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 UNRE-
LATED BUSINESS.—Section 513 (relating to unrelated trade or busi-
ness) 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
H. R. 4—310
services (as defined in section 501(q)(4)(B)) by any organization 
other than an organization which meets the requirements of section 
501(q).’’. 
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in paragraph (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 ORGANIZATIONS.—In the 
case of any organization described in paragraph (3) or (4) of 
section 501(c) of the Internal Revenue Code of 1986 and with 
respect to which the provision of credit counseling services 
is a substantial 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.—
(1) IN GENERAL.—Paragraph (2) of section 4940(c) (relating 
to gross investment income) is amended by adding at the end 
the following new sentence: ‘‘Such term shall also include 
income from sources similar to those in the preceding sen-
tence.’’. 
(2) CONFORMING
AMENDMENT.—Subsection (e) of section 
509 (relating to gross investment income) is amended by adding 
at the end the following new sentence: ‘‘Such term shall also 
include income from sources similar to those in the preceding 
sentence.’’. 
(b) CAPITAL GAIN NET INCOME.—Paragraph (4) of section 
4940(c) (relating to capital gains and losses) is amended—
(1) in subparagraph (A), by striking ‘‘used for the produc-
tion of interest, dividends, rents, and royalties’’ and inserting 
‘‘used for the production of gross investment income (as defined 
in paragraph (2))’’, 
(2) in subparagraph (C), by inserting ‘‘or carrybacks’’ after 
‘‘carryovers’’, and 
(3) by adding at the end the following new subparagraph: 
‘‘(D) Except to the extent provided by regulation, under 
rules similar to the rules of section 1031 (including the 
exception under subsection (a)(2) thereof), no gain or loss 
shall be taken into account with respect to any portion 
of property used for a period of not less than 1 year for 
a purpose or function constituting the basis of the private 
foundation’s exemption if the entire property is exchanged 
immediately following such period solely for property of 
like kind which is to be used primarily for a purpose 
or function constituting the basis for such foundation’s 
exemption.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after the date of the enact-
ment of this Act. 
SEC. 
1222. 
DEFINITION 
OF 
CONVENTION 
OR 
ASSOCIATION 
OF 
CHURCHES. 
Section 7701 (relating to definitions) is amended by redesig-
nating subsection (o) as subsection (p) and by inserting after sub-
section (n) the following new subsection:
H. R. 4—311
‘‘(o) CONVENTION OR ASSOCIATION OF CHURCHES.—For purposes 
of this title, any organization which is otherwise a convention 
or association of churches shall not fail to so qualify merely because 
the membership of such organization includes individuals as well 
as churches or because individuals have voting rights in such 
organization.’’. 
SEC. 1223. NOTIFICATION REQUIREMENT FOR ENTITIES NOT CUR-
RENTLY REQUIRED TO FILE. 
(a) IN GENERAL.—Section 6033 (relating to returns by exempt 
organizations), as amended by this Act, is amended by redesignating 
subsection (i) as subsection (j) and by inserting after subsection 
(h) the following new subsection: 
‘‘(i) ADDITIONAL NOTIFICATION REQUIREMENTS.—Any organiza-
tion the gross receipts of which in any taxable year result in 
such organization being referred to in subsection (a)(3)(A)(ii) or 
(a)(3)(B)—
‘‘(1) shall furnish annually, in electronic form, and at such 
time and in such manner as the Secretary may by regulations 
prescribe, information setting forth—
‘‘(A) the legal name of the organization, 
‘‘(B) any name under which such organization operates 
or does business, 
‘‘(C) the organization’s mailing address and Internet 
web site address (if any), 
‘‘(D) the organization’s taxpayer identification number, 
‘‘(E) the name and address of a principal officer, and 
‘‘(F) evidence of the continuing basis for the organiza-
tion’s exemption from the filing requirements under sub-
section (a)(1), and 
‘‘(2) upon the termination of the existence of the organiza-
tion, shall furnish notice of such termination.’’. 
(b) LOSS OF EXEMPT STATUS FOR FAILURE TO FILE RETURN 
OR NOTICE.—Section 6033 (relating to returns by exempt organiza-
tions), as amended by subsection (a), is amended by redesignating 
subsection (j) as subsection (k) and by inserting after subsection 
(i) the following new subsection: 
‘‘(j) LOSS OF EXEMPT STATUS FOR FAILURE TO FILE RETURN 
OR NOTICE.—
‘‘(1) IN
GENERAL.—If an organization described in sub-
section (a)(1) or (i) fails to file an annual return or notice 
required under either subsection for 3 consecutive years, such 
organization’s status as an organization exempt from tax under 
section 501(a) shall be considered revoked on and after the 
date set by the Secretary for the filing of the third annual 
return or notice. The Secretary shall publish and maintain 
a list of any organization the status of which is so revoked. 
‘‘(2) APPLICATION
NECESSARY
FOR
REINSTATEMENT.—Any 
organization the tax-exempt status of which is revoked under 
paragraph (1) must apply in order to obtain reinstatement 
of such status regardless of whether such organization was 
originally required to make such an application. 
‘‘(3) RETROACTIVE REINSTATEMENT IF REASONABLE CAUSE 
SHOWN FOR FAILURE.—If, upon application for reinstatement 
of status as an organization exempt from tax under section 
501(a), an organization described in paragraph (1) can show 
to the satisfaction of the Secretary evidence of reasonable cause
H. R. 4—312
for the failure described in such paragraph, the organization’s 
exempt status may, in the discretion of the Secretary, be 
reinstated effective from the date of the revocation under such 
paragraph.’’. 
(c) NO
DECLARATORY
JUDGMENT
RELIEF.—Section 7428(b) 
(relating to limitations) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4) NONAPPLICATION
FOR
CERTAIN
REVOCATIONS.—No 
action may be brought under this section with respect to any 
revocation of status described in section 6033(j)(1).’’. 
(d) NO MONETARY PENALTY FOR FAILURE TO NOTIFY.—Section 
6652(c)(1) (relating to annual returns under section 6033 or 
6012(a)(6)) is amended by adding at the end the following new 
subparagraph: 
‘‘(E) NO PENALTY FOR CERTAIN ANNUAL NOTICES.—This 
paragraph shall not apply with respect to any notice 
required under section 6033(i).’’. 
(e) SECRETARIAL OUTREACH REQUIREMENTS.—
(1) NOTICE REQUIREMENT.—The Secretary of the Treasury 
shall notify in a timely manner every organization described 
in section 6033(i) of the Internal Revenue Code of 1986 (as 
added by this section) of the requirement under such section 
6033(i) and of the penalty established under section 6033(j) 
of such Code—
(A) by mail, in the case of any organization the identity 
and address of which is included in the list of exempt 
organizations maintained by the Secretary, and 
(B) by Internet or other means of outreach, in the 
case of any other organization. 
(2) LOSS
OF
STATUS
PENALTY
FOR
FAILURE
TO
FILE 
RETURN.—The Secretary of the Treasury shall publicize, in 
a timely manner in appropriate forms and instructions and 
through other appropriate means, the penalty established under 
section 6033(j) of such Code for the failure to file a return 
under subsection (a)(1) or (i) of section 6033 of such Code. 
(f) EFFECTIVE DATE.—The amendments made by this section 
shall apply to notices and returns with respect to annual periods 
beginning after 2006. 
SEC. 1224. DISCLOSURE TO STATE OFFICIALS RELATING TO EXEMPT 
ORGANIZATIONS. 
(a) IN GENERAL.—Subsection (c) of section 6104 is amended 
by striking paragraph (2) and inserting the following new para-
graphs: 
‘‘(2) DISCLOSURE OF PROPOSED ACTIONS RELATED TO CHARI-
TABLE ORGANIZATIONS.—
‘‘(A) SPECIFIC
NOTIFICATIONS.—In the case of an 
organization to which paragraph (1) applies, the Secretary 
may disclose to the appropriate State officer—
‘‘(i) a notice of proposed refusal to recognize such 
organization as an organization described in section 
501(c)(3) or a notice of proposed revocation of such 
organization’s recognition as an organization exempt 
from taxation, 
‘‘(ii) the issuance of a letter of proposed deficiency 
of tax imposed under section 507 or chapter 41 or 
42, and
H. R. 4—313
‘‘(iii) the names, addresses, and taxpayer identifica-
tion numbers of organizations 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 informa-
tion is disclosed under subparagraph (A) may be made 
available for inspection by or disclosed to an appropriate 
State officer. 
‘‘(C) PROCEDURES FOR DISCLOSURE.—Information may 
be inspected or disclosed under subparagraph (A) or (B) 
only—
‘‘(i) upon written request by an appropriate State 
officer, and 
‘‘(ii) for the purpose of, and only to the extent 
necessary in, the administration of State laws regu-
lating such organizations. 
Such information 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. 
‘‘(D) DISCLOSURES OTHER THAN BY REQUEST.—The Sec-
retary may make available for inspection or disclose returns 
and return information of an organization to which para-
graph (1) applies to an appropriate State officer of any 
State if the Secretary determines that such returns or 
return information may constitute evidence of noncompli-
ance under the laws within the jurisdiction of the appro-
priate State officer. 
‘‘(3) DISCLOSURE WITH RESPECT TO CERTAIN OTHER EXEMPT 
ORGANIZATIONS.—Upon written request by an appropriate State 
officer, the Secretary may make available for inspection or 
disclosure returns and return information of any organization 
described 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 solicitation or administration of the charitable 
funds or charitable assets of such organizations. Such informa-
tion 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
ADMINISTRATIVE
PRO-
CEEDINGS.—Returns and return information disclosed pursuant 
to this subsection may be disclosed in civil administrative and 
civil judicial proceedings pertaining to the enforcement of State 
laws regulating such organizations in a manner prescribed 
by the Secretary similar to that for tax administration pro-
ceedings under section 6103(h)(4). 
‘‘(5) NO DISCLOSURE IF IMPAIRMENT.—Returns 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 seri-
ously impair Federal tax administration.
H. R. 4—314
‘‘(6) DEFINITIONS.—For purposes of this subsection—
‘‘(A) RETURN AND RETURN INFORMATION.—The terms 
‘return’ and ‘return information’ have the respective 
meanings given to such terms by section 6103(b). 
‘‘(B) APPROPRIATE STATE OFFICER.—The term ‘appro-
priate State officer’ means—
‘‘(i) the State attorney general, 
‘‘(ii) the State tax officer, 
‘‘(iii) in the case of an organization to which para-
graph (1) applies, any other State official charged with 
overseeing organizations of the type described in sec-
tion 501(c)(3), and 
‘‘(iv) in the case of an organization to which para-
graph (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 amended by inserting 
‘‘or section 6104(c)’’ after ‘‘this section’’. 
(2) Subparagraph (A) of section 6103(p)(3) is amended by 
inserting ‘‘and section 6104(c)’’ after ‘‘section’’ in the first sen-
tence. 
(3) Paragraph (4) of section 6103(p) is amended—
(A) in the matter preceding subparagraph (A), by 
inserting ‘‘, any appropriate State officer (as defined in 
section 6104(c)),’’ before ‘‘or any other person’’, 
(B) in subparagraph (F)(i), by inserting ‘‘any appro-
priate State officer (as defined in section 6104(c)),’’ before 
‘‘or any other person’’, and 
(C) in the matter following subparagraph (F), by 
inserting ‘‘, an appropriate State officer (as defined in sec-
tion 6104(c)),’’ after ‘‘including 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 amended 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)’’. 
(7) Paragraph (2) of section 7431(a) is amended 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 RELATING TO UNRE-
LATED 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 imposed by section 511 
(relating to imposition of tax on unrelated business 
income of charitable, etc., organizations) by such
H. R. 4—315
organization, 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. 
SEC. 1226. STUDY ON DONOR ADVISED FUNDS AND SUPPORTING 
ORGANIZATIONS. 
(a) STUDY.—The Secretary of the Treasury shall undertake 
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 con-
sider—
(1) whether the deductions allowed for the income, gift, 
or estate taxes for charitable contributions to sponsoring 
organizations (as defined in section 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 organizations for 
the benefit of the person making the charitable contribution 
(or a person related to such person), 
(2) whether donor advised funds should be required to 
distribute for charitable purposes a specified 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 is operating consistent with the purposes or func-
tions constituting the basis for its exemption under section 
501, or its status as an organization described in section 509(a), 
of such Code, 
(3) whether the retention by donors to organizations 
described in paragraph (1) of rights or privileges with respect 
to amounts transferred to such organizations (including 
advisory rights or privileges with respect to the making of 
grants or the investment of assets) is consistent with the treat-
ment 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 enact-
ment 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 rec-
ommendations as the Secretary of the Treasury considers appro-
priate. 
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
H. R. 4—316
Tax Increase Prevention and Reconciliation 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 manager 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 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 per-
son 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 
distribution. 
‘‘(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 distribution’ 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 purpose other than 
one specified in section 170(c)(2)(B), or 
‘‘(ii) the sponsoring organization does not exercise 
expenditure responsibility with respect to such dis-
tribution in accordance with section 4945(h). 
‘‘(2) EXCEPTIONS.—Such term shall not include any distribu-
tion from a donor advised fund—
‘‘(A) 
to 
any 
organization 
described 
in 
section 
170(b)(1)(A) (other than a disqualified supporting organiza-
tion), 
‘‘(B) to the sponsoring organization of such donor 
advised fund, or 
‘‘(C) to any other donor advised fund. 
‘‘(d) DEFINITIONS.—For purposes of this subchapter—
‘‘(1) SPONSORING
ORGANIZATION.—The term ‘sponsoring 
organization’ means any organization which—
‘‘(A) is described in section 170(c) (other than in para-
graph (1) thereof, and without regard to paragraph (2)(A) 
thereof), 
‘‘(B) is not a private foundation (as defined in section 
509(a)), and 
‘‘(C) maintains 1 or more donor advised funds. 
‘‘(2) DONOR ADVISED FUND.—
H. R. 4—317
‘‘(A) IN GENERAL.—Except as provided in subparagraph 
(B) or (C), the term ‘donor advised fund’ means a fund 
or account—
‘‘(i) which is separately identified by reference to 
contributions of a donor or donors, 
‘‘(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 reason-
ably 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 advised fund’ shall 
not include any fund or account—
‘‘(i) which makes distributions only to a single 
identified organization or governmental entity, or 
‘‘(ii) with respect to which a person described in 
subparagraph (A)(iii) advises as to which individuals 
receive grants for travel, study, or other similar pur-
poses, if—
‘‘(I) such person’s advisory privileges are per-
formed 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) control, directly or indirectly, such com-
mittee, and 
‘‘(III) all grants from such fund or account 
are awarded on an objective and nondiscriminatory 
basis pursuant to a procedure approved in advance 
by the board of directors of the sponsoring 
organization, and such procedure is designed to 
ensure that all such grants meet the requirements 
of paragraph (1), (2), or (3) of section 4945(g). 
‘‘(C) SECRETARIAL
AUTHORITY.—The Secretary may 
exempt a fund or account not described in subparagraph 
(B) from treatment as a donor advised fund—
‘‘(i) if such fund or account is advised by a com-
mittee not directly or indirectly controlled by the donor 
or any person appointed or designated by the donor 
for the purpose of advising with respect to distributions 
from such fund (and any related parties), or 
‘‘(ii) if such fund benefits a single identified chari-
table purpose. 
‘‘(3) FUND MANAGER.—The term ‘fund manager’ means, with 
respect to any sponsoring organization—
‘‘(A) an officer, director, or trustee of such sponsoring 
organization (or an individual having powers or responsibil-
ities 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 organization having authority 
or responsibility with respect to such act (or failure to 
act).
H. R. 4—318
‘‘(4) DISQUALIFIED SUPPORTING ORGANIZATION.—
‘‘(A) IN GENERAL.—The term ‘disqualified supporting 
organization’ means, with respect to any distribution—
‘‘(i) any type III supporting organization (as 
defined in section 4943(f)(5)(A)) which is not a function-
ally integrated type III supporting organization (as 
defined in section 4943(f)(5)(B)), and 
‘‘(ii) any organization which is described in 
subparagraph (B) or (C) if—
‘‘(I) the donor or any person designated by 
the donor for the purpose of advising with respect 
to distributions from a donor advised fund (and 
any related parties) directly or indirectly controls 
a supported organization (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 inappropriate. 
‘‘(B) TYPE I AND TYPE II SUPPORTING ORGANIZATIONS.—
An organization is described in this subparagraph if the 
organization meets the 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 connection with 
one or more such organizations. 
‘‘(C) FUNCTIONALLY INTEGRATED TYPE III SUPPORTING 
ORGANIZATIONS.—An organization is described in this 
subparagraph 
if 
the 
organization 
is 
a 
functionally 
integrated type III supporting organization (as defined 
under section 4943(f)(5)(B)). 
‘‘SEC. 4967. TAXES ON PROHIBITED BENEFITS. 
‘‘(a) IMPOSITION OF TAXES.—
‘‘(1) ON THE DONOR, DONOR ADVISOR, OR RELATED 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 
person or any other person described in subsection (d) receiving, 
directly or indirectly, a more than incidental benefit as a result 
of such distribution, a tax equal to 125 percent of such benefit. 
The tax imposed by this paragraph shall be paid by any person 
described in subsection (d) who advises as to the distribution 
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 manager 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 para-
graph 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 section 4958. 
‘‘(c) SPECIAL RULES.—For purposes of subsection (a)—
H. R. 4—319
‘‘(1) JOINT AND SEVERAL LIABILITY.—If more than one per-
son is liable under paragraph (1) or (2) of subsection (a) with 
respect to a distribution described in subsection (a), all such 
persons shall be jointly and severally liable under such para-
graph with respect to such distribution. 
‘‘(2) LIMIT
FOR
MANAGEMENT.—With respect to any one 
distribution described in subsection (a), the maximum amount 
of the tax imposed by subsection (a)(2) shall not exceed $10,000. 
‘‘(d) PERSON DESCRIBED.—A person is described in this sub-
section 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 enact-
ment 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 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 para-
graph (7) with respect to such donor advised fund (as 
so defined), and 
‘‘(E) which involves a sponsoring organization (as 
defined in section 4966(d)(1)), any person who is described 
in paragraph (8) with respect to such sponsoring organiza-
tion (as so defined).’’. 
(2) DONORS, DONOR ADVISORS, AND INVESTMENT ADVISORS 
TREATED AS DISQUALIFIED PERSONS.—Section 4958(f) is amended 
by adding at the end the following new paragraphs: 
‘‘(7) DONORS AND DONOR ADVISORS.—For purposes of para-
graph (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 individual 
described in subparagraph (A), or 
‘‘(C) is a 35-percent controlled entity (as defined in 
paragraph (3) by substituting ‘persons described in 
subparagraph (A) or (B) of paragraph (7)’ for ‘persons 
described in subparagraph (A) or (B) of paragraph (1)’ 
in subparagraph (A)(i) thereof). 
‘‘(8) INVESTMENT
ADVISORS.—For purposes of paragraph 
(1)(F)—
‘‘(A) IN GENERAL.—A person is described in this para-
graph if such person—
‘‘(i) is an investment advisor,
H. R. 4—320
‘‘(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 substituting ‘persons described 
in clause (i) or (ii) of paragraph (8)(A)’ for ‘persons 
described 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 employee 
of such organization) compensated by such organization 
for managing the investment of, or providing investment 
advice with respect 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 TRANS-
ACTIONS.—
(1) IN GENERAL.—Section 4958(c) is amended by redesig-
nating 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 described 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 payment.’’. 
(2) SPECIAL RULE FOR CORRECTION OF TRANSACTION.—Sec-
tion 4958(f)(6) is amended by inserting ‘‘, except that in the 
case of any correction of 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 ADVISED FUNDS. 
(a) IN GENERAL.—Section 4943 is amended by adding at the 
end the following new subsection: 
‘‘(e) APPLICATION OF TAX TO DONOR ADVISED FUNDS.—
‘‘(1) IN GENERAL.—For purposes of this section, 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 individual described 
in subparagraph (A), or
H. R. 4—321
‘‘(C) a 35-percent controlled entity (as defined in section 
4958(f)(3) by substituting ‘persons described in subpara-
graph (A) or (B) of section 4943(e)(2)’ for ‘persons described 
in subparagraph (A) or (B) of paragraph (1)’ in subpara-
graph (A)(i) thereof). 
‘‘(3) PRESENT HOLDINGS.—For purposes of this subsection, 
rules similar to the rules of paragraphs (4), (5), and (6) of 
subsection (c) shall apply to donor advised funds (as so defined), 
except that—
‘‘(A) ‘the date of the enactment of this subsection’ shall 
be substituted for ‘May 26, 1969’ each place it appears 
in paragraphs (4), (5), and (6), and 
‘‘(B) ‘January 1, 2007’ shall be substituted for ‘January 
1, 1970’ in paragraph (4)(E).’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after the date of the enact-
ment of this Act. 
SEC. 1234. TREATMENT OF CHARITABLE CONTRIBUTION DEDUCTIONS 
TO DONOR ADVISED FUNDS. 
(a) INCOME.—Section 170(f) (relating to disallowance of deduc-
tion in certain cases and special rules), as amended by this Act, 
is amended by adding at the end the following new paragraph: 
‘‘(18) CONTRIBUTIONS TO DONOR ADVISED FUNDS.—A deduc-
tion otherwise allowed under subsection (a) for any contribution 
to a donor advised fund (as defined in section 4966(d)(2)) shall 
only be allowed if—
‘‘(A) the sponsoring organization (as defined in section 
4966(d)(1)) with respect to such donor advised fund is not—
‘‘(i) described in paragraph (3), (4), or (5) of sub-
section (c), or 
‘‘(ii) a type III supporting organization (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 
‘‘(B) the taxpayer obtains a contemporaneous written 
acknowledgment (determined under rules similar to the 
rules of paragraph (8)(C)) from the sponsoring organization 
(as so defined) of such donor advised fund that such 
organization has exclusive legal control over the assets 
contributed.’’. 
(b) ESTATE.—Section 2055(e) is amended by adding at the end 
the following new paragraph: 
‘‘(5) CONTRIBUTIONS TO DONOR ADVISED FUNDS.—A deduc-
tion otherwise allowed under subsection (a) for any contribution 
to a donor advised fund (as defined in section 4966(d)(2)) shall 
only be allowed if—
‘‘(A) the sponsoring organization (as defined in section 
4966(d)(1)) with respect to such donor advised fund is not—
‘‘(i) described in paragraph (3) or (4) of subsection 
(a), or 
‘‘(ii) a type III supporting organization (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 
‘‘(B) the taxpayer obtains a contemporaneous written 
acknowledgment (determined under rules similar to the
H. R. 4—322
rules of section 170(f)(8)(C)) from the sponsoring organiza-
tion (as so defined) of such donor advised fund that such 
organization has exclusive legal control over the assets 
contributed.’’. 
(c) GIFT.—Section 2522(c) is amended by adding at the end 
the following new paragraph: 
‘‘(5) CONTRIBUTIONS TO DONOR ADVISED FUNDS.—A deduc-
tion otherwise allowed under subsection (a) for any contribution 
to a donor advised fund (as defined in section 4966(d)(2)) shall 
only be allowed if—
‘‘(A) the sponsoring organization (as defined in section 
4966(d)(1)) with respect to such donor advised fund is not—
‘‘(i) described in paragraph (3) or (4) of subsection 
(a), or 
‘‘(ii) a type III supporting organization (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 
‘‘(B) the taxpayer obtains a contemporaneous written 
acknowledgment (determined under rules similar to the 
rules of section 170(f)(8)(C)) from the sponsoring organiza-
tion (as so defined) of such donor advised fund that such 
organization has exclusive legal control over the assets 
contributed.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to contributions made after the date which is 180 
days after the date of the enactment of this Act. 
SEC. 1235. RETURNS OF, AND APPLICATIONS FOR RECOGNITION BY, 
SPONSORING ORGANIZATIONS. 
(a) MATTERS INCLUDED ON RETURNS.—
(1) IN GENERAL.—Section 6033, as amended by this Act, 
is amended by redesignating subsection (k) as subsection (l) 
and by inserting after subsection (j) the following new sub-
section: 
‘‘(k) 
ADDITIONAL
PROVISIONS
RELATING
TO
SPONSORING 
ORGANIZATIONS.—Every organization described in section 4966(d)(1) 
shall, on the return required under subsection (a) for the taxable 
year—
‘‘(1) list the total number of donor advised funds (as defined 
in section 4966(d)(2)) it owns at the end of such taxable year, 
‘‘(2) indicate the aggregate value of assets held in such 
funds at the end of such taxable year, and 
‘‘(3) indicate the aggregate contributions to and grants 
made from such funds during such taxable year.’’. 
(2) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to returns filed for taxable years ending 
after the date of the enactment of this Act. 
(b) MATTERS INCLUDED ON EXEMPT STATUS APPLICATION.—
(1) IN GENERAL.—Section 508 is amended by adding at 
the end the following new subsection: 
‘‘(f) 
ADDITIONAL
PROVISIONS
RELATING
TO
SPONSORING 
ORGANIZATIONS.—A sponsoring organization (as defined in section 
4966(d)(1)) shall give notice to the Secretary (in such manner as 
the Secretary may provide) whether such organization maintains 
or intends to maintain donor advised funds (as defined in section
H. R. 4—323
4966(d)(2)) and the manner in which such organization plans to 
operate such funds.’’. 
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to organizations applying for tax-exempt 
status after the date of the enactment of this Act. 
PART 3—IMPROVED ACCOUNTABILITY OF 
SUPPORTING ORGANIZATIONS 
SEC. 1241. REQUIREMENTS FOR SUPPORTING ORGANIZATIONS. 
(a) TYPES OF SUPPORTING ORGANIZATIONS.—Subparagraph (B) 
of section 509(a)(3) is amended to read as follows: 
‘‘(B) is—
‘‘(i) operated, supervised, or controlled by one or 
more organizations described in paragraph (1) or (2), 
‘‘(ii) supervised or controlled in connection with 
one or more such organizations, or 
‘‘(iii) operated in connection with one or more such 
organizations, and’’. 
(b) REQUIREMENTS FOR SUPPORTING ORGANIZATIONS.—Section 
509 (relating to private foundation defined) is amended by adding 
at the end the following new subsection: 
‘‘(f) REQUIREMENTS FOR SUPPORTING ORGANIZATIONS.—
‘‘(1) TYPE
III
SUPPORTING
ORGANIZATIONS.—For purposes 
of subsection (a)(3)(B)(iii), an organization shall not be consid-
ered to be operated in connection with any organization 
described in paragraph (1) or (2) of subsection (a) unless such 
organization meets the following requirements: 
‘‘(A) RESPONSIVENESS.—For each taxable year begin-
ning after the date of the enactment of this subsection, 
the organization provides to each supported organization 
such information as the Secretary may require to ensure 
that such organization is responsive to the needs or 
demands of the supported organization. 
‘‘(B) FOREIGN SUPPORTED ORGANIZATIONS.—
‘‘(i) IN GENERAL.—The organization is not operated 
in connection with any supported organization that 
is not organized in the United States. 
‘‘(ii) TRANSITION
RULE
FOR
EXISTING
ORGANIZA-
TIONS.—If the organization is operated in connection 
with an organization that is not organized in the 
United States on the date of the enactment of this 
subsection, clause (i) shall not apply until the first 
day of the third taxable year of the organization begin-
ning after the date of the enactment of this subsection. 
‘‘(2) ORGANIZATIONS CONTROLLED BY DONORS.—
‘‘(A) IN GENERAL.—For purposes of subsection (a)(3)(B), 
an organization shall not be considered to be—
‘‘(i) operated, supervised, or controlled by any 
organization described in paragraph (1) or (2) of sub-
section (a), or 
‘‘(ii) operated in connection with any organization 
described in paragraph (1) or (2) of subsection (a), 
if such organization accepts any gift or contribution from 
any person described in subparagraph (B). 
‘‘(B) PERSON DESCRIBED.—A person is described in this 
subparagraph if, with respect to a supported organization
H. R. 4—324
of an organization described in subparagraph (A), such 
person is—
‘‘(i) a person (other than an organization described 
in paragraph (1), (2), or (4) of section 509(a)) who 
directly or indirectly controls, either alone or together 
with persons described in clauses (ii) and (iii), the 
governing body of such supported organization, 
‘‘(ii) a member of the family (determined under 
section 4958(f)(4)) of an individual described in clause 
(i), or 
‘‘(iii) a 35-percent controlled entity (as defined in 
section 4958(f)(3) by substituting ‘persons described 
in clause (i) or (ii) of section 509(f)(2)(B)’ for ‘persons 
described in subparagraph (A) or (B) of paragraph 
(1)’ in subparagraph (A)(i) thereof). 
‘‘(3) SUPPORTED ORGANIZATION.—For purposes of this sub-
section, the term ‘supported organization’ means, with respect 
to an organization described in subsection (a)(3), an organiza-
tion described in paragraph (1) or (2) of subsection (a)—
‘‘(A) for whose benefit the organization described in 
subsection (a)(3) is organized and operated, or 
‘‘(B) with respect to which the organization performs 
the functions of, or carries out the purposes of.’’. 
(c) CHARITABLE TRUSTS WHICH ARE TYPE III SUPPORTING 
ORGANIZATIONS.—For purposes of section 509(a)(3)(B)(iii) of the 
Internal Revenue Code of 1986, an organization which is a trust 
shall not be considered to be operated in connection with any 
organization described in paragraph (1) or (2) of section 509(a) 
of such Code solely because—
(1) it is a charitable trust under State law, 
(2) the supported organization (as defined in section 
509(f)(3) of such Code) is a beneficiary of such trust, and 
(3) the supported organization (as so defined) has the power 
to enforce the trust and compel an accounting. 
(d) PAYOUT REQUIREMENTS FOR TYPE III SUPPORTING ORGANIZA-
TIONS.—
(1) IN
GENERAL.—The Secretary of the Treasury shall 
promulgate new regulations under section 509 of the Internal 
Revenue Code of 1986 on payments required by type III sup-
porting organizations which are not functionally integrated type 
III supporting organizations. Such regulations shall require 
such organizations to make distributions of a percentage of 
either income or assets to supported organizations (as defined 
in section 509(f)(3) of such Code) in order to ensure that a 
significant amount is paid to such organizations. 
(2) TYPE
III
SUPPORTING
ORGANIZATION; FUNCTIONALLY 
INTEGRATED TYPE III SUPPORTING ORGANIZATION.—For purposes 
of paragraph (1), the terms ‘‘type III supporting organization’’ 
and ‘‘functionally integrated type III supporting organization’’ 
have the meanings given such terms under subparagraphs 
(A) and (B) section 4943(f)(5) of the Internal Revenue Code 
of 1986 (as added by this Act), respectively. 
(e) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by subsections 
(a) and (b) shall take effect on the date of the enactment 
of this Act.
H. R. 4—325
(2) CHARITABLE TRUSTS WHICH ARE TYPE III SUPPORTING 
ORGANIZATIONS.—Subsection (c) shall take effect—
(A) in the case of trusts operated in connection with 
an organization described in paragraph (1) or (2) of section 
509(a) of the Internal Revenue Code of 1986 on the date 
of the enactment of this Act, on the date that is one 
year after the date of the enactment of this Act, and 
(B) in the case of any other trust, on the date of 
the enactment of this Act. 
SEC. 1242. EXCESS BENEFIT TRANSACTIONS INVOLVING SUPPORTING 
ORGANIZATIONS. 
(a) DISQUALIFIED PERSONS.—Paragraph (1) of section 4958(f), 
as amended by this Act, is amended by redesignating subparagraphs 
(D) and (E) as subparagraphs (E) and (F), respectively, and by 
adding after subparagraph (C) the following new subparagraph: 
‘‘(D) any person who is described in subparagraph (A), 
(B), or (C) with respect to an organization described in 
section 509(a)(3) and organized and operated exclusively 
for the benefit of, to perform the functions of, or to carry 
out the purposes of the applicable tax-exempt organiza-
tion.’’. 
(b) CERTAIN TRANSACTIONS TREATED AS EXCESS BENEFIT TRANS-
ACTIONS.—Section 4958(c), as amended by this Act, is amended 
by redesignating paragraph (3) as paragraph (4) and by inserting 
after paragraph (2) the following new paragraph: 
‘‘(3) SPECIAL RULES FOR SUPPORTING ORGANIZATIONS.—
‘‘(A) IN
GENERAL.—In the case of any organization 
described in section 509(a)(3)—
‘‘(i) the term ‘excess benefit transaction’ includes—
‘‘(I) any grant, loan, compensation, or other 
similar payment provided by such organization to 
a person described in subparagraph (B), and 
‘‘(II) any loan provided by such organization 
to a disqualified person (other than an organiza-
tion described in paragraph (1), (2), or (4) of section 
509(a)), and 
‘‘(ii) the term ‘excess benefit’ includes, with respect 
to any transaction described in clause (i), the amount 
of any such grant, loan, compensation, or other similar 
payment. 
‘‘(B) PERSON DESCRIBED.—A person is described in this 
subparagraph if such person is—
‘‘(i) a substantial contributor to such organization, 
‘‘(ii) a member of the family (determined under 
section 4958(f)(4)) of an individual described in clause 
(i), or 
‘‘(iii) a 35-percent controlled entity (as defined in 
section 4958(f)(3) by substituting ‘persons described 
in clause (i) or (ii) of section 4958(c)(3)(B)’ for ‘persons 
described in subparagraph (A) or (B) of paragraph 
(1)’ in subparagraph (A)(i) thereof). 
‘‘(C) SUBSTANTIAL CONTRIBUTOR.—For purposes of this 
paragraph—
‘‘(i) IN GENERAL.—The term ‘substantial contrib-
utor’ means any person who contributed or bequeathed 
an aggregate amount of more than $5,000 to the
H. R. 4—326
organization, if such amount is more than 2 percent 
of the total contributions and bequests received by 
the organization before the close of the taxable year 
of the organization in which the contribution or bequest 
is received by the organization from such person. In 
the case of a trust, such term also means the creator 
of the trust. Rules similar to the rules of subparagraphs 
(B) and (C) of section 507(d)(2) shall apply for purposes 
of this subparagraph. 
‘‘(ii) EXCEPTION.—Such term shall not include any 
organization described in paragraph (1), (2), or (4) of 
section 509(a).’’. 
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendments made by subsection 
(a) shall apply to transactions occurring after the date of the 
enactment of this Act. 
(2) SUBSECTION (b).—The amendments made by subsection 
(a) shall apply to transactions occurring after July 25, 2006. 
SEC. 1243. EXCESS BUSINESS HOLDINGS OF SUPPORTING ORGANIZA-
TIONS. 
(a) IN GENERAL.—Section 4943, as amended by this Act, is 
amended by adding at the end the following new subsection: 
‘‘(f) APPLICATION OF TAX TO SUPPORTING ORGANIZATIONS.—
‘‘(1) IN GENERAL.—For purposes of this section, an organiza-
tion which is described in paragraph (3) shall be treated as 
a private foundation. 
‘‘(2) EXCEPTION.—The Secretary may exempt the excess 
business holdings of any organization from the application of 
this subsection if the Secretary determines that such holdings 
are consistent with the purpose or function constituting the 
basis for its exemption under section 501. 
‘‘(3) 
ORGANIZATIONS
DESCRIBED.—An 
organization 
is 
described in this paragraph if such organization is—
‘‘(A) a type III supporting organization (other than 
a functionally integrated type III supporting organization), 
or 
‘‘(B) an organization which meets the requirements 
of subparagraphs (A) and (C) of section 509(a)(3) and which 
is supervised or controlled in connection with one or more 
organizations described in paragraph (1) or (2) of section 
509(a), but only if such organization accepts any gift or 
contribution 
from 
any 
person 
described 
in 
section 
509(f)(2)(B). 
‘‘(4) DISQUALIFIED PERSON.—
‘‘(A) IN
GENERAL.—In applying this section to any 
organization described in paragraph (3), the term ‘disquali-
fied person’ means, with respect to the organization—
‘‘(i) any person who was, at any time during the 
5-year period ending on the date described in sub-
section (a)(2)(A), in a position to exercise substantial 
influence over the affairs of the organization, 
‘‘(ii) any member of the family (determined under 
section 4958(f)(4)) of an individual described in clause 
(i), 
‘‘(iii) any 35-percent controlled entity (as defined 
in section 4958(f)(3) by substituting ‘persons described
H. R. 4—327
in clause (i) or (ii) of section 4943(f)(4)(A)’ for ‘persons 
described in subparagraph (A) or (B) of paragraph 
(1)’ in subparagraph (A)(i) thereof), 
‘‘(iv) any person described in section 4958(c)(3)(B), 
and 
‘‘(v) any organization—
‘‘(I) which is effectively controlled (directly or 
indirectly) by the same person or persons who 
control the organization in question, or 
‘‘(II) substantially all of the contributions to 
which were made (directly or indirectly) by the 
same person or persons described in subparagraph 
(B) or a member of the family (within the meaning 
of section 4946(d)) of such a person. 
‘‘(B) PERSONS
DESCRIBED.—A person is described in 
this subparagraph if such person is—
‘‘(i) a substantial contributor to the organization 
(as defined in section 4958(c)(3)(C)), 
‘‘(ii) an officer, director, or trustee of the organiza-
tion (or an individual having powers or responsibilities 
similar to those of the officers, directors, or trustees 
of the organization), or 
‘‘(iii) an owner of more than 20 percent of—
‘‘(I) the total combined voting power of a cor-
poration, 
‘‘(II) the profits interest of a partnership, or 
‘‘(III) the beneficial interest of a trust or 
unincorporated enterprise, 
which is a substantial contributor (as so defined) to 
the organization. 
‘‘(5) TYPE
III
SUPPORTING
ORGANIZATION; FUNCTIONALLY 
INTEGRATED TYPE III SUPPORTING ORGANIZATION.—For purposes 
of this subsection—
‘‘(A) TYPE
III
SUPPORTING
ORGANIZATION.—The term 
‘type III supporting organization’ means an organization 
which meets the requirements of subparagraphs (A) and 
(C) of section 509(a)(3) and which is operated in connection 
with one or more organizations described in paragraph 
(1) or (2) of section 509(a). 
‘‘(B) FUNCTIONALLY INTEGRATED TYPE III SUPPORTING 
ORGANIZATION.—The term ‘functionally integrated type III 
supporting organization’ means a type III supporting 
organization which is not required under regulations estab-
lished by the Secretary to make payments to supported 
organizations (as defined under section 509(f)(3)) due to 
the activities of the organization related to performing 
the functions of, or carrying out the purposes of, such 
supported organizations. 
‘‘(6) SPECIAL RULE FOR CERTAIN HOLDINGS OF TYPE III SUP-
PORTING ORGANIZATIONS.—For purposes of this subsection, the 
term ‘excess business holdings’ shall not include any holdings 
of a type III supporting organization in any business enterprise 
if, as of November 18, 2005, the holdings were held (and at 
all times thereafter, are held) for the benefit of the community 
pursuant to the direction of a State attorney general or a 
State official with jurisdiction over such organization.
H. R. 4—328
‘‘(7) PRESENT HOLDINGS.—For purposes of this subsection, 
rules similar to the rules of paragraphs (4), (5), and (6) of 
subsection (c) shall apply to organizations described in section 
509(a)(3), except that—
‘‘(A) ‘the date of the enactment of this subsection’ shall 
be substituted for ‘May 26, 1969’ each place it appears 
in paragraphs (4), (5), and (6), and 
‘‘(B) ‘January 1, 2007’ shall be substituted for ‘January 
1, 1970’ in paragraph (4)(E).’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after the date of the enact-
ment of this Act. 
SEC. 1244. TREATMENT OF AMOUNTS PAID TO SUPPORTING ORGANIZA-
TIONS BY PRIVATE FOUNDATIONS. 
(a) QUALIFYING
DISTRIBUTIONS.—Paragraph (4) of section 
4942(g) is amended to read as follows: 
‘‘(4) LIMITATION ON DISTRIBUTIONS BY NONOPERATING PRI-
VATE FOUNDATIONS TO SUPPORTING ORGANIZATIONS.—
‘‘(A) IN GENERAL.—For purposes of this section, the 
term ‘qualifying distribution’ shall not include any amount 
paid by a private foundation which is not an operating 
foundation to—
‘‘(i) any type III supporting organization (as 
defined in section 4943(f)(5)(A)) which is not a function-
ally integrated type III supporting organization (as 
defined in section 4943(f)(5)(B)), and 
‘‘(ii) any organization which is described in 
subparagraph (B) or (C) if—
‘‘(I) a disqualified person of the private founda-
tion directly or indirectly controls such organiza-
tion or a supported organization (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 inappropriate. 
‘‘(B) TYPE I AND TYPE II SUPPORTING ORGANIZATIONS.—
An organization is described in this subparagraph if the 
organization meets the 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 connection with 
one or more such organizations. 
‘‘(C) FUNCTIONALLY INTEGRATED TYPE III SUPPORTING 
ORGANIZATIONS.—An organization is described in this 
subparagraph 
if 
the 
organization 
is 
a 
functionally 
integrated type III supporting organization (as defined 
under section 4943(f)(5)(B)).’’. 
(b) TAXABLE
EXPENDITURES.—Subparagraph (A) of section 
4945(d)(4) is amended to read as follows: 
‘‘(A) such organization—
‘‘(i) is described in paragraph (1) or (2) of section 
509(a),
H. R. 4—329
‘‘(ii) is an organization described in section 
509(a)(3) (other than an organization described in 
clause (i) or (ii) of section 4942(g)(4)(A)), or 
‘‘(iii) is an exempt operating foundation (as defined 
in section 4940(d)(2)), or’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distributions and expenditures after the date of 
the enactment of this Act. 
SEC. 1245. RETURNS OF SUPPORTING ORGANIZATIONS. 
(a) REQUIREMENT TO FILE RETURN.—Subparagraph (B) of sec-
tion 6033(a)(3) is amended by inserting ‘‘(other than an organization 
described in section 509(a)(3))’’ after ‘‘paragraph (1)’’. 
(b) MATTERS
INCLUDED
ON
RETURNS.—Section 6033, as 
amended by this Act, is amended by redesignating subsection (l) 
as subsection (m) and by inserting after subsection (k) the following 
new subsection: 
‘‘(l) 
ADDITIONAL
PROVISIONS
RELATING
TO
SUPPORTING 
ORGANIZATIONS.—Every organization described in section 509(a)(3) 
shall, on the return required under subsection (a)—
‘‘(1) list the supported organizations (as defined in section 
509(f)(3)) with respect to which such organization provides sup-
port, 
‘‘(2) indicate whether the organization meets the require-
ments of clause (i), (ii), or (iii) of section 509(a)(3)(B), and 
‘‘(3) certify that the organization meets the requirements 
of section 509(a)(3)(C).’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to returns filed for taxable years ending after the 
date of the enactment of this Act. 
TITLE XIII—OTHER PROVISIONS 
SEC. 1301. TECHNICAL CORRECTIONS RELATING TO MINE SAFETY. 
Section 110 of the Federal Mine Safety and Health Act of 
1977 (30 U.S.C. 820), as amended by the Mine Improvement and 
New Emergency Response Act of 2006 (Public Law 109–236), is 
amended—
(1) by striking subsection (d); and 
(2) in subsection (a)—
(A) by striking ‘‘(1)(1) The operator’’ and inserting ‘‘(1) 
The operator’’; 
(B) in the paragraph (2) added by section 8(a)(1)(B) 
of the Mine Improvement and New Emergency Response 
Act of 2006 (Public Law 109–236)—
(i) by striking ‘‘paragraph (1)’’ and inserting ‘‘sub-
section (a)(1)’’; and 
(ii) by redesignating such paragraph as subsection 
(d) and transferring such subsection so as to appear 
after subsection (c); and 
(3) in subsection (b)—
(A) by striking ‘‘Any operator’’ and inserting ‘‘(1) Any 
operator’’; and 
(B) in the second sentence, as added by section 8(a)(2) 
of the Mine Improvement and New Emergency Response
H. R. 4—330
Act of 2006 (Public Law 109–236), by striking ‘‘Violations’’ 
and inserting the following: 
‘‘(2) Violations’’. 
SEC. 1302. GOING-TO-THE-SUN ROAD. 
(a) IN
GENERAL.—Section 1940 of the Safe, Accountable, 
Flexible, Efficient Transportation Equity Act: A Legacy for Users 
(119 Stat. 1511) is amended—
(1) in subsection (a)—
(A) by striking paragraphs (1) and (2); 
(B) by redesignating paragraphs (3) through (5) as 
paragraphs (1) through (3), respectively; and 
(C) by striking ‘‘$10,000,000’’ each place that it appears 
and inserting ‘‘$16,666,666’’; and 
(2) by adding at the end the following: 
‘‘(c) CONTRACT AUTHORITY.—Except as otherwise provided in 
this section, funds authorized to be appropriated under this section 
shall be available for obligation in the same manner as if the 
funds were apportioned under chapter 1 of title 23, United States 
Code.’’. 
(b) RESCISSION.—Section 10212 of the Safe, Accountable, 
Flexible, Efficient Transportation Equity Act: A Legacy for Users 
(119 Stat. 1937) is amended by striking ‘‘$8,543,000,000’’ each place 
it appears and inserting ‘‘$8,593,000,000’’. 
SEC. 1303. EXCEPTION TO THE LOCAL FURNISHING REQUIREMENT 
OF THE TAX-EXEMPT BOND RULES. 
(a) SNETTISHAM HYDROELECTRIC FACILITY.—For purposes of 
determining whether any private activity bond issued before May 
31, 2006, and used to finance the acquisition of the Snettisham 
hydroelectric facility is a qualified bond for purposes of section 
142(a)(8) of the Internal Revenue Code of 1986, the electricity 
furnished by such facility to the City of Hoonah, Alaska, shall 
not be taken into account for purposes of section 142(f)(1) of such 
Code. 
(b) LAKE DOROTHY HYDROELECTRIC FACILITY.—For purposes 
of determining whether any private activity bond issued before 
May 31, 2006, and used to finance the Lake Dorothy hydroelectric 
facility is a qualified bond for purposes of section 142(a)(8) of 
the Internal Revenue Code of 1986, the electricity furnished by 
such facility to the City of Hoonah, Alaska, shall not be taken 
into account for purposes of paragraphs (1) and (3) of section 142(f) 
of such Code. 
(c) DEFINITIONS.—For purposes of this section—
(1) LAKE
DOROTHY
HYDROELECTRIC
FACILITY.—The term 
‘‘Lake Dorothy hydroelectric facility’’ means the hydroelectric 
facility located approximately 10 miles south of Juneau, Alaska, 
and commonly referred to as the ‘‘Lake Dorothy project’’. 
(2) SNETTISHAM
HYDROELECTRIC
FACILITY.—The term 
‘‘Snettisham hydroelectric facility’’ means the hydroelectric 
project described in section 1804 of the Small Business Job 
Protection Act of 1996. 
SEC. 1304. QUALIFIED TUITION PROGRAMS. 
(a) PERMANENT EXTENSION
OF MODIFICATIONS.—Section 901 
of the Economic Growth and Tax Relief Reconciliation Act of 2001 
(relating to sunset provisions) shall not apply to section 402 of 
such Act (relating to modifications to qualified tuition programs).
H. R. 4—331
(b) REGULATORY AUTHORITY TO PREVENT ABUSE.—Section 529 
(relating to qualified tuition programs) is amended by adding at 
the end the following new subsection: 
‘‘(f) REGULATIONS.—Notwithstanding any other provision of this 
section, the Secretary shall prescribe such regulations as may be 
necessary or appropriate to carry out the purposes of this section 
and to prevent abuse of such purposes, including regulations under 
chapters 11, 12, and 13 of this title.’’. 
TITLE XIV—TARIFF PROVISIONS 
SEC. 1401. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This title may be cited as the ‘‘Miscellaneous 
Trade and Technical Corrections Act of 2006’’. 
(b) TABLE OF CONTENTS.—The table of contents of this title 
is as follows:
TITLE XIV—TARIFF PROVISIONS 
Sec. 1401. Short title; table of contents. 
Sec. 1402. Reference. 
Subtitle A—Temporary Duty Suspensions and Reductions 
CHAPTER 1—NEW DUTY SUSPENSIONS AND REDUCTIONS 
Sec. 1411. Certain non-knit gloves designed for use by auto mechanics. 
Sec. 1412. Certain microphones for use in automotive interiors. 
Sec. 1413. Acrylic or modacrylic synthetic filament tow. 
Sec. 1414. Acrylic or modacrylic synthetic staple fibers, carded, combed, or other-
wise processed for spinning. 
Sec. 1415. Nitrocellulose. 
Sec. 1416. Potassium sorbate. 
Sec. 1417. Sorbic acid. 
Sec. 1418. Certain capers. 
Sec. 1419. Certain pepperoncini prepared or preserved otherwise than by vinegar 
or acetic acid. 
Sec. 1420. Certain capers. 
Sec. 1421. Certain pepperoncini prepared or preserved by vinegar or acetic acid in 
concentrations at 0.5 percent or greater. 
Sec. 1422. Certain pepperoncini prepared or preserved otherwise than by vinegar 
or acetic acid in concentrations less than 0.5 percent. 
Sec. 1423. Chloral. 
Sec. 1424. Imidacloprid technical (imidacloprid). 
Sec. 1425. Triadimefon. 
Sec. 1426. Polyethylene HE1878. 
Sec. 1427. Thiacloprid. 
Sec. 1428. Pyrimethanil. 
Sec. 1429. Foramsulfuron. 
Sec. 1430. Fenamidone. 
Sec. 1431. Cyclanilide technical. 
Sec. 1432. Para-benzoquinone. 
Sec. 1433. O-Anisidine. 
Sec. 1434. 2,4-Xylidine. 
Sec. 1435. Crotonaldehyde. 
Sec. 1436. Butanedioic acid, dimethyl ester, polymer with 4-hydroxy-2,2,6,6,-
tetramethyl-1-piperidineethanol. 
Sec. 1437. Mixtures of CAS Nos. 106990-43-6 and 65447-77-0. 
Sec. 1438. MCPA. 
Sec. 1439. Bronate advanced. 
Sec. 1440. Bromoxynil octanoate tech. 
Sec. 1441. Bromoxynil meo. 
Sec. 1442. Hydraulic control units. 
Sec. 1443. Shield asy-steering gear. 
Sec. 1444. 2,4-Dichloroaniline. 
Sec. 1445. 2-Acetylbutyrolactone. 
Sec. 1446. Alkylketone. 
Sec. 1447. Cyfluthrin (baythroid).
H. R. 4—332
Sec. 1448. Beta-cyfluthrin. 
Sec. 1449. Cyclopropane-1,1-dicarboxylic acid, dimethyl ester. 
Sec. 1450. Spiroxamine. 
Sec. 1451. Spiromesifen. 
Sec. 1452. 4-Chlorobenzaldehyde. 
Sec. 1453. Oxadiazon. 
Sec. 1454. NAHP. 
Sec. 1455. Phosphorus thiochloride. 
Sec. 1456. Trifloxystrobin. 
Sec. 1457. Phosphoric acid, lanthanum salt, cerium terbium-doped. 
Sec. 1458. Lutetium oxide. 
Sec. 1459. ACM. 
Sec. 1460. Permethrin. 
Sec. 1461. Thidiazuron. 
Sec. 1462. Flutolanil. 
Sec. 1463. Resmethrin. 
Sec. 1464. Clothianidin. 
Sec. 1465. Certain master cylinder assembles. 
Sec. 1466. Certain transaxles. 
Sec. 1467. Converter asy. 
Sec. 1468. Module and bracket asy-power steering. 
Sec. 1469. Unit asy-battery hi volt. 
Sec. 1470. Certain articles of natural cork. 
Sec. 1471. Glyoxylic acid. 
Sec. 1472. Cyclopentanone. 
Sec. 1473. Mesotrione technical. 
Sec. 1474. Malonic acid-dinitrile 50% NMP. 
Sec. 1475. Formulations of NOA 446510. 
Sec. 1476. DEMBB distilled-ISO tank. 
Sec. 1477. Methylionone. 
Sec. 1478. Certain acrylic fiber tow. 
Sec. 1479. Certain acrylic fiber tow. 
Sec. 1480. MKH 6561 isocyanate. 
Sec. 1481. Endosulfan. 
Sec. 1482. Tetraconazole. 
Sec. 1483. M-alcohol. 
Sec. 1484. Certain machines for use in the assembly of motorcycle wheels. 
Sec. 1485. Deltamethrin. 
Sec. 1486. Palm fatty acid distillate. 
Sec. 1487. 4-Methoxy-2-methyldiphenylamine. 
Sec. 1488. 2-Methylhydroquinone. 
Sec. 1489. 1-Fluoro-2-nitrobenzene. 
Sec. 1490. Cosmetic bags with a flexible outer surface of reinforced or laminated 
polyvinyl chloride (PVC). 
Sec. 1491. Mixtures 
of 
methyl 
4-iodo-2-[3-(4-methoxy-6-methyl-1,3,5-triazin-2-
yl)ureidosulfonyl]benzoate, sodium salt (iodosulfuron methyl, sodium 
salt). 
Sec. 1492. Ethyl 
4,5-dihydro-5,5-diphenyl-1,2-oxazole-3-carboxylate 
(isoxadifen-
ethyl). 
Sec. 1493. (5-cyclopropyl-4-isoxazolyl)[2-(methylsulfonyl)–4-
(trifluoromethyl)phenyl]methanone (isoxaflutole). 
Sec. 1494. Methyl 
2-[(4,6-dimethoxypyrimidin-2-ylcarbamoyl)sulfamoyl]-α-
(methanesulfonamido)-p-toluate (mesosulfuron-methyl) whether or not 
mixed with application adjuvants. 
Sec. 1495. Mixtures of foramsulfuron and iodosulfuron-methyl-sodium. 
Sec. 1496. Vulcuren UPKA 1988. 
Sec. 1497. Vullcanox 41010 NA/LG. 
Sec. 1498. Vulkazon AFS/LG. 
Sec. 1499. P-Anisaldehyde. 
Sec. 1500. 1,2-Pentanediol. 
Sec. 1501. Agrumex. 
Sec. 1502. Cohedur RL. 
Sec. 1503. Formulations of prosulfuron. 
Sec. 1504. Lewatit. 
Sec. 1505. Para-Chlorophenol. 
Sec. 1506. Cypermethrin. 
Sec. 1507. Ion-exchange resin powder. 
Sec. 1508. Ion-exchange resin powder. 
Sec. 1509. Desmodur E 14. 
Sec. 1510. Desmodur VP LS 2253. 
Sec. 1511. Desmodur R-E. 
Sec. 1512. Walocel MW 3000 PFV.
H. R. 4—333
Sec. 1513. TSME. 
Sec. 1514. Walocel VP-M 20660. 
Sec. 1515. Xama 2. 
Sec. 1516. Xama 7. 
Sec. 1517. Certain cases for toys. 
Sec. 1518. Certain cases for toys. 
Sec. 1519. Aniline 2.5-disulfonic acid. 
Sec. 1520. 1,4-benzenedicarboxylic acid, polymer with n,n′-bis(2-aminoethyl)–1,2-
ethanediamine, cyclized, methosulfate. 
Sec. 1521. Sulfur blue 7. 
Sec. 1522. Formaldehyde, 
reaction 
products 
with 
1,4-benzenediol 
and 
m-
phenylenediamine, sulfurized. 
Sec. 1523. Isocyanatosulfonyl. 
Sec. 1524. Isocyanatosulfonyl. 
Sec. 1525. Gemifloxacin, 
gemifloxacin 
mesylate, 
and 
gemifloxacin 
mesylate 
sesquihydrate. 
Sec. 1526. Butralin. 
Sec. 1527. Spirodiclofen. 
Sec. 1528. Propamocarb HCL (PREVICUR). 
Sec. 1529. Desmodur IL. 
Sec. 1530. Chloroacetone. 
Sec. 1531. IPN (isophthalonitrile). 
Sec. 1532. NOA 446510 technical. 
Sec. 1533. Hexythiazox technical. 
Sec. 1534. Crelan (self-blocked cycloaliphatic polyuretdione). 
Sec. 1535. Aspirin. 
Sec. 1536. Desmodur BL XP 2468. 
Sec. 1537. Desmodur RF-E. 
Sec. 1538. Desmodur HL. 
Sec. 1539. D-Mannose. 
Sec. 1540. Certain camel hair. 
Sec. 1541. Waste of camel hair. 
Sec. 1542. Certain camel hair. 
Sec. 1543. Woven fabric of vicuna hair. 
Sec. 1544. Certain camel hair. 
Sec. 1545. Noils of camel hair. 
Sec. 1546. Chloroacetic acid, ethyl ester. 
Sec. 1547. Chloroacetic acid, sodium salt. 
Sec. 1548. Low expansion laboratory glass. 
Sec. 1549. Stoppers, lids, and other closures. 
Sec. 1550. Pigment yellow 213. 
Sec. 1551. Indoxacarb. 
Sec. 1552. Dimethyl carbonate. 
Sec. 1553. 5-Chloro-1-indanone (EK179). 
Sec. 1554. Mixtures of famoxadone and cymoxanil. 
Sec. 1555. Decanedioic acid, bis(2,2,6,6-tetramethyl-4-piperidinyl) ester. 
Sec. 1556. Acid blue 80. 
Sec. 1557. Pigment brown 25. 
Sec. 1558. Formulations of azoxystrobin. 
Sec. 1559. Formulations of pinoxaden/cloquintocet. 
Sec. 1560. Mixtures of difenoconazole/mefenoxam. 
Sec. 1561. Fludioxinil technical. 
Sec. 1562. Mixtures of clodinafop-propargyl. 
Sec. 1563. Avermectin b, 1,4″-deoxy-4″-methylamino-, (4″r)-, benzoate. 
Sec. 1564. Cloquintocet-mexyl. 
Sec. 1565. Metalaxyl-M technical. 
Sec. 1566. Cyproconazole technical. 
Sec. 1567. Pinoxaden technical. 
Sec. 1568. Mixtures of tralkoxydim. 
Sec. 1569. Certain chemicals. 
Sec. 1570. Mixtures of ( ± )–(cis and trans)–1-[[2-(2,4-dichlorophenyl)–4-propyl-1,3-
dioxolan-2-yl]-methyl]-1h-1,2,4-triazole. 
Sec. 1571. Paraquat dichloride. 
Sec. 1572. Certain basketballs. 
Sec. 1573. Certain leather basketballs. 
Sec. 1574. Certain rubber basketballs. 
Sec. 1575. Certain volleyballs. 
Sec. 1576. 4-Chloro-3-[[3-(4-methoxyphenyl)–1,3-dioxopropyl]-amino]-dodecyl ester. 
Sec. 1577. Linuron. 
Sec. 1578. N,N-Dimethylpiperidinium chloride (mepiquat chloride). 
Sec. 1579. Diuron. 
Sec. 1580. Formulated product Krovar I DF.
H. R. 4—334
Sec. 1581. Triasulfuron technical. 
Sec. 1582. Brodifacoum technical. 
Sec. 1583. Pymetrozine technical. 
Sec. 1584. Formulations 
of 
thiamethoxam, 
difenoconazole, 
fludioxinil, 
and 
mefenoxam. 
Sec. 1585. Trifloxysulfuron-sodium technical. 
Sec. 1586. 2 Benzylthio-3-ethyl sulfonyl pyridine. 
Sec. 1587. 2-Amino-4-methoxy-6-methyl-1,3,5-triazine. 
Sec. 1588. Formulated products containing mixtures of the active ingredient 2-
chloro-n-[[(4-methoxy-6-methyl-1,3,5-triazin-2yl) 
amino]carbonyl] 
benzenesulfonamide and application adjuvants. 
Sec. 1589. 2-methyl-4-methoxy-6-methylamino-1,3,5-triazine. 
Sec. 1590. Mixtures 
of 
sodium-2-chloro-6-[(4,6 
dimethoxypyrimidin-2-
yl)thio]benzoate and application adjuvants (pyrithiobac-sodium). 
Sec. 1591. Certain decorative plates, decorative sculptures, decorative plaques, and 
architectural miniatures. 
Sec. 1592. Certain music boxes. 
Sec. 1593. 2-Methyl-4-chlorophenoxyacetic acid. 
Sec. 1594. Phenmedipham. 
Sec. 1595. Desmedipham. 
Sec. 1596. Certain footwear with open toes or heels. 
Sec. 1597. Certain work footwear. 
Sec. 1598. Certain refracting and reflecting telescopes. 
Sec. 1600. Certain work footwear. 
Sec. 1601. Certain footwear for men. 
Sec. 1602. Certain rubber or plastic footwear. 
Sec. 1604. Zinc dimethyldithiocarbamate. 
Sec. 1605. Certain liquid crystal device (LCD) panel assemblies. 
Sec. 1606. Certain watertube boilers and reactor vessel heads. 
CHAPTER 2—EXISTING DUTY SUSPENSIONS AND REDUCTIONS 
Sec. 1611. Extension of certain existing duty suspensions and reductions. 
Subtitle B—Other Tariff Provisions 
CHAPTER 1—LIQUIDATION OR RELIQUIDATION OF CERTAIN ENTRIES 
Sec. 1621. Certain tramway cars and associated spare parts. 
Sec. 1622. Reliquidation of certain entries of candles. 
Sec. 1623. Certain entries of roller chain. 
Sec. 1624. Certain entries of soundspa clock radios. 
CHAPTER 2—MISCELLANEOUS PROVISIONS 
Sec. 1631. Vessel repair duties. 
Sec. 1632. Suspension of new shipper review provision. 
Sec. 1633. Extension and modification of duty suspension on wool products; wool 
research fund; wool duty refunds. 
Sec. 1634. Authorities relating to DR–CAFTA Agreement. 
Sec. 1635. Technical amendments to Customs modernization. 
Subtitle C—Effective Date 
Sec. 1641. Effective date.
SEC. 1402. REFERENCE. 
Except as otherwise expressly provided, whenever in this title 
an amendment or repeal is expressed in terms of an amendment 
to, or repeal of, a chapter, subchapter, note, additional U.S. note, 
heading, subheading, or other provision, the reference shall be 
considered to be made to a chapter, subchapter, note, additional 
U.S. note, heading, subheading, or other provision of the Har-
monized Tariff Schedule of the United States (19 U.S.C. 3007).
H. R. 4—335
Subtitle A—Temporary Duty Suspensions 
and Reductions 
CHAPTER 1—NEW DUTY SUSPENSIONS AND 
REDUCTIONS 
SEC. 1411. CERTAIN NON-KNIT GLOVES DESIGNED FOR USE BY AUTO 
MECHANICS. 
(a) IN GENERAL.—Subchapter II of chapter 99 is amended by 
inserting in numerical sequence the following new headings:
‘‘
9902.14.01
Mechanics’ work gloves, 
valued not over $3.50 per 
pair (provided for in sub-
heading 6216.00.58) .........
2.8%
No change 
No change 
On or before 
12/31/2009
9902.14.02
Mechanics’ work gloves, 
valued over $3.50 but not 
over $3.70 per pair (pro-
vided for in subheading 
6216.00.58) ........................
2.8%
No change 
No change 
On or before 
12/31/2009
’’. 
9902.14.03
Mechanics’ work gloves, 
valued over $3.70 but not 
over $4.99 per pair (pro-
vided for in subheading 
6216.00.58) ........................
2.8%
No change 
No change 
On or before 
12/31/2009
’’. 
9902.14.04
Mechanics’ work gloves, 
valued over $4.99 but not 
over $7.72 per pair (pro-
vided for in subheading 
6216.00.58) ........................
2.8%
No change 
No change 
On or before 
12/31/2009
’’. 
9902.14.05
Mechanics’ work gloves, 
valued over $7.72 per pair 
(provided for in sub-
heading 6216.00.58) .........
2.8%
No change 
No change 
On or before 
12/31/2009
’’. 
(b) AMENDMENT TO U.S. NOTES.—Subchapter II of chapter 99 
is amended by adding at the end of the U.S. Notes to such sub-
chapter the following new U.S. Note: 
‘‘18. 
For 
purposes 
of 
headings 
9902.14.01, 
9902.14.02, 
9902.14.03, 9902.14.04, and 9902.14.05, the term ‘mechanics’ work 
gloves’ means gloves, of man-made fibers, having synthetic leather 
palms and fingers; fourchettes of synthetic leather or of fabric 
of nylon or elastomeric yarn; backs comprising either one layer 
of knitted fabric of elastomeric yarn or three layers, with the 
outer layer of knitted fabric of elastomeric yarn, the center layer 
of foam and the inner layer of tricot fabric; the foregoing, whether 
or not including an thermoplastic rubber logo or pad on the back; 
and elastic wrist straps with molded thermoplastic rubber hook-
and-loop enclosures.’’. 
SEC. 1412. CERTAIN MICROPHONES FOR USE IN AUTOMOTIVE INTE-
RIORS. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
H. R. 4—336
‘‘
9902.10.17
Unidirectional (cardioid) 
electret condenser micro-
phone modules for use in 
motor vehicles provided 
for in headings 8701 
through 8705 (other than 
such modules designed for 
handheld, microphone 
stand, or lapel use), the 
foregoing each including 
wire leads for external 
connection, whether or not 
including a multi-pin 
board level type connector 
but not including a bat-
tery compartment; having 
a typical frequency re-
sponse of 250 Hertz 
through 7,000 Hertz with 
no more than a 20 decibel 
deviation in that fre-
quency range and an elec-
trostatic discharge immu-
nity of 4,000 V (contact) 
and 8,000 V (air); and ca-
pable of operation and 
storage in the tempera-
ture range of -40°C 
through 85°C and a hu-
midity of not over 95 per-
cent (provided for in sub-
heading 8518.10.80) .........
Free 
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1413. ACRYLIC OR MODACRYLIC SYNTHETIC FILAMENT TOW. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
‘‘
9902.10.21
Synthetic filament tow: 
acrylic or modacrylic (pro-
vided for in subheading 
5501.30.00) ........................
6.8%
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1414. ACRYLIC OR MODACRYLIC SYNTHETIC STAPLE FIBERS, 
CARDED, COMBED, OR OTHERWISE PROCESSED FOR 
SPINNING. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
‘‘
9902.10.22
Synthetic staple fibers, 
carded, combed, or other-
wise processed for spin-
ning: acrylic or modacrylic 
(provided for in sub-
heading 5506.30.00) .........
Free 
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1415. NITROCELLULOSE. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
‘‘
9902.10.23
Cellulose nitrates (nitro-
cellulose, including collo-
dions) (CAS 9004-70-0) 
(provided for in sub-
heading 3912.20.00) .........
4.4%
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1416. POTASSIUM SORBATE. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
H. R. 4—337
‘‘
9902.10.24
Potassium sorbate (CAS 
No. 24634–61–5) (pro-
vided for in subheading 
2916.19.10) ........................
1.4%
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1417. SORBIC ACID. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
‘‘
9902.10.25
Sorbic acid (CAS No. 110–
44–1) (provided for in sub-
heading 2916.19.20) .........
1.9%
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1418. CERTAIN CAPERS. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
‘‘
9902.10.26
Capers, prepared or pre-
served by vinegar other 
than such goods in imme-
diate containers each 
holding 3.4 kg or less 
(provided for in sub-
heading 2001.90.20) .........
Free 
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1419. CERTAIN PEPPERONCINI PREPARED OR PRESERVED 
OTHERWISE THAN BY VINEGAR OR ACETIC ACID. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
‘‘
9902.10.27
Pepperoncini, prepared or 
preserved otherwise than 
by vinegar, not frozen 
(provided for in sub-
heading 2005.90.55) .........
Free 
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1420. CERTAIN CAPERS. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
‘‘
9902.10.28
Capers, prepared or pre-
served by vinegar in im-
mediate containers each 
holding more than 3.4 kg 
(provided for in sub-
heading 2001.90.10) .........
Free 
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1421. CERTAIN PEPPERONCINI PREPARED OR PRESERVED BY 
VINEGAR OR ACETIC ACID IN CONCENTRATIONS AT 0.5 
PERCENT OR GREATER. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
‘‘
9902.10.29
Pepperoncini, prepared or 
preserved by vinegar (pro-
vided for in subheading 
2001.90.38) ........................
2.2%
No change 
No change 
On or before 
12/31/2009
’’.
H. R. 4—338
SEC. 1422. CERTAIN PEPPERONCINI PREPARED OR PRESERVED 
OTHERWISE THAN BY VINEGAR OR ACETIC ACID IN CON-
CENTRATIONS LESS THAN 0.5 PERCENT. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
‘‘
9902.10.30
Giardiniera, prepared or 
preserved otherwise than 
by vinegar, not frozen 
(provided for in sub-
heading 2005.90.55) .........
Free 
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1423. CHLORAL. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
‘‘
9902.10.31
Trichloroacetaldehyde 
(CAS No. 75–87–6) (pro-
vided for in subheading 
2913.00.50) ........................
Free 
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1424. IMIDACLOPRID TECHNICAL (IMIDACLOPRID). 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
‘‘
9902.10.32
1-[(6-Chloro-3-
pyrdinyl)methyl]-N-nitro-
2-imidazolidinimine 
(Imidacloprid) (CAS No. 
138261–41–3) (provided 
for in subheading 
2933.39.27) ........................
Free 
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1425. TRIADIMEFON. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
‘‘
9902.10.33
1-(4-Chlorophenoxy)–3,3-
dimethyl-1-(1H-1,2,4-
triazol-1-y1)–2-butanone 
(CAS No. 43121–43–3) 
(Triadimefon) (provided 
for in subheading 
2933.99.22) ........................
Free 
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1426. POLYETHYLENE HE1878. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading:
‘‘
9902.10.34
Polyethylene HE1878 
(CAS No. 25087–34–7), 
with l-butene as comon-
omer (provided for in sub-
heading 3901.20.50) .........
3.6%
No change 
No change 
On or before 
12/31/2009
’’. 
SEC. 1427. THIACLOPRID. 
Subchapter II of chapter 99 is amended by inserting in numer-
ical sequence the following new heading: