[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 494 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 494

   To amend the Internal Revenue Code of 1986 to provide changes in 
       application of wagering taxes to charitable organizations.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 3, 1993

Mr. Daschle (for himself and Mr. Brown) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to provide changes in 
       application of wagering taxes to charitable organizations.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. CHANGES IN APPLICATION OF WAGERING TAXES TO CHARITABLE 
              ORGANIZATIONS.

    (a) Exemption From Occupational Tax for Charitable Organizations.--
Section 4411 of the Internal Revenue Code of 1986 (relating to 
occupational tax on wagering) is amended by adding at the end thereof 
the following new subsection:
    ``(c) Exception for Charitable Organizations, Etc.--No tax shall be 
imposed by subsection (a) on--
            ``(1) any organization exempt from tax under section 501 or 
        521, and
            ``(2) any person who is engaged in receiving wagers only 
        for or on behalf of such an organization,
if the only wagers accepted by such organization (and such person) are 
authorized under the law of the State in which accepted.''
    (b) Exception From Wagering Tax for Charitable Organizations.--
Section 4402 of such Code (relating to exemptions from tax on wagers) 
is amended by inserting ``(a) In General.--'' before ``No tax'' and by 
adding at the end thereof the following new subsection:
    ``(b) Charitable Organizations, Etc.--
            ``(1) Exemption where charitable expenditures exceed 
        winnings.--If the amount of charitable expenditures of any 
        organization described in section 4411(c) for any calendar 
        quarter equals or exceeds the amount of wagering winnings of 
        such organization for such quarter, no tax shall be imposed by 
        this subchapter on wagers placed during such calendar quarter 
        with such organization or with any person described in section 
        4411(c)(2) with respect to such organization.
            ``(2) Reduction of tax where winnings exceed charitable 
        expenditures.--
                    ``(A) In general.--If paragraph (1) does not apply 
                to an organization or person described in section 
                4411(c) for any calendar quarter, the tax imposed by 
                this subchapter on wagers placed with such organization 
                or person during such quarter shall be the applicable 
                percentage of the tax which would (but for this 
                paragraph) be imposed on such wagers during such 
                quarter.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage for any 
                calendar quarter is the excess of 100 percent over the 
                percentage which the charitable expenditures of such 
                organization for such quarter is of the wagering 
                winnings of such organization for such quarter.
            ``(3) Definitions and special rule.--For purposes of this 
        subsection--
                    ``(A) Charitable expenditures.--The term 
                `charitable expenditures' means, for any calendar 
                quarter, the sum of--
                            ``(i) the amount paid by such organization 
                        during such quarter to accomplish 1 or more of 
                        the purposes described in section 170(c)(2)(B) 
                        or to acquire an asset used (or held for use) 
                        directly in carrying out 1 or more of such 
                        purposes, and
                            ``(ii) the amount permanently set-aside by 
                        such organization during such quarter for 1 or 
                        more of such purposes.
                    ``(B) Wagering winnings.--The term `wagering 
                winnings' means, with respect to any calendar quarter, 
                the excess of the wagers which would (but for this 
                subsection) be subject to tax under this subchapter and 
                which are placed with the organization during such 
                calendar quarter over the winnings paid on such wagers.
                    ``(C) Special rule.--Wagers received by any person 
                for or on behalf of an organization shall be treated as 
                received by such organization.''
    (c) Effective Dates.--
            (1) Subsection (a).--The amendment made by subsection (a) 
        shall apply to taxes imposed for periods beginning after the 
        date of the enactment of this Act.
            (2) Subsection (b).--The amendment made by subsection (b) 
        shall apply to wagers placed in calendar quarters beginning 
        after the date of the enactment of this Act.

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