[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3801 Introduced in House (IH)]







104th CONGRESS
  2d Session
                                H. R. 3801

    To amend the Internal Revenue Code of 1986 to provide that the 
  furnishing of recreational fitness services by tax-exempt hospitals 
shall be treated as an unrelated trade or business and that tax-exempt 
     bonds may not be used to provide facilities for such services.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 12, 1996

    Mr. Kleczka (for himself and Mr. Sensenbrenner) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
    To amend the Internal Revenue Code of 1986 to provide that the 
  furnishing of recreational fitness services by tax-exempt hospitals 
shall be treated as an unrelated trade or business and that tax-exempt 
     bonds may not be used to provide facilities for such services.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Taxpayer Bond Fairness Act of 
1996''.

SEC. 2. TREATMENT OF THE FURNISHING OF RECREATIONAL FITNESS SERVICES.

    (a) Unrelated Trade or Business Treatment.--
            (1) In general.--Section 513 of the Internal Revenue Code 
        of 1986 (defining unrelated trade or business) is amended by 
        adding at the end the following new subsection:
    ``(i) Recreational Fitness Services.--In the case of a hospital 
described in section 170(b)(1)(A)(iii), the term `unrelated trade or 
business' includes any trade or business which consists of providing 
physical fitness services (including the use of facilities) to any 
individual other than--
            ``(1) an employee of such hospital, or
            ``(2) as part of a course of rehabilitation or therapy 
        prescribed by a licensed physician or physical therapist to 
        treat a physical injury or dysfunction.''
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to services provided after June 30, 1996, in 
        taxable years ending after such date.
    (b) Denial of Tax-Exempt Bond Financing.--
            (1) In general.--Section 145 of such Code (defining 
        qualified 501(c)(3) bond) is amended by redesignating 
        subsection (e) as subsection (f) and by inserting after 
        subsection (d) the following new subsection:
    ``(e) Qualified 501(c) Bonds Not To Include Bonds Financing 
Recreational Fitness Facilities.--
            ``(1) In general.--For purposes of this part, the term 
        `qualified 501(c)(3) bond' shall not include any bond issued as 
        part of an issue if any portion of the net proceeds of the 
        issue are to be used directly or indirectly to provide any 
        recreational fitness facility.
            ``(2) Recreational fitness facility.--For purposes of 
        paragraph (1), the term `recreational fitness facility' means 
        any facility owned or operated by a hospital described in 
        section 170(b)(1)(A)(iii) if any of the income from the use of 
        the facility, or from services provided at the facility, would 
        be income of such hospital from an unrelated trade or business 
        (as defined in section 513).''
            (2) Effective date.--
                    (A) In general.--The amendment made by paragraph 
                (1) shall apply to obligations issued after July 12, 
                1996.
                    (B) Exception.--The amendment made by paragraph (1) 
                shall not apply to obligations issued to refund (or 
                issued as part of a series of obligations issued to 
                refund) an obligation issued on or before such date if 
                the requirements of section 144(a)(12)(A)(i) of the 
                Internal Revenue Code of 1986 are met.
                                 <all>