[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 997 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 997

To assist States in providing individuals a credit against State income 
     taxes or a comparable benefit for contributions to charitable 
  organizations working to prevent or reduce poverty and protect and 
     encourage donations to charitable organizations, to prohibit 
   discrimination against nongovernmental organizations and certain 
individuals on the basis of religion in the distribution of government 
  funds to provide government assistance and the distribution of such 
assistance, to allow such organizations to accept such funds to provide 
   such assistance without impairing the religious character of such 
 organizations, to provide for tax-free distributions from individual 
  retirement accounts for charitable purposes, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 11, 1999

 Mr. Santorum (for himself, Mr. Abraham, Mr. Ashcroft, Mr. Brownback, 
 Mr. Coverdell, Mr. DeWine, Mrs. Hutchison, and Mr. McCain) introduced 
the following bill; which was read twice and referred to the Committee 
                               on Finance

_______________________________________________________________________

                                 A BILL


 
To assist States in providing individuals a credit against State income 
     taxes or a comparable benefit for contributions to charitable 
  organizations working to prevent or reduce poverty and protect and 
     encourage donations to charitable organizations, to prohibit 
   discrimination against nongovernmental organizations and certain 
individuals on the basis of religion in the distribution of government 
  funds to provide government assistance and the distribution of such 
assistance, to allow such organizations to accept such funds to provide 
   such assistance without impairing the religious character of such 
 organizations, to provide for tax-free distributions from individual 
  retirement accounts for charitable purposes, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Charity 
Empowerment Act of 1999''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
     TITLE I--ASSISTANCE TO STATES IN PROVIDING CHARITY TAX CREDITS

Sec. 101. Authority to use certain Federal grant funds for State 
                            charity tax credit.
Sec. 102. Definitions.
Sec. 103. Study and report.
Sec. 104. Effective date.
                        TITLE II--BUDGET OFFSET

Sec. 201. Reduction of earned income credit for individuals without 
                            children.
      TITLE III--TORT REFORMS RELATING TO CHARITABLE CONTRIBUTIONS

Sec. 301. Definitions.
Sec. 302. Liability.
Sec. 303. Exceptions.
Sec. 304. Superseding provision.
Sec. 305. Election of State regarding nonapplicability.
Sec. 306. Effective date.
               TITLE IV--CHARITABLE CHOICE EXPANSION ACT

Sec. 401. Provision of assistance under government programs by 
                            religious organizations.
TITLE V--TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS FOR 
                          CHARITABLE PURPOSES

Sec. 501. Tax-free distributions from individual retirement accounts 
                            for charitable purposes.

     TITLE I--ASSISTANCE TO STATES IN PROVIDING CHARITY TAX CREDITS

SEC. 101. AUTHORITY TO USE CERTAIN FEDERAL GRANT FUNDS FOR STATE 
              CHARITY TAX CREDIT.

    (a) In General.--Notwithstanding any other provision of law, if 
there is in effect under State law a charity tax credit, then the State 
may use for any purpose not more than 50 percent of each total amount 
paid to the State during the fiscal year under each of the provisions 
of law specified in subsection (d).
    (b) Limitation.--The aggregate amount a State may use under 
subsection (a) during a fiscal year shall not exceed an amount equal to 
100 percent of the revenue loss of the State during the fiscal year 
that is attributable to the charity tax credit, as determined by the 
Secretary of the Treasury without regard to any such revenue loss 
occurring before January 1, 2000.
    (c) Certain Credit Amounts Treated as State Payment for Temporary 
Assistance for Needy Families.--For purposes of title IV of the Social 
Security Act, an amount equal to the excess (if any) of--
            (1) the amount of the revenue loss of a State (not to 
        exceed 100 percent) during a fiscal year that is attributable 
        to the charity tax credit, as determined under subsection (b); 
        over
            (2) the aggregate amount used by the State under subsection 
        (a) during the fiscal year,
shall be treated as an amount used during the fiscal year by the State 
to carry out a State program funded under part A of such title.
    (d) Provisions of Law.--The provisions of law specified in this 
subsection are the following:
            (1) Paragraphs (1) through (4) of section 403(a) of the 
        Social Security Act (42 U.S.C. 603(a)).
            (2) The Child Care and Development Block Grant Act of 1990 
        (42 U.S.C. 9858-9858q) and section 418 of the Social Security 
        Act (42 U.S.C. 618).
            (3) Sections 2002 and 2007 of the Social Security Act (42 
        U.S.C. 1397a and 1397f).
            (4) The Community Services Block Grant Act (42 U.S.C. 9901-
        9912).
            (5) The Low-Income Home Energy Assistance Act of 1981 (42 
        U.S.C. 8621 et seq.).
            (6) The Job Training Partnership Act (29 U.S.C. 1501 et 
        seq.).
            (7) Title I of the Housing and Community Development Act of 
        1974 (42 U.S.C. 5301 et seq.).

SEC. 102. DEFINITIONS.

    (a) Charity Tax Credit.--For purposes of this title, the term 
``charity tax credit'' means a nonrefundable credit against State 
income tax (or, in the case of a State which does not impose an income 
tax, a comparable benefit)--
            (1) which is allowable only to an individual for a cash 
        contribution to a qualified charity; and
            (2) of which the maximum amount allowable to an individual 
        for any taxable year does not exceed $50 ($100 in the case of a 
        joint or combined return of individuals who are married to each 
        other) in the first year the credit is available and such 
        amount is increased by not more than $50 ($100 in the case of a 
        joint or combined return of individuals who are married to each 
        other) for each subsequent year (but not to exceed $250 ($500, 
        if applicable)).
    (b) Qualified Charity.--For purposes of this title--
            (1) In general.--The term ``qualified charity'' means any 
        organization--
                    (A) which is described in section 501(c)(3) of the 
                Internal Revenue Code of 1986 and exempt from tax under 
                section 501(a) of such Code;
                    (B) which is certified by the appropriate State 
                authority as meeting the requirements of paragraphs (3) 
                and (4); and
                    (C) which annually reports the information required 
                to be furnished under paragraph (5) and if such 
                organization is otherwise required to file a return 
                under section 6033 of such Code, which elects to treat 
                the information required to be furnished under 
                paragraph (5) as the information specified in section 
                6033(b) of such Code.
            (2) Certain contributions to collection organizations 
        treated as contributions to qualified charity.--
                    (A) In general.--A contribution to a collection 
                organization shall be treated as a contribution to a 
                qualified charity if the donor designates in writing 
                that the contribution is for the qualified charity.
                    (B) Collection organization.--The term ``collection 
                organization'' means an organization described in 
                section 501(c)(3) of the Internal Revenue Code of 1986 
                and exempt from tax under section 501(a) of such Code--
                            (i) which solicits and collects gifts and 
                        grants which, by agreement, are distributed to 
                        qualified charities described in paragraph (1);
                            (ii) which distributes to qualified 
                        charities described in paragraph (1) at least 
                        90 percent of the gifts and grants received 
                        that are designated for such qualified 
                        charities; and
                            (iii) which meets the requirements of 
                        paragraph (6).
            (3) Charity must primarily assist poor individuals.--
                    (A) In general.--An organization meets the 
                requirements of this paragraph only if the appropriate 
                State authority reasonably expects that the predominant 
                activity of such organization will be the provision of 
                direct services within the United States to individuals 
                and families whose annual incomes generally do not 
                exceed 185 percent of the official poverty line (as 
                defined by the Office of Management and Budget) in 
                order to prevent or alleviate poverty among such 
                individuals and families.
                    (B) No recordkeeping in certain cases.--An 
                organization shall not be required to establish or 
                maintain records with respect to the incomes of 
                individuals and families for purposes of subparagraph 
                (A) if such individuals or families are members of 
                groups which are generally recognized as including 
                substantially only individuals and families described 
                in subparagraph (A).
                    (C) Food aid and homeless shelters.--Except as 
                otherwise provided by the appropriate State authority, 
                for purposes of subparagraph (A), services to 
                individuals in the form of--
                            (i) donations of food or meals; or
                            (ii) temporary shelter to homeless 
                        individuals,
                shall be treated as provided to individuals described 
                in subparagraph (A) if the location and operation of 
                such services are such that the service provider may 
                reasonably conclude that the beneficiaries of such 
                services are predominantly individuals described in 
                subparagraph (A).
            (4) Minimum expense requirement.--
                    (A) In general.--An organization meets the 
                requirements of this paragraph only if the appropriate 
                State authority reasonably expects that the annual 
                poverty program expense of such organization will not 
                be less than 75 percent of the annual aggregate 
                expenses of such organization.
                    (B) Poverty program expense.--For purposes of 
                subparagraph (A)--
                            (i) In general.--The term ``poverty program 
                        expense'' means any expense paid or incurred in 
                        providing program services described in 
                        paragraph (3).
                            (ii) Exceptions.--Such term shall not 
                        include--
                                    (I) any management or general 
                                expense;
                                    (II) any expense for the purpose of 
                                influencing legislation (as defined in 
                                section 4911(d) of the Internal Revenue 
                                Code of 1986);
                                    (III) any expense for the purpose 
                                of fundraising;
                                    (IV) any expense for a legal 
                                service provided on behalf of any 
                                individual described in paragraph (3); 
                                and
                                    (V) any expense which consists of a 
                                payment to an affiliate of the 
                                organization.
            (5) Reporting requirement.--The information required to be 
        furnished under this paragraph is--
                    (A) each category of services (including food, 
                shelter, education, substance abuse, job training, or 
                otherwise) which constitutes the predominant activities 
                of the organization; and
                    (B) the percentages determined by dividing the 
                categories of the organization's expenses for the year 
                by the total expenses of the organization for the year, 
                including--
                            (i) program services;
                            (ii) management expenses;
                            (iii) general expenses;
                            (iv) fundraising expenses; and
                            (v) payments to affiliates.
            (6) Additional requirements for solicitation 
        organizations.--The requirements of this paragraph are met if 
        the organization--
                    (A) maintains separate accounting for revenues and 
                expenses; and
                    (B) makes available to the public administrative 
                and fundraising costs and information regarding any 
                organization receiving funds from the organization and 
                the amount of such funds.
            (7) Recommendations.--It is recommended, but not required, 
        that--
                    (A) the definition of ``qualified charity'' be 
                further limited under State law to an organization--
                            (i) which has been operating for at least 1 
                        year or is controlled by, or operated under the 
                        auspices of, an organization which has been 
                        operating for at least 1 year; and
                            (ii) with expenses for the purpose of 
                        influencing legislation, litigation on behalf 
                        of any individual described in paragraph (3), 
                        voter registration, political organizing, 
                        public policy advocacy, or public policy 
                        research in an amount not in excess of 5 
                        percent of the total expenses of the 
                        organization;
                    (B) except as provided in subsection (a)(2), the 
                amount of the charity tax credit be equal to at least 
                50 percent and not more than 90 percent of the amount 
                of the individual's cash contribution to a qualified 
                charity; and
                    (C) contributions made not later than the time 
                prescribed by law for filing the return of the State 
                income tax for a taxable year (not including extensions 
                thereof) be treated as made (at the taxpayer's 
                election) on the last day of such year.
            (8) Special rule for states requiring tax uniformity.--In 
        the case of a State--
                    (A) which has a constitutional requirement of tax 
                uniformity; and
                    (B) which, as of December 31, 1997, imposed a tax 
                on personal income with--
                            (i) a single flat rate applicable to all 
                        earned and unearned income (except insofar as 
                        any amount is not taxed pursuant to tax 
                        forgiveness provisions); and
                            (ii) no generally available exemptions or 
                        deductions to individuals,
        the requirement of subsection (a)(2) shall be treated as met if 
        the amount of the credit is limited to a uniform percentage 
        (but not greater than 25 percent) of State personal income tax 
        liability (determined without regard to credits).
            (9) Coordination with federal charitable contribution 
        deduction.--The amount of the deduction allowed under the 
        Internal Revenue Code of 1986 for contributions which are taken 
        into account in determining any charity tax credit shall be 
        reduced by the amount of such credit which is allowed.
    (c) State.--For purposes of this title, the term ``State'' means 
each of the several States, the District of Columbia, the Commonwealth 
of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern 
Mariana Islands, any other territory or possession of the United 
States.

SEC. 103. STUDY AND REPORT.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study of the effects of the charity tax credit under this 
title, including--
            (1) the types of organizations which receive contributions 
        during the first year to which the credit applies; and
            (2) the types of services provided to the poor by such 
        organizations.
    (b) Report.--The Comptroller General shall report to Congress the 
results of such study, including--
            (1) the geographical distribution of funding from charity 
        tax credit contributions, and an analysis of the information 
        provided on the annual returns required under section 6033 of 
        the Internal Revenue Code of 1986 with respect to qualified 
        charities to determine if the broad categories of services 
        provided to the poor (including food, shelter, education, 
        substance abuse, job training, or otherwise) match the services 
        that would otherwise be provided by Federal welfare program 
        funds without the enactment of the reductions in the programs 
        permitted by this legislation; and
            (2) any recommendations for legislative changes.

SEC. 104. EFFECTIVE DATE.

    This title shall take effect on January 1, 2000.

                        TITLE II--BUDGET OFFSET

SEC. 201. REDUCTION OF EARNED INCOME CREDIT FOR INDIVIDUALS WITHOUT 
              CHILDREN.

    (a) In General.--The table in subparagraph (A) of section 32(b)(1) 
of the Internal Revenue Code of 1986 (relating to percentages) is 
amended by striking the item relating to no qualifying children and 
inserting the following:

 
 
 
   ``No qualifying children.....  3.825                     7.65.''
 

    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2001.

      TITLE III--TORT REFORMS RELATING TO CHARITABLE CONTRIBUTIONS

SEC. 301. DEFINITIONS.

    In this title:
            (1) Aircraft.--The term ``aircraft'' has the meaning 
        provided that term in section 40102(6) of title 49, United 
        States Code.
            (2) Business entity.--The term ``business entity'' means a 
        firm, corporation, association, partnership, consortium, joint 
        venture, or other form of enterprise.
            (3) Equipment.--The term ``equipment'' includes mechanical 
        equipment, electronic equipment, and office equipment.
            (4) Facility.--The term ``facility'' means any real 
        property, including any building, improvement, or appurtenance.
            (5) Gross negligence.--The term ``gross negligence'' means 
        voluntary and conscious conduct by a person with knowledge (at 
        the time of the conduct) that the conduct is likely to be 
        harmful to the health or well-being of another person.
            (6) Intentional misconduct.--The term ``intentional 
        misconduct'' means conduct by a person with knowledge (at the 
        time of the conduct) that the conduct is harmful to the health 
        or well-being of another person.
            (7) Motor vehicle.--The term ``motor vehicle'' has the 
        meaning provided that term in section 30102(6) of title 49, 
        United States Code.
            (8) Nonprofit organization.--The term ``nonprofit 
        organization'' means--
                    (A) any organization described in section 501(c)(3) 
                of the Internal Revenue Code of 1986 and exempt from 
                tax under section 501(a) of such Code; or
                    (B) any not-for-profit organization organized and 
                conducted for public benefit and operated primarily for 
                charitable, civic, educational, religious, welfare, or 
                health purposes.
            (9) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, Guam, American Samoa, the Northern 
        Mariana Islands, any other territory or possession of the 
        United States, or any political subdivision of any such State, 
        territory, or possession.

SEC. 302. LIABILITY.

    (a) Liability of Business Entities That Donate Equipment to 
Nonprofit Organizations.--
            (1) In general.--Subject to section 303, a business entity 
        shall not be subject to civil liability relating to any injury 
        or death that results from the use of equipment donated by a 
        business entity to a nonprofit organization.
            (2) Application.--This subsection shall apply with respect 
        to civil liability under Federal and State law.
    (b) Liability of Business Entities Providing Use of Facilities to 
Nonprofit Organizations.--
            (1) In general.--Subject to section 303, a business entity 
        shall not be subject to civil liability relating to any injury 
        or death occurring at a facility of the business entity in 
        connection with a use of such facility by a nonprofit 
        organization, if--
                    (A) the use occurs outside of the scope of business 
                of the business entity;
                    (B) such injury or death occurs during a period 
                that such facility is used by the nonprofit 
                organization; and
                    (C) the business entity authorized the use of such 
                facility by the nonprofit organization.
            (2) Application.--This subsection shall apply--
                    (A) with respect to civil liability under Federal 
                and State law; and
                    (B) regardless of whether a nonprofit organization 
                pays for the use of a facility.
    (c) Liability of Business Entities Providing Use of a Motor Vehicle 
or Aircraft.--
            (1) In general.--Subject to section 303, a business entity 
        shall not be subject to civil liability relating to any injury 
        or death occurring as a result of the operation of aircraft or 
        a motor vehicle of a business entity loaned to a nonprofit 
        organization for use outside of the scope of business of the 
        business entity, if--
                    (A) such injury or death occurs during a period 
                that such motor vehicle or aircraft is used by a 
                nonprofit organization; and
                    (B) the business entity authorized the use by the 
                nonprofit organization of motor vehicle or aircraft 
                that resulted in the injury or death.
            (2) Application.--This subsection shall apply--
                    (A) with respect to civil liability under Federal 
                and State law; and
                    (B) regardless of whether a nonprofit organization 
                pays for the use of the aircraft or motor vehicle.
    (d) Liability of Business Entities Providing Tours of Facilities.--
            (1) In general.--Subject to section 303, a business entity 
        shall not be subject to civil liability relating to any injury 
        to, or death of an individual occurring at a facility of the 
        business entity, if--
                    (A) such injury or death occurs during a tour of 
                the facility in an area of the facility that is not 
                otherwise accessible to the general public; and
                    (B) the business entity authorized the tour.
            (2) Application.--This subsection shall apply--
                    (A) with respect to civil liability under Federal 
                and State law; and
                    (B) regardless of whether an individual pays for 
                the tour.

SEC. 303. EXCEPTIONS.

    Section 302 shall not apply to an injury or death that results from 
an act or omission of a business entity that constitutes gross 
negligence or intentional misconduct, including any misconduct that--
            (1) constitutes a crime of violence (as that term is 
        defined in section 16 of title 18, United States Code) or act 
        of international terrorism (as that term is defined in section 
        2331 of title 18, United States Code) for which the defendant 
        has been convicted in any court;
            (2) constitutes a hate crime (as that term is used in the 
        Hate Crime Statistics Act (28 U.S.C. 534 note));
            (3) involves a sexual offense, as defined by applicable 
        State law, for which the defendant has been convicted in any 
        court; or
            (4) involves misconduct for which the defendant has been 
        found to have violated a Federal or State civil rights law.

SEC. 304. SUPERSEDING PROVISION.

    (a) In General.--Subject to subsection (b) and section 305, this 
title preempts the laws of any State to the extent that such laws are 
inconsistent with this title, except that this title shall not preempt 
any State law that provides additional protection for a business entity 
for an injury or death described in a subsection of section 302 with 
respect to which the conditions specified in such subsection apply.
    (b) Limitation.--Nothing in this title shall be construed to 
supersede any Federal or State health or safety law.

SEC. 305. ELECTION OF STATE REGARDING NONAPPLICABILITY.

    (a) Election of State Regarding Nonapplicability.--A provision of 
this title shall not apply to any civil action in a State court against 
a business entity in which all parties are citizens of the State if 
such State enacts a statute--
            (1) citing the authority of this section;
            (2) declaring the election of such State that such 
        provision shall not apply to such civil action in the State; 
        and
            (3) containing no other provisions.

SEC. 306. EFFECTIVE DATE.

    This title shall apply to injuries (and deaths resulting therefrom) 
occurring on or after the date of the enactment of this Act.

               TITLE IV--CHARITABLE CHOICE EXPANSION ACT

SEC. 401. PROVISION OF ASSISTANCE UNDER GOVERNMENT PROGRAMS BY 
              RELIGIOUS ORGANIZATIONS.

    Title XXIV of the Revised Statutes is amended by inserting after 
section 1990 (42 U.S.C. 1994) the following:

``SEC. 1994A. CHARITABLE CHOICE.

    ``(a) Short Title.--This section may be cited as the `Charitable 
Choice Expansion Act of 1999'.
    ``(b) Purpose.--The purposes of this section are--
            ``(1) to prohibit discrimination against nongovernmental 
        organizations and certain individuals on the basis of religion 
        in the distribution of government funds to provide government 
        assistance and distribution of such assistance, under 
        government programs described in subsection (c); and
            ``(2) to allow such organizations to accept such funds to 
        provide such assistance to such individuals without impairing 
        the religious character of such organizations or the religious 
        freedom of such individuals.
    ``(c) Religious Organizations Included as Nongovernmental 
Providers.--For any program carried out by the Federal Government, or 
by a State or local government with Federal funds, in which the 
Federal, State, or local government is authorized to use 
nongovernmental organizations, through contracts, grants, certificates, 
vouchers, or other forms of disbursement, to provide assistance to 
beneficiaries under the program, the government shall consider, on the 
same basis as other nongovernmental organizations, religious 
organizations to provide the assistance under the program, so long as 
the program is implemented in a manner consistent with the 
Establishment Clause of the first amendment to the Constitution. 
Neither the Federal Government nor a State or local government 
receiving funds under such program shall discriminate against an 
organization that provides assistance under, or applies to provide 
assistance under, such program, on the basis that the organization has 
a religious character.
    ``(d) Exclusions.--As used in subsection (c), the term `program' 
does not include activities carried out under--
            ``(1) Federal programs providing education to children 
        eligible to attend elementary schools or secondary schools, as 
        defined in section 14101 of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 8801) (except for activities 
        to assist students in obtaining the recognized equivalents of 
        secondary school diplomas);
            ``(2) the Higher Education Act of 1965 (20 U.S.C. 1001 et 
        seq.);
            ``(3) the Head Start Act (42 U.S.C. 9831 et seq.); or
            ``(4) the Child Care and Development Block Grant Act of 
        1990 (42 U.S.C. 9858 et seq.).
    ``(e) Religious Character and Independence.--
            ``(1) In general.--A religious organization that provides 
        assistance under a program described in subsection (c) shall 
retain its independence from Federal, State, and local governments, 
including such organization's control over the definition, development, 
practice, and expression of its religious beliefs.
            ``(2) Additional safeguards.--Neither the Federal 
        Government nor a State or local government shall require a 
        religious organization--
                    ``(A) to alter its form of internal governance; or
                    ``(B) to remove religious art, icons, scripture, or 
                other symbols;
        in order to be eligible to provide assistance under a program 
        described in subsection (c).
    ``(f) Employment Practices.--
            ``(1) Tenets and teachings.--A religious organization that 
        provides assistance under a program described in subsection (c) 
        may require that its employees providing assistance under such 
        program adhere to the religious tenets and teachings of such 
        organization, and such organization may require that those 
        employees adhere to rules forbidding the use of drugs or 
        alcohol.
            ``(2) Title vii exemption.--The exemption of a religious 
        organization provided under section 702 or 703(e)(2) of the 
        Civil Rights Act of 1964 (42 U.S.C. 2000e-1, 2000e-2(e)(2)) 
        regarding employment practices shall not be affected by the 
        religious organization's provision of assistance under, or 
        receipt of funds from, a program described in subsection (c).
    ``(g) Rights of Beneficiaries of Assistance.--
            ``(1) In general.--If an individual described in paragraph 
        (3) has an objection to the religious character of the 
        organization from which the individual receives, or would 
        receive, assistance funded under any program described in 
        subsection (c), the appropriate Federal, State, or local 
        governmental entity shall provide to such individual (if 
        otherwise eligible for such assistance) within a reasonable 
        period of time after the date of such objection, assistance 
        that--
                    ``(A) is from an alternative organization that is 
                accessible to the individual; and
                    ``(B) has a value that is not less than the value 
                of the assistance that the individual would have 
                received from such organization.
            ``(2) Notice.--The appropriate Federal, State, or local 
        governmental entity shall ensure that notice is provided to 
        individuals described in paragraph (3) of the rights of such 
        individuals under this section.
            ``(3) Individual described.--An individual described in 
        this paragraph is an individual who receives or applies for 
        assistance under a program described in subsection (c).
    ``(h) Nondiscrimination Against Beneficiaries.--
            ``(1) Grants and contracts.--A religious organization 
        providing assistance through a grant or contract under a 
        program described in subsection (c) shall not discriminate, in 
        carrying out the program, against an individual described in 
        subsection (g)(3) on the basis of religion, a religious belief, 
        a refusal to hold a religious belief, or a refusal to actively 
        participate in a religious practice.
            ``(2) Indirect forms of disbursement.--A religious 
        organization providing assistance through a voucher, 
        certificate, or other form of indirect disbursement under a 
        program described in subsection (c) shall not deny an 
        individual described in subsection (g)(3) admission into such 
        program on the basis of religion, a religious belief, or a 
        refusal to hold a religious belief.
    ``(i) Fiscal Accountability.--
            ``(1) In general.--Except as provided in paragraph (2), any 
        religious organization providing assistance under any program 
        described in subsection (c) shall be subject to the same 
        regulations as other nongovernmental organizations to account 
        in accord with generally accepted accounting principles for the 
        use of such funds provided under such program.
            ``(2) Limited audit.--Such organization shall segregate 
        government funds provided under such program into a separate 
        account. Only the government funds shall be subject to audit by 
        the government.
    ``(j) Compliance.--A party alleging that the rights of the party 
under this section have been violated by a State or local government 
may bring a civil action pursuant to section 1979 against the official 
or government agency that has allegedly committed such violation. A 
party alleging that the rights of the party under this section have 
been violated by the Federal Government may bring a civil action for 
appropriate relief in an appropriate Federal district court against the 
official or government agency that has allegedly committed such 
violation.
    ``(k) Limitations on Use of Funds for Certain Purposes.--No funds 
provided through a grant or contract to a religious organization to 
provide assistance under any program described in subsection (c) shall 
be expended for sectarian worship, instruction, or proselytization.
    ``(l) Effect on State and Local Funds.--If a State or local 
government contributes State or local funds to carry out a program 
described in subsection (c), the State or local government may 
segregate the State or local funds from the Federal funds provided to 
carry out the program or may commingle the State or local funds with 
the Federal funds. If the State or local government commingles the 
State or local funds, the provisions of this section shall apply to the 
commingled funds in the same manner, and to the same extent, as the 
provisions apply to the Federal funds.
    ``(m) Treatment of Intermediate Contractors.--If a nongovernmental 
organization (referred to in this subsection as an `intermediate 
organization'), acting under a contract or other agreement with the 
Federal Government or a State or local government, is given the 
authority under the contract or agreement to select nongovernmental 
organizations to provide assistance under the programs described in 
subsection (c), the intermediate organization shall have the same 
duties under this section as the government but shall retain all other 
rights of a nongovernmental organization under this section.''.

TITLE V--TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS FOR 
                          CHARITABLE PURPOSES

SEC. 501. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS 
              FOR CHARITABLE PURPOSES.

    (a) In General.--Subsection (d) of section 408 of the Internal 
Revenue Code of 1986 (relating to individual retirement accounts) is 
amended by adding at the end the following new paragraph:
            ``(8) Distributions for charitable purposes.--
                    ``(A) In general.--No amount shall be includible in 
                gross income by reason of a qualified charitable 
                distribution from an individual retirement plan--
                            ``(i) to an organization described in 
                        section 170(c), or
                            ``(ii) to a trust or fund, or for the 
                        issuance of an annuity, described in 
                        subparagraph (B).
                    ``(B) Special rules relating to charitable 
                remainder trusts, pooled income funds, and charitable 
                gift annuities.--
                            ``(i) In general.--A trust, fund, or 
                        annuity is described in this subparagraph if 
                        such trust, fund, or annuity is--
                                    ``(I) a charitable remainder 
                                annuity trust or a charitable remainder 
                                unitrust (as such terms are defined in 
                                section 664(d)),
                                    ``(II) a pooled income fund (as 
                                defined in section 642(c)(5)), or
                                    ``(III) a charitable gift annuity 
                                (as defined in section 501(m)(5)).
                        The preceding sentence shall apply only if no 
                        person holds an income interest in the amounts 
                        in the trust, fund, or annuity attributable to 
                        a qualified charitable distribution other than 
                        one or more of the following: the individual 
                        for whose benefit such account or annuity is 
                        maintained, the spouse of such individual, or 
                        any organization described in section 170(c).
                            ``(ii) Determination of inclusion of 
                        amounts distributed.--In determining the amount 
                        includible in the gross income of any person by 
                        reason of a payment or distribution from a 
                        trust referred to in clause (i)(I) or a 
                        charitable gift annuity (as so defined), the 
                        portion of any qualified charitable 
                        distribution to such trust or for such annuity 
                        which would (but for this subparagraph) have 
                        been includible in gross income--
                                    ``(I) shall be treated as income 
                                described in section 664(b)(1), and
                                    ``(II) shall not be treated as an 
                                investment in the contract.
                            ``(iii) No inclusion for distribution to 
                        pooled income fund.--No amount shall be 
                        includible in the gross income of a pooled 
                        income fund (as so defined) by reason of a 
                        qualified charitable distribution to such fund.
                    ``(C) Qualified charitable distribution.--For 
                purposes of this paragraph, the term `qualified 
                charitable distribution' means any distribution from an 
                individual retirement plan--
                            ``(i) which is made on or after the date 
                        that the individual for whose benefit the 
                        account or annuity is maintained has attained 
                        age 59\1/2\, and
                            ``(ii) which is made directly from the 
                        account or annuity to--
                                    ``(I) an organization described in 
                                section 170(c); or
                                    ``(II) a trust, fund, or annuity 
                                described in subparagraph (B).
                    ``(D) Denial of deduction.--The amount allowable as 
                a deduction under section 170 to the taxpayer for the 
                taxable year shall be reduced (but not below zero) by 
                the sum of the amounts of the qualified charitable 
                distributions during such year which would be 
                includible in the gross income of the taxpayer for such 
                year but for this paragraph.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
                                 <all>